Chapter 2 Funding of R&D

Transcription

1 Chapter 2 Funding of R&D

2 1 Introduction At the European Summit in Barcelona (March 22), the Heads of State or Government decided on the objective of increasing total R&D expenditure (GERD) to 3% of GDP (gross domestic product) in the EU (the 3 % objective ) by the year 21. As an additional objective, they decided that one-third of R&D expenditure should be publicly funded, with the other two-thirds coming from the business community. This target was one of the headlines of the Lisbon Strategy from 2. Flanders translated this objective within the Flemish context through the so-called Innovation Pact. This pact was signed in March 23, and it contains a formal engagement by all the actors involved in the Flemish research and innovation landscape to jointly reach this 3% objective by means of complementary efforts. The Vlaanderen in Actie (Flanders in Action) plan reflects the joint long-term vision, strategy and planned actions of the Flemish Government and the social partners. It identifies a number of strategic breakthroughs in various fields that are crucial for the future wealth and well-being of all in Flanders. With this plan, Flanders aims to become one of the top-5 EU regions by 22. STI play a transversal role across these various themes. In 29, the Flemish Government and the Flemish social partners took the initiative to conclude the Pact 22, which specifies and implements the broader societal objectives of the Flanders in Action plan. The importance of STI is reflected by the target to spend 3% of GDP on R&D, in accordance with the EU 22 Strategy. The Pact 22 contains twenty thematic chapters with concrete targets and actions to be achieved by 22, which are monitored on an annual basis. The specific targets include: innovation will be more widely and better distributed across all industries, business types and segments of society; an increase of turnover from new or improved products and services; a year-on-year increase of the number of patent applications; to be among the EU s top-5 regions for public spending on eco-innovation. 2 GERD In 212, Flanders spent over 5,24 million euros on R&D (GERD). Two-thirds of the research cost was paid by companies (the Business Enterprise Sector or BES) and one-third by public research institutes (PNP, GOV en HES). When the total R&D intensity of the GERD (2.41% for 211) is broken down by source of funding, 1.7% comes from private funds and.7% from public funds (federal, regional, community, European and international funds), which equates to 71% and 29% by private and public sectors respectively. This effort of 5.1 billion euros represents almost two-thirds of the GERD for the whole of Belgium (211). The R&D intensity (measured as the percentage of GERD related to GDP) of Flanders was 2.42% in 212 (compared to 2.28% in 21 and 2.41% in 211). Flanders ranks higher than the Netherlands, France and the EU-28 average, yet much lower than the USA, Germany and the Scandinavian top countries for the total R&D intensity of GERD in

3 Figure 1: Evolution of total R&D spending (GERD) and the R&D intensity of the GERD in Flanders from 1993 to 212, in million euros (current prices) ,7 1,92 2,16 2,5 1,96 1,97 2,6 2,12 2,28 2,41 2,42 2, ,5 1, GERD R&D intensity - GERD Figure 2: International comparison of the R&D intensity of GERD for ,5 3 2,5 2 1,98 2,16 2,24 2,29 2,42 2,79 2,98 2,98 3,35 3,41 3,55 1,5 1,5 Source: OECD database, Main Science and Technology Indicators Denmark: provisional, national estimate or projection; Sweden, Germany: national estimate or projection series; France, the Netherlands, Belgium: provisional figure; USA: provisional and excludes most or all capital expenditure; EU-28: secretariat estimate (provisional). 43

