Skip to main

You are here

European IT R&D lags US

Europe is lagging the US in software R&D, but there may be some rising stars among small EU companies.

Europe is lagging the US in software R&D, but there may be some rising stars among small EU companies. The European Commission's 2013 EU Industrial R&D Investment Scoreboard showed that overall, EU-based firms (527 companies) stepped up R&D investment by 6.3%, just above the average of the 2000 firms in the Scoreboard (+6.2%). However, like last year they lagged behind their US counterparts (+8.2%).

EU companies also showed a mixed performance depending on the sector, with strong R&D growth in some but stagnation or decline elsewhere. EU Scoreboard companies surveyed expect to increase their R&D investments by 2.6 % on average per year for the period 2013-2015, a fall in expectations over the previous year.

Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science said: "The EU still lags behind its main competitors in business investment in R&D, and there are some worrying signs in these latest reports. Despite the positive results of top EU companies in important industrial sectors such as automobiles, we are still too weak in high tech sectors such as biotechnology and software."

The 6.2% increase on average in R&D growth of the Scoreboard companies came despite a slowdown of net sales growth (+4.2% vs +9.9% in 2011) and a 10.1% decline in operating profits in 2012. The EU's overall positive results were largely driven by the R&D growth rates of German companies, particularly in the automobile sector.

Results of EU companies in the ICT sector were mixed, with Software and Computer Services performing well (+14.2%) but showing a decline in IT Hardware (-2.3%). In contrast, US-based companies performed well across both sectors (+12.6% and +14.8% respectively).

An analysis of trends over the last 10 years shows that the US continue to increase its specialisation in R&D intensive sectors such as ICT and health (70% share of the total R&D investments made by US Scoreboard companies in 2012 vs 64 % in 2004).

Despite the strong US lead in these highly R&D intensive sectors, a closer look at the lower ranks of the EU companies shows a significant number of good performers in sectors such as Software and Biotech, companies which might become leaders in the future.