RIO country report 2015 : Cyprus.
Date: 2016-05-13
Institutions: Institute for Prospective Technological Studies
Subjects: Cyprus, EU research policy, innovation, organisation of research, private investment, public investment, research and development, research policy, research report, scientific cooperation

RIO COUNTRY REPORT 2015: 
Cyprus 

Lena Tsipouri 

Sophia Athanassopoulou 

Robert Gampfer 

2016 

EUR 27856 EN 

 
 
 
This publication is a Science for Policy Report by the Joint Research Centre, the European Commission’s in-house 
science service. It aims to provide evidence-based scientific support to the European policy-making process. This 
publication,  or  any  statements  expressed  therein,  do  not  imply  nor  prejudge  policy  positions  of  the  European 
Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible 
for the use which might be made of this publication. 

Contact information 
Address: Edificio Expo. c/ Inca Garcilaso, 3. E-41092 Seville (Spain) 
E-mail: jrc-ipts-secretariat@ec.europa.eu 
Tel.: +34 954488318 
Fax: +34 954488300 

JRC Science Hub 
https://ec.europa.eu/jrc 

JRC101174 

EUR 27856 EN 

PDF 

ISBN 978-92-79-57791-8 

ISSN 1831-9424 

doi:10.2791/926454 

LF-NA-27856-EN-N 

© European Union, 2016 

Reproduction is authorised provided the source is acknowledged. 

How to cite: Lena Tsipouri, Sophia Athanassopoulou, Robert Gampfer; RIO Country Report 2015: Cyprus;  
EUR 27856 EN; doi:10.2791/926454 

All images © European Union 2016 except for the ERA Dashboard image on the first page by Niels Meyer licensed 
under CC BY 2.0 

Abstract 
The 2015 series of RIO Country Reports analyse and assess the policy and the national research and innovation 
system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA 
and Innovation Union. The executive summaries of these reports put forward the main challenges of the research 
and innovation systems.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents 

Foreword ................................................................................................................. 4 

Acknowledgments ..................................................................................................... 5 

Executive summary ................................................................................................... 6 

1. 

Overview of the R&I system .............................................................................. 12 

1.1 

1.2 

Introduction ................................................................................................ 12 

Structure of the national research and innovation system and its governance ....... 14 

1.2.1 

Main features of the R&I system ............................................................... 14 

1.2.2 

Governance ........................................................................................... 15 

1.2.3 

Research performers .............................................................................. 16 

2. 

Recent Developments in Research and Innovation Policy and systems ..................... 18 

2.1 

2.2 

2.3 

2.4 

National R&I strategy ................................................................................... 18 

R&I policy initiatives ..................................................................................... 19 

European Semester 2014 and 2015 ................................................................ 21 

National and Regional R&I Strategies on Smart Specialisation ............................. 22 

2.5  Main policy changes in the last five years ........................................................ 23 

3. 

Public and private funding of R&I and expenditure ................................................ 24 

3.1 

3.2 

Introduction ................................................................................................ 24 

Smart fiscal consolidation .............................................................................. 25 

3.2.1 

Economic growth, fiscal context and public R&D ......................................... 25 

3.2.2 

Direct funding of R&D activities ................................................................ 26 

3.2.3 

Indirect funding – tax incentives and foregone tax revenues ........................ 29 

3.2.4 

Fiscal consolidation and R&D .................................................................... 29 

3.3 

Funding flows .............................................................................................. 30 

3.3.1 

Research funders ................................................................................... 30 

3.3.2 

Funding sources and funding flows ........................................................... 30 

3.4 

Public funding for public R&I .......................................................................... 30 

3.4.1 

Project vs. institutional allocation of public funding ..................................... 30 

3.4.2 

Institutional funding ............................................................................... 30 

3.4.3 

Project funding ...................................................................................... 31 

3.4.4 

Other allocation mechanisms ................................................................... 31 

3.5 

Public funding for private R&I ........................................................................ 32 

3.5.1 

Direct funding for private R&I .................................................................. 32 

3.5.2 

Public procurement of innovative solutions ................................................. 35 

3.5.3 

Indirect financial support for private R&I ................................................... 36 

3.6 

Business R&D .............................................................................................. 36 

3.6.1 

The development in business R&D intensity ............................................... 36 

3.6.2 

The development in business R&D intensity by sector .................................. 37 

3.6.3 

The development in business R&D intensity and value added ........................ 39 

3.7 

Assessment ................................................................................................. 40 

4. 

