Report from the Commission - Annual Report on research and technological development activities of the European Union in 2004 {SEC(2005) 1326}
Date: 2005-10-24
Institutions: European Commission
Subjects: EU programme, activity report, research and development, technology

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 24.10.2005 
COM(2005) 517 final 

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REPORT FROM THE COMMISSION 

Annual Report on research and technological development activities of 
the European Union in 2004 

{SEC(2005) 1326} 

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REPORT FROM THE COMMISSION 

Annual Report on research and technological development activities of 
the European Union in 2004 

1. 

INTRODUCTION 

This  Annual  Report  covers  developments  and  activities  during  2004.  It  has  been  prepared 
pursuant  to  Article  7  of  the  Euratom  Treaty1  and  Article  173  of  the  Treaty  establishing  the 
European  Community2,  as  well  as  Article  4  of  the  decision  on  the  Sixth  Framework 
Programme3.  

The  report  is  accompanied  by  an  annexed  Commission  Staff  Working  Document,  which 
provides  more  detailed  reporting  and  statistics.  The  main  chapters  are  on  the  activities  and 
results  achieved  in  2004  and  on  developments  in  research  and  technological  development 
activities in the Member States of the European Union. The statistical tables are in a separate 
annex. 

2. 

COMMUNITY RESEARCH AND TECHNOLOGICAL DEVELOPMENT ACTIVITIES 

2.1. 

Implementation of the 6th Framework Programme 

The  implementation  of  the  Sixth  Framework  programme  (FP6)  has  been  successful.  It  was 
launched  in  2002  with  a  budget  of  17,500  million  euro  for  the  period  2002-06,  which  was 
later  increased  with  the  enlargement  of  the  Union  to  19,200  million  euro.  Particular  efforts 
were also made to encourage participation by the new Member States.  

In  2004  almost  16,000  proposals  were  received  with  more  than  84,400  participants.  Almost 
2,000 of these proposals were retained for funding (involving some 13,700 participants).  

In total nearly 2,100 contracts were signed in 2004 with a total EC contribution of more than 
4,200 million euro. 

Under  the  heading  of  ‘Integrating  and  Strengthening  the  ERA’,  more  than  7,300  proposals 
were  submitted  of  which  almost  1,100  were  selected  for  funding  involving  over  11,400 
participations.  The  majority  of  these  (some  4,200  proposals)  were  in  the  seven  thematic 

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“The Commission shall ensure that these programmes are carried out and shall submit an annual report 
thereon to the Council”. 
“At the beginning of each year the Commission shall send a report to the European Parliament and the 
Council. The report shall include information on research and technological development activities and 
the dissemination of results during the previous year, and the work programme for the current year.” 
Decision  No  1513/2002/EC  of  27  June  2002.  Article  4  “In  the  context  of  the  annual  report  to  be 
submitted  by  the  Commission  pursuant  to  Article  173  of  the  Treaty,  the  Commission  shall  report  in 
detail  on  progress  with  implementing  the  sixth  framework  programme,  and  in  particular  progress 
towards achieving its objectives and meeting its priorities…; information on financial aspects and the 
use of instruments shall also be included. 

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priorities  of  the  6th  Framework  Programme,  and  a  significant  number  in  the  horizontal 
activities involving SMEs and the specific measures in support of international cooperation.  

The  new  activities  in  FP6  on  SSP  (Scientific  Support  to  Policy)  and  NEST  (New  and 
Emerging  Science  and  Technology)  have  also  proved  to  be  successful  with  over  120 
proposals selected for funding.  

Under  the  heading  ‘Structuring  the  ERA’  over  8  500  proposals  were  received  in  2004,  of 
which the vast majority (around 7,900 proposals) under the Human Resources and Mobility 
actions. More than 800 proposals were selected for funding, of which 90 % were for human 
resources  and  mobility;  the  others  were  for  funding  actions  for  Research  and  Innovation, 
Research Infrastructures and Science and Society.  

