25 April 1994
on research and development in
(Rapporteur: Mr POÇAS SANTOS,
Portugal, Liberal, Democratic and Reformers Group)
Scientific research and technological development are vital components in a country's economy. However, the attitudes concerning research and development have been subject to change recently, for their immediate impact on growth could not be measured with precision. Therefore, two groups of countries have been formed: those who had the means to maintain their research and development efforts in a number of fields, and those who due to shortage of resources had to minimise their activities. Due to a number of reasons, research and development have evolved differently in each smaller country, even though some of these countries face a number of problems in common, like limited financial and human resources, which forces them to follow the steps that major industrialised countries have laid down, or set up their own research and development models. Hence, the governments of these countries are faced with a dilemma concerning their priorities.
Most countries, even small ones, have acquired, as part of a historical process, a degree of know-how and expertise in a certain number of scientific and technological fields. These areas should become the main focus in each countries long-term R&D strategy. It is also crucial to improve the innovation network, namely the co-operation and co-ordination between private enterprise, university and the research institutions.
As regards central and eastern European countries, the problems related to the transition to market economy should not undermine the necessity of making an effort for R&D in particular for responding to the socio-economic needs of the population, even if the cost-effectiveness might not seem obvious in the short run.
I. Draft resolution
1. The Parliamentary Assembly observes that smaller countries are ever more frequently confronted with difficulties concerning the research sector, and that they try on the whole to overcome them separately.
2. The difficulties are due to certain factors and processes, namely:
a. limited human, financial and material resources;
b. the vicious circle created by limitation of resources which makes it necessary to choose between research sectors and retards certain sectors by comparison with others, hence the need for technology imports;
c. the relations, often subordinative, which they maintain with multinationals usually based in the larger countries;
d. the brain drain, detected even in smaller countries with a high standard of R&D such as Sweden or Switzerland, but now most alarming in the countries of central and eastern Europe.
3. The influence of governments operates at the level of basic research, but applied research has become almost entirely the preserve of private enterprise.
4. The countries of central and eastern Europe face specific R&D problems following the political changes which occurred a few years ago.
5. The Assembly accordingly invites the governments of Council of Europe member states:
i. to lay the foundations for sound institutional co-ordination of leading-edge activity at local, regional and national levels, paying special attention to the sectors embracing disciplines which have an interface function: interdisciplinary sciences, generic technologies and transfer sciences (including engineering);
ii. to step up efforts to improve technology transfer to the countries of central and eastern Europe, in particular:
a. by organising advanced training programmes for researchers from the countries of central and eastern Europe;
b. by providing them with material and financial support as regards essential equipment and requisites that are less costly but nonetheless crucial, for example, payment of travel expenses for researchers taking part in colloquies or conferences abroad, and purchase of publications and periodicals in hard currency;
6. The Assembly is also aware that the large number of decision-making centres found in most OECD countries in the science and technology field (enabling each sector to be solely responsible for the aspects relating to its sphere of competence) also has adverse effects such as dispersal of efforts, duplication, poor co-ordination and multiplicity of advisory bodies;
7. It therefore invites the states concerned:
i. to improve co-ordination between the independent sectors of the science and technology complex and more generally between central government, universities, private enterprise, non-profit making institutions, etc. The network formed by their mutual relations should be managed and exploited or if necessary built up and developed. This aim is to be achieved essentially through co-operation on research projects as well as by other more specific means. These involve tax incentives to encourage recruitment of researchers by firms and foster the development of network "intersections" within the firms themselves (particularly SMBs);
ii. to set goals and priorities for scientific research, having regard to two elements:
a. basic technologies in which each country has recognised know-how because of their general economic implications, and which are of special importance for sunrise industries;
b. other fields where countries already have competitive industries and/or comparative advantages;
iii. to uphold the principle of researchers' freedom of initiative, while encouraging them to undertake research in fields having recognised priority in the light of the criteria set forth above;
