The European Union was in 2023 first for investment in research and development (R&D) with a 9.8% increase that surpassed its main competitor the US (5.9%) and China (9.6%), according to new data released by the EU Industrial R&D Investment Scoreboard. Despite the result, the EU still lags behind in some key factors like tech and need to ensure investments move across the whole bloc.
The EU was also second for R&D private investment with 18.7%, behind the US at 42.3% but ahead of China at 17.1%. The scoreboard showed that the EU still needs to boost private investments and develop local big players in some key industries, like Information & Communication Technologies (ICT) and health. A good sign for the EU is the ongoing diversification of R&D in several sectors across the bloc.
Commenting on the result, Ekaterina Zaharieva, Commissioner for Startups, Research and Innovation said that “Research and innovation investments will determine tomorrow’s economy, industry and competitiveness. We count on the contribution of European corporate leaders to help close our innovation gap with other world regions.”
More than three-quarters of global R&D in the last ten years focused on four sectors, ICT, health, software and automotive. In fifth place the chemical sector, while the energy sector recently overcome aerospace and defence.
The automotive sector is an EU stronghold, with 45.4% of global R&D investments, twice as much as the US. Unsurprisingly, it’s also the sector with the most corporate R&D investment in Europe, with a share of 34.2%. In the health sector the US has the lion’s share, but the EU is second and it is the sector with the most EU-based companies among the top 2000, although China is closing the gap. Health is where most of the EU’s top small and medium-size enterprises that made the top list are located, mostly based in Sweden, France, Denmark and Germany. French companies were the ones investing the most.
However, in ICT and hardware nobody can match the US’s R&D investments. ICT software was for the last decade the sector with the highest annual R&D growth rate, however investments are currently slowing down. China had the most growth in the sector, while in hardware is seeing South Korea and Taiwan making strides.
Another point of issue for the EU is the geographical distribution of R&D. The top companies that made the list for R&D investments are located in 19 out of 27 member states, with four countries having only one company each – those four being Portugal, Hungary, Slovenia and Malta. The Czech Republic and Poland despite not having many companies headquartered in their countries, lead the way for subsidiaries located within their borders, showing that an EU-wide system can benefit member states across the board.
