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Young leading innovators and the EU's R&D intensity gap

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  • Michele Cincera
  • Reinhilde Veugelers

Abstract

Europe's innovation gap relative to the USA is often attributed to its industrial structure in which new firms do not play a significant role, especially in high-tech sectors. This view of a structural European Union (EU) innovation deficit is popular in European innovation policy discussions, but has received little or no thorough empirical investigation. This article aims to address this ‘evidence gap’. Using industrial R&D Scoreboard data from leading world innovators, we find that compared to the USA, the EU has fewer young firms among its leading innovators. Using a decomposition analysis, we show that having fewer young firms accounts for about one-third of the EU--US differential in R&D intensity, while 55% of the differential is due to the fact that young leading innovators in the EU are less R&D intensive than their US counterparts. Further analysis shows that this is almost entirely due to a different sectoral composition. We thus confirm that the EU--US private R&D gap is indeed mostly a structural issue.

Suggested Citation

  • Michele Cincera & Reinhilde Veugelers, 2013. "Young leading innovators and the EU's R&D intensity gap," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(2), pages 177-198, March.
  • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:2:p:177-198
    DOI: 10.1080/10438599.2012.731166
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    References listed on IDEAS

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    1. repec:dau:papers:123456789/131 is not listed on IDEAS
    2. Bruno Pottelsberghe de la Potterie, 2008. "Europe's R&D: Missing the Wrong Targets?," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(4), pages 220-225, July.
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    Cited by:

    1. Alex Coad & Antonio Vezzani, 2017. "Manufacturing the future: is the manufacturing sector a driver of R&D, exports and productivity growth?," JRC Working Papers on Corporate R&D and Innovation 2017-06, Joint Research Centre (Seville site).
    2. Michele Cincera & Reinhilde Veugelers, 2013. "Exploring Europe's R&D deficit relative to the US: Differences in the rates of return to R&D of young leading R&D firms," iCite Working Papers 2013 - 001, ULB -- Universite Libre de Bruxelles.
    3. Francesco Bogliacino & Matteo Lucchese & Leopoldo Nascia & Mario Pianta, 2015. "The virtuous circle of innovation in Italian firms," Working Papers 1504, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2015.
    4. Cincera, Michele & Veugelers, Reinhilde, 2014. "Differences in the rates of return to R&D for European and US young leading R&D firms," Research Policy, Elsevier, vol. 43(8), pages 1413-1421.
    5. Pietro Moncada-Paternò-Castello, 2016. "Sector dynamics and demographics of top R&D firms in the global economy," JRC Working Papers on Corporate R&D and Innovation 2016-06, Joint Research Centre (Seville site).
    6. David Audretsch & Agustí Segarra & Mercedes Teruel, 2014. "Why don't all young firms invest in R&D?," Small Business Economics, Springer, vol. 43(4), pages 751-766, December.
    7. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2014. "Young Firms and R&D subsidies in Catalonia," Working Papers 2072/242276, Universitat Rovira i Virgili, Department of Economics.
    8. Francesca Barbiero & Michael Blanga-Gubbay & Valeria Cipollone & Koen De Backer & Sébastien Miroudot & Alexandros Ragoussis & André Sapir & Reinhilde Veugelers & Erkki Vihriälä & Guntram B. Wolff & Ge, . "Manufacturing Europe’s future," Blueprints, Bruegel, number 795.
    9. Alex Coad, 2017. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," JRC Working Papers on Corporate R&D and Innovation 2017-04, Joint Research Centre (Seville site).
    10. Alex Coad, 2017. "Persistent heterogeneity of R&D intensities within sectors: Evidence and policy implications," JRC Working Papers on Corporate R&D and Innovation 2017-04, Joint Research Centre (Seville site).
    11. Dominique Guellec & Caroline Paunov, 2017. "Digital Innovation and the Distribution of Income," NBER Chapters,in: Measuring and Accounting for Innovation in the 21st Century National Bureau of Economic Research, Inc.
    12. Pietro-Moncada- Paternò-Castello, 2016. "EU corporate R&D intensity gap: Structural features calls for a better understanding of industrial dynamics," JRC Working Papers JRC103361, Joint Research Centre (Seville site).
    13. repec:rsr:supplm:v:65:y:2017:i:9:p:17-30 is not listed on IDEAS
    14. Daria Ciriaci & Pietro Moncada-Paternò-Castello & Peter Voigt, 2016. "Innovation and job creation: a sustainable relation?," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 189-213, August.
    15. Alexander Ebner & Fabian Bocek, 2015. "Best Practices as to How to Support Investment in Intangible Assets," WWWforEurope Working Papers series 101, WWWforEurope.
    16. Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2014. "R&D Financing Constraints of Young and Old Innovation Leaders in the EU and the US," iCite Working Papers 2014-008, ULB -- Universite Libre de Bruxelles.
    17. Pietro Moncada-Paterno-Castello & Peter Voigt, 2013. "The effect of innovative SMEs' growth to the structural renewal of the EU economy - A projection to the year 2020 –," JRC Working Papers JRC83400, Joint Research Centre (Seville site).

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