In focus: The interaction between science and business is a top priority for the EU-27 during the crisis

In a slow and prolonged release of the financial and economic crisis of 2008 - 2009 г. (decrease of 0.4% in 2012, GDP in the euro area on an annual basis) investments in science, technology and innovation are a challenge even for large economies which further complicates achievement of the 3% target for R & D expenditure as a share of GDP by 2020 for EU-27.Governments are very cautious in directing financial resources to support the long-term priorities and rather prefer to guarantee financial stability following the austerity policy.This process is often accompanied by an underestimation of the negative impact on economic growth as a result of limited public spending or denial of funding for the creation and dissemination of technological knowledge ( ref. 1).

During the period 2010 - 2012 the increase in public spending on R & D is a fact in about 60% of the EU-27 countries.In 2011, the average intensity of public R & D expenditure was 0.76% of GDP.For the countries that are "innovative leaders” following the rankings of the Innovation Union Scoreboard (Denmark, Finland, Germany, Sweden) invest public money over 1% of GDP.The group of countries known as catching-up is still far from these indicators which reveal the big investment gap across Europe.

Although the post-crisis is short we can summarize some facts:

  • although Finland and the United States reduce med-term investments, they retained their leading positions for public expenditures in R&D;
  • BRIC countries have substantially increased their budgets for R & D, such as Russia and Brazil closing the gap with the EU-27 in public spendings;
  • the main source of public funding for R & D for a large part of the EU-27 countries are European Structural Funds.

Regardless of the economic downturn, within the group of moderate innovators, including Bulgaria (together with Lithuania, Latvia and Romania) we monitor increase in public R & D spending (except for Romania), which in large part is due to structural funding - an increase of 552% of the funds sourced "Other countries" in 2010 compared to 2009 for example in Bulgaria. This trend, however, is combined with significant cost savings for R & D on internal agents (public sector, higher education, business, NGOs) – where leaders unfortunately is Bulgaria with a reduction of 83%.

The priorities of European policy in the field of science, technology and innovation in 2011-2012 remain. Public R & D funding is allocated to:

  • University research - about 35%;
  • R & D in publicly funded research units - about 13.5%;
  • research infrastructure - about 9.5%;
  • cooperation in R & D - about 8.8%;and
  • R & D in the business - about 7.5%.

If the above data were recalculated according to the size of the countries in the EU-27 (i.e the number of universities in Germany or England is many times the number of knowledge institutions in other smaller European countries), it is clear that the priority in public R & D spending have different forms of cooperation with about 28% of the total financial resources.Next are university research with only 11% share of public funding.

Public support for innovation activity of the companies across Europe is targeted to:

  • promoting entrepreneurship and start-ups, including incubation;
  • commercialization of new ideas, includingprotection of intellectual property;
  • cooperation and clustering.

Promotion of various forms of cooperation between science and business, including with foreign partners is a prerequisite for increased and effective use of innovation potential and economic growth, making it one of the priority directions of public support.In Bulgaria understanding of the importance of these factors to achieve innovative growth has yet to happen.

(1) Funding Research and Innovation in the EU and Beyond: Trends During 2010-2012, Produced under the Specific Contract for the Integration of the INNO Policy TrendChart with ERAWATCH (2011-2012), December 2012.