Introduction
Since the end of the Second World War, European countries have lost their grip and control on the fate of the world. The exposure success of the United States during the wars brought the world’s attention to the country for the future. This trend has since continued until today with the knowledge economy as since by the fact the control of American telecommunications multinationals such as Apple, Google and Microsoft leading the world. Also, there is competition from countries from Far East including Japan, China and South Korea ( Eurostat, 2019). While the world looks at the US, China, Japan and South Korea for leadership in technology and innovation, countries of the European Union seems to have lost grip on research and development. The European Union no longer provide leadership to the world in terms of technological innovation. However, while the countries of the EU seems to be at slumber, there is a lot of research and development at new technologies developed each day.
Support of Research and Development in EU
Technological competitiveness of a nation is mainly based on research and development (R&D) conducted by both private and public organizations. Also referred to as Research and Technological Development (RTD), R&D includes all the activities taken by a country to bring about new services and products ( Maes et al., 2012) . As the first stage of the development process, RTD improvement ad growth of an organization. Research and development also covers basic scientific research done by universities awaiting application and commercialization. The evaluation of the R&D activities of an entity are based on total spending, the outcomes of the process and the impact it has on its bottom-line. Based on these factors, we shall evaluate the countries of the European Union for R&D and by extension technological competitiveness.
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R&D in the EU is mainly supported through provision of resources including money. The spending on R&D in the EU has been on the increase since beginning on the 21 st century. According to Eurostat, (2019), the members’ states of the European Union spent a total of 320 billion Euros on research and development in 2017. This was an increase from the previous year as it represents 2.07% of the GDP while in 2016 it was 2.04% and 1.77% in 2007 (Eurostat, 2019). This shows a positive trend in the area and the inclination towards increasing technology to promote the growth of the industries. However, while a lot is being done to increase the amount of R&D among EU countries, the block remains behind in terms of spending on these ventures compared to other technological giants.
Figure 1: R&D Expenditure as % of GDP (Eurostat, 2019)
Countries of the EU have been utilizing funds located for R&D in different ways. For example, Germany and Sweden have developed infrastructure in terms of research units where there are specialized laboratories for companies and scientist to work ( Maes et al., 2012) . The European commission and governments also provide research grants for scientists in different sectors to develop new technologies and move knowledge further for the purpose of development and innovation. Through the EU’s Framework Program for Research and Innovation, Horizon 2020, the EU commission funds different projects in the country to promote development and growth. There are also projects for applied business research that seeks to expand the EU market to other parts of the world ( Camagni & Capello, 2013) . This project leads in promotion of business EU countries.
Most countries such as Germany and Denmark have innovation funds. In Germany, the government offers subsidies for R&D in all types of technologies with a specific target to small and medium sized enterprises. Policies are present in Sweden to ensure that there is protection of intellectual property so that innovative ideas developed benefit both the makers and other members of the society ( Maes et al., 2012) . In Finland, innovation is promoted by direct incentives through funds and proper spread of innovative solutions.
Sweden, Germany and Denmark Comparison with other OECD Countries
In terms of economies and proportion of R&D spending to the economies, EU as a block remains behind compared to other nations. For example, while R&D represents 2.07% of the GDP in the EU, it is 4.22% in South Korea, 3.28% in Japan, and 2.76% in the US (Eurostat, 2019). However, while the intensity of R&D in the EU as a block has been low, certain member countries have had extremely high spending on RTD in the block.
Some countries of the European Union have their RTD allocation higher than that of the average spending by the block. For example, Sweden, Germany and Denmark had their spending more than 3% of GDP. Sweden is second, only beaten by South Korea while Austria, Finland and Germany had 3.16%, 3.06% and 3.02% expenditure (Eurostat, 2019). These countries have shown a lot of competitiveness in regards to technological development as a result of high allocation of money to RTD. However, Romania, Latvia, Malta and Cyprus with 0.5%, 0.51%, 0.55% and 0.56% respectively have the lowest rates of expenditure on RTD. These are the primary reasons R&D expenditure scores for the block have been low.
