eu4journalists

Growth and Jobs

5. Stimulating research and innovation

To create growth and jobs, Europe needs to develop more new technologies and new products. The EU realises that for this to happen there needs to be more investment in research and development (R&D). EU leaders have agreed that by 2010 the EU as a whole should invest 3 percent of its GDP in R&D, from state and business sources combined. Most Member States have set a national target.

The EU performs particularly weakly in comparison to its competitors over the number of patent applications and the amount of business spending on R&D. The 'innovation gap' reflects weaknesses in areas such as links between research and industry, the availability of early stage finance, education and the business environment. In 2005, the EU's investment in R&D stood at around 1.9 percent of GDP, compared to over 2.5 percent in the US and over 3 percent in Japan.

Europe must also encourage companies to innovate more – in other words, to get new products and services quickly to market, or to make the way the business operates more efficient. Strong competition is a key incentive for companies to innovate.

Increasing the use of information and communication technologies (ICT) leads to boosting productivity and, consequently, economic growth. The effective use of ICT adds a competitive edge to all sectors of the economy. But, due to under-investment and institutional constraints, its huge potential is not yet fully exploited in Europe. To redress the situation, the EU has earmarked more than €9 billion for ICT funding under the Seventh Research Framework Programme for 2007-2013.

In this way, ICT will be a catalyst in three key areas beneficial both to the economy and to society: productivity and innovation; modernisation of public services; and scientific and technological developments.