Lhe recent performances of the research and innovation system of the European Union (EU), compared to those of the United States and China, suggest some encouraging signs, but above all alarm signals. EU spending on research and development (R&D), expressed as a percentage of gross domestic product, is still far from the 3% target it set for 2010: it reached 2% in 2015 and 2.2% in 2021, when the United States went from 2.8% to 3.5%. The gap has widened, instead of narrowing. Furthermore, China has made much more progress than the EU, and has even managed to overtake it (from 1.9% to 2.4%).
If the EU deficit compared to the United States has not worsened in terms of R&D financed by the public sector, this deficit is growing with regard to private sector R&D expenditure. Europe may have centers of excellence in science, but it is generally less successful in achieving major innovative successes. This situation is perfectly illustrated in the field of artificial intelligence (AI). If the EU leads in publications relating to AI compared to the United States, this is absolutely not the case for patents relating to AI. The EU has been and continues to be a dwarf in this area: it holds less than 5% of all AI patents in the world. The patent race on this subject is taking place between the United States and China, a race that China is gradually winning: it held two thirds of these patents in 2022.
The EU’s corporate R&D deficit is also illustrated by the position of European companies in the global ranking of private R&D spending. This ranking, which includes 2,500 companies, is dominated by American firms. And, over time, the EU continues to lose ground, while the United States and China gain places; while in 2017, Chinese companies were as numerous as European ones in this ranking, they will be twice as numerous in 2022, just as American companies still are.
The information and communication technologies (ICT) sector is by far the most important when it comes to innovation, and is increasingly so. However, the EU lags considerably behind the United States in this sector, a delay which has widened further. R&D spending by EU companies was only 16% of that by US companies in 2022. In ICT markets, where ‘winner takes all’, it is important to be at the top, as shown by case of Big Tech. Among the 10% of companies that spend the most on R&D in the field of ICT (Top 10%), the gap is even greater, with the EU representing only 9% of US spending! China is the only competitor that has managed to gradually narrow the gap with the United States. This illustrates the intensity of the battle between Washington and Beijing for leadership in digital technology.
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