iv. to give R&D priority at the pre-marketing stage and emphasise generic technologies (in the EUREKA projects, for instance). This will make room for future co-operation by all countries in major technological programmes such as aeronautics, space programmes and high-speed trains;
v. to evolve a system of loans for research;
vi. to encourage young people to take up research by enhancing its status and making it more attractive to them;
8. The Assembly particularly invites the countries of central and eastern Europe:
i. to state in precise terms, at the highest political level, the types of R&D activity deemed essential, and to allocate finance to them accordingly;
ii. to promote, for the furtherance of international co-operation, measures such as language learning, travel facilities, evaluation of enterprises by foreign experts, joint programmes and projects, and pooling of resources;
iii. to devise effective national accounting systems (or reform the existing ones) for the production of internationally compatible statistics;
iv. to develop and maintain appropriate conditions and incentive measures, in particular tax incentives, so that firms may carry on their activities and self-finance the R&D which suits their corporate strategies;
v. to take whatever action will encourage firms to co-operate with each other and with universities in respect of industrial research;
vi. to provide technological research institutes with infrastructures for technology transfer and joint development of these technologies;
vii. to include in special public funding programmes any R&D activity projects which support official objectives such as improvement of the public health system, environment, better workplace safety and development and rational use of primary and renewable energy sources, objectives whose commercial viability is limited at present;
viii. to open up increasingly to international co-operation in the R&D field, taking full advantage of the European programmes to which they have access.
II. Explanatory memorandum
by Mr POÇAS SANTOS
Which are the smaller countries? 6
Problems specific to the smaller countries 7
Central and east European countries 9
European co-operation 10
Possible strategies 11
1. Attitudes to scientific research and technological development have changed since the end of the second world war. To begin with, as a result of the war effort, some fields developed at a tremendous rate (radar, nuclear physics, aeronautics, medicine — antibiotics in particular — and the motor industry are a few examples). Because of discoveries that enhanced national prestige, were strategically important and offered prospects of commercial advantage, governments invested massively in research and development (R&D). Then in the 1960s and 1970s it was realised that the effect of the R&D effort on the health of national economies was not as direct as had been thought and that the determinants of economic growth were much more complex. The success of the Japanese economy, which at the time did not invest large sums in scientific research, was one of the factors in the reassessment. The oil crisis in 1974 caused many countries, particularly smaller or medium-sized ones, to revise their investment priorities and place more emphasis on immediate commercial profit — that is, on improving their balance of payments. That approach left little room for major medium-term and long-term R&D programmes.
2. A gap began to open up between two groups of industrialised countries: those which, on account of worldwide political and economic ambitions, maintained their R&D effort in a range of fields and those which shortage of resources forced to scale down their activities. Since the onset, over a decade ago, of a new surge of scientific and technical discoveries with industrial applications (in areas like robotics, computing, particularly microprocessors, biotechnology and telecommunications), R&D has returned to the fore. Today a number of European countries, especially on the edge of Europe, are worried about missing out on the new industrial revolution after very belatedly catching up on last century's.
3. R&D is not a panacea of course. But, given the extremely sophisticated technologies that dominate every area of modern life, it is undoubtedly one of the keys to economic survival in the jungle of international competition. A preliminary point needs making, though, about the traditional distinction between basic research and applied research, together with the technologies generated. The distinction is eroding daily. Financial backing for an "art for art's sake" approach is harder and harder to obtain, even from the state, and nearly all scientific research is now geared to some ultimate practical application or possibility of commercial exploitation. For the sake of simplicity, therefore, we shall disregard the distinction and treat R&D as a single field.
4. A distinction must be made, however, between the different research environments. It is very much in the interest of institutions such as universities and research centres to publish their findings: their reputation depends on them doing so. In contrast, private undertakings have an interest in keeping their results secret, for commercial reasons. This difference in approach gives rise to some problems, among them the risk that research scientists employed at university or research institutes might sell their work to private firms, with the result that it becomes secret.
