R&D investment by EU companies falls for the first time in 10 years

In 2020, a year heavily impacted by the pandemic and a very complicated general economic environment, EU-based companies reduced their total R&D investment by 2.2%. This decline, the first in a decade, was due to a drop in R&D in the automotive, aerospace and defence sectors, according to the 18th edition of the 2021 EU Industrial R&D Investment Scoreboard, released last week.

Nevertheless, these companies increased their R&D investment in the health (10.3%) and ICT services (7.2%) sectors, albeit at a slower pace than US and Chinese companies. In the US and China, during the coronavirus crisis, companies increased their total R&D investment by 9.1% and 18.1%, respectively. This increase was especially significant in the health sector (US: 17.9%; China: 30.7%), ICT services (12.4% and 21.2%) and ICT producers (7.8% and 11.5%).

Although the health crisis stimulated rapid growth in the ICT services and health sectors worldwide, it hit traditional industries such as automotive (-4.3%) and aerospace and defence (-17%) hard. As the most important R&D investment sector for EU companies, the automotive sector played a major role in the overall decline in innovation spending. However, 14 EU companies are among the top 50 in the global ranking of the top 2,500 R&D investors.

Increasing digitalisation

Globally, industrial R&D investment has proved resilient in the face of the coronavirus crisis. In 2020, it continued to grow, by 6%, for the eleventh consecutive year. The same year, however, was marked by significant reductions in capital expenditure, net sales and operating profits.

The importance of the ICT, health and automotive sectors in global innovation competitiveness is illustrated by the fact that aggregate R&D in these three sectors has more than doubled since 2010, with ICT services in particular having tripled. In terms of the ranking of business investment levels, the ICT sector continues to top the scoreboard, reflecting the increasing digitalisation of the global economy. For 2020, the top five places go to companies in the digital sector.

R&D investment of over 800,000 affiliates

The 2021 edition of the Scoreboard includes the 2,500 companies that invested the largest amounts in R&D worldwide in 2020. The data, drawn from the latest published company accounts, includes key indicators on parent companies and their more than 800,000 subsidiaries that allow for analysis of the economic and innovation performance of companies. These companies, based in 39 countries, each invested at least €36.5 million in R&D for a total amount of €908.9 billion.

The total R&D investment in this edition of the Scoreboard is equivalent to about 90% of the world’s business-funded R&D. The sample is composed of 401 EU-based companies, which account for 20.3% of total R&D in the sample, 779 US companies (37.8%), 597 Chinese companies (15.5%), 293 Japanese companies (12.2%) and 430 companies in the rest of the world (14.2%).