lion and consecutively larger with each cycle, the current 8th
Framework Programme (Horizon 2020) is in the middle of
its seven-year funding cycle (2014-2020). Horizon 2020 is the
largest of all the framework programs with about 95 billion
available for a wide range of science and technology research
projects. Framework programs are implemented by the European Commission (EC), the executive arm of the EU.
Germany is the economic, industrial and R&D leader of the
European region. It is the fourth largest R&D investor in the
world, behind the U.S., China and Japan. With a forecast
R&D investment in 2018 of $116.6 billion, Germany has a
global R&D share of 5.3%, down slightly from 5.5% in 2016.
The country has an R&D as a percent of GDP of 2.84%,
one of the largest in the global R&D community. About
two-thirds of Germany’s R&D investments are provided by
German industrial firms. These companies work closely with
universities and research institutes, such as the large network
of Germany’s Fraunhofer Institutes.
Germany is also home to the world’s largest industrial
automotive firm, Volkswagen, which is also the world’s fifth
largest industrial R&D investor behind Amazon, Alphabet/
Google, Intel and Microsoft. Volkswagen is expected to
invest approximately $10.9 billion in R&D in 2018, which has
declined over the past several years, following the company’s
exposure for falsifying, on a global basis, its diesel emission’s
testing results. Germany is also home to Daimler, the 21st
largest industrial R&D investor in the world with expected
2018 R&D of $5.7 billion.
Germany’s largest industry is automotive, which has led to
the siting of R&D centers in the country by other manufacturers as well. Honda, for example, recently announced its
investment in advanced bi-directional charging technologies
at its European R&D center in Offenbach, Germany. The new
technology incorporates renewable energy (photovoltaic)
generation and is a test bed for hardware that be available to
private households in the future.
France is the second largest R&D investor in Europe and the
seventh largest R&D investor in the world. With a forecast
2018 R&D investment of $63.1 billion, France is responsible
for 14% of Europe’s total R&D and 2.9% of the global R&D
total. The French innovation system is the second largest in
Europe, behind Germany, with about 5% of OECD GERD,
patents and publications. Some of France’s pharmaceutical,
aerospace and nuclear industries are among the world’s larg-
est industrial investors in R&D.
France’s R&D as a percent of GDP has recovered following
several years of decline. France also is labored by a broad base
of SMEs (small-medium enterprises) that play a minor role in
the research system. France’s innovation entrepreneurship is
considered fragile. Its patent level is below the OECD median.
On the plus side, France’s inflow of new doctoral graduates in
science and engineering disciplines is steady.
A strong feature of France’s R&D environment is its strong
use of R&D tax incentives. R&D tax relief in France accounts
for about 70% of the total public support for business R&D,
the sixth largest share in the OECD area. This compares to
an average share of 39% across OECD-surveyed countries.
In France, the cost of R&D tax relief rose from 0.09% to
0.26% of GDP from 2006 to 2013. Compared to the OECD
median incentive, the French program has more categories of
expenditures that are eligible for tax relief including expenses
related to self-developed patents and depreciation.
The United Kingdom is the ninth largest investor in R&D
with expected 2018 investments of $49.6 billion, an increase
of 0.9% over the $49.2 billion it spent in 2017. The U.K.’s
R&D is nearly 11% of the total R&D invested in the European region and about 2.3% of the global R&D total. The
country currently invests about 1.7% of its GDP on R&D.
The government recently announced that this ratio will
steadily increase over the next five years due to increased
investments by the government. An extra $3.1 billion of
government R&D investments will be added in 2021, raising
total government support to $17 billion. The government
will also work with industries to increase their investments,
which could see total R&D spending increase by as much as
$110 billion over the next 10 years.
The U.K. government is focusing on four “grand challenge”
R&D areas: artificial intelligence and the data economy; clean
growth; health aging; and the future of mobility. The target for
these investments is to increase R&D as a share to GDP to 2.4%
from its current 1.7% level. The Brexit vote does not appear to
have affected the UK’s overall R&D investments for 2018. Brexit,
however, does not go into effect until 2019 and some in the UK
are asking for another two-year extension beyond that.
Germany is the economic,
industrial and R&D leader of
the European region.
A strong feature of France’s
R&D environment is its strong
use of R&D tax incentives.