From the proposals submitted in 2004, the new instruments integrated projects and networks 
of  excellence  accounted  for  some  900  proposals,  of  which  some  150  were  retained  for 
funding. During 2004, 165 contracts for integrated projects were signed and 76 for networks 
of excellence.  

The  work  programmes  for  the  Specific  Programmes  of  the  6th  Framework  Programme  have 
been  updated  several  times.  By  the  end  of  2004  the  EC  'Integrating  and  strengthening  the 
ERA' programme had been updated 14 times, the EC 'Structuring the ERA' programme eight 
times, and the work programme for the Euratom ‘Fission and Fusion' programme twice. Each 
update generates the content for new calls for proposals and by the end of 2004 over 120 calls 
for proposals had been published under FP6.  

A review of the effectiveness of the instruments of the 6th Framework Programme started at 
the end of 2003 by an independent high level panel led by Professor R. Marimón. The report 
of  the  panel4  was  submitted  by  the  end  of  June  2004.  The  panel  which  assessed  the  new 
instruments  (networks  of  excellence  and  integrated  projects)  endorsed  the  objectives 
addressed by these instruments, but proposed some adjustments in their implementation. The 
Commission  gave  an  official  reply  to  the  report  at  the  end  of  August  2004  and  continued 
carrying out corrective measures as well as introducing an action plan for rationalisation and 
acceleration to improve the implementation of the framework programme. 

A  Five-Year  Assessment  for  1999-2003  was  carried  out  by  the  panel  of  high-level  experts 
chaired by Dr E. Ormala. The panel underlined the importance of the framework programmes 
in  developing  Europe's  knowledge  base  and  correcting  the  shortcomings  in  the  European 
research  landscape,  particularly  the  networking  of  researchers  and  activities.  The  Panel’s 
recommendations  concerned  both  the  6th  Framework  Programme  and  future  framework 
programmes, in particular the endorsement of a substantial increase in funds for research and 
the creation of the European Research Council and technology platforms. This evaluation was 
supported  by  a  series  of  ex-post  impact  studies.  The  impact  study  concerning  the  5th 
Framework  Programme  concluded  that  it  had  promoted  research  of  strategic  importance 
which would not have taken place without EU support. 

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COM(2004) 574; SEC(2004) 1057, 27.8.2004. 

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2.2. 

Other actions towards the creation of a European Research Area 

In  addition  to  the  Framework  Programme,  the  European  Union  took  a  number  of  other 
important steps towards the creation of a European Research Area, a major objective of the 
Research DG.  

The ‘Investing in research’ action plan, currently under way, has already come up with its first 
concrete  results,  such  as  the  creation  of  some  25  Technology  Platforms.  Many  of  these 
Technology Platforms are already well advanced in developing Strategic Research Agendas. 
The  coordination  of  national  research  policies  through  the  so  called  Open  Method  of 
Coordination (OMC) involving CREST is also being implemented (see Section 3.1 below). 

Initiatives  were  carried  out  with  a  view  to  attracting  the  best  researchers  in  Europe  and 
improving  their  career  prospects,  such  as:  visas  for  third-country  researchers’5;  the 
preparation of a proposal for a recommendation for a European Researchers Charter and for a 
code for conduct for the recruitment of researchers; the ERA-link network linking European 
researchers  working  in  the  United  States;  and  the  ERA-MORE  network  between  mobility 
centres for European researchers. 

The Communication ’Towards a European strategy for nanotechnology’6 triggered a political 
debate on this key 21st-century technology, which seeks to develop products, techniques and 
systems on an atomic and molecular scale which will make life easier and can be applied in 
numerous areas such as health, environment and security. 

To  contribute  to  establishing  an  independent  European  satellite  observation  and  remote 
sensing  capacity,  the  Commission  presented  a  plan  for  implementing  the  second  phase 
(2004-2008)  of  the  Global  Monitoring  for  Environment  and  Security  initiative  (GMES)7  in 
close  collaboration  with  the  European  Space  Agency.  Together  with  the  highly  strategic 
navigation  satellite  project  GALILEO,  this  initiative  will  form  an  integral  part  of  the 
European space programme which is in preparation. 