5. We shall also bear in mind that every country is unique: similarities only extend so far and generalisations have only limited validity. R&D has evolved differently in each country, in accordance with historical factors, geography and natural resources, economic capability, degree of industrialisation, the education system, intellectual tradition, political and military aim, and the national bent for innovation. The history of science abounds in cases of distinguished scientists from "small" countries whose discoveries were developed by larger countries, and that is still the pattern: in publishing their results, scientists from smaller countries make contributions to the international body of knowledge which are then harnessed by the large multinationals. This is a form of exploitation, which lack of resources makes possible and of which the brain drain is the classic manifestation.
Which are the smaller countries?
6. The criteria which have been suggested by different writers include size, population, growth rate, per capita income and number of researchers. The first two of those certainly do not account on their own for a country's R&D rank. GNP, although not an infallible criterion when taken in isolation, is at least free of subjectivity as opposed to a criterion such as industry's attitude to research, as well as providing a pointer to national availability of resources for investment in research and innovation — though the resources still have to be used in a purposeful, organised way and by competent people.
7. This is where national historical factors come into play. A long tradition and lengthy experience in a particular field, particularly if backed up over the years by sustained R&D and continuing investment, will place a country, regardless of size, among the leaders in its field, as exemplified by the Swiss pharmaceuticals industry. Many similar examples could be given in other R&D sectors to account for some countries — Sweden, say, or the Netherlands — being in less difficulty than others.
8. An OECD classification, however, may be a better guide to each country's place in the overall scheme, based on the one hand on the level of R&D expenditure (GERD1/GDP ratio) and on the other on the rate of growth of R&D expenditure (see Appendices I, II and III).
9. The GERD/GDP ratio is over 2% in eight countries, three of which are "smaller" economies: Sweden, Switzerland and the Netherlands. These countries also stand out for their ratio between the R&D expenditure of businesses, on the one hand, and of the state, higher education and non-profit-making institutions, on the other (see Appendix IV), as well as for the level of internationalisation of their undertakings. The efforts being made to catch up by countries like Finland and Spain, where the rate of growth of R&D expenditure between 1975 and 1989 was the highest in the OECD area, should also be noted.
Problems specific to the smaller countries
10. The first is that less money is available for R&D, even though, in percentage terms, investment can add up to quite a large proportion of GNP. This is the case in Sweden, for example, which invests around 2,8% of GNP in R&D, only a little ahead of Switzerland and the Netherlands. In absolute figures, though, this does not even match R&D investment by the six leading Japanese electronics firms (around US$ 8 thousand million). The multinational IBM corporation alone spends more on R&D than any of the fourteen smaller OECD countries, including Australia.
11. Secondly, smaller countries' limited resources force them to make hard choices. On the one hand, if they spread modest investment across a wide range of disciplines and projects, there is a dissipation of effort. On the other, concentrating too rigidly on certain research sectors may leave them lagging behind in scientific progress as a whole. Each country tries to overcome this dilemma in its own way. The present tendency is to put more effort into sectors which might have a direct effect on the technological capability of export industries. That decision is a highly political one and does not necessarily take any account of the long term.
12. For some time now there has even been a question to what extent smaller countries have any real option. The major industrialised countries, which virtually control the markets but at the same time have a powerful R&D infrastructure, shape R&D patterns, exerting an undoubted influence on R&D trends and determining what the core technologies are to be. Thus the smaller countries' decisions as to which areas to invest in are very often taken with reference to priorities which other countries have laid down. Those priorities do not always match the natural course that a smaller country should be following. The smaller country is left with a formidable challenge on its hands: either it follows a path which has been forced on it or it has to set up R&D models of its own so as not to be completely unable to compete.
13. In addition to all the problems already mentioned, there is a new factor in the shape of an international redivision of labour, with some newly industrialised countries (NICs), in particular in south-east Asia, surging to the fore and investing prodigious effort in the electronics sector. Those countries' R&D investment is going to extend into other sectors in the years ahead, further reducing the margin for manoeuvre in R&D of the countries we are concerned with here. Figure 1 illustrates the argument that the traditional activity sector of smaller countries (B) is being increasingly squeezed from two sides: in traditional, mature technologies by the NICs (A) and in high-tech sectors by the major industrialised countries (C). Zone B (intermediate technologies) is shrinking and escape routes are necessary if a total squeeze-out is to be avoided.
