Investment injection needed to power Europe’s global technology race success

Europe must boost its investment in R&D, skills, infrastructure, and the integration of eco-friendly and advanced technologies if it is to achieve its environmental objectives and maintain a competitive edge, say institutional banks.

Isabel Schnabel of the European Central Bank has highlighted a concerning investment trend, where numerous European companies fall short when compared to their international rivals, underscoring the critical need for heightened R&D investments.

“At the turn of the millennium, Europe was operating at the global technological frontier, but today many euro area firms are laggards. Compared with many of their global peers, they invest less in both physical capital and research and development, and they are less productive,” Schnabel remarked.

The European Investment Bank (EIB) has emphasised that these types of investment are increasingly reliant on the private sector because of growing strains on public finances.

The European Investment Bank has issued a warning to policymakers that to stay competitive, the European Union and its member states must enhance productivity, foster innovation, bridge skill gaps, pioneer new technologies, and bolster young, enterprising companies.

While Europe’s R&D investments across various tech sectors indicate forward movement, the continent still faces hurdles in raising its technological profile.

Europe’s R&D landscape – bridging the gap

The 2023 EU Industrial R&D Investment Scoreboard revealed record-high global R&D investment, with Alphabet from the U.S. leading the charge. Volkswagen stands as the sole EU company among the top 10 R&D investors, revealing the urgent need to bridge the investment gap to secure Europe’s technological future.

The four sectors that have dominated the R&D landscape—ICT producers, ICT services, health, and automotive—account for over three-quarters of the Scoreboard’s R&D investment. These sectors encompass technologies deemed critical for the EU’s economic security, including advanced semiconductors, artificial intelligence, quantum technologies, and biotechnologies.

However, these industries, with fewer large players in the EU compared to the United States (for ICT and health) and China (for ICT), continue to present challenges for the EU in trying to match the United States in global R&D investments while keeping pace with China’s recent advancements.

Reshaping EU’s innovation, talent landscape

Chinese tech giant Huawei ranking as the world’s fifth-largest private sector investor in R&D, continues to prioritise Europe for growth. The company says its investments foster a talent-rich and innovative ecosystem, which they argue helps propel Europe towards a sustainable and technologically advanced future.

At Huawei’s ICT Competition Europe 2023-2024 in Istanbul, Tide Xu, Chief Strategy Officer of Huawei Europe, told the audience that low-carbon development and intelligent transformation are the megatrends driving the industry forward, and ICT technology is the key enabler of an intelligent world. The competition aims to foster the tech talent of the future.

Xu emphasises the company’s dedication to driving innovation: “We invest more than 20% of our annual revenue in R&D.” Much of the global research that Huawei carries out takes place in Europe.

It has anchored its European Research Institute in Leuven, Belgium, where the institute serves as a focal point for overseeing R&D activities across Huawei’s European network, spanning multiple countries and encompassing various ICT-related research areas such as wireless, fixed, optical, and future network technologies.

European footprint

Huawei set up its first research centre in Sweden in the year 2000. 24 years later it has 27 research centers and 13,000 employees across Europe. Through a series of partnerships with over 100 academic and research partners, Huawei is working closely with the ICT research ecosystem in Europe.

Huawei is also the largest patent applicant in Europe with more than 3,500 applications registered at the European Patent Office in 2021. Projects are often carried out in collaboration with top-tier European Universities and research institutions, which not only ensures funding for academic research projects but also leads to knowledge sharing and spillover effects on society.

Recently, the company launched the Huawei Europe Enterprise Roadshow 2024 underscoring the company’s dedication to fostering collaboration and accelerating digital transformation across key sectors in Europe. Through this initiative, Huawei says it aims to catalyse innovation in areas vital to Europe’s growth, including education, health, transport, and retail.

[By Nicole Verbeeck I Edited by Brian Maguire | Euractiv’s Advocacy Lab ]

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