The Group on Earth Observations (GEO), which seeks to develop by February 2005 a 10-year 
implementation  plan  for  a  comprehensive,  coordinated  and  sustained  Global  Earth 
Observation System of Systems (GEOSS), is co-chaired by the European Commission, United 
States, Japan and South Africa. Of the 55 GEO member countries, 20 % are from Europe. The 
Commission  closely  supports  the  preparation  of  the  GEOSS  implementation  plan  and 
coordinates the European position.  

The European Union worked to secure a consensus between the parties on the geographical 
location  of  the  ITER  (International  Thermonuclear  Experimental  Reactor)  project  at  the 
Cadarache  (France)  site,  chosen  unanimously  by  the  Council,  and  on  the  complementary 
activities  to  ITER.  The  ITER  project  is  aimed  at  constructing  a  nuclear  fusion  reactor  in 
partnership between the European Union, Japan, the United States, China, South Korea and 
Russia.  Demonstrating  the  viability  of  such  a  non-polluting  energy  source  would  be  an 
essential step towards meeting growing energy needs.  

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COM(2004) 178, 16.3. 2004. 
COM(2004) 338, 12.5.2004. 
COM(2004) 65, 3.2.2004. 

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The  new  preparatory  action  on  security  research8  seeks  to  foster  the  development  of  a 
strategic research agenda to plug the gap between civil research supported by the Community 
framework programmes and national and intergovernmental initiatives. 

The  signing  of  Scientific  and  Technological  Agreements  with  Brazil  and  Mexico,  and 
ratification  of  agreements  with  Tunisia  and  Morocco  in  2004  furthered  the  international 
dimension of the European Research Area.  

The  Communication  entitled  "Europe  and  basic  research"9  was  presented  in  early  2004, 
identifying the need for a new support mechanism for basic research based solely on criteria 
of  scientific  excellence,  i.e.  through  a  European  Research  Council.  The  debate  on  this 
Communication  also  contributed  to  the  preparation  of  the  proposal  for  the  Seventh 
Framework Programme. 

3. 

3.1. 

DEVELOPMENTS IN MEMBER STATES AND APPLICATION OF THE OPEN METHOD OF 
COORDINATION 

The  Open  Method  of  Coordination  in  support  of  reaching  the  Barcelona 
objectives 

The Open Method of Coordination (OMC) is a Community response to contribute to policy 
learning and policy integration by encouraging and facilitating mutual exchange of knowledge 
and  best  practice.  In  2004  a  first  cycle  of  application  of  the  OMC  to  research  policy  was 
concluded  successfully.  The  CREST  report  on  this  first  cycle  of  the  implementation  of  the 
OMC  to  the  3%  Action  Plan  was  adopted  in  October  and  submitted  to  the  Council  and  the 
Commission. It contains 30 policy recommendations. The added value of the OMC applied to 
research was acknowledged by Member States and the Council. Subsequently a second cycle 
was launched.  

There was some criticism in the first cycle of the information requirements on Member States 
being  relatively  heavy.  Consequently,  the  second  cycle  was  launched  in  early  2005  with 
clearer and lighter procedures. It focuses on the following five topics:  

•  Encourage the reform of public research centres and universities, in particular to 

promote technology transfer to society and industry; 

•  Design measures to promote the growth of young research-intensive SMEs; 

•  Design  and  evaluation  of  the  fiscal  measures  to  promote  business  research, 

development and innovation; 

•  Improve the design and implementation of national policy mixes; and 

•  IPR ownership regimes in the public sector.  

The themes were defined in the light of the results of the first cycle, which they will extend 
and  deepen  the  analysis.  The  groups  working  on  the  themes  will  report  to  CREST,  which 

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COM(2004) 72, 3.2.2004. 
COM(2004) 9, 14.1.2004. 

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maintains  its  particular  role  in  reporting  both  to  the  Commission  and  to  the  Council.  It  is 
expected that a report on the second cycle will be adopted by CREST in March 2006.  

