Monitoring Industrial Research: Industrial R&D Economic and Policy Analysis Report 2006

This paper addresses a series of key policy questions in industrial R&D. It questions whether EU growth suffers from underinvestment in R&D, or whether the lack of R&D is a reflection of more general imperfections of the single market. It also elaborates on the finding that EU companies in sectors with traditionally high levels of R&D spend as much on R&D as their competitors. This is combined with evidence from surveys showing that lack of funding for R&D is not the most binding constraint for investing companies. It also builds on the notion that the internationalisation and outsourcing of R&D appears to carry on regardless of differences in government financial support. One conclusion, therefore, is that market-oriented reforms and complementary policies to improve the structure of the European economy may be more effective in raising R&D expenditures – and in generating growth through innovation – than direct incentives.JRC.J.3-Knowledge for Growt