Competing in the Single Market - SMEs and ... - Erhvervsstyrelsen

Of the available innovation statistics, national expenditure on R&D as a percentage of GDP isgenerally considered both one of the most important indicators, and one of the determinants of acountry’s innovative capacity. Given the importance assigned to R&D within the national innovationsystem, the extremely low total investment in R&D in all the B4 countries could be interpreted as aworrying sign of low national innovative capacity (see Table 4). Whereas public expenditure on R&Dis roughly one third of the average share for the EU-15, private sector expenditure on R&D amountsto only about one sixth of the EU equivalent. 7Table 4: Expenditure on R&D (as a percentage of GDP)Total Public Business Data fromSweden 4.27 0.96 3.31 2001Finland 3.41 1.02 2.47 2002Germany 2.49 0.73 1.76 2001Denmark 2.40 0.75 1.65 2001Norway 1.62 0.65 0.97 2002Ireland 1.24 0.37 0.87Spain 0.96 0.46 0.50 2001Portugal 0.84 0.57 0.27 2001Estonia 0.78 0.53 0.26 2001Lithuania 0.69 0.49 0.20 2001Poland 0.68 0.43 0.24Greece 0.67 0.48 0.19 1999Latvia 0.44 0.28 0.16 2001EU 1.99 0.69 1.30 2002Source: European Innovation Scoreboard 2003Summing up, there appears to be a significant gap between the B4 countries and the existing EUMember Countries, when it comes to the ability to innovate. However, it would be hasty, andwrong, to conclude from these observations that the B4 countries are ‘hopelessly’ behind in theirstriving towards innovation and competitiveness. Firstly, since they came out of the severe economiccrises that afflicted most Candidate Countries in the early 1990s, the B4 have experienced averageeconomic growth rates that are significantly higher than those of the Nordic countries, the EU or theOECD, for that matter (see Table 5). 87The actual percentages for Latvia and Lithuania might in reality be slightly higher than listed here, due to the fact that, in the case of Latvia, the businessenterprise sector is not fully covered, while in Lithuania defence R&D is not included (OECD (2003), STI Scoreboard, p.66). However, these considerationsdo not increase the total R&D expenditure shares for these countries significantly to disprove the conclusions drawn in this analysis.8However, this observation is moderated by the fact that GDP in the B4 grew from very low initial levels.21