information memo Higher Education & Research

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1 information memo Higher Education & Research In 2014, gross domestic expenditure on R&D (GERD) in France came to 47.9 billion euros ( bn), up by 0.6% in volume on The rise in GERD is due to the increase in business enterprise expenditure on research and development (R&D) (+1.2%), but is tempered by a slight fall in government expenditure ( 0.4%). 417,200 people were employed (full time equivalent) in R&D activities in business enterprises and the public sector. France's investment in research, measured by comparing GERD to gross domestic product (GDP) remained at 2.24% in It could fall slightly in 2015, to reach 2.23%. Growth in GERD should accelerate (0.9% in volume, estimate) due to the increase in business enterprise and government GERD, but less quickly than GDP (+1.3%). Research and development expenditure in France Detailed results for 2014 Gross domestic expenditure on R&D (GERD) covers R&D work carried out in the national territory (metropolitan France and overseas departments), regardless of the origin of the funding 1. In 2014, this came to 47.9 billion euros ( bn) (chart 1), an increase of 0.6bn on When corrected by price developments, GERD increased by 0.6% in 2014 (chart 2). BERD rose by 1.2% in volume, while GovERD fell by 0.4%. While GERD measures the R&D work carried out in France, national research and development expenditure (GNERD) covers all research work funded by French business enterprises and government, including work performed abroad 2. In 2013, GNERD amounted to 51.4bn, of which 7.2bn was used to fund work carried out abroad. Between 2013 and 2014, it increased by 2.0bn, a rise of 3.5% in volume. In 2014, business enterprise contribution to national R&D expenditure was 31.7bn (business GNERD) and government expenditure came to 19.8bn (government GNERD). CHART 1 Research funding and performance in France in 2014 (semi finalised results) 2.2bn and initial estimates for 2015 Government (38%) Gov. GNERD = 19.8bn FUNDING GNERD = 51.4bn 2.40% of GDP 1. GERD, cf. "Sources et definitions". 2. GNERD, cf. "Sources et definitions". Business enterprises (62%) Business GNERD 5.0bn Abroad 15.1bn 0.9bn 2.5bn 25.7bn Abroad 0.9bn Government (35%) Business 2.9bn GovERD = 16.8bn GERD MANCE = enterprises (65%) 0.78% of GDP 47.9bn BERD = 31.1bn 2.24% of GDP Note: due to rounding of figures, the total may differ from the sum of the items shown. Total R&D expenditure is measured either by reference to R&D funding or R&D performance by two main economic players: government and business enterprises. Government here means the public sector, higher education and non profit institutions. R&D funding by government includes contracts and subsidies from the public sector for R&D in the business sector. It does not include tax incentive measures such as the Research Tax Credit (CIR) or the young innovative company (YIC) status. Scope: all business enterprises and government administrations based in France Sources: MENESR DGESIP/DGRI SIES Research and INSEE

2 In 2015, growth in GERD could accelerate slightly (+0.9% in volume) following business enterprise expenditure, accompanied by a rise in government expenditure, 3% following its slight fall in 2014 (chart 2). 2% GERD is therefore expected to reach 48.6bn. 1% BERD should increase by 1.1% in volume to reach 31.7bn. 0% CHART 2 - Contributions* by business enterprises and government to GERD trends between 2004 and 2015 a steady rate of increase in 5% GovERD is expected to increase by -1% 0.5% in volume, to reach 17.0bn. -2% (in v Of every ten researchers, six work in business enterprises and four in the public sector In 2014, 417,200 people were employed in R&D activities in France as full-time equivalent (FTE). This number increased by 0.1% in 2014 (table 1), compared to 1.5% in Nearly two-thirds of these personnel are researchers, of which six in ten work in business enterprises. In business enterprises, jobs in research fell by 0.8% in Following a slight rise in 2013, R&D personnel in manufacturing industry branches fell by 1.1%. In service branches, numbers of R&D personnel also fell (-0.6%), putting an end to the marked increase of previous years (+6.5% in 2013, following +6.8% in 2012). The manufacturing industry continues to account for 69% of R&D Contribution by business enterprises (in % points) Contribution by government (in % points) Annual trends in GERD in volume (as %) * The method for calculating BERD contribution against GERD fluctuations in percentage points is as follows: [(GERD year N - GERD year N-1 / GERD year N-1) *100 (r) Breaks in series (sd) Semi-finalised data (e) Estimate Key: in 2014, GERD increased by 0.6% in volume. This growth was due to the rise in business enterprise expenditure on R&D, at 0.8 percentage points, and the fall in government expenditure, at 0.2 percentage points. Scope: all business enterprises and government administrations based in France. Sources: MENESR-DGESIP/OG RI-SIES Research and lnsee personnel in business enterprises, and 64% of R&D researchers and engineers. In the public sector, universities 4 are the largest employer of research personnel (66,600 FTE in 2014). Overall, public sector personnel increased once more (+1.5% in 2014, after +0.8% in 2013), while numbers employed in business enterprises fell. Within the public sector, R&D personnel in public institutions (EPST5 and EPIC 6 ) fell once again, with a decrease of 0.7% in 2014, following the 0.4% decrease recorded in Researcher numbers were up by 0.5%, following an increase of 2.5% in In total, researchers held 63.9% of full-time equivalent R&D jobs (62.0% in the public sector and 65.2% in business enterprises). The number of research personnel in business enterprises continues to grow, but at an increasingly slower pace (+0.2% in 2014, following +3.2% in 2013), compared to the average annual rate observed for the last ten years (+4.7%). In the public sector, 3. FTE research, cf. "Sources and definitions". 4. The "universities" scope here refers to all public higher education and research institutions under a simple contract with the Ministry of National Education, Higher Education and Research. 5. EPST: Scientific and technological public institution. 6. EPIC: Industrial and commercial public institution. TABLE 1 - Research personnel in business enterprises and government in 2014 (semi-finalised results) R&D personnel Numbers of researchers Proportion of Full-time Trends Full-time researchers Trends equivalent equivalent in R&D (FTE) 2013/2014 (FTE) 2013/2014 personnel Business enterprises 248,041-0,8% 161, % 65.2% Manufacturing industries 170, % 103, % 60.8% Service industries 67, % 52, % 77.6% Primary, energy, construction 9, % 5, % 56.9% Public sector 169, % 104, % 62.0% Public institutions and ministerial departments 81, % 46, % 56.5% of which: EPST (including the CNRS) 56,820 29, % 52.2% EPIC 23, % 15, % 67.4% Higher education and research institutions 80, % 55, % 68 9% of which: Universities and higher education and research institutions 66, % 49, % 74.4% under the authority of the MENESR Non-profit institutions 7, % 3, % 48.7% Total 417, % 266, % 63.9% Note: due to rounding of figures, the total may differ from the sum of the items shown. Scope: all business enterprises and government administrations based in France Source: MENESR-DGESIP/DGRJ-SIES Research information memo Page 2

3 the number of researchers increased moderately (0.9% in 2014), reaching 105,000 full time equivalent personnel. With 161,800 full time equivalent personnel, business enterprises employ 60.7% of researchers in France. In France, the ratio of R&D expenditure to GDP stagnated in 2014 Research investment, measured by comparing domestic R&D expenditure to gross domestic product (GDP) stagnated at 2.24% in 2014 (table 2). Unlike previous years, domestic R&D expenditure has not increased as quickly as GDP. France is still ranked fifth in terms of GERD among the largest OECD countries, behind South Korea (4.29%), Japan (3.59%), Germany (2.90%) and the United States (2.74% in 2013). Research investment has increased in all these countries since France is still ahead of the United Kingdom, despite the latter's increase in research investment, as well as Italy, Canada, Australia and Spain. Finland, Sweden and Denmark are still the countries that devote the largest share of their GDP to R&D in the European Union, although their respective research efforts decreased in In 2015, French research investment could fall slightly, to reach 2.23%. The development in GERD should accelerate (+0.9% in volume, estimate), but less quickly than GDP (+1.3%). As a reminder, the objective of the Horizon 2020 strategy for research investment in Europe is 3%. The number of researchers and R&D engineers compared to the working