4 Figure 3: R&D intensity broken down by sector of performance or source of funds for Flanders, ,5 2 1,5 1,5 2,41 2,42 2,28 2,16 2,5 1,92 1,96 1,98 2,6 2,12 1,7,76,8,56,76,47,62,6,62,66,73,41 1,7 1,6 1,5 1,49 1,47 1,5 1,51 1,29 1,45 1,6 1,43 1,35 1,36 1,4 1,39 1,52 1,64 1,62,55,53,51,56,61,69, BERD/GDP non-berd/gdp public funding/gdp private funding/gdp GERD/GDP 3 BERD In 212, the business enterprise sector spent 3,483 million euros on R&D activities in Flanders, measured at current prices. This is the Business Expenditure on R&D (BERD), which corresponds to a R&D intensity (BERD as a % of GDP) of 1.62%. This level represents a sharp increase for the GERD compared to 21 (1.53%) and a small decrease compared to 211 (1.64%). When the total R&D intensity of the BERD is broken down by source of funding, 1.51% comes from private funds and.13% from public funds (211). The share of the BERD in the GERD was 67% in 212. Figure 4: Evolution of the R&D spending by companies (BERD) and R&D intensity for the BERD, from 1993 to 212, in million euros (current prices) , , ,6 1,43 1,35 1,36 1,4 1, , ,64 1, ,75 1,5 1,25 1,,75,5, , BERD R&D intensity - BERD 44

5 Figure 5: International comparison of the R & D intensity of BERD for 212 Japan Finland Sweden Germany Denmark USA Flanders Belgium France EU-28 The Netherlands 1,24% 1,22% 1,52% 1,48% 1,62% 2,2% 1,96% 1,95% 2,31% 2,44% 2,57%,%,5% 1,% 1,5% 2,% 2,5% 3,% Source: OECD database, Main Science and Technology Indicators France, the Netherlands, Belgium: provisional figure; EU-28: secretariat estimate (provisional); USA: provisional and excludes most or all capital expenditure; Denmark, Sweden: national estimate or projection, provisional. The R&D activities (expenditure) within companies in Flanders are mainly focused on the following high-tech sectors (211): chemicals and pharmaceuticals (NACE 2-21) account for 34% of total BERD expenditure on R&D (based on a sample); information technology, electronic products, optical products and electrical equipment (NACE 26-27) account for 14%; motion picture, video and TV production, computer programmes, engineering, and technical testing and analysis activities (NACE 59-63, and 71) account for 16%; and machinery and transport (NACE 28-3) account for 12%. In 212, the R&D intensity in the business sector was 1.62%. Flanders therefore ranks higher than the EU-28 average and the Netherlands, but much lower than the Scandinavian countries, Germany, the USA and Japan. 4 Non-BERD The share of R&D spending by the public sector within total R&D spending increased between 24 and 29 from 3% to 34.4%. In 21 and 211, the share of R&D spending by the public sector fell slightly, but a slight recovery was noted for 212. R&D spending by the public sector (non-berd = GOVERD + HERD + PNP) amounted to 1,721 million euros in 212. One-third of this amount was spent by public research institutes (GOV) and nearly 64% by higher education institutions (HES).There is a stronger increase in the R&D expenditure (in absolute terms) of the private sector compared to the public sector. The R&D intensity for the public sector (non-berd as a % of GDP) in Flanders amounted to.8% in 212, a steady increase since 27. When the total R&D intensity of the non- BERD is broken down by source of funds,.19% is funded privately and.57% by public funds (211). 45

6 Figure 6: Evolution of the R&D spending by GOV, HES and PNP (non-berd=goverd+herd+pnp), from 1993 to 212, in million euros (current prices) PNP HERD GOVERD NON-BERD The GOVERD and HERD (211) can be broken down by different fields of science. For the GOV sector, this indicates the dominant position of engineering and technology (73.2%). For the HES sector, the most important fields of science are the medical sciences (31.4%), the natural sciences (17.5%), the social sciences (16.5%) and engineering & technology (16.1%). Figure 7: Evolution of the R&D intensity for the non-berd (GOVERD, HERD and PNP) from 1993 to 212,9%,8%,73%,76%,76%,8%,7%,6%,5%,4%,3%,2%,1%,%,41%,29%,9%,46%,31%,13%,56%,35%,18%,62%,6%,62%,38%,37%,38%,22%,21%,21%,66%,41%,23%,46%,48%,49%,25%,25%,25%,51%,27%,3%,3%,2%,2%,2%,2%,2%,2%,2%,2%,2% HERDgew PNP GOVERD non-berd 46

