Europe must embrace more R&D

A lack of investment into research and innovation in European business could threaten the competitiveness of the region's knowledge economy, the European Commission has warned.

The Key figures 2007 on Science, Technology and Innovation report shows the percentage of GDP spent on research and development in Europe has stagnated since the mid-1990s.

On average, just 1.84 per cent of GDP is spent on R&D in the 27 EU countries and if current trends continue China will catch up by 2008.

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In contrast, Japan, China and South Korea have all increased their R&D intensity in recent years, which the Commission says has seen a more even distribution of knowledge than ever before.

European science and research commissioner Janez Potocnik said businesses need to invest in knowledge now if they are to be at the leading edge in the future and governments need to play a role with public-sector spending.

The R&D intensity deficit with the US has remained, despite efforts by the EU to catch up.

A major cause of the intensity gap is the low level of private R&D spending due to differences in industrial structure, according to the Commission.

The report suggests this is due to Europe having a smaller high-tech industry - normally the biggest source of R&D spending – than other regions.

There are some exceptions to the low R&D spending with several EU countries, including Austria, Germany and Finland having R&D intensity levels of two per cent and above.

Another key point in the report is that the EU needs to adapt to increased competition from other economies such as China.