NOTE. for the Interparliamentary Meeting of the Committee on Budgets

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NOTE for the Interparliamentary Meeting of the Committee on Budgets THE ROLE OF THE EU BUDGET TO SUPPORT MEMBER STATES IN ACHIEVING THEIR ECONOMIC OBJECTIVES AS AGREED WITHIN THE FRAMEWORK OF THE

European Parliament's Committee on Budgets with the corresponding committees in the EU national parliaments, in the framework of the European Parliamentary Week.

1 NOTE for the Interparliamentary Meeting of the Committee on Budgets THE ROLE OF THE EU BUDGET TO SUPPORT MEMBER STATES IN ACHIEVING THEIR ECONOMIC OBJECTIVES AS AGREED WITHIN THE FRAMEWORK OF THE EUROPEAN SEMESTER: THE EXAMPLE OF INNOVATION, RESEARCH AND DEVELOPMENT Tuesday, 29 January, 2013, 11h00-13h00 The present note has been prepared as a background document of the meeting of the European Parliament's Committee on Budgets with the corresponding committees in the EU national parliaments, in the framework of the European Parliamentary Week. Its aim is to present the basic data on the financing of the research in the EU over the last decade, at the national (point 1 below) and EU level (point 2). 1. FINANCING OF RESEARCH AT THE NATIONAL LEVEL Table 1 (p. 2) presents the evolution of spending on R&D in the EU and some reference countries between 2000 and As these data demonstrate, the EU as a whole has not reached the target of 3% of GDP spent on R&D activities set in the Lisbon Strategy, and subsequently maintained in the Europe 2020 strategy under the 'Innovation Union' flagship. Nevertheless, according to the estimates of the Eurostat, the gross domestic expenditure on R&D has risen in this period by some 43,5% (2010 to 2000, current prices). 1 As Figure 1 (p. 3) illustrates, R&D spending expressed in terms of % of GDP has also risen in most of the EU countries, and in the EU as a whole. 1 Source: Eurostat webpage: accessed on 09/01/

2 Table 1: Gross domestic expenditure on R&D, (% share of GDP) EU EURO Area Belgium Bulgaria Czech Republic Denmark (1) Germany Estonia Ireland Greece : 0.58 : : : : Spain France (2) Italy Cyprus Latvia Lithuania Luxembourg 1.65 : : Hungary (3) Malta (3) : : Netherlands Austria Poland Portugal Romania Slovenia (4) Slovakia Finland Sweden (5) : 4.13 : United Kingdom Iceland : : Norway : Switzerland 2.53 : : : 2.90 : : : 2.99 : : Croatia : : Turkey : Japan (4) : : United States : : (1) Break in series, 2007 (4) Break in series, 2008 (2) Break in series, 2000 and 2004 (5) Break in series, 2005 (3) Break in series, 2004 Source: Eurostat 2

3 Figure 1: Gross domestic expenditure on R&D, 2000 and 2010 (% share of GDP) 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,00 EU 27 EURO Area Belgium Bulgaria Czech Republic Denmark Germany Estonia Ireland Greece (1) Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta (2) 3 Netherlands Austria (1) 2001 instead of 2000 and 2007 instead of 2010 (3) 2001 instead of 2000 (5) 2008 instead of 2010 (2) 2002 instead of 2000 (4) 2009 instead of 2010 Source: based on Eurostat data Poland Portugal Romania Slovenia Slovakia Finland Sweden (3) United Kingdom Iceland (4) Norway (3) Switzerland (5) Croatia (2) Turkey (4) Japan (5) United States (5)

