In a telling sign of an ever more dynamic global technological race, the top 2500 industrial players worldwide increased their R&D investment by 8.3% last year. The growth in investment by EU-based companies is, however, outpaced by their US and Chinese counterparts: the former increased their R&D investment last year by 9%, the latter by 20%.
These are some of the main findings of the 2018 Industrial R&D Investment Scoreboard, published by the European Commission today. It provides a timely and in-depth analysis of the most recent investment trends of the world’s leading R&D players, contributing to understanding the positioning of the EU companies in the global landscape.
Carlos Moedas, Commissioner for Research, Science and Innovation, said:
The scoreboard is a timely reminder of Europe’s strengths and weaknesses in the world of corporate R&D. EU companies are leading the global technology race in strategic industrial sectors such as automobiles, pharma or aeronautics. But we come up short in the deep-tech areas that are shaping the next wave of innovation, such as artificial intelligence or new materials. That's where the future European Innovation Council will play an important role, investing in companies with high risk and scaling-up potential that can create new markets.
Tibor Navracsics, Commissioner for Education, Culture, Youth and Sport, responsible for the Joint Research Centre, said:
A strong knowledge base is key in making sure our companies can compete on a global scale. The Scoreboard shows that businesses choose to base their production and research and development activities where they find highly qualified, creative, entrepreneurial people and knowledge. That is why promoting professional and university education in leading scientific fields, notably science, technology, engineering and maths, is crucial to build a competitive, resilient Europe.
Research and innovation are the key drivers of productivity and hence prosperity growth. In an accelerating global innovation race, in which digital technologies and the physical word are merging, business R&D investments play a fundamental role: they determine the innovation capacity of companies, their competiveness, and contribute to creating a sustainable, inclusive and prosperous Europe.
The Scoreboard shows that the total investment into R&D of the top 2500 companies, accounting for 90% of the world’s business-funded R&D, amounted to €736.4 billion in 2017. 577 firms based in the EU ranked within the 2500 world's top industrial R&D players and account for more than a quarter (27%) of global investment. US companies (778) constitute 37% of business R&D investment, Japanese (339) 14%, Chinese (438) 10% and companies from the rest of the world (368) 12%.
The Scoreboard also shows that R&D sector specialisations of the four main regions are very different. EU firms reinforced their specialisation in medium-high tech sectors, increasing significantly their contribution to global automobile R&D but reducing considerably their global share in ICT industries. US companies, on the other hand, strengthened their position in high tech sectors, especially in ICT services and Health. Companies based in Asia underwent contrasting changes: Chinese companies increased their global R&D share, especially in ICT and low-tech sectors, whereas that of Japanese companies focused mainly on automotive and ICT sectors, fell.
Finally, the report shows that the growth in R&D investment of the 2500 top industrial players is accompanied by a raise in most financial indicators. Notably, net sales reversed the negative trend started in 2011, with an increase of 9.8%, overall profits showed an impressive growth of 22.6%, while capital expenditures recovered after three negative years (5.1%). Employment continued to increase at a modest pace (2.1%).
The EU Industrial R&D Investment Scoreboard is published annually since 2004 by the European Commission (Directorate-General for Research and Innovation and the Joint Research Centre). The 2018 edition of the Scoreboard comprises the 2500 companies investing the largest sums in R&D in the world in 2017/18. The Scoreboard data, taken from companies’ latest published accounts, comprise key indicators on the 2500 parent companies and more than 700k subsidiaries that enable assessing companies' economic and innovation performance. The 2500 companies, based in 46 countries, each invested over €25m in R&D for a total of €736.4 billion. This is equivalent to 90% of the world’s business-funded R&D. The Scoreboard includes a separate listing of the top 1000 EU companies with R&D investment over €8 million.