Mapping R&D Investment by the European ICT Business Sector

Abstract

The paper shows that the ICT sector alone is responsible for about half the R&D investment gap between the EU and the US, i.e. the fact that EU invests a much smaller share of its GDP in R&D. It argues that this is partly because the ICT sector is a smaller part of the economy in the EU than it is in the US. More important, however, is the lower R&D intensity (business R&D / value added) of the ICT sector in the EU. This is mainly due to lower R&D intensity in two sub-sectors: Computer Services and Software, and Electronic Measurement Instruments. Current data analysis gives no indication that the ICT R&D gap is closing. The analysis further finds that among EU member states, Northern member states show higher ICT R&D intensity than Southern member states, and the Western member states a much higher intensity than the Eastern member states. The bulk of the paper then takes a closer look at each of the ICT sub-sectors, mapping out the R&D effort in each of them.