Central and east European countries (CEECs)
14. For many years the various Unesco statistics were the sole source of international information on the effort being made within the CEECs in the R&D field. Because these countries used different criteria, their statistics were not fully comparable with those of OECD. For example, staff statistics frequently included not just staff officially assigned to R&D, but all staff engaged in scientific and technical activities. Moreover, the statistics for the staff in question were not calculated in terms of full-time post equivalents, as OECD requires, but rather in terms of the number of people engaged for some of the time in R&D2 activities. This explains the exaggerated estimates in the past of R&D activities in the CEECs. It is also the main reason for now trying to establish statistics compatible with those for OECD countries.
15. This does not mean that the CEECs were backward in the area of R&D. That this was not the case is clear just from the fact that, towards the end of the 1980s, they were investing 2% to 3% of GNP (according to the new statistics) in R&D, a relatively high percentage by international standards.3
16. Since the political changes, problems have arisen in the area of R&D. R&D investment in Hungary, for example, which was 2% of GNP, has dropped by 20% to 30% since the end of the 1980s.4
17. For decades, the institutional machinery established in the CEECs was geared more to serving the interests of an authoritarian government than to economic progress. There was also a tendency to regard science as a cultural matter rather than an instrument of economic development. It is also significant that the universities used to play a less important role than academies of science role in national research systems.
18. The CEECs have always been regarded as scientifically advanced in the area of basic research despite the serious handicaps resulting from years of isolation from the international scientific community and from a lack of modern, particularly computing, resources and up-to-date scientific information. They are now cut off from the Soviet information network which used to supply them with translations of scientific publications from all over the world.
19. At macroeconomic level, restrictive budgetary and monetary policies and high rates of inflation are a disincentive to long-term investment strategies in industrial R&D. Governments are sometimes tempted to make drastic cuts in funds for research institutes which they regard as unproductive. At microeconomic level, the private sector is concentrating on short-term strategies and prefers to obtain technology from the west rather than develop it itself. So CEEC research workers often leave their home countries to work in the west or simply change career.
20. European research co-operation is at its closest within the European Union.
The Framework Programme provides a nucleus for several specific research programmes. These include:
—ES PRIT: European strategic programme for research and development in information technologies;—
—BR ITE/EURAM: Specific research and technological development programme in the fields of industrial manufacturing technologies and advanced materials applications (European Research on Advanced Materials);—
—RA CE: Programme in the field of telecommunications technologies — research and development in advanced communications technologies in Europe;—
—BR IDGE: Biotechnology research for innovation, development and growth in Europe;—
—th e controlled thermonuclear fusion programme;—
—th e programme for the environment;—
—SC IENCE: Plan to stimulate the international co-operation and interchange needed by European research scientists.Th
The financing of the Framework Programme is shown in Appendix V.
21. The EUREKA Programme, which includes the countries of the European Union, the EFTA countries, Turkey and the European Commission, is more market-oriented, although certain EUREKA projects comprise basic research with potential industrial application. Some EUREKA projects are genuine Europe-wide activities, among them:
—JE SSI: Joint European Submicron Silicon Initiative—
—HD TV: High-definition television—
—PR OMOTHEUS: Programme for a European Traffic System with highest efficiency and unprecedented safety.22
22. The COST structure (European co-operation in the field of scientific and technical research) could probably be extended to include the CEECs, with the same rights and obligations as current members. (On the other hand, they can only join Community programmes and the EUREKA programme through agreements of varying degrees of flexibility.)
23. OECD has set up the Centre for Co-operation with European Economies in Transition (CCEET), whose primary function is to draw up and implement a technical advice and assistance programme. It is, however, regrettable that its initiatives, such as the "Partners for Transition" programme, only involve some east European countries (Hungary, Poland, the Czech Republic and Slovakia), while other countries' needs are as great.
