R&D expenditure increasing, on course for 3% of GDP in 2020 ({{commentsTotal}})

Research and Development (R&D) in the business sector in Estonia, 2009-2017
Research and Development (R&D) in the business sector in Estonia, 2009-2017 Source: Statistics Estonia

Research and development (R&D) expenditure rose year-on-year (y-o-y) by 13% in 2017, according to figures from Statistics Estonia, to a total of €304.3 million.

This followed a fall in expenditure y-o-y to 2016; most of the increase came from the non-profit institutional sector (23%, compared with a 3% rise in the business enterprise sector y-o-y).

Forty percent of R&D expenditure derived from state funding during the period, to a total of €122 million. Again, the bulk of this (72%) was focussed on the non-profit institutional sector, with 4% going to the business enterprise sector.

R&D expenditure going to the business enterprise sector is still significantly lower than it had been in 2011 and 2012 (see diagram).

State budget funds on R&D include finance from the EU Structural Funds which are counted as part of the state budget. Consequently, whereas the share of R&D financing in general government expenditure was 1.32% during the period, the proportion of ''foreign'' funds going towards R&D expenditure was much higher at 15%, according to Statistics Estonia.

Breakdown of expenditure areas

A little more than half of the R&D expenditure increase went on experimental development, with 28% going to basic research and 21% to applied research. As might be expected, however, these proportions varied by sector. In the higher education and public sectors, basic research made up the largest share; in the business sector, the greater part (82%) of expenditure went on applied research.

Labour costs accounted for 56% in R&D expenditure, unchanged from 2016, and investments accounted for 11%. In the business sector, those proportions were similar at 60% and 14% respectively.

In 2017, the number of full-time equivalent persons employed in R&D was 6,048, representing a 5% rise y-o-y. Full-time equivalent researchers and engineers numbered 4,674: and 8% rise y-o-y. Women accounted for 45% of persons employed in R&D, and 41% of researchers and engineers, in 2017, which was unchanged from the previous year.

Important goal both domestically and internationally

Estonia's R&D expenditure has been under sharp focus in recent years. One of the reasons for this is the competitiveness goal of "Estonia 2020", which aims to increase R&D expenditure to 3% of GDP. This has not been reached yet, but is on course, Statistics Estonia reports.

The Centre Party in particular puts an emphasis on R&D expenditure and the need for it to rise; education minister Mailis Reps has spoken on the issue several times, and the difficulties in inducing the private sector, which is required to contribute 2% to the increase, as compared with the 1% needed from the public sector.

As regards international comparison, the R&D intensity index – the ratio of expenditure on R&D to GDP – was 1.29 for Estonia which was not a significant rise, despite the increase in total R&D expenditure. This was partly due to Statistics Estonia adjusting the GDP for 2014-2016 upwards. Estonia remains ahead of Latvia and Lithuania in R&D intensity index, but significantly behind Finland and Sweden.

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Statistics Estonia is a government agency under the aegis of the Ministry of Finance, and provides public institutions, business and research circles, international organisations and individuals with reliable and objective information on the economic, demographic, social and environmental situation and trends in Estonia.

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Editor: Andrew Whyte



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