New insights on EU-US comparison of corporate R&D - IPTS WORKING PAPER on CORPORATE R&D AND INNOVATION - No. 1/2010

Abstract

Policy-makers have become increasingly aware that corporate R&D and innovation are the main drivers of an economy's competitiveness and growth. The widespread adoption of R&D targets has led researchers and analysts to pursue a deeper understanding of corporate R&D investment trends, drivers and impacts. This paper focuses on the main differences between the EU and the US in corporate R&D performance, especially in the following three main aspects: (i) dynamics of the economic structures and the cause of the R&D intensity gap; (ii) R&D performance and company demographics and (iii) financial availability and corporate R&D investment. Based on the literature review, the paper concludes that (a) there have been more dynamic changes in the structure of the US economy than in the EU in the last two decades which in turn have favoured the growth in the US of higher R&D-intensity sectors to a larger extent than in the EU; (b) younger and smaller-sized US companies are more present - and show a higher capacity to grow - in high-R&D intensity sectors than similar companies in the EU; (c) financial markets, especially in the last decade, have hampered EU firms' R&D investment more than that of US firms. The paper concludes that policy measures to stimulate corporate R&D and innovation activities should be expressly conceived according to the typology of companies, sectors and countries.