Quality of science base and priorities of the European Research Area ...................... 41 

 
 
 
4.1  Quality of the science base ............................................................................ 41 

4.2  Optimal transnational co-operation and competition .......................................... 42 

4.2.1 

Joint programming, research agendas and calls .......................................... 42 

4.2.2 

RI roadmaps and ESFRI .......................................................................... 42 

4.3 

4.4 

International cooperation with third countries ................................................... 43 

An open labour market for researchers ............................................................ 44 

4.4.1 

Introduction .......................................................................................... 44 

4.4.2 

Open, transparent and merit-based recruitment of researchers ..................... 45 

4.4.3 

Access to and portability of grants ............................................................ 48 

4.4.4 

Doctoral training .................................................................................... 48 

4.4.5 

Gender equality and gender mainstreaming in research ............................... 48 

4.5  Optimal circulation and Open Access to scientific knowledge ............................... 49 

4.5.1 

e-Infrastructures and researchers electronic identity ................................... 49 

4.5.2 

Open Access to publications and data ........................................................ 49 

5. 

Framework conditions for R&I and Science-Business cooperation ............................ 51 

5.1  General policy environment for business .......................................................... 51 

5.2 

5.3 

5.4 

5.5 

5.6 

5.7 

Young innovative companies and start-ups ...................................................... 51 

Enterpreneurship skills and STEM policy .......................................................... 52 

Access to finance ......................................................................................... 53 

R&D related FDI ........................................................................................... 54 

Knowledge markets ...................................................................................... 54 

Knowledge transfer and open innovation ......................................................... 55 

5.7.1 

Indicators ............................................................................................. 55 

5.7.2 

Policy Measures ..................................................................................... 58 

5.7.3 

Assessment ........................................................................................... 59 

5.8 

5.9 

Regulation and innovation ............................................................................. 59 

Assessment of the framework conditions for business R&I .................................. 60 

6. 

Conclusions ..................................................................................................... 61 

6.1 

Structural challenges of the national R&I system .............................................. 61 

6.2  Meeting structural challenges ......................................................................... 64 

References .............................................................................................................. 67 

Abbreviations .......................................................................................................... 70 

List of Figures .......................................................................................................... 73 

List of Tables ........................................................................................................... 74 

Annex 1 – List of the main research performers ............................................................ 75 

Annex 2 – List of the main funding programmes ........................................................... 76 

Annex 2B – List of all funding programmes under proposed DESMI 2015-2020 ................. 77 

Annex 3 – Evaluations, consultations, foresight exercises ............................................... 78 

3 

 
 
 
Foreword 

The  report  offers  an  analysis  of  the  R&I  system  in  Cyprus  for  2015,  including  relevant 
policies  and  funding,  with  particular  focus  on  topics  critical  for  EU  policies.  The  report 
identifies  the  main  challenges  of  the  Cypriot  research  and  innovation  system  and 
assesses  the  policy  response. It  was  prepared  according  to  a  set  of  guidelines  for 
collecting  and  analysing  a  range  of  materials,  including  policy  documents,  statistics, 
evaluation  reports,  websites  etc.  The  quantitative  data  is,  whenever  possible, 
comparable  across  all  EU  Member  State  reports.  Unless  specifically  referenced  all  data 
used  in  this  report  are  based  on  Eurostat  statistics  available  in  February  2016.  The 
report contents are partly based on the RIO Country Report Cyprus 2014 (Tsipouri and 
Athanassopoulou, 2015). 

4 

 
 
 
 
Acknowledgments 

The  report  draft  has  benefited  from  comments  and  suggestions  of  Christos  Aspris  and 
Nikos  Ioannou  from  the  Cypriot  Directorate  General  for  European  Programmes, 
Coordination and Development, and Nick Harrap from JRC-IPTS.  

Comments from DG RTD are gratefully acknowledged. 

Peter  Fako,  Lorenzo  Isella  and  Athina  Karvounaraki  produced  the  statistics  and  the 
analytical assessments for sections 3.2 and 3.6 of the report. 

We  would  like  to  thank  Sophie  Bodart  for  her  assistance  in  preparing  this  report  for 
publication. 

Authors' affiliation: 

Lena Tsipouri, National and Kapodistrian University of Athens 

Sophia Athanassopoulou, National and Kapodistrian University of Athens 

Robert  Gampfer,  European  Commission,  Directorate-General  Joint  Research  Centre, 
Directorate  J  -  Institute  for  Prospective  Technological  Studies,  Innovation  Systems 
Analysis unit (Brussels, Belgium) 

5 

 
 
 
 
Executive summary  

Context 

The Cypriot economy has been experiencing a sovereign debt crisis, which started with 
the losses that the local banking system suffered in 2011 from the restructuring haircut 
of Greek state bonds. Real GDP contracted by 5.4% in 2013 and by 2.3% in 2014. It is 
estimated to have started growing again by 1.2% in 20151. 

The fiscal consolidation process over the last few years has reduced budgets in all policy 
areas,  including  for  public  funding  for  research  and  innovation.  R&D  appropriations 
decreased significantly after 2009 and in particular after 2011, when the sovereign debt 
crisis fully hit the Cypriot economy. Although cuts in budget appropriations for R&D were 
more severe than the decline in actual expenditure, the fiscal adjustment process during 
the sovereign debt crisis has clearly been at the expense of public support to R&D. 

