Estonia: Final data on R&D expenditures in 2010

Submitted by Oliver Kovacs on 8 December, 2011 - 14:13
in
Country: 
Estonia

The Estonian Ministry of Economic Affairs and Communications has published a press release on the basis of the revised statistical data of the Statistics Estonia about the trends and status of R&D expenditures.

According to Statistics Estonia, in 2010 the ratio of research and development (R&D) expenditures to the gross domestic product reached a novel level – 1.63%, a year earlier the respective indicator was 1.43%.

The press release also calls our attention to the fact that the share of R&D investment in percentage of GDP has risen steadily in recent years. However, today it is too early to tell whether last year's leap in private investment is exceptional or it will be a long-lasting trend, because the statistics are significantly influenced by the oil industry's spending on research and development. The improved result was significantly influenced by investments in the technological development made in the oil industry.

The peculiarity of a small country statistics lies in the fact that the change in the activities even of one enterprise can significantly influence some statistical indicator. In the case of Estonia it has previously happened with the high-tech export or innovation expenditure figures. Substantial investments in the technological development were made in 2010 in our oil industry and as a result the total R&D expenditure for Estonia compared to the previous year increased by 18% and that of the enterprise sector even by 32%. The good news is that when taking not into account the mentioned investments the R&D expenditure of enterprise sector nevertheless increased by 5.5%. The bad news is that one can possibly predict a certain drop for R&D expenditure in 2011 as there took place one-time effort.

The event was accompanied with remarkable change in the structure of R&D expenditure and financing. For the first time the enterprise sector R&D expenditure surpassed that of the non-profit institutional sectors making up 50.2% from the total of 232.8 billion euro. The share of enterprises in financing of the R&D expenditure became nearly equal to that of government (enterprises – 43.6%, government – 44.1%, foreign sources – 11.4%). Those structural changes brought Estonia nearer to developed industrial countries. It is worth mentioning here that the EU supports received through the mediation of the state budget are classified as supports received from the state.

Obviously the government finances first of all the non-profit sectors for which the government share reached 77% in 2010. In the case of the enterprise sector the share was only 11% and the lion share of those finances account for the support to micro- and small enterprises given by Enterprise Estonia. The growth of the enterprise sector government-financed R&D expenditure from the 9.7 million euro in 2009 to 13 million euro in 2010 gives hint on the government strategy.

Forgetting the fact that the private sector investment in R&D activities is also affected by the subsidy policy would be unwise. During the period 2007-2013, the country set up R&D subsidies amounted to more than EUR 500 million. It is therefore extremely difficult to isolate the investments carrying out by the given firm with its own financial latitude from those when the company uses significant amount of subsidies. While the former one may imply that the framework conditions have been improving, the latter one might mean that the business sector still requires significant support in order to become more competitive.

Minister of Economic Affairs and Communications, Juhan Parts has emphasised that it is an instructive progress that more and more companies are willing to cooperate with each other with the aim of gaining new competences by utilising the internal and external knowledge. It has therefore a non-negligible positive impetus on productivity, and of course it can presumably lead to the improvement of added value. "The trend is correct. However, in an effort to trigger a significant impact on the structure of the economy, R&D investment should be at least 3% of the GDP" – said Parts.

References / further information:

  • 288 reads