In  addition  to  the  work  of  the  first  cycle,  the  revised  Lisbon  Strategy  has  introduced 
streamlined  national  reporting  on  the  Lisbon  Strategy.  In  particular  Member  States  adopt 
National Reform Programmes, which are presented to the Commission. The National Reform 
Programmes  will  integrate  reporting  on  most  OMC’s  including  the  OMC  3%  applied  to 
research. 

Regarding  OMC  applied  to  Human  Resources  in  research,  the  Steering  Group  for  the 
Implementation  of  the Mobility Strategy  has been active since 2002. The Steering Group is 
composed of representatives from Member States and its work has led to very concrete results 
in improving the environment for the mobility of researchers, as reported on a yearly basis in 
so-called implementation reports and to CREST in the frame of the implementation of the 3% 
Action  Plan.  It  has  been  a  very  positive  experience,  both  for  Member  States  and  for  the 
Commission services. 

3.2. 

Trends in research investment 

The  overall  trend  of  R&D  intensity  in  the  EU  25  in  the  period  2000-2003  is  close  to 
stagnation10. This weak growth performance is mainly caused by the low growth rate of R&D 
intensity  in  the  three  largest  R&D  spending  countries  Germany,  France  and  the  UK,  which 
represent around two thirds of the total R&D expenditure in the EU-25.  

The annual growth rate in R&D intensity of 0,7% (average annual growth between 2000 and 
2003)  is  far  from  sufficient  to  reach  the  3%  objective  by  2010.  If  this  trend  remains 
unchanged  (i.e.  assuming  a  linear  forecast  applied  on  the  2000-2003  trend),  the  EU’s  R&D 
intensity will  be  some 2,20% in 2010. The EU’s R&D intensity, however, grew at a higher 
rate  than  that  of  the  US,  where  private  spending  on  R&D  has  been  significantly  decreasing 
since 2000. As a result, the EU-25 as a whole is slowly catching up with the US. The growth 
of R&D intensity is higher in Japan than in both the EU and the US, although this seemingly 
good  performance  can  be  partially  explained  by  the  low  growth  rate  of  Japan’s  GDP 
(denominator) over recent years.  

At  EU-25  level,  the  share  of  R&D  expenditure  (GERD)  funded  by  the  private  sector  is 
significantly  lower  than  in  the  US  and  Japan.  The  contribution  of  the  private  sector  to  the 
financing  of  research  has  even  been  reduced  over  recent  years  in  both  the  EU  and  the  US, 
although the reduction was of a larger magnitude in the  US. Conversely,  the share  of R&D 
expenditure funded by the business enterprise sector has been increasing in Japan.  

It  has  frequently  been  pointed  out  that  the  Lisbon  3%  target  is  not  simply  an  expenditure 
target. It implies a significant increase in numbers of researchers in Europe, and this in turn 
requires a real expansion of researcher training and a growth in the availability of attractive 
research careers. It has been estimated that to fulfil the Lisbon/Barcelona targets an extra 1.2 
million researchers are needed: 500,000 for renewal of the research labour force (to replace 

10 

R&D  intensity  is  the  relation  of  Gross  Expenditures  for  Research  &  Development  (GERD)  to  Gross 
Domestic  Product  (GDP).  All  indicators  are  extracted  from  the  Key  Figures  2005  on  Science, 
Technology and  Innovation. Towards a  European  Knowledge Area’  (to  be  published in  2005).  These 
figures are based on the latest available time series from OECD (MSTI-2005-1) and EUROSTAT.  

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retirees) and 700,000 net new researchers. The number of researchers has been growing from 
1997 to 2002 by 22,5% (or 105.000 full time equivalents).  

At EU level, the number of post-graduate students (which includes future PhD holders) and of 
diplomas  awarded  every  year  in  science  and  engineering,  allows  for  a  continuation  of  the 
increase of the number of research personnel at the pace observed since 1997. From 1998 to 
2001 the average annual number of PhD level graduates was 76,750, 44% of which were in 
Science and Engineering. In recent years research graduates in Europe as a whole have been 
increasing  at  approximately  4%  per  year,  although  a  few  countries  have  seen  a  decline  in 
specific fields such as chemistry and physics.  

