Share of technological breakdown

In 2002, the European Council agreed that overall spending on research and development (R&D) and innovation in the EU should increase to 3 % of gross domestic product (GDP) by 2010, with two-thirds coming from the private sector. However, according to Eurostat, only six Member States – representing more than a third of EU GDP – had R&D expenditure of (nearly) 3 % of GDP or more as of 2023 (Austria, Belgium, Denmark, Finland, Germany and Sweden). This widens the gap with the EU’s main international partners, especially the US, Japan and South Korea, all of which invest more than 3 % of their GDP in R&D. It also directly challenges the EU’s capacity to achieve its overarching political objectives, such as achieving a carbon neutral economy by 2050.
The nature of the investment gap matters as much as its magnitude. According to the European Investment Bank (EIB) 2023/2024 investment report, private R&D (measured by the amount of R&D expenditure or patenting activity) at a global level tends to be ever-more geographically concentrated in specific sectors. According to the 2023 EU industrial R&D investment scoreboard, the world’s top 2 500 R&D investors account for almost 80 % of global R&D expenditure (€1 124.7 billion of a total €1 249.7 billion), and 60 % of patent filings across all technologies. Among them, the top 50 investors alone account for 40 % of total private R&D expenditure. While 367 EU companies belong to the top 2 500 R&D investors, only 12 are in the top 50. Between 2002 and 2022, only 82 EU companies entered the top 2 500 for the first time (compared to 657 Chinese and 634 US companies). Inside the EU, just three countries – Germany, France and the Netherlands – host 50 % of the top R&D investors, who account for 73 % of private EU R&D investment.
According to the EU scoreboard, four industrial sectors accounted for more than 75 % of the private EU R&D expenditure in 2023, namely ICT production, ICT services, health, and automotive; and specialisation plays a role in EU-US R&D intensity. In 2024, a scientific publication on EU innovation policy estimated around 60 % of the gap between the respective private R&D intensity in the EU and the US results from their respective industrial specialisation. While high-tech industry accounts for 85 % of private R&D expenditure in the US (especially software and computer services, pharmaceuticals and biotechnology), in the EU around 50 % of private R&D expenditure is driven by mid-tech industry, such as the automotive sector.