Leapfrogging to Smart R&D

The aim is not an immediate increase in R&D spending, but rather building modern research institutions, which can bypass legacy problems and are competitive at a global level.

24 September 2019

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Since the 2004 enlargement and beyond, New Europe has been on a solid path of convergence with its western counterpart. There has been success in many sectors, but these central and eastern regions have struggled to catch up in the area of technology, including research and development (R&D). While the national governments of new member states systematically underfund R&D, their researchers feel that they do not do well and suffer from imbalances in the competitive nature of EU grants. If this trend continues, the division between old and new member states will be prolonged perpetually, causing further divisions to develop and swell.

 

There remains a large East-West gap in research and technology, which has created a feeling of “technological colonialism”. Various regions of New Europe have witnessed cases of unfair competition with big research institutions from old member states, to attract funds and hire the best performing scientists. As a consequence, there are calls to redirect EU spending to promote research excellence and technological development in the new member states.

While the V4 countries do receive approximately 2-3 per cent of their GDP in cohesion funding support, very little  of the EU spending on R&D goes to New Europe.

The new member states lag in national spending on R&D – currently amounting to approximately 1 per cent of GDP on average for the V4, which is about one half of the EU average of 2.1 per cent of GDP and way below the EU target of 3 per cent. Moreover, less than one-fifth of the funds come from public (national) R&D spending (i.e., less than 0.2 per cent of GDP).

Therefore, even a modest section of cohesion support redirected towards R&D translates into a very significant boost to public spending on R&D.

However, a unique component to EU funding for R&D is that it is one of the few budget items which does not have a national “flag” attached. This is essential given that all major EU research programmes like Horizon 2020 or the European Research Council work on a competitive basis. This means that the only criterion whether to fund a project or a researcher is scientific excellence, not the nationality of the researcher or the country where the project should take place.

Due to this competitive allocation of EU funds for research, it is unavoidable that researchers or research institutions in some countries receive a larger share than others. New Europe, in particular, does not seem to be able to compete strictly on the criterion of scientific excellence.

Part of the reason for these significant disproportions between the best and worst performers is not necessarily the level of funding or available talent but rather infrastructural deficiencies.

Of course, all EU countries have a network of universities and other tertiary education institutions. However, in many countries – especially in the new member states – they are plagued by a swarm of legacy problems resulting often in low levels of teaching and research capabilities, not to mention an inability to cooperate with the private business sector.

All the V4 countries have made some progress in terms of business R&D. The level remains below the EU average of (now) 1.4 per cent, but Czechia and Hungary are not far behind. In Poland, business R&D is at 0.7 per cent of GDP, half of the EU average, but it has increased more than three-fold over the last 10 years. If that growth continues, Poland would reach the EU average by about 2025. The available data thus suggest that R&D investment by the private business sector is still low, but will increase in the next years.

This has led to calls to foster more indigenous research. One important indicator on which the new member states are still lagging is that of having top universities. For example, in the Times Higher Education global ranking of 2019, there are 224 universities from EU countries among the top 500 places, which is over 40 per cent of the global total, attesting to the strength of the EU in
higher education. Yet, only one of these is from the V4 (Semmelweis University in Budapest). In other words, universities in New Europe would appear at the very bottom of any European ranking.

There have been voices the European Parliament arguing that the “imbalance” in EU R&D spending should be addressed, perhaps by adding some cohesion element into the EU research programmes.

However, this creates a severe conflict with other member states who feel that their researchers won by means of a fair competition. Moreover, it would risk a devaluation of these EU research programmes because the quality of output is likely to suffer if scientific excellence is no longer the sole criterion.

Recipient countries or regions can of course redirect part of the funds they receive towards universities and research centres. Under present rules, member states have to create smart specialisation strategies and the cohesion funds have to finance the development of additional research capacity. However, in reality this has resulted chiefly in spending on new buildings rather than on attracting the best talent.

Formally, this builds capacity in physical terms, but in reality, it is not clear whether this type of financial support is supplementary or whether the Structural Funds merely finance expenditure which would have taken place anyway. The same problem applies to funding for training and education or innovation investment supported by the European Investment Fund. The global university ranking mentioned above suggests that so far little improvement has materialised.

A majority in the European Parliament recognises that if nothing immediately changes, the imbalance will become more pronounced and would be a point of contention that Eurosceptic parties could use to drum up support.

To counter this inert “development”, a new funding policy is set up that is different from Horizon 2020 and other funding programmes. Funding from R&D cohesion funds now targets the construction of modern research institutions mostly independent of existing legacy institutions. In principle, these new organisations are supposed to be specialised in particular areas vital to the economy or problems of a particular country.

The goal is to build excellence centres capable of competing with old member states research centres for R&D grants. Importantly, domestic authorities have accepted that if the aim is to establish high quality R&D centres on their territories, most of the personnel would come from abroad.

As mentioned previously, this is not because there are no high-level scientists in New Europe. The key reason is simple: high quality science is by its nature global. Even in the US, the majority of the faculty of the best universities are not US-born.

High quality research centres can be established in the V4 countries only if they hire the best people and not the ones appointed through nepotism. This allows the institutions to bring quality research and smart innovation that attracts high tech industries for collaboration.

This approach instigates a conflict with other member states who feel that their researchers won through a fair competition and claim that these new institutions supported by EU cohesion funds are making future grants harder to obtain. This complaint was only partially true as the competition was not really “fair”, since applications from new member states suffered from the handicap of inefficient and rigid institutions that often suppressed innovative ideas and competition from young scientists in order to secure a position of entrenched professors. A truly fair competition was only possible after the appearance of new institutions.

Despite the initial protests from the old member states, these policy shifts also turned out to be beneficial to them. The fiercer competition forced old member states to evaluate and improve their own approach to scientific excellence and technological development. As a result, the quality of research output increased across the entire EU.