7 For the GOVERD, the most important source of funds in 211 was government funding (46.8%), followed by abroad (46.5%) and thirdly the companies (6.5%). For the HERD, government funding was again the most important source of funds (6.8%), followed by the higher education sector (15.9%) and the companies (13.5%). The proportion of the HERD that is supported by (domestic) companies for 212 (16.7%) ranks higher internationally than any of the EU-28 countries and is more than twice the figure for the EU-28 as a whole. Only Germany has a similar proportion. In other words, companies are both an important client and an important source of funds for the research carried out at the Flemish higher education institutions. Figure 8: International comparison of the funding of the HERD by companies in 212, in % ,7 14 1,7 8,2 6,6 5,1 4, ,4 2,7 2,6 Source: OECD database, Main Science and Technology Indicators EU-28: provisional and secretariat estimate or projection; Denmark: national estimate or projection; USA: projection and most or all capital expenditure is excluded. For the R&D intensity of the HES, Flanders scores roughly similar (212) to France and above the EU- 28 average. Finland (.71%), the Netherlands (.67%), Denmark (.94%) and Sweden (.9%) have a much higher R&D intensity for the HES. In summary, Flanders is maintaining its international position, compared to the 211 figures. The R&D intensity of the GOV (212) is higher in Flanders than in Sweden, the Netherlands and Denmark. Flanders results are roughly similar to the EU-28 average and Norway, but lower than those of Germany, Finland and France. In summary, Flanders is again maintaining its international position, compared to the 211 figures. 47

8 Figure 9: International comparison of the R&D intensity of HERD and GOVERD for 212 Denmark (211) Sweden (211) Finland The Netherlands (211) Norway Germany (211) Flanders Belgium (211) France (211) EU-28 Japan USA,94%,9%,71%,67%,52%,51%,51%,49%,47%,47%,45%,39%,34%,22%,27%,42%,27%,18%,31%,25%,29%,6%,15%,32%,%,2%,4%,6%,8% 1,% 1,2% HERD GOVERD Source: OECD database, Main Science and Technology Indicators The Netherlands: includes other classes (GOVERD), provisional; EU-28: secretariat estimate or projection based on national sources, provisional; USA: federal or central government only (GOVERD), most or all capital expenditure excluded (HERD); Germany, provisional figures, includes other classes. 5 GBAORD This section examines in detail the R&D support received from Flanders, in particular that of the Flemish government, and compares it with that of other countries. GBAORD (Government Budget Appropriations or Outlays for R&D) is an indicator used by the OECD and EUROSTAT. The table below shows an international comparison of the GBAORD as a percentage of GDP. The calculation method of the Flemish figure is explained further in this chapter. It is clear that the trends for GBAORD, expressed as a percentage of GDP, differ between countries. In some countries there is stagnation; in others there is even a drop over a period of several years. Figure 1 compares Flanders with selected countries. Because of the worldwide financial and economic crisis, followed by measures taken for the benefit of the economy, it is necessary to proceed with caution when comparing budgets. Comparison is therefore made for the year 21, the most recent year with data for all the compared countries. Table 2: International comparison of Government Budget Appropriations or Outlays for R&D (GBAORD), expressed as a percentage of GDP(R) Flanders,64%,66%,62%,7%,71%,74%,72%,71%,7%,73% Belgium,59%,61%,6%,68%,67%,67%,65%,66% no data Denmark,71%,72%,79%,85%,98%,97% 1,2% 1,3% 1,2% Germany,77%,76%,77%,8%,91%,92%,91%,9%,92% Finland 1,3% 1,2%,97%,98% 1,12% 1,16% 1,1% 1,7% 1,3% France,97%,81%,75%,88%,93%,84%,84%,74%,73% Ireland,45%,43%,48%,52%,55%,53%,49%,46% no data Italy,67%,61%,64%,63%,64%,62%,56%,56% no data 48