In terms of the availability of human resource in research the evidence is mixed. Poor career 
prospects  in  scientific  occupations  are  often  cited  as  one  of  the  main  reasons  behind  the 
decline in scientific studies among young people, but across the EU there is little evidence of 
strong upward pressure on wages for S&T professionals yet. The problems appear to be rather 
on the demand side than the supply side. The EU would be on track with the Barcelona target 
if about 60% of science and engineering graduates enter research as a career. However, recent 
survey  figures  reveal  that  only  40%  of  PhD  graduates  working  in  the  UK  are  performing 
research activities either in academia (22%) or outside academia (18%). This signals profound 
changes  in  the  labour  market  for  researchers.  The  sources  of  demand  are  more  varied  than 
before  (with  demand  emanating  from  services,  transnational  firms,  and  start-ups,  for 
example).  Knowledge-intensive  services,  including  sectors  of  activity  such  as  education, 
health and social work, employ most of these highly qualified people. 

The  increased  international  mobility  of  researchers  and  the  increased  competition  to  attract 
the ‘top performers’ will exert an additional pressure on the management of human resources 
for R&D in Member States.  

3.3. 

Trends in research policy 

Although  public  funding  of  R&D  has  experienced  significant  pressure  from  overall  budget 
constraints,  common  trends  in  upgrading  the  policy  mixes  and  governance  structures  for 
research in line with the Lisbon agenda are clearly observable. The precise array of measures 
and  instruments  varies  significantly  across  countries,  as  does  the  relative  ‘weight’  of  the 
policies,  but  they  share  a  growing  awareness  of  the  need  for  improved  coherence  and 
integration of policies. 

A  first  trend  is  the  convergence  of  conceptual  approaches  to  RTD  policy  across  the  MS 
towards  the  so-called  ‘systems’  framework.  This  policy  framework  is  explicitly  adopted  in 
policy making in countries such as Finland, Germany, Sweden and the Netherlands. It focuses 
on  the  overall  ‘system’  of  institutions  and  organisations  –  specific  for  each  country  -  that 
foster  research  and  innovation  and  condition  linkages  between  actors,  and  stresses  the 
interconnectedness between different types of policies.  

The increasing complexity of the policy mixes is a second trend. The range of long standing 
policies  for  research  funding  (R&D  subsidies,  technology  transfer)  is  expanded  with 
additional  financial  instruments  (including  venture  capital  operations)  and  a  wide  variety  of 
complementary  policies  related  to  education  and  researcher  training  and  mobility,  research 
infrastructures,  clustering policies,  collaboration and cooperation programmes,  IPR  regimes, 
regulatory  policies,  the  role  of  the  public  sector  as  a  user  of  RTD,  company  formation, 

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sustainable  development  etc.  This  ‘horizontalisation’  of  RTD  policy  has  blurred  the  border 
line with other policies and argues in favour of greater policy integration.  

The  growing  importance  of  coordination  issues  has  become  a  third  trend  that  impacts  all 
countries to different degrees. The Finish experience with the Science and Technology Policy 
Council  has  been  emulated  by  a  number  of  countries  (e.g.  The  Netherlands).  However, 
research  systems  in  many  countries  are  too  ‘fragmented’  and  there  is  a  need  for  closer 
integration of the strategies of the different agencies and institutions.  

The  ‘Europeanisation’  of  Member  States  research  policies  is  in  line  with  the  growing 
awareness  of  interdependencies  and  of  the  effects  of  the  new  stage  in  globalisation  on  the 
restructuring  of 
the 
internationalisation of the research system is on the agenda. In all Member States the Lisbon 
process implicitly supports their modernisation policies, in line  with the  different actions of 
the 3% Action Plan. The adoption of R&D investment targets in line with the 3% objective in 
many Member States constitutes also an explicit reference to the 3% Action Plan. 

In  several  countries 

research  systems. 

the  debate  on 

the 

4. 

