18 Dec 2024
EU companies surpass US and Chinese counterparts in R&D investment growth
Europe's industry has increased its investment in research and development (R&D) by 9.8% in 2023. This marks the first time since 2013 that it has surpassed the growth of corporate R&D investment in the US (+5.9%) and China (+9.6%), according to the newly published edition of the EU Industrial R&D Investment Scoreboard. In 2023, the EU ranked second globally in private R&D investment (18.7%), behind the US (42.3%) but ahead of China (17.1%), Japan (8.3%), and other countries around the world (13.6%). Despite a slowdown in global R&D growth (+7.8% versus +12.6% in 2022), the top 2,000 companies invested a record €1,257.7 billion in R&D in 2023. The top 50 companies, including 11 from the EU, contributed 40.1% of the investments, indicating a strong concentration of R&D spending among the largest players.
The European Union is at the forefront of research and development (R&D) investments in the automotive sector, helping fuel global R&D growth along with the ICT and health industries. Over the past decade, four key sectors—software, ICT hardware, health, and automotive—have represented more than three-quarters of worldwide R&D investments. The ICT software sector has experienced the fastest growth, with a 10-year compound annual growth rate of 13.3%, followed by health (7%), ICT hardware (6.9%), and automotive (6.3%). However, R&D spending in ICT and health is starting to stabilise following a post-COVID-19 surge.
In 2023, European companies dominated the automotive R&D landscape, contributing 45.4% of the global investment in this sector. EU-based automotive firms invested over twice as much as their counterparts in the US and Japan, and more than three times as much as those in China. Conversely, the R&D investment from EU companies in the ICT software sector remains minimal globally, with US firms representing 70% of the sector's global R&D efforts, and China also making significant strides.
In the ICT hardware sector, US-based companies account for 43.3% of global R&D, with major players from the Republic of Korea and Taiwan becoming increasingly important, particularly in semiconductor manufacturing. The health sector boasts the largest number of companies among the top 2000 global R&D investors, with 437 firms—including many smaller biotech enterprises. Of these, 238 are US-based, leading the sector with 52% of global R&D investment. The number of Chinese health sector companies has grown from 13 to 63 over the past decade, approaching the EU's count of 64 firms in 2023.
The energy sector has also seen a significant boost, with global investment increasing by 21% in 2023 to €23.8 billion, surpassing aerospace and defense, and closely trailing the chemicals sector.
In total, the top 800 companies in the EU invested €247.7 billion in R&D in 2023, an 8.7% increase from the previous year. The automotive sector leads these EU companies, accounting for 34.2% of EU corporate R&D investments, followed by health (19.3%), ICT hardware (14%), and ICT software (7.8%). Notably, some EU companies in the semiconductor, automotive components, and biotech/pharma sectors have significantly increased their R&D investment, showing growth ranging from two to fifty times over the past decade. This suggests substantial diversification and growth potential in these areas.
Among these top EU-800 companies, 99 are small and medium-sized enterprises (SMEs) with fewer than 250 employees. The majority (74) are in the health sector and are based in countries like Sweden, France, Denmark, and Germany. French SMEs lead in R&D investment, contributing 34% of the total, followed by Sweden (21.3%) and the Netherlands (16.6%). These SMEs invested €2.4 billion in R&D in 2023, a 3.7% increase from the previous year.
However, lower-performing research and innovation countries, are less represented in the Scoreboard ranking. In 2023, only four of the top 2000 global corporate R&D investors were headquartered in the EU's 15 Widening Member States (one each in Portugal, Hungary, Slovenia, and Malta). More than half of the 14,000 subsidiaries of Scoreboard companies in Widening countries are located in Czechia (34.1%) and Poland (16.6%), underscoring the importance of leading innovators headquartered in other EU countries for these regions.
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