At the end of 2014, total GERD was at €82.7m (0.47% of GDP), marking a decrease of 
1.3%  compared  to  2013.  Cyprus  ranks  last  before  Romania  in  terms  of  R&D  intensity 
among  all  EU  member  states  (GERD  has  been  fluctuating  around  0.5%  of  GDP  in  the 
period 2009-2012, less than 1/4 of the EU average). The significant fluctuations of GDP 
determine to a large extent the evolution of R&D intensity. The R&D intensity target has 
been set at 0.5% of GDP. Although this target is not planned to be revised after Cyprus 
has  exited  the  Economic  Adjustment  Programme  (March  2016),  there  are  plans  to 
strongly increase public R&I expenditures until 2020. 

To put the issues discussed below into perspective, it has to be stressed that the Cypriot 
R&I  system  is  not  only  very  small,  but  also  very  young.  The  first  public  university  was 
established  in  1989,  the  first  national  research  funding  programme  launched  in  1998, 
and the first R&I strategy finalised in 2004 in the context of EU accession. A comparison 
of  input  and  output  indicators  ranks  the  Cypriot  R&I  system  6th  within  the  EU-28  in 
terms of efficiency2. Cyprus was rather successful in FP7 project funding, receiving 0.2% 
of  total  funding  (for  comparison,  Malta,  Luxembourg,  Latvia  and  Lithuania  all  received 
0.1%). 

GERD  increased  from  0.43%  of  GDP  in  2012  to  0.47%  in  2014  (latest  available  data). 
However,  the  significant  fluctuations  of  GDP  have  determined  to  a  large  extent  the 
evolution  of  this  indicator  over  the  past  few  years.  Cyprus  ranks  last  in  the  EU-28  in 
terms  of  R&D  intensity.  BERD  stood  at  0.08%  of  GDP  in  2014,  far  below  the  EU-28 
average  (1.3%).  Business  performed  17.3%  of  total  GERD  in  Cyprus  in  2014. 
Government  intramural  expenditure  (GOVERD)  and  expenditure  on  higher  education 
R&D  (HERD)  accounted  for  0.06%  and  0.25%  of  GDP  in  2014  (EU-28:  0.25%  and 
0.47%,  respectively).  In  terms  of  R&D  financing,  the  Cypriot  private  sector  funded 
12.7% of overall R&D expenditure in 2013 (most recent available data). The public share 
in  funding  of  GERD  was  67.7%,  and  the  share  of  GERD  financed  from  abroad  was 
19.6%. 

Key  developments  in  the  R&I  system  in  2015  were  the  adoption  of  the  smart 
specialisation  strategy  by  the  Council  of  Ministers  in  March,  and  the  release  and  public 
consultation of the first national policy document on open access. 

Cyprus  has  a  good  science  base  with  a  research  output  well  above  comparable  EU 
Member  States.  It  ranks  11th  among  terms  of  number  of  publications  per  thousand  of 
population with 1.99 publications, compared to 1.08 for Malta and an EU-28 average of 
1.43. The small size of the country has fuelled international co-publications (61.6%, only 
surpassed  by  Luxembourg)3.  The  proposed  framework  programme  for  public  research 

1 European Commission, European Economic Forecast Autumn 2015 
2 Edquist, Charles and Jon Zabala-Iturriagagoitia (2015) 
3 Based on SciVal/Scopus data; see Table 6 in report 

6 

 
 
                                          
funding  2015-2020  allocates  €14.5m  to  cooperation  with  EU  and  third  countries.  The 
labour market for researchers is highly regulated, with no institutional autonomy. 

However, the level of science-industry collaboration is very low in Cyprus. The share of 
public-private co-publications is 0.7% (EU-28 average: 1.8%). Private funding for public 
R&D was just €672,000 in 2013 (see Challenge 3). 

The identified challenges for Cyprus's R&I system are: 

(1) 

(2) 

(3) 

Lack of strategic guidance and evaluation in R&I governance 

Low private sector R&I activity 

Little knowledge transfer and commercialisation of research results 

R&I Challenges 

Challenge  1:  Improve  guidance  and  evaluation  at  strategic  level  of  R&I 
governance 

Description 

The  National  Council  for  Research  and  Innovation  (NCRI),  composed  of  six  cabinet 
ministers,  is  the  top-level  body  in  Cypriot  R&I  governance  and  responsible  for 
formulating  long-term  strategy.  Since  2007,  it  has  met  only  once,  without  taking  any 
policy  decisions4.  Similarly,  the  Cyprus  Scientific  Council  (CSC),  which  is  the  country's 
main  R&I  advisory  body  composed  of  19  internationally  recognised  scientists,  has  met 
only a few times since its establishment in 2010, mostly without the necessary quorum 
to  adopt  recommendations5.  Its  only  formal  decision  was  endorsement  of  the  EU2020 
R&I  intensity  target.  As  a  consequence,  R&I  governance  lacks  guidance  and  vision,  as 
well as a coherent strategy. Funding programmes used to allow for proposal submissions 
in any subject, which encouraged uptake of R&D activities in many different fields. This 
was  initially  intended  to  activate  as  strong  and  diverse  research  dynamics  as  possible, 
but has led to funding being spread thinly over many research areas without regard for 
the country's competitive advantages and the economy's small size6. 