24. The European countries this report is concerned with take a pluralist approach to science and technology — that is, decisions tend to be taken and priorities decided by researchers themselves and the universities. This accords with the time-honoured principle of research freedom, at least in basic research. Government influence is exerted mainly through research institutions, academies of science and, where they exist, state enterprises. Applied research, on the other hand, has for some time been dominated by the private sector.
25. Having as many decision-makers as this, though it does allow potential talent to flower in various sectors, has the drawback of causing dispersal and duplication of effort, and the complexity of the system makes co-ordination difficult and generates higher costs. Decentralisation of R&D tends to be more marked in federal countries. In a system in which central government influence touches little more than 25% of the total volume of centrally funded research, R&D is scarcely being steered in desired directions. Here the primary requirement is to set about improving liaison between government and the R&D system, improve co-ordination and introduce more effective consultation arrangements.
26. One of the reactions of smaller countries to the problems posed by new production technologies, often in areas of industry controlled by multinationals, has been to enter into contracts with the multinationals for the manufacture of components. In other words, those countries' industries are increasingly tending to become subcontractors. This extreme specialisation has brought closer integration with the international production system but at the same time has disjointed the national R&D sector, both vertically and horizontally. The results are clear to see: greater dependence on other countries together with isolation at national level. The lack of dovetailing, at domestic level, between R&D and industry results in a lack of flexibility and undue rigidity in the production system which, in a recession, might hinder rapid adjustment.
27. The relations with multinationals need some clear-sighted reassessment. From the economic and employment standpoint there is no doubt a great deal to be said for them but against that must be set the R&D implications. Often what the multinationals require of their subsidiaries is confined to assembly of components, without any technology transfer (the Irish electronics industry and the motor vehicle industry in Turkey are good examples), and the work involved is not very skilled. At the same time, national R&D in the sector concerned is wiped out because it cannot pay its way. Agreements with multinationals need redrawing on joint-venture lines with know-how clauses, though that is easier said than done since smaller countries are not negotiating from a position of strength.
28. The answer might be for the smaller country to develop its own multinationals. That would take not only a considerable R&D effort but also developed industrial infrastructure, skilled labour, and world market opportunities in areas in which the country concerned already has some experience (Italy and Spain, for instance, had a large lead over their competitors in solarenergy and biomass research). However, areas of advanced technology (agri-foodstuffs production, for example) do not always present such opportunities and concentration on one area may mean continuing to lag behind in other promising fields such as new materials or robotics.
29. There could be opportunities for smaller countries prepared to co-ordinate their R&D resources. Countries might join forces for a specific project. Some specialists view co-operation of this kind between "equals" as being of more benefit to the countries concerned than involvement — still in a subcontracting capacity — in major international ventures such as the European Space Agency, CERN or Airbus. At any rate there are pros and cons. It is probably fair to say that smaller countries have a lot to gain from participation in programmes such as Eureka in which the emphasis is on generic (pre-competitive) technology. The same goes for areas of science research such as human genome, biodiversity and climate change. On the other hand, involvement in end-stage production using fully developed technologies is not likely to contribute very much to a smaller country's R&D.
30. Governments of small or medium-sized countries are faced with difficult decisions as regards R&D priorities. They have to reconcile the necessity for every country to participate in the human intellectual adventure and maintain a certain volume of basic research with being technologically competitive, and they also need to reconcile the need for rationally organised R&D with the freedom which research and the universities have traditionally enjoyed. The problem is one of managing a complex network of relationships involving central government, the universities, the private sector and international organisations and programmes, to say nothing of regional and local authorities. This network must be managed, where it already exists and is reliable, or built up on the basis of the historical heritage of each country — that is the way industries developed and the knowledge acquisition and learning process. In Denmark, for example, the economy is based on the agri-food, biology and electronics sectors, and technology policy and industrial development have been centred on regional entities which first had to be established and organised around the relations between the state, the universities and private undertakings.
