Research and development
The first phase of the innovation process often starts with research and development (R&D). The basic knowledge required to produce high quality and high-tech products for goods and services alike is created through this R&D. However, R&D and the commercialisation of its results do not necessarily take place within one and the same region, a fact that can also affect regional economic growth)11).
Regional income from R&D investments depends on several factors such as: supplementary R&D activities with other economic activities along the value chain, the aim of R&D activities (basic research, applied research or experimental development), the size of the regional home market and the access to capital. The time factor also plays an important role since successful innovation processes often have a time horizon of several decades. Accordingly, a specialised R&D sector of relevant size and quality is the first step towards economic success in the modern knowledge economy. Measured in this way, the Öresund region takes a leading role in the Nordic countries as well as in Europe (see Chapter 6 Industry). This prominence is also visible in the access to capital - and foreign capital - to finance research and development. It can also be said that the general climate for foreign investments in the Nordic countries, Denmark in particular, is one of the best in the world(12).
R&D investments
Investments in research and development are a central measure of the ability and commitment of regions to increase basic knowledge. However, this is not necessarily the same thing as commercial production of innovative R&D results. The Lisbon Strategy, which aims to make the EU the most competitive knowledge economy in the world, lists the intensity of R&D investments as one of the fourteen indicators to measure success. The target for 2010 is an investment level of at least 3 percent as a share of GDP, of which two thirds are to be financed through the business sector.
With the exception of Norway, the Nordic countries together with Japan are world leaders concerning total R&D investments. As early as 2004 Sweden, Finland and Iceland made R&D investments above the targets of the Lisbon Strategy. Denmark’s investments were lower, but were still at a considerable level. Nearly two thirds of these expenses were financed by the domestic business sectors, a high share from an international perspective. The situation is similar to the conditions in the United States, Germany and Switzerland. Only Japan and Luxembourg exhibit larger financial contributions from the business sector. The remaining investments are mostly from public sources within the countries. In Denmark and Sweden nearly one tenth of the R&D investments come from abroad. The share of foreign R&D investments from abroad is even a bit larger in Iceland.
Looking at the R&D commitment from the business sector in relation to total investments, there is a clear connection between these investments. That is to say, the higher the investments from the business sector, the higher the level of general investments in the country(13). This connection is not as clearobvious in most of the Nordic regions. The European pattern is most apparent in the Nordic metropolitan areas such as the Capital Region of Denmark and Region Skåne.
- R&D intensity in Europe and the world 2004
Source: EUROSTAT, OECD. Preliminary data: DK, FR, NL. Estimate Eurostat: AT, DE and Nordregio: the Nordic countries. CH, CN, JP, NO, UK, US: 2003
(11)This fact is supported by several empirical studies. Further evidence was given in a study from 2006, where the connection between both R&D intensity as the rate of patent applications on the one hand and economic development (measured as GDP growth per inhabitant) on the other was compared for 240 European regions (NUTS 2 regions). The study maintains that the region which invested the most in R&D, Braunschweig in Germany, is at the same time the fourth worst region measured in economic growth. Conversely, none of the regions in the Top 10 Growth League have an R&D intensity exceeding 2 percent (Hanell, T & Neubauer, J: Geographies of Knowledge Production in Europe. 2006:3).
(12)Forbes Capital Hospitality Index 2007. EU & EEA Top 4 are in descending order (world ranking in parentheses): Denmark (4), Norway (6), Finland (7), and Sweden (9).
(13)Hanell, Neubauer 2006