In terms of competition on the global scale including the number of innovations from a nation, Denmark, Germany and Sweden have innovations with most global importance. Different indices are used to determine the level of technological innovation among countries of the European Union. One important indicator of technological development is the presence of attractive research systems. This is a measure of international competitiveness on the base of science that use scientific publications among top 10% worldwide total publications, non-EU doctorate holders per all in the country, and international co-publishing in science per million populations ( Camagni & Capello, 2013) . In terms of attractive research systems, has 176.5 points, Sweden Denmark 181.7 points and Germany 99.2 points. It is an indicator of willingness to collaborate with others in developing technology.
Another indicator used in determining technological development is in human resources. This refers to the extent to which the government and private organizations institute policies to enable for workers to develop skills necessary for innovation. According to Bileviciene, Bileviciute, & Parazinskaite (2015) in order for any entity to develop, it must integrate internal and external flow of information by the use of employee skills that enable for value formation in an organization. High rates of innovation in human resources therefore shows a country’s position in terms of capability to innovate. According, Sweden has a high rate of Innovation in human resources with 179.6 points, Denmark has 184.2 points while Germany has 94.4 points.
Other indicators for technological development that can be used for EU countries include the presence of an innovation-friendly environment, investment in private sector, synergy between public and private sector in innovation, intellectual assets, presence of attractive systems for use in research, finance and innovation support, exports and sales from innovative companies and employment levels. All the three countries score favorably in all these indicators.
Investment in R&D and Economic Growth
There sufficient evidence that innovation and development of new technologies improves the economic outlook of a company. Notably, countries with the highest spending on RTD in Europe including Denmark, Finland, Germany and Sweden have experienced growth in both GDP and GNP. The growth in export of intellectual property and other products of innovation in Germany, the UK and Switzerland have been implicated in the growth of the nations’ economies for the past few years. Moreover, research into the impact of investment in R&D shows an improvement in a country’s economic growth. Research shows that research and development especially in the area of technology is the only remaining front for developed nation to continuously improve. According to new growth theory, endogenous growth model and evolutionary approach with complex technological change is the chief source of economic growth for developed nations ( Sokolov-Mladenović et al., 2016) .
Among studies that shows a positive correlation between investment in RTD and economic growth is that by Sokolov-Mladenović in Europe. According to Sokolov-Mladenović et al., (2016), an increase in the expenditure in R&D by 1% results in improvement in real GDP by at least 2.2% ceteris Paribas. This is based on research among 28 countries of the EU for a period between 2000 and 2012. Also, innovation has been the major driver of economic growth in the US (Blanco, Gu & Prieger, 2016). However, the level of human capital and development is of essence in the growth of GDP as a result of investment in R&D. With the age of industrialisations coming to an end in developed countries and developing countries such as China and other nations of South East Asia taking over manufacturing, intellectual property and knowledge remains the forefront determiner of economic growth in the OECD countries.
References
Belinchon, F. & Moynihan, R. (2018). These are the 20 most innovative countries in Europe. Business Insider. https://www.businessinsider.com/here-are-the-20-most-innovative-countries-in-europe-2018-7?IR=T
Bileviciene, T., Bileviciute, E., & Parazinskaite, G. (2015). Innovative trends in human resources management. Economics & Sociology , 8 (4), 94. https://www.economics-sociology.eu/files/11_147_Bileviciene_Bileviciute_Parazinskaite.pdf
Blanco, L. R., Gu, J., & Prieger, J. E. (2016). The impact of research and development on economic growth and productivity in the US states. Southern Economic Journal , 82 (3), 914-934. https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1047&context=sppworkingpapers
Camagni, R., & Capello, R. (2013). Regional innovation patterns and the EU regional policy reform: toward smart innovation policies. Growth and change , 44 (2), 355-389. https://onlinelibrary.wiley.com/doi/full/10.1111/grow.12012
Eurostat, (2019). R& D Expenditure in the EU increased slightly to 2.07% of GDP in 2017. First Estimates of Research and Development Expediture. https://ec.europa.eu/eurostat/documents/2995521/9483597/9-10012019-AP-EN.pdf/856ce1d3-b8a8-4fa6-bf00-a8ded6dd1cc1
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Sokolov-Mladenović, S., Cvetanović, S., & Mladenović, I. (2016). R&D expenditure and economic growth: EU28 evidence for the period 2002–2012. Economic research-Ekonomska istraživanja , 29 (1), 1005-1020. https://www.tandfonline.com/doi/full/10.1080/1331677X.2016.1211948