These  shortcomings  in  strategic  governance  are  compounded  by  the  absence  of  an 
evaluation culture at this level. Whereas evaluations of individual proposals and projects 
are  carried  out  conforming  to  FP7  and  Structural  Funds  procedures,  and  are  deemed 
largely  efficient 7 ,  tools 
for  strategy  and  policy  design  and  adaptation  are 
underdeveloped. Systematic programme evaluations or foresight exercises are not being 
undertaken.  This  weakens  the  system's  capacity  to  react  to  changes  in  the  economic 
situation or in funding recipients' needs.  

Policy response 

A  National  Committee  for  Research,  Innovation  and  Technological  Development 
(NCRITD, not to be confused with NCRI mentioned in the description above) was created 
in 2013 to prepare suggestions on a new R&I structure and governance. It presented its 
report to the government in spring 2014. For top-level governance, it recommended the 
creation  of  the  post  of  a  Commissioner  of  Entrepreneurship  and  Innovation  who  is  to 
hold political responsibility for R&I strategy and policy, and to be advised by a National 
Council of Research, Innovation and Entrepreneurship, which designs and monitors R&D 
strategy. 

4 Stairway to Excellence expert report Cyprus 
(http://s3platform.jrc.ec.europa.eu/documents/20182/117536/S2E_Report_CY.pdf) 
5 Ibid. 
6 Smart Specialisation Strategy Cyprus, September 2014 
7 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus, Facts & 
Figures, July 2015 

7 

 
 
 
                                          
Since  2015,  the  country's  Smart  Specialisation  Strategy  (Cyprus  consists  of  a  single 
region) doubles as the national R&I strategy. It was developed jointly by the Directorate 
General  for  European  Programmes,  Coordination  and  Development  (the  main  body 
responsible  for  research  policy  implementation),  the  Research  Promotion  Foundation 
(main  funding  agency)  and  the  Cyprus  University  of  Technology,  thus  involving  also 
research  funders  and  performers.  The  strategy  was  formally  submitted  to  the  EC  in 
December 2014 after having passed a peer review8, and was approved in July 2015. It 
establishes  as  thematic  priority  areas  tourism,  energy  (mainly  solar),  agriculture/food, 
construction/building  materials,  maritime  transport,  and  health;  and  the  cross-sectoral 
priorities  environment,  ICT,  social  innovation  and  general  application  technologies 9 . 
Specific measures and concrete sub-fields are listed under each priority, complemented 
with  sketches  of  corresponding  programmes,  indicative  budgets  and  implementation 
timetables. The strategy is fully compatible with the 2014-2020 Operational Programme 
for  Competitive  and  Sustainable  Growth10.  It  will  largely  be  implemented  through  the 
2015-2020 R&I framework programme ("Desmi"), which was published  in July and was 
expected  to  be  launched  in  December  2015.  The  preparation  of  Desmi  involved 
extensive  consultations  with  stakeholders  (public  and  private  universities,  public 
research organisations, enterprises, chambers of commerce, NGOs). 

The Cyprus Agency of Quality Assurance and Accreditation in Higher Education has been 
established in 2015. Its task is to ensure and evaluate the quality of higher education in 
the  country,  and  to  identify  weaknesses  and  disadvantages  of  the  higher  education 
system11. 

Assessment 

is  still  to  be  made  on  how  to 

implement  the  NCRITD 
A  political  decision 
recommendations, making the prospects for swift implementation difficult to assess. On 
the development of programme evaluation systems and foresight capacities, no tangible 
progress  has  been  made.  However,  the  establishment  of  the  Cyprus  Agency  of  Quality 
Assurance  and  Accreditation  in  Higher  Education  is  a  positive  first  step  in  the  right 
direction. 

