Academic journal article Research-Technology Management

E.U. Mulls How to Boost Its R&D. (Perspectives: News and Views of the Current Research * Technology Management Scene)

Academic journal article Research-Technology Management

E.U. Mulls How to Boost Its R&D. (Perspectives: News and Views of the Current Research * Technology Management Scene)

Article excerpt

Europe hopes to bridge a widening knowledge gap over the Atlantic through a mix of tax, patent and other financial incentives to spur spending on research and development. At a policy summit in Barcelona earlier this year, the European Council, a policy arm of the European Union, set several targets to boost R&D efforts across the 15 member states. Since then, officials from the European Commission, the executive arm of the E.U., have called for quick action, but issues remain over how these targets can be achieved and when.

The E.U. has fallen noticeably behind the United States as governments and industry across the 15 member states struggle to keep pace with U.S. expenditures in science and technology. In 2000, the gap widened for the seventh time in as many years, with the U.S. spending EUR288 billion ($285.6 billion) on R&D in medical technology, aviation, pharmaceuticals and other fields, compared to Europe's EUR164 billion ($166.6 billion), the Commission reported in June. Between 1995 and 1999, the gap between U.S. and E.U. spending on R&D had more than tripled, according to the Commission. By the end of that period, European industries and governments spent EUR76 billion a year less than their U.S. rivals.

Equally disturbing is the gap in private sector spending. In the U.S., the private sector paid for around 68.2 percent of all R&D spending, according to the Commission. By comparison, the private sector in Europe paid for about 56.3 percent of a much smaller sum.

The Commission called the widening R&D gap "worrying," with some economists warning that Europe might never catch up. The gap has already seen some European companies flee the continent and relocate their R&D operations in North America.

In May, for instance, Swiss drug giant Novartis AG announced that it would shift its global research from Basel, Switzerland, to Cambridge, Massachusetts, in a move the company says will bring it closer to the center of genetic research in the U.S. and to the world's largest and most lucrative pharmaceuticals market. The move, involving around 1,000 scientists, marks one of the most high-profile defections yet from Europe's once mighty pharmaceutical industry in favor of the United States.

Novartis and other European pharmaceutical companies have long complained that Europe's ever-tighter grip on prescription-drug prices makes it increasingly difficult to recoup soaring research costs in the region.

Many European business and government officials fear that achievements in the region, such as last year's cutting-edge research on mapping the human genome, could become even more rare. Now authorities in Brussels appear to agree that radical action is necessary to turn the tide. But they acknowledge that encouraging businesses to spend more on R&D during the current economic downturn and uncertain stock market conditions will be anything but easy.

"It is time to act and implement our policies, even if the economic situation isn't the best," said Philippe Busquin, the European commissioner for research and the principal author of the proposals studied at the Barcelona summit. "If Europe wants to remain prosperous, keep its social system and create employment, it has to invest more in science," he warned.

Spending Hike Sought

A majority of the Council members at Barcelona called for overall R&D spending in the E.U. to be increased by 2010 to 3 percent of Gross Domestic Product (GDP) from the current 1.9 percent, with roughly two-thirds of this investment coming from the private sector. The hike would bring Europe in line with the U.S., where R&D investment is 2.64 of GDP, and Japan, which spends around 3.04 percent, according to the Organisation for Economic Cooperation and Development (OECD). Sweden leads Europe with 3.6 percent, followed by Finland with 3.1 percent.

The problem is, not all member states agree to setting an explicit target; Germany and the Netherlands, for instance, have opposed the move, arguing that while governments can encourage the private sector to spend more on R&D through various incentives, they can not force them. …

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