population is another indicator of a country's research effort. With 9.4 researchers and R&D engineers for every 1,000 working people in 2014, France is still behind South Korea (13.0 ) and Japan (10.4 ). However, it is ahead of Germany (8.4 ), the United Kingdom (8.4 ) and the United States (8.3% in 2013). Finland, Denmark and Sweden, the countries with the lowest populations in the European Union, stand out respectively with 14.2, 13.9 and 12.9 researchers and R&D engineers for every 1,000 working people. TABLE 2 Indicators of research investment by the main OECD countries* Researchers** / 1,000 working GERD/GDP as % people United States 2.70 (j) 2.74 (jp) (b) 8.3 (b).. Japan 3.34 (y) 3.48 (ay) 3.59 (y) (a) 10.4 (b) Germany (cp) South Korea France (p) United Kingdom 1.62 (c) (cp) 8.0 (c) (cp) Finland Sweden 3.28 (c) 3.31 (m) 3.16 (p) 9.7 (cm) 12.6 (am) 12.9 (mp) Denmark (c) 13.7 (b) 13.8 (b) 13.9 (b) European Union (EU 28) 1.92 (b) 1.93 (b) 1.95 (b) 7.0 (b) 7.2 (b) 7.2 (b) OECD 2.34 (b) 2.37 (b) 2.38 (b) 7.3 (b) 7.5 (b).. * The first six countries are the OECD countries in which R&D expenditure is the highest. ** The number of researchers is assessed as full time equivalent. (a) Break in series with the previous year for which data are available. (b) Estimate or forecast by the OECD Secretariat based on national sources. (c) National estimate or forecast. (g) Social sciences and humanities excluded. (j) Capital expenditure excluded (all or part). (m) Under estimated or based on under estimated data. (p) Provisional. (u) University graduates instead of researchers. (y) Estimated according to the SCN 1993 accounting framework. Sources: OECD (PIST ), MENESR DGESIP/DGRI SIES Research TABLE 3 Domestic business enterprise expenditure on R&D and public funding* received per branch of research in 2014 (semi finalised results) Main branches of research Domestic business enterprise expenditure Develop As % In ment of M 2013/201 total 4 In M Of which public funding As % of total As % of BERD funded Manufacturing industry branches 23, % 1, % Manufacture of motor vehicles 4, % % Manufacture of air and spacecraft 3, % % Pharmaceutical industry 3, % % Chemical industry 1, % % Manufacture of instruments and appliances for measuring, Manufacture of electronic components and boards, computers and peripheral Manufacture of machinery and equipment n.e.c. 1, % % 1, % % 1, % % Manufacture of electrical equipment 1, % % Manufacture of communication equipment Other manufacturing industry branches 1, % % 4, % % Primary, energy, construction 1, % % Service branches 6, % % Computer related and information service activities Professional, scientific and technical activities 2, % % 2, % % Publishing, audiovisual and broadcasting 1, % % Telecommunications % % Other service branches % % Total 31, % 2, % Note: due to rounding of figures, the total may differ from the sum of the items shown. * Public funding received by the enterprise for its R&D work carried out internally (BERD). Funding for sub contracting and collaborations on public contracts is excluded. Scope: all business enterprises established in France information memo Page 3

4 CHART 3 Sectors benefiting from BERD, as a percentage of external BERD received in 2014 French companies of which belonging to the Group of which outside the Group 0% 10% 20% 30% 40% 50% 60% 7,051m 2,583m 4,468m Foreign companies 4,983m of which belonging to the Group 3,452m of which outside the Group 1,531m French public sector (excluding 438m higher education) Higher education 155m Foreign organisations 93m Scope: all companies established in France In 2014, the increase in BERD accelerated (+1.2%), ending the slowdown In 2014, domestic business enterprise expenditure on R&D by businesses based in France (BERD) reached 31.1bn (table 3). Although the increase in BERD volume tended to slow down up to 2013, it accelerated in 2014: +1.2% compared to 1.0% in The breakdown of domestic R&D expenditure per research branch shows a significant concentration. The first three branches of research in terms of domestic R&D expenditure are still manufacture of motor vehicles, manufacture of air and spacecraft and related machinery and the pharmaceutical industry. These three research branches account for 35% of domestic business enterprise expenditure on R&D. Domestic R&D expenditure by the automotive industry reached 4.4bn in It has developed in an irregular fashion since