31. A further important task for political leaders is the shaping of public opinion and the heightening of awareness of R&D expenditure. If less than 0,8% to 1% of GNP is spent on R&D, it is no longer possible to maintain the capacity to assimilate new knowledge from other countries, — a development which signals that the country has started to lose its place in the R&D world.
32. In deciding its priorities every country is guided by certain absolute prerequisites. Quite apart, of course, from economic constraints, there are national security or political considerations bound up with geopolitics or membership of alliances. Commitment to military or strategic projects can bring technological "spin-off". Some countries have decided not to allow considerations of that kind to influence their R&D priorities and are thus able to focus their resources on other areas. Other countries are trying to keep up with the "giants" in nearly all categories of R&D whereas the country next door decides to specialise with an eye to commercial opportunities. A great many options are available. One thing is certain: the smaller countries are at a crossroads in scientific research and development; they need to evolve proper strategies for the future — tactical decisions are not enough.
1990-94 Framework Programme
Areas of activity
Amount in millions of ecus
Telecommunications, microelectronics, new products
— Information and communication technology
— Information technology
— Communication technology
— Development of general-purpose telematic systems
— Industrial and materials technology
Industrial and materials technology
Measurement and testing
Management of natural resources
Marine science and technology
Life sciences and associated technology
Agricultural and agri-industrial research
Biomedical and health research
Life sciences and associated technology for developing countries
Non-nuclear energy sources
Nuclear fusion safety
Controlled thermonuclear fusion
Enhancement of intellectual resources
Human capital and mobility
The figures in brackets are sub-totals
Financial implications of the 4th Framework Programme for community R&D activities and the Framework Programme for Community research activities for the European Atomic Energy Community (in millions of ecu)
4th Framework Programme
Information and communication technology
Life sciences and associated technology
Clean and efficient energy technology
Nuclear safety and security
Controlled thermonuclear fusion
Research for a European transport policy
Targeted socioeconomic research
Promotion of co-operation with non-member countries and international organisations
Community action for the dissemination and exploitation of results
Stimulation of the training and mobility of research scientists
The Joint Research Centre (JRC) is to carry out strategic and applied research. These activities are to be undertaken as an integral part of the European science and technology system and are also intended to help provide a scientific basis for Community policies as a whole.
Source: Commission of the European Communities
Reporting committee: Committee on Science and Technology.
Budgetary implications for the Assembly: none.
Reference to committee: Doc. 6774 and Reference No. 1855 of 26 March 1993.
Draft resolution unanimously adopted by the committee on 12 April 1994.
Members of the committee: Mr Roseta (Chairman), Mr Meszaros, Mrs Terborg (Vice-Chairpersons), Mr Alemyr, Mrs Arnold, MM. Bartodziej, Bauer, Berger, Birraux, Borderas, Bosco, Mrs Brenden (Alternate: Mr Lie), MM. Bugli, Fulvio Caccia, Paolo Caccia, Cunliffe, De Decker, Dees, Dumont (Alternate: Decagny), Galley, Golu, Hurta, Inönü, Ivanov, Mrs Kaliská, MM. Konecny, Konstandinidis (Alternate: Korahais), Leers, Lenzer, Lopez Valdivielso (Alternate: Palacios), Lotz, Łuczak, Metelko (Alternate: Pahor), Mitchell, Mocioi, Moran, Panov, Pecriaux, Poças Santos, Požéla, Probst, Mrs Ragnarsdóttir, Mr Regenswetter, Mrs Saint Cyr, Mrs Stiborová, Sir Donald Thompson (Alternate: Mr Howell), MM. Jack Thompson, Tiuri, Trabacchini, Vrettos (Alternate: Sofoulis), Yürür.
N.B. The names of the members present at the meeting are printed in italics.
Secretary to the committee: Mr Perin.
1 1Gross Domestic Expenditure on Research and Development.
2 1OECD, CCEET: "Politiques de la science, de la technologie et de l'innovation — Hongrie", 1993.
3 2OECD: "Politique scientifique et technologique — Bilan et perspectives 1991."
4 3OECD: "Study of science, technology and innovating policies in Hungary" — 1992.