In the absence of a stand-alone national R&I strategy, the Smart Specialisation Strategy 
represents  at  least  in  the  shorter  term  a  usable  substitute  that  can  guide  policy 
formulation  and  development.  While  its  choice  of  priority  areas  seems  very  broad,  it 
identifies concrete sub-fields for specialisation and sets out a plan for implementation12. 
This  result  seems  to  have  been  greatly  facilitated  by  the  May  2014  peer  review,  which 
also led to improvements in plans for how to monitor and measure RIS3 implementation 
(S3 Platform 2014). Apart from "construction/building materials", which could be a result 
of  path-dependence  following  the  pre-crisis  construction  boom,  the  priority  areas  seem 
to  well  reflect  Cyprus'  competitive  advantages  and  have  received  favourable  reviews 
from  peer  evaluators  and  the  EC.  The  implementation  of  the  smart  specialisation 
strategy  might  be  facilitated  by  the  R&I  system's  young  age,  which  implies  few 
institutional rigidities. 

8 S3 Platform (2014) RIS3 Peer-Review Report Cyprus 
9 Smart Specialisation Strategy Cyprus, September 2014 
10 Tsipouri, Lena and Sophia Athanassopoulou (2015) RIO Country Report Cyprus 2014 
11 Ministry of Education and Culture (2015) Agency of Quality Assurance and Accreditation in Higher Education. 
http://www.highereducation.ac.cy/en/cy_agency_quality_assurance_aaccre.html 
12 Tsipouri, Lena and Sophia Athanassopoulou (2015) RIO Country Report Cyprus 2014 

8 

 
 
 
                                          
Challenge 2: Strengthen and support private sector R&I activities 

Description 

In  2012,  Cyprus  received  a  Country-Specific  Recommendation  to  "take  appropriate 
policy  measures  on  the  demand  side  to  stimulate  business  innovation".  Whereas  the 
Economic Adjustment Programme agreed in 2013 has shifted attention in the context of 
the  European  Semester  to  macroeconomic  stability  and  the  financial  system,  the 
problem  of  low  private  sector  R&I  activities  persists.  Business  R&D  spending  is  one  of 
the lowest in the EU and has been continuously decreasing between 2008 and 2012 from 
€16.7m  to  €11.9m,  although  it  has  recovered  during  2013  and  2014  to  €14.3m.  The 
Innovation Union  Scoreboard puts  Cypriot  business  R&D  expenditure  at  only  5%  of  the 
EU median13. 

The  reasons  for  low  private  R&I  investment  and  demand  lie  to  a  large  extent  in 
geography and  the  structure  of  the  economy.  Cyprus'  peripheral  and  remote location  – 
far away even of the closest EU Member State, Greece – and the small domestic market 
(700,000  inhabitants)  are  a  disincentive  for  high-tech  companies'  location  choices.  The 
service  sector  dominates  the  economy  (84.5%  of  Gross  Value  Added).  Whereas  some 
financial service firms may perform well in terms of process innovations, these activities 
are not measured reliably and R&D intensity of Cypriot service firms is low. Employment 
in medium-high and high-tech manufacturing was at 0.9% of total employment in 2014, 
lower than Luxembourg (1.3%), Malta (4.2%) and Estonia (3.5%). 

However, there are also institutional reasons for low business R&D activity, among them 
complex  and  lengthy  procedures  in  public  support  programmes,  and  a  policy  tradition 
that favours academia over enterprises' competitiveness. Low awareness among SMEs of 
support programmes and funding opportunities has also been identified as an obstacle to 
higher R&D activity14. 

Policy response 

A  number  of  instruments  have  been  put  in  place  or  are  planned  to  support  SMEs' 
investment  in  R&D.  Among  them  is  a  grant  programme  by  the  Ministry  of  Energy, 
Commerce, Industry and Tourism for co-funding R&I activities with a budget of €17m for 
2015-2017  (which  exceeds  current  total  annual  business  R&D  expenditure).  Further 
initiatives  launched  in  2015  include  Business  Innovation  Centres,  which  will  provide 
advisory  services  to  public  and  private  businesses  for  the  development  of  competitive 
products, the creation of clusters in ICT, transport, viniculture and construction, and an 
innovation  voucher  system  ("Innovation  Packages")  providing  limited  funding  support 
(€5,000-€20,000)  for  joint  ventures,  start-ups  or  collaborations  with  public  research 
organisation.  All  direct  funding  instruments  are  to  be  co-financed  by  Structural  Funds. 
Core R&D Structural Funds amounted to €42m in the period 2007-2012 (for comparison, 
this  equals  about  half  of  Cyprus'  2012  GERD).  "Innovation  Houses"  will  be  established 
from  2015  to  provide  entrepreneurship  training  and  guidance  to  the  unemployed  and 
students. The scheme is expected to help create 40 new SMEs. In June 2015, RPF issued 
a call for expressions of interest for participating in the planned programme "Enhancing 
the Innovation Management Capacity of Cypriot SMEs"15. 