4 Despite the growing R&D expenditure in relative terms (expressed as % of GDP), its level in the EU (2% in 2010) remains well below these in the US (2,79% in 2008) and Japan (3,45% in 2008). Table 2: Gross domestic expenditure on R%D by source of funds, 2010 (% total gross expenditure on R%D) Business enterprises Government Abroad EU 27 (1) EURO Area (1) Belgium (1) Bulgaria (1) Czech Republic Denmark (2) Germany (1) Estonia Ireland (1) Greece (3) Spain (1) : France Italy (1) Cyprus (1) Latvia Lithuania Luxembourg Hungary Malta Netherlands (1) Austria Poland Portugal (1) Romania Slovenia (4) Slovakia Finland (5) Sweden (1) (6) United Kingdom Iceland (1) Norway (1) Switzerland (7) Croatia Turkey (1) (8) Japan (4) (7) United States (7) : (1) 2009 instead of 2010 (5) Break in series, abroad, 2005 (2) Break in series, 2007 (6) Break in series, 2005 (3) 2005 instead of 2010 (7) 2008 instead of 2010 (4) Break in series 2008 (8) Break in series, business enterprises and government, 2008 Source: based on Eurostat data 4

5 Participation of private businesses (Table 2 on p. 4) in the financing of R&D expenditure in the EU stood at some 54% of the overall spending in This figure hides, however, huge discrepancies between different EU countries; taken individually, the corresponding share varies country-by-country between less than 16% and over 66% (2010 data). Corresponding figures for the US and Japan were 67% and 78% respectively (2008 data). Similarly, the EU countries have also noted different share of foreign funding for R&D, ranging from less than 4% up to 20% in their overall spending. 2. RESEARCH FUNDING FROM THE EU BUDGET Under the current programming period, financing of research activities from the EU budget is channelled via three main instruments: the 7th Research Programme, with the separate envelope for the nuclear research, the Competitiveness and Innovation Programme, and the European Institute of Innovation and Technology. Table 3 below presents the financial programming for these headings under the current Multiannual Financial Framework. Table 3: Expenditure on research from the EU budget by financial instrument, (mln EUR) Financial instrument 7th FP for research, technological development and demonstration activities 7th FP for nuclear research Competitiveness and Innovation Programme (CIP) European Institute of Innovation and Technology (EIIT) Total amount 5 082, , , , , , , ,2 404,2 496,0 599,3 609,5 631, , , ,3 387,7 412,4 509,3 525,7 583,9 614,4 659, ,6 2,9 5,8 30,2 62,8 79,3 123,1 304,1 Source: Statement of estimates of the European Commission for the financial year 2013, p It is proposed that under the next programming period as of 2014, funding of the research activities by the EU budget be covered by a new strategic programme, Horizon 2020 (see Annex 1 for an overview). Impact of the R&D spending from the EU budget and its leverage effect are often difficult to quantify and express in numerical terms. The figure below presents the evolution of the concept of the European Added Value in the subsequent Framework Programmes for research activities. 5

6 Figure 2: The Evolving Character of 'European Added Value' Dimensions of European Added Value FP1 FP2 FP3 FP4 FP5 FP6 FP7 Scale too big for Member States (MS) to handle alone Financial benefits: a joint approach would be advantageous Combines complementary MS efforts to tackle European problems X X X X X X X X X X X X X X X X X X X X X Cohesion X X X X X X X Unification of European S&T across borders X X X X X X X Promotes uniform laws and standards X X X X X X X Mobilising EU potential at European and global level by coordinating national and EU programmes X X X X Contributes to implementing EU policy X X X Contributes to societal objectives (later grand challenges ) Exploits opportunities for the development of European science, technology and industry X X X X X X Structures the EU R&D community and fabric X X Improves quality through exposure to EU-wide competition Source: European Policy Evaluation Consortium (EPEC), 'Understanding the Long Term Impact of the Framework Programme', Dec 2011 (study executed for the European Commission, DG Research), p.12. X Annex: 1. EP Library Briefing 'Horizon 2020: research and innovation for growth', Nov

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

EUROPEAN COMMISSION Brussels,.4.29 COM(28) 86 final/ 2 ANNEXES to 3 ANNEX to the REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE