The increase was expected, as it followed the start of a new EU Structural Funds financing period from 2017, it is reported.

Expenditure grew in all subsectors, according to Statistics Estonia, especially in higher education, where it grew 35 percent y-o-y.

Business enterprise R&D expenditure also grew, by 8 percent y-o-y, to €155 million over the same period.

Expenditure growth resulted from investments, as in 2017, Statistics Estonia reports. Total investments increased by 46 percent, particularly in the higher education and public sectors, but fell in the business and private non-profit sectors.

Labour costs, which account for more than half of R&D expenditure, increased by 13 percent compared to the previous year, except in the public sector, where labour costs decreased by 8 percent.

€156 million euros, 43 percent of the R&D spend, came from the state budget in 2018, including EU subsidies, which are counted as government allocations. The majority, 70 percent, of the state budget allocations went into the higher education sector. State budget allocations accounted for 6 percent of private sector R&D expenditure, Statistics Estonia reports.

In 2018, the R&D intensity index in Estonia, expressed as a ratio of expenditure on R&D to GDP, stood at 1.4. According to preliminary data, this placed Estonia 13th in the EU on this measure for 2018, an increase of two places since 2017. Compared to 2017, Estonia has moved up two places.

Statistics Estonia says the current growth rate of R&D spend suggests that the objective of increasing the share of R&D expenditure to 3 percent of GDP by 2020 will most likely not be reached.

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