13 European Commission, Innovation Union Scoreboard 2015 
14 Tsipouri, Lena and Sophia Athanassopoulou (2015) RIO Country Report Cyprus 2014; Smart Specialisation Strategy for 
Cyprus, Final Report, Nicosia, March 2015 
15 RPF – Research Promotion Foundation (2015) Enhancing the Innovation Management Capacity of Cypriot SMEs. 
http://www.research.org.cy/EL/news/3830.html 

9 

 
 
                                          
Indirect support has been introduced in 2014 in the form of tax exemptions for R&D and 
innovation expenses. To be eligible, companies must have allocated at least 10% of their 
operating expenses on R&D over the past 3 years, or be vetted by an expert committee 
as  being 
(Tsipouri  and 
Athanassopoulou  2015).  Estimates  of  foregone  tax  revenue  from  this  measure  are 
currently not available. 

capable  of  producing 

innovative/improved 

results 

Assessment 

To address the structural economic deficiencies, a suitable way forward seems to be the 
renewal  and  expansion  of  productive  capacities  in  high-tech  niche  areas.  Some  of  the 
above  instruments,  notably  the  clusters  initiative,  have  the  potential  to  contribute  to 
such a development. 

The impacts of the new direct funding measures need to be evaluated in a few years, for 
which  evaluation  capacity  might  have  to  be  strengthened  (see  Challenge  1). 
Expectations should remain realistic regarding the extent of innovative activities of SMEs 
to be created with the help of Innovation Houses, as the establishment of many of those 
firms may be driven more by the difficulty to find other employment than by innovative 
business ideas. 

It  is  also  too  early  to  assess  the  effect  of  R&D  tax  exemptions,  but  the  eligibility  rules 
leave room for some  doubt whether the incentive can induce SMEs to newly take up R&D 
activity. Lastly, putting more emphasis on raising SMEs' awareness of available support 
measures could be valuable to improve uptake of R&D activities. 

Challenge  3:  Intensify  knowledge  transfer  and  commercialisation  of  research 
results 

Description 

While  Cyprus  occupies  a  mid-field  position  in  turnover  from  innovation  (rank  14)  and 
SMEs  innovating  in-house  (rank  15),  these  innovations  are  incremental  and  largely 
marketing/organisational  innovations  in  the  service  sector  (especially  in  financial 
intermediaries) 16 .  Similarly,  Cyprus  performs  reasonably  well  in  academic  research 
output  (11.83%  of  top-10%  most  highly  cited  publications,  higher  than  Estonia  or 
Malta).  However,  exploitation  of  knowledge  and  research  results  is  weak,  as  the  PCT 
applications  indicator  in  the  IUS  shows  (18%  of  the  EU  median).  Science-business 
cooperation is low, with only 4.6% of innovative companies cooperating with universities 
or  public  research  organisations.  The  country's  high  score  on  community  trademarks  is 
largely due to the existence of an IPR Box scheme (see "Policy response" below). 

Support for science-based entrepreneurship is very weak. An existing incubator scheme 
does  not  receive  funding  anymore,  and  the  establishment  of  a  Science  and  Technology 
Park has been postponed several times for lack of a real estate investor. The supply of 
venture  capital  or  business  angel  funding,  which  could  support  university  spin-offs,  is 
almost negligible (business angel investments totalled €600,000 and were concentrated 
in 2 companies in 2013; data on VC is not available). 

Further contributing to this situation is a lack of awareness and underestimation among 
SMEs of the benefits they can reap from cooperation with research organisations17. 

Policy response 

6  Industry  Liaison  Offices  have  been  created  at  Cypriot  universities  until  2014  to 
facilitate  knowledge  transfer,  among  other  means  by  placing  university  graduates  in 
companies.  The  Research  Promotion  Foundation,  Cyprus'  principal  R&I  funding  agency, 
runs  a  Business  Support  Centre  that  also  provides  intermediary  services  for  knowledge 

16 European Commission, Innovation Union Scoreboard 2015. 
17 Tsipouri, Lena and Sophia Athanassopoulou (2015) RIO Country Report Cyprus 2014; Smart Specialisation Strategy for 
Cyprus, Final Report, Nicosia, March 2015 

10 

 
 
                                          
and  technology  transfer.  The  NCRITD  report  on  improving  R&I  governance  (see 
Challenge  1)  recommended  the  establishment  of  a  National  Knowledge  Transfer  Office 
(NKTO), with the task to facilitate collaboration between all potential public and private 
R&D  performers  to  promote  commercialisation  of  R&D  results.  A  business  plan  for  the 
NKTO  has  been  completed  in  March  2015  and  an  accompanying  legal  study  was  being 
prepared in early 2016. 

In 2014 the Research Promotion Foundation started to implement support measures for 
the  development  of  institutional  IPR  Policies  in  nine  major  academic  and  research 
institutions in Cyprus. Isis Innovation, the Technology Transfer Office of the University of 
Oxford,  has  been  contracted  to  provide  consulting  and  coaching  services  to  the 
participating  organisations.  By  end-2015,  each  institution  had  formulated  a  "Draft 
Institutional Policy Document for IPR Management", which are currently awaiting formal 
adoption. 