OUTLOOK FOR THE FUTURE 

The  leading  role  of  research  in  the  knowledge-based  society  and  in  competitiveness  and 
growth in Europe was acknowledged and substantiated by a doubling of the funds for research 
in the Commission's proposals on the Union's financial perspectives for the period 2007-13.11  

In  June  2004  the  Communication  "Science  and  technology,  the  key  to  Europe's  future"12 
started a political debate on the guidelines for future European research policy and activities. 
Initiating  in  this  way  the  preparation  of  the  7th  framework  programmes,  it  proposes  to 
strengthen  European  research  efforts  and  increase  the  impact  of  the  Union's  action  by 
organising it around six major objectives: creating centres of excellence through collaborative 
research; launching major European technological initiatives; stimulating basic research (and 
creating  a  European  Research  Council);  making  Europe  more  attractive  to  the  best 
researchers;  developing  research  infrastructures  of  European  interest;  and  improving  the 
coordination of national research programmes. 

Two  major  consultations  of  stakeholders  followed after the Communication, one  on general 
guidelines for the way ahead and the other on future thematic priorities. An impact study and 
ex  ante  assessment  of  the  seventh  framework  programmes  was  prepared,  with  particular 
regard to the programmes' economic, social and environmental impact and to integrating the 
socioeconomic and forecasting aspects into the priorities. 

Following  this  debate,  the  Commission  presented  its  proposals  for  the  7th  Framework 
programme13 at the beginning of April 2005. 

These proposals are complemented by the Commission’s proposals for the next generation of 
Structural Funds programmes, which also emphasize investment in research and innovation as 
a souce of economic growth.  

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COM(2004) 101, 10.2.2004; COM (2004) 487, 14.7.2004. 
COM(2004) 353, 16. 6.2004. 
COM(2005) 119 final, 6.4.2004. 

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5. 

SOURCES OF FURTHER INFORMATION 

More  details  are  included  in  the  Commission  Working  Document  that  accompanies  this 
Report. For further information, the following are publicly available: 

–  Annual  Monitoring  Reports  for  the  Framework  Programme  and  Specific  Programmes, 
which provide a concise, independent summary of the progress and quality of the measures 
taken to implement the programmes. 

–  Five-year  Assessment  Reports  which  examine  implementation  and  achievements  of 

Community research activities over the five previous years.  

–  The European Report on Science and Technology Indicators, which contains descriptions, 
statistics  and  detailed  analyses  of  European  and  national  RTD  activities  in  the  world 
context. 

–  Key  Figures  reports  published  each  year,  providing  a  set  of  indicators  to  take  stock  of 

Europe’s position in science, technology and innovation. 

–  Statistics on Science and Technology, produced by Eurostat on R&D, innovation, Human 
resources on science and technology, patents and high tech industries (available on free of 
charge  on  the  Eurostat  webpage  –  see  address  below  -  under  the  domain  “Science  and 
technology”). 

–  Statistics on Science and Technology in Europe, published as part of the “Panorama of the 

European Union” collection (DG Research/Eurostat). 

–  Studies and analyses published in connection with the Community RTD programmes and 

addressing issues specific to the fields of RTD which they cover. 

Most of these documents can be obtained or ordered from the Commission’s Internet sites: 

–  The Commission’s general EUROPA site: http://europa.eu.int/  

–  The CORDIS site containing comprehensive information on the RTD Framework 

Programme: http://www.cordis.lu 

–  The site of the Commission’s Directorate-General for Research: 

http://europa.eu.int/comm/research 

–  The site of the Commission’s Directorate-General for the Information Society: 

 http://europa.eu.int/information_society/index_en.htm  

–  The site of the Commission’s Directorate-General for Enterprise: 

http://europa.eu.int/comm/dgs/enterprise/  

–  The site of the Commission’s Directorate-General for Energy and Transport: 

http://europa.eu.int/comm/dgs/energy_transport/index.html 

–  The Joint Research Centre (JRC) site: http://www.jrc.cec.eu.int/ 

–  The Eurostat site: http://epp.eurostat.cec.eu.int 

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