According to an EC report released on May 12th, Europe's Information and Communication Technologies (ICT) sector, leads the way in private research and development (R&D) in the EU. Accounting for just 4.8% of GDP, ICT represented 25% of total investment and 32% of researchers working in the private sector in 2007. However, both public and private EU ICT R&D still has to bridge the gap with global competitors, as one of the main issues to be tackled by forthcoming European Digital Agenda.

The 2010 report on R&D in ICT in the European Union was commissioned by the European Commission's Directorate General for Information Society and Media and carried out by experts at the Institute for Prospective Technological Studies (IPTS), one of the seven scientific institutes of the European Commission's Joint Research Centre (JRC). The work relies on the latest available official statistics delivered by the Member States, Eurostat and the OECD and is focused on three complementary perspectives:

• National statistics covering both private and public R&D expenditure
• Company data
• Technology-based indicators

Covering the period 2002-2007, the report puts forward statistical data showing that the EU is lagging behind its main competitors (the US, Canada, Japan and South Korea) in terms of corporate R&D investments in the ICT sector.

R&D business investment is 2.5 times greater in the US (€83.8 billion in purchasing power parity) than in the EU (€34.1 billion). 50% of R&D patents submitted by US-based inventors are in ICT technologies compared to 20% by European researchers. However, lower R&D investment in the EU compared to the US does not necessarily mean that individual EU ICT companies invest less in R&D than their international competitors. The disparity is largely due to the smaller size and slower growth rate of European ICT companies.

European Union ICT R&D Funding

In 2009, the European Commission put forward the EU Strategy for ICT R&D, committing to increase the annual funding available under the ICT part of its overall research programme from €1.1 billion in 2010 to €1.7 billion in 2013. It called on Member States to match this budget increase at national level with diverted and new sources of financing including pre-commercial procurements of research results and cohesion policy funds.

When it comes to public funding, EU governments fund a smaller share of ICT R&D in relation to total public funding for R&D compared to the US. In 2007, 6% of total public funding for R&D in the EU (€5.3 billion) went to the ICT sector, while it was close to 9% in the US (€10.4 billion). Finland, Sweden and Spain were the countries with the highest levels of ICT public funding in relation to their GDP, close to the US level.

Despite the strong increase in R&D investments made by the ICT sector in the new EU Member States, this expenditure is still low in relation to their GDP. However, spectacular increases in ICT manufacturing employment have occurred in Hungary (42%) and the Czech Republic (44%).

R&D in ICT across Member States

In 2007, Germany alone accounted for 27% of employment in the ICT manufacturing sub-sectors, while the UK remained the leader in ICT services, taking up 19% of jobs. These two countries, together with France, contributed to more than half of business R&D expenditure in ICT, and generated three out of four of all European patents in ICT technologies, with Germany in the lead, with almost 45%. Finland, Germany, the Netherlands and Sweden are the only four Member States whose number of ICT patent applications is similar to or above the US ratio of 110 patents for every million people in 2006. Finland and Sweden invest the largest amount of business R&D expenditure in ICT in relation to their GDP, above the US level.