In  2012  Cyprus  introduced  the  Intellectual  Property  Rights  Box.  It  provides  for  tax 
exemption of dividends resulting from IP exploitation, and 80% tax deduction of profits 
from selling IP rights. By setting up a Cyprus International Trust, total tax exemption of 
IPR income can be achieved, provided that the owner of the shares held by the trust is a 
resident in Cyprus. 

Assessment 

To  some  degree,  commercialisation  of  research  results  can  only  be  improved  if  the 
private  sector's  low  demand  for  R&D  is  addressed  (see  Challenge  2).  Given  that  most 
parts  of  the  country's  R&I  system  are  very  young,  as  explained  in  the  introduction,  it 
might  be  unrealistic  to  expect  a  rapid  improvement  in  the  smoothness  of  science-
business  interactions.  New  support  schemes  have  not  been  in  place  long  enough  to 
robustly assess their effectiveness. 

A formal assessment of the IPR Box's effect on research and innovation activities has not 
been carried out yet, but so far it seems that the scheme merely encourages transfers of 
IPR acquired elsewhere to a Cypriot trust, rather than setting up R&D activities in Cyprus 
proper.  One  indication  backing  this  assessment  is  that  most  top  patent  applicants  are 
IPR management holdings18. 

18 WIPO (2013) Statistical Country Profiles Cyprus 

11 

 
 
 
 
                                          
1.  Overview of the R&I system 

1.1  Introduction 

Cyprus is the third largest Mediterranean island and one of the smallest member states 
of  the  European  Union  (9.251km2)  with  a  population  of  847,000  people  at  the  end  of 
2014 (less than 0.2% of the EU-28)19.  

The  economy  is  under  financial  distress  since  2011,  which  culminated  in  March  2013, 
when  the  EU-ECB-IMF  Troika  and  the  Cyprus  government  agreed  to  an  Economic 
Adjustment  Programme  including  a  financial  rescue  package.  A  haircut  of  47.5%  on  all 
cash  deposit  bank  balances  in  excess  of    €  100,000  was  imposed  and  restrictions  on 
daily  withdrawal  amounts  from  the  banks  (€300/day),  as  well  as  on  monthly  money 
transfers abroad (€3,000 per month). These capital controls were lifted in two stages in 
December 2014 and in January 201520.  

The Troika-supported financial programme for the period 2013-2016 foresees a total of 
€10.0b of funding, 90% of which will be provided from the European Stability Mechanism 
(ESM) and just €1.0b from the International Monetary Fund (IMF)21. By July 2015, €5.8b 
had  been  disbursed  by  the  ESM22.    Non-Performing  Loans  (NPL)  continue  to  be  a  big 
problem  in  Cyprus,  in  spite  of  the  creation  of  arrears  management  units  within  Cypriot 
banks.  Deposit  outflows  from  Cypriot  banks  have  started  to  stabilise  from  early  2015 
onwards.  

As a result of the crisis, GDP in current prices decreased by more than 10% in the period 
2012-2014:  GDP  per  capita  declined  from  €22,500  in  2012,  to  €21,000  in  2013  and 
€20,500  in  2014  (75%  of  EU-28  average)23.  GDP  is  expected  to  bottom  out  in  2015, 
recording  a  marginal  contraction  of  about  0,4%.24 The  recovery  of  economic  activity  is 
forecasted to continue in the following quarters25. Real investment continued to decrease 
and was just 12% of GDP in 2014 compared to 27% of GDP in 200826. Government debt 
has been steadily increasing from 79.5% of GDP in 2012 to 107.5% of GDP at the end of 
2014 (EU-28 average at 86.8%)27. It is expected to decline to 106% by the end of 2015a 
and 80% by 202028. Budget deficit was at 8.8% of GDP in 2014, after a stabilisation at 
about 5.5% of GDP, on average, in 2012 and 201329. The increase was attributed to the 
recapitalisation  of  Cooperative  Credit  Institutions  (COOPS)30.  A  primary  surplus  target 
was achieved in 201431. The 2015 end year target was revised from a primary deficit of 
1.6% of GDP to a surplus of 1.5% of GDP. For 2017, a primary surplus of 3% of GDP is 
forecasted32. 