9 Finland Denmark Portugal Germany United States Sweden The Netherlands Austria Japan France Flanders EU-28 Belgium United Kingdom Italy Spain Ierland The,79%,8%,78%,77%,85%,83%,83%,82%,79% Netherlands Austria,66%,66%,65%,7%,78%,8%,81%,81%,81% Portugal,7%,69%,75%,91% 1,4% 1,2% 1,2%,94%,96% Spain,55%,68%,76%,77%,83%,79%,69%,52% no data United,66%,65%,64%,62%,66%,62%,59%,57% no data Kingdom Sweden,86%,84%,79%,8%,91%,88%,83%,88% no data EU-27,68%,66%,66%,7%,75%,73%,7%,67% no data Japan,71%,71%,68%,71%,76%,74%,78%,78%,75% United States 1,%,98%,98%,98% 1,14% 1,%,93%,88%,8% Source: OECD database, Main Science and Technology Indicators Flemish Government R&D funding + Flemish share of the federal funding (35.5% ESA, 56% for the rest), Belgium 212 figure: Commissie Federale Samenwerking, CFS/STAT: final budget Flanders + provisional budget other authorities). Figure 1: International comparison of Government Budget Appropriations or Outlays for R&D (GBAORD) 212, expressed as a percentage of GDP(R) 1,2% 1,%,8%,6% 1,7% 1,3%,94%,9%,88%,88%,82%,81%,78%,74%,71%,67%,66%,57%,56%,52%,46%,4%,2%,% civil GBAORD defence-gbaord Source: OECD database, Main Science and Technology Indicators Flemish Government R&D funding + Flemish share of the federal funding (35.5% ESA, 56% for the rest), Flanders and all countries:

10 6 Estimate calculation method for publicly financed R&D intensity (1% objective) For the period after 211, no R&D survey data by sector is yet available. A cautious estimate is being made of the growth path necessary to reach the 1% objective (the publicly financed share of the above mentioned 3% objective) by 22. Consequently, for the present purpose, as in previous EWI Budget Browsers, a calculation is included to approximate the results of the most recent years. The combined efforts of the government are calculated by elaborating different variants. 1. The own efforts of the Flemish Government This is the Flemish GBAORD in the strict sense, funded by the Flemish Government only. 2. The efforts of the Flemish Government + the Flemish share of federal government R&D funding In Flanders, R&D activities are also funded by federal government R&D funds. When this share received from the federal government is added to the Flemish GBAORD in the strict sense (1), a GBAORD is obtained for Flanders that is probably closer to reality. This variant is consequently the most suitable for an international comparison of the GBAORD. When calculating Flanders share of federal government funding, the following formula is used: 35.5% of the funding from the European Space Agency (source: Flemish Council for Science and Innovation VRWI) and 56% for the remainder of the total federal R&D funding. 3. The efforts of the Flemish Government + the Flemish share of federal government R&D funding + the Flemish return from the funds of the EU Framework Programs for Research and Technological Development In another variant, the Flemish return from the EU Framework Programs for Research and Technological Development can also be added, since this too represents R&D activities funded publicly. However, the result of this calculation can no longer be considered as GBAORD, but is actually a third variant that can be used for calculating the publicly financed share of the R&D intensity. The results of this calculation are given in the table below. The figure for 214, initial budget (i), is estimated at.79% of GDP(R). Table 3: Evolution of the R&D budget and R&D intensity R&D budget i (million euro) Flemish Government (1) 1.111, , , , , , Flemish Gov. + Flemish share of federal gov. (2) Flemish Gov. + federal share + EU-FP (3) 1.35, , , , , , , , , , , ,69 Public R&D intensity as % of i GDP(R) (1% objective) Flemish Government (1),57%,52%,53%,56%,56%,58% Flemish Gov. + Flemish share of federal gov. (2) Flemish Gov. + federal share + EU-FP (3),69%,66%,66%,69%,69%,72%,76%,74%,74%,76%,76%,79% GDP(R) (million euro) (4) i , , , , 22.68, ,9 5

