Estonia had the biggest fall in R&D expenditure in the EU

According to Statistics Estonia, in 2013 the expenditure on research and development (R&D) in Estonia equalled 326 million euros, which is 14% less than in 2012.

Despite the negative nature of this piece of news, there is no reason to raise the alarm. The peculiarity of the statistics of a small country lies in the fact that the start or termination of a single large-scale project can significantly influence a concrete statistical indicator. In 2010–2012 substantial investments in new technology were made in the Estonian oil industry, which boosted Estonia’s R&D expenditure to a significantly higher level than before. In 2013 the pilot factory reached the production phase and the resultant decrease in new investments was the cause of the downward trend in R&D expenditure.

The ratio of R&D expenditure to the gross domestic product (GDP), also known as R&D intensity, declined from 2.16% in 2012 to 1.74% in 2013. This was the biggest drop – 19% – among the EU member states, as the decrease in R&D expenditure was amplified by the 6% increase in the GDP. Nevertheless, Estonia was placed just outside the top ten in the R&D intensity ranking of the member states.

Diagram: Research and development intensity, 2002–2013

The diagram shows clearly that, in the shadow of the intermediary boom caused by the oil industry, the long-term trend for Estonia has not changed and the convergence to the EU mean is continuing. In 2002 the Estonian R&D expenditure per inhabitant amounted to just 11% of the EU mean, whereas in 2013 it reached already 46%.

47% of Estonia’s R&D expenditure was financed by the government in 2013 and this financing increased by 6% compared to 2012. The share of R&D financing in the general government expenditure was higher than ever – 2.13%.

Source: Statistics Estonia

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