After significantly increasing in 2011 (+10.5% in volume), then falling by 5.5% in volume in 2012 and 12.3% in 2013, it again increased strongly in 2014 (+9.9%). Domestic R&D expenditure by the air and spacecraft industry fell by 0.4%, following marked increases in volume since 2011 (+8.4% in 2013, after +10.7% in 2012 and +8.3% in 2011). Since 2012, expenditure in this branch has outstripped the pharmaceutical industry, which was second in terms of activities with the highest domestic expenditure on R&D until that point. Investments in this research branch have in fact fallen since In 2014, they reached 3.0bn, down 1.3% in volume compared to All the service branches combined represented 21% of BERD in 2014, i.e. 6.6bn, as in From 2007 to 2010, this research expenditure increased significantly. After slowing down in 2011 (+4.4% in volume, after +20.9% in 2010), then significantly increasing in 2012 (+9.5%) and 2013 (+8.1%), it slowed down in 2014 (+0.5% in volume). In 2014, therefore, R&D expenditure in the manufacturing industry branches (+1.6%) was more dynamic than in the service branches. Direct public funding covers 8% of intramural business enterprise R&D activities Funding for business enterprise R&D activities either comes from public resources, or from other enterprises or organisations based in France or abroad, or from self funding. All external resources, excluding selffunding, amounted to 9.6bn in 2014, 0.23bn less than in These resources fell by 2.9% in volume following a significant increase in 2013 (+3.0%). In 2014, 31% of BERD was funded by these external resources, which consisted of direct public aid at 26%, funding from abroad at 30% (foreign enterprises, international and national foreign organisations, European Union funds) and funding from other enterprises based in France at 44% (mostly belonging to the same group). With regard to public funding of BERD, enterprises received 2.5bn from direct public funding (Government contracts or subsidies), i.e. 8% of their intramural expenditure. Enterprises carrying out R&D work in the air and spacecraft industry received the largest share of direct R&D funding (31.6%), higher than in This amount covered 23% of their intramural R&D expenditure (table 3). Enterprises whose R&D activities come under manufacture of instruments and appliances for measuring and manufacture of communication equipment also receive a significant share of direct public R&D funding (12.1% and 9.4% respectively). It should be noted that direct public funding of business enterprise R&D does not include tax incentive measures for research such as the R&D tax credit (CIR) and young innovative company (YIC) status. According to data collected by the Central agency for social security organisations (ACOSS), 3,289 enterprises qualified for YIC status in They were exempted from 139m of employers' social security contributions. In 2013, 19,700 enterprises declared R&D expenditure for the CIR (excluding innovation tax credit), a total amount of 5.6bn. In 2014, enterprises allocated 12.7bn to R&D subcontracting and cooperation partnerships In 2014, enterprises allocated 12.7bn for external R&D, entrusted to other enterprises or government departments. External business enterprise R&D expenditure (external BERD) was up by 35% in volume on (chart 3). In 2014, the largest share of external business enterprise expenditure went to other enterprises (94%), half of this to enterprises belonging to the group of the sub contracting enterprise and the other half to enterprises not belonging to the same group. information memo Page 4

5 TABLE 4 Domestic government R&D expenditure per sector of performance in 2014 (semifinalised results) Main branches of research Public institutions and ministerial departments Note: the level of expenditure presented is rounded up to the nearest ten million euros. Scope: all government departments located in France Enterprises also entrust 5% of their sub contracted work to French government departments and 1% to foreign organisations. Domestic government expenditure on R&D fell by 0.4% in 2014 Domestic government expenditure on research and development (GovERD) came to 16.8bn in 2014 (table 4). Corrected by price developments, GovERD fell by 0.4% in volume in 2014, following a 1.0% increase in In 2015, according to initial estimates, GovERD could amount to 17.0bn which, taking into account price developments, would mean an