11 (1) Flemish Government budget for R&D: final budgets ; initial budget 214. (2) Flemish share in the federal government R&D funds: ESA distribution key at 35.5% for Flanders (source: VRWI) and the remainder of federal government R&D funds estimated at 56% for Flanders. federal government R&D funds: source: CFS/STAT; for 212 and 213i the initial budget of 212 was used. (3) estimated return based on final results of the Flemish return for the Seventh Framework Programme (publication in preparation). Sources: ecorda data, reworked by EWI. (4) GDP(R): Gross Domestic Product by Region. Source: Hermreg - Research Centre of the Flemish Government (Studiedienst van de Vlaamse Regering), June Seventh Framework Programme for Research and Technological Development (FP7) 7.1 Introduction In March 21, the European Commission launched the Europe 22 strategy, the successor to the Lisbon Strategy, which ended in 21. The new EU strategy for jobs and smart, sustainable and inclusive growth will help Europe to overcome the crisis and prepare for the recovery of the European economy over the next 1 years. The Europe 22 strategy is based on three coherent and mutually reinforcing priorities: smart growth (an economy based on knowledge and innovation); sustainable growth (a low-carbon, efficient and competitive economy with better use of resources); and growth for everyone (a high-employment economy with social and territorial cohesion). The new strategy is therefore focused on several key areas where action is needed: knowledge and innovation, a sustainable economy, high employment and social inclusion. The most important funding instrument for research within the European Union (EU) is the European Framework Programme for Research, Technological Development and Demonstration Activities, a multi-year research and stimulation programme that sets out the activities of the EU in the field of research and technological development in the medium term. It contributes substantially to the aims of the European Research Area (ERA) and the Innovation Union flagship of the EU 22 strategy. The Seventh Framework Programme (FP7), which covered the period from 27 until 213, had a total budget of 5,521 million euros. The data used in the present section were taken from the database that the European Commission makes available via the electronic platform e-corda. The release date of the data is 21 February 214, when about 85% of the available budget over the total period had been allocated. 7.2 Participation by Flanders Flanders has participated 2,774 times in 2,14 projects under the Seventh Framework Programme. This equates to a total participation funding for Flanders of 1,66.3 million euros. Flanders was responsible for the major part of the total Belgian number of participations, projects and coordinators, as well as the largest share of the participation grants. 51

12 The total Flemish participation funding represents 2.48% of the total funding received from the European Commission for participating in FP7. During the period 27-February 214, Flanders received a yearly average of more than million euros in FP7 financing. ICT, Marie Curie and Health were the three thematic priorities with the highest number of participations from knowledge actors in Flanders. As shown in figure 11, the Flemish participation was most successful in the thematic priorities Fission, Fusion, Social Science and Humanities (SSH), Food, ICT, Space, Nanotech and Health. The participation in Fission was due to the participation of the research institute for nuclear energy SCK/CEN, which is located in Flanders, but depends on the federal government. The participation in Fusion was mainly due to the participation of the University of Ghent (UGent), but also of SCK/CEN. The participation in SSH was mainly by the universities. In the priorities Food, ICT, Space, Nanotech and Health, the participation was shared by the universities, research centres (IMEC, VIB, VITO, iminds, VKI) and industry. Figure 11: Financial return for Flemish participants in the thematic priorities of FP7, as compared to the expected return (vertical line at 2.3%) (preliminary results as of February214) Health Food ICT Nanotech Energy Environment Transport SSH Space Security General JTI (Annex IV- ERC Marie Curie Infrastructures SME Regions Potential Society Policies INCO Fusion Fission HES IND REC OTH % 1% 2% 3% 4% 5% 6% 7% 8% Return (%) HES: IND: REC: OTH: Higher education sector Industry Research centres Others 52

