Maximising the Value of Innovation

Research commissioned by Europe’s leading venture capitalist 3i and conducted by the Economic Intelligence Unit (EIU) shows that despite the difficult economic climate, cutting back on R&D damages long-term growth prospects.

The statistical analysis conducted by the EIU looked at different elements of R&D in 29 OECD countries between 1993 to 2001. In particular, the research analysed the relationship between GDP growth and gross domestic expenditure on R&D, business enterprise expenditure on R&D and numbers of resident patent applications. Key findings of the research include:
– A massive 48% of the variations in GDP growth in the US are attributable to innovation spending
– However, only 17% of the European Union’s variations in GDP growth can be attributed to R&D investment
– Countries with higher levels of R&D expenditure such as the Nordics, Japan and the US have higher correlations of R&D to GDP growth
– Technology and biotech investments as a share of total VC funding in the US were 13.5% and 70% respectively higher in 2002 compared with 1998 figures, proving that innovative companies can still gain funding

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