increase of 1.1% in volume. In 2014, payroll represented 65.7% of domestic government expenditure on research and development, increasing by 0.8% between 2013 and Government research investment, measured by the ratio of GovERD to GDP, came to 0.78% in 2014 and should reach the same level in Domestic expenditure on R&D fell slightly for scientific and technological public institutions (EPST), and more significantly for industrial and commercial public institutions (EPIC). It also fell slightly for higher education and research institutions ( 0.4% in volume in 2014, after a rise of 2.1% in 2013). Only expenditure in the non profit institutions sector increased (+5.3%), accompanied by a rise in the number of personnel. Universities are still the main contributor to government expenditure on R&D (34.5%). In 2014, they spent 5.8bn on intramural R&D activity. Corrected by price developments, however, their intramural expenditure on R&D fell CHART 4 Structure of public research funding in 2014 and corresponding amounts (semi finalised results) Public research institutions and ministerial departments of which EPST (including the CNRS) of which EPIC Higher education and research institutions of which: Universities and higher education institutions under the authority of the MENESR Non profit institutions Total government Domestic government expenditure on R&D Trends 2013/2014 In M As % of total (in volume) 9, % of which: EPST (including the CNRS) 5, % EPIC 3, % Higher education and research institutions of which: Universities and higher education institutions under the authority of the MENESR 6, % 5, % non profit institutions % Total government expenditure 16, % by 1.3% in 2014, following a 1.7% increase in External government expenditure on research and development (external GovERD) represents the sums committed by government to sub contracted research, reaching 2.4bn in In detail, 49% of this external expenditure went to business enterprises, 41% to government departments and 10% to foreign institutions. In 2014 as in 2013, contractual resources represented 23% of government R&D funding In 2014, government departments involved in research devoted 19.1bn to R&D (internal or external) (chart 4), 1.4% down in volume on This work was funded by two types of resources: budget allocations under MIRES (the Research and higher education interministerial mission), non MIRES budget allocations and other resources (resources under contract, own resources). Budget allocations, the main sources of funding for government, came to 13.0bn in 2014 (89% of which was MIRES allocations), i.e. 68% of the financial resources dedicated to R&D. 7. With regard to external BERD, the 2014 figure includes a significant modification in the declaration by one enterprise that until that date had not accounted for R&D expenditure towards other enterprises in its 11,188m group. The 2014 figure should therefore be interpreted with caution. 5,757m 4,141m 6,918m 5,924m 991m 19,096m 0% 20% 40% 60% 80% 100% MIRES Allocations Non MIRES allocations Contractual resources Own funding Key: in 2014, R&D work performed by higher education and research institutions was funded to the tune of 6.9bn, 72% of this coming from MIRES budget allocations, 1% from non MIRES budget allocations, 21% from resources under contract and 6% from own funding excluding R&D contracts. Scope: all government departments located in France information memo Page 5

6 Contractual resources and own resources contributed to government R&D funding at respective levels of 23% and 9%. In public institutions and ministerial departments, i.e. mainly R&D organisations, budget allocations came to 7.8bn in 2014, representing 70% of their financial resources. Resources under contract accounted for 22% of funds. In accordance with the vocation of EPIC (industrial and commercial public institutions), the proportion of contractual resources devoted to R&D was higher (29%) than for other public institutions, such as EPST (scientific and technological public institutions) (21%), whose main resources came form MIRES allocations. For higher education and research institutions, most of the funding for research came from budget allocations (73%). Resources under contract contributed to 21% of R&D funding in this sector. Since 2010, these resources have been growing, thanks to the increase in R&D contracts entered into under funding for European Projects or the National