13 7.3 Benchmark for Flanders The performance of Flanders in the Seventh Framework Programme was examined by dividing its financial return by the Gross Domestic Product and ranking the result with those of other participating countries. Figure 12 shows that Flanders performs well with a ranking in third place, behind the Netherlands and Greece, but performing better than the Scandinavian countries, Finland, Denmark and Sweden. Figure 12: Benchmark for the Flemish participation in FP7: funding / GDP The Netherlands Greece Flanders Belgium Finland Denmark Sweden Switzerland Austria Ireland United Kingdom Spain Portugal Germany France Italy Norway Poland Funding (in thousands of euros) / GDP (in billions of euros) 7.4 Top participating organizations The higher education sector (HES) was the main Flemish beneficiary of FP7, accounting for about 45% of the return received by Flanders. The research centres received almost 3% of the Flemish return, and the companies about 21%. The top-3 participating institutions in Flanders (and Belgium) in FP7 were KU Leuven, UGent and IMEC, which jointly represented almost a third of the total EU FP contributions to Belgian grant holders. 53

14 The chancellor, masters and scholars of the University of Cambridge The chancellor, masters and scholars of the University of Oxford Imperial college of science, technology and medicine University college London Eidgenoessische technische hochschule Zurich Katholieke Universiteit Leuven Ecole polytechnique federale de Lausanne Danmarks tekniske Universitet Technische Universiteit Delft The University of Edinburgh Number of participations Funding (in millions of euros) Figure 13: Top-1 universities (HES) in an international ranking, sorted by number of participations and funding (in millions of euros) Number of participations Funding (in millions of euro) EU Regional Policy for R&D&I support For the period , the Flemish Region is also entitled to receive structural funding within the framework of the Objective 2 and Objective 3 programmes. However, these (cohesion) budgets are considerably lower than the (competition-based) support that stems from the Framework Programme for Research and Technological Development. More precisely, a total budget of 2 million euros was available between 27 and 213 under the Objective 2 programme, divided equally among four main priorities. The first of these is Knowledge and Innovation. Subtracting the budget for coordination costs, the total available R&D&I budget for Flanders amounts to 48.5 million euros, which is an average of about 8 million euros per year (compared to 16 million euros per year from FP7). Flanders is also active in a number of Interreg IV projects under the Objective 3 programme, which aim at increasing the research and innovation potential. There are a number of major initiatives worth mentioning in this respect: BioBase Europe (allocation of 21.8 million euros): a project for the construction of a pilot plant (for research) and training facilities for bio-based activities, which aim to speed up the development of a sustainable bio-based economy in Europe. It is the first facility of its kind in Europe that will use renewable resources for industrial biotechnology on such a scale. The actors involved are the Ghent Bio-energy Valley, UGent, Stad Gent, Biopark Terneuzen (Zeeuws-Vlaanderen, the Netherlands), and various other stakeholders. 54

15 NanoSensEU (allocation of 1.6 million): a project that intends to develop a universal measure surface for the detection of biomolecules; to develop and use biosensors; and also to set up a knowledge cluster on biosensors (various specialities). The Flemish partners involved are UHasselt, IMOMEC (IMEC vzw) and KU Leuven. Hydrogen Region Flanders - South Netherlands (allocation of 14.1 million euros): a project that focuses on the sustainable generation of hydrogen in the fields of education, production, infrastructure and early markets (demonstration projects). The Flemish participants are IMEC, UGent, several university colleges and various other stakeholders. Organext: a project that brings together twelve partners from business, policy and knowledge centres from the Euregio Maas-Rhine, Eindhoven and Leuven, with expertise in the domain of nanotechnology, new materials, organic solar cells and economic valorisation. The Flemish partners are UHasselt and IMOMEC. 55