Research Agency (ANR), in particular under the "Future Investments" programmes. For more Finally, for non profit institutions, own resources and contractual resources are the two main sources of funding, accounting for 44% and 46% of funds respectively. Philippe Roussel and Camille Schweitzer, MENESR DGESIP/DGRI SCSESR SIES "Domestic R&D expenditure in 2014", Flash Note 11, Ministry of Higher Education and Research, September "The state of scientific employment in France 2016 Edition", Ministry of Higher Education and Research, September "Researchers in business enterprises in 2013", Information Memo 16.05, Ministry of Higher Education and Research, July "Research and development expenditure in France in 2013 Initial estimates for 2014", Information Memo 15.09, Ministry of Higher Education and Research, December REPÈRES site: recherche.gouv.fr/reperes/ Sources and definitions The results come from surveys carried out by the Ministry of National Education, Higher Education and Research (MENESR), in the Information Systems and Statistical Studies Sub Department (SIES), firstly on enterprises (private or public) and secondly on government departments. The business enterprise survey is carried out on around 11,000 enterprises performing R&D work in the French territory. The survey is exhaustive for enterprises with intramural R&D expenditure of over 0.4m and sampled for the others. In government departments, the survey is carried out on institutions performing research work: for the public sector: ministerial departments (including Defence), public research organisations (EPST and EPIC) and other public institutions; for the higher education sector: higher education institutions under the authority of the MENESR (universities), other public or private higher education and research institutions, university hospital centres and cancer research centres; for the non profit sector: charities and foundations. The 2013 results are finalised, the 2014 results are semi finalised and the 2015 figures are estimated. The development of R&D aggregates is measured in volume, i.e. excluding price effects. Price variations are estimated using the gross domestic product deflator (GDP), obtained by the ratio of the value and volume of GDP. Gross domestic expenditure on research and development (GERD) This is the sum of the financial resources (national and foreign) used to perform R&D work in the national territory (metropolitan France and overseas departments) by the French public sector (GovERD) and the business enterprise sector (BERD). It includes running costs (payroll expenses for R&D personnel and operating expenses) and capital expenditure (purchase of equipment necessary for R&D). Gross national expenditure on research and development (GNERD) This is the sum of the funding used by the business enterprise sector (Business GNERD) and the French public sector (Government GNERD) for research work carried out in France and abroad. The difference between the GERD and the GNERD represents the balance of trade in R&D between France and other countries, including international organisations. Researchers Researchers and R&D engineers working on the design or creation of knowledge, products, processes, methods or new systems. This also includes funded doctoral students (including the beneficiaries of a CIFRE agreement) and high level personnel with responsibilities for leading teams of researchers. Research branch This is the branch of economic activity benefiting from R&D work, described here in 32 items constructed using the revised French industry classification 2 (NAF rev. 2). Research full time equivalent (FTE) In the MENESR's R&D surveys on government departments and business enterprises, the personnel measured in full time equivalent (FTE) corresponds to the FTE worked in the R&D activity over one year, i.e. "FTE worked in research". For example, a person working part time at 80% (80% share of employment), present for half the year (e.g. recruited in the middle of the year on a short term 6 month contract) and who has only dedicated half of their working time to the research activity, corresponds to 0.2 FTE worked in research (0.8 x 6/12 x 0.5), referred to here as FTE. MENESR SIES MENESR SIES Editorial secretary: Christophe Jaggers Director of Publications: 1 rue Descartes Paris Agency: Opixido Isabelle Kabla Langlois sies.diffusion@enseignementsup recherche.gouv.fr information memo Page 6