In 2014, unemployment exceeded 16% of the labour force, compared to 11.9% in 2012 
(35.3% increase) and an EU-28 average of 10.2%33. Total employment rate in the age 
group  20-64  years  old  reached  67.6%  in  2014,  compared  to  67.3%  in  2013  and  a 

19 Eurostat, Population (tps00001) 
20 COMMISSION STAFF WORKING DOCUMENT, Country Report Cyprus 2015, February 2015, pg. 11 
21 Ibid. pg. 5 
22 http://ec.europa.eu/economy_finance/assistance_eu_ms/cyprus/index_en.htm 
23 Eurostat, GDP (nama_gdp_c) 
24 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 1 
25 http://ucy.ac.cy/erc/documents/EconomicOutlook_Oct15.pdf  
26 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg. 9 
27 Eurostat (gov_10dd_edpt1) 
28 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg. 42 
29 Eurostat (gov_10dd_edpt1) 
30 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg.15 
31 http://ec.europa.eu/economy_finance/publications/eeip/pdf/ip007_en.pdfIbid. pg.22 
32 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg.29 
33 Eurostat  (tsdec450) 

12 

 
 
                                          
national  target  of  75%-77%  by  2020 34.  Exit  from  long-term  unemployment  remains 
limited. About 60% of the unemployed between 12 and 18 months remain unemployed 2 
quarters  later 35 .  The  economy  is  dominated  by  microenterprises  and  SMEs,  which 
together  account  for  99.8%  in  terms  of  number  of  establishments  and  58.4%  of  GDP. 
Micro companies alone account for 92.2% of entrepreneurship and contribute 21.5% to 
GDP 36 .  The  service  sector  (tourism,  shipping  and  financial  services)  leads  while  the 
manufacturing  industry’s  share  are  insignificant;  this  partly  explains  the  low  R&I 
intensity.  Employment  in  knowledge-intensive  service  sectors  accounts  traditionally  for 
more than 35% total employment and has been steadily increasing since 2011. High and 
medium high technology sectors accounted for less than 1% of total employment in the 
period 2011-2014, compared to a EU28 average ohigher than 5%37.  

On  a  positive note in 2014  there was  a high export  growth  in  national  accounts  due to 
the change of ESA2010 treatment for ship owners38. But for the open economy of Cyprus 
instability in Greece and Russia are key risk factors39.  

At  the  end  of  2014,  total  GERD  was  at  €  82.7  m  (0.47%  of  GDP),  slightly  lower 
compared  to  2013  (€83.8m)  and  0.7%  lower  compared  to  2012.    Cyprus  ranks  last 
before Romania in terms of R&D intensity among all EU member states (GERD has been 
fluctuating  around  0.5%  of  GDP  in  the  period  2009-2012,  less  than  1/4  of  the  EU 
average)40,41.  BERD  remains  low  at  17.3%  of  total  GERD  (0.08%  of  GDP-2014  data)42. 
Innovation  expenditure  was  steadily  decreasing  from  16.1%  in  2008  to  14.7%  in  2010 
and  11.4%  in  2012,  compared  to  EU-28  average  of  11.9% 43 .  There  are  no  official 
statistical  data  since  2012.  The  R&D  intensity  target  has  been  set  at  0.5%  of  GDP  by 
2020  and  R&D  will  need  to  increase  by  1.0%  annually  to  meet  this  target 44 .  The 
significant  fluctuations  of  GDP  determine  to  a  large  extent  the  evolution  of  R&D 
intensity.  Although  the  target  is  unlikely  to  be  revised  upwards,  there  are  plans  to 
significantly  increase  R&I  expenditures  after  Cyprus  has  exited  the  current  Economic 
Adjustment Programme (March 2016). 

34 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 3 
35 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg. 14 
36 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg. 90 
37 Eurostat , Employment in technology and knowledge-intensive sectors at the national level, by sex (from 2008 
onwards, NACE Rev. 2) (htec_emp_nat2) 
38 Under the ESA2010 if vessels are registered in Cyprus they are now treated as Cypriot economic residents irrespective 
of where the principal activities of the ship owners are. 
39 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 2 
40 Eurostat , Total intramural R&D expenditure (GERD) by sectors of performance (rd_e_gerdtot) 
41 Eurostat , Research and Development Expenditure by Sectors of Performance (tsc00001) 
42 Eurostat , Business enterprise R&D expenditure (BERD) by economic activity and source of funds (NACE Rev. 2) 
(rd_e_berdfundr2) 
43  Eurostat- Turnover from Innovation as % of total turnover (tsdec340) 
44 Europe 2020 targets Research and Development, pg. 5 

13 

 
 
 
 
                                          
Table 1 Main R&I indicators 2012-2014 

2012 
22,500 
-2.4 
-5.8 

79.5 

11.9 

83.3 

0.43 

96.7 

0.7 

2013 
21,000 
-5.4 
-4.9 

102.2 

15.9 

83.8 

0.46 

96.8 

1.0 

2014 
20,500 
-2.5 
-8.9 

108.2 

16.1 

82.7 

0.47p 

96.4p 

0.9 

EU average (2014) 
27,400 
1.4 
-3.0 

86.8 

10.2 

283,009.4 
(Total for EU 28) 
2.03 

558.4 

5.7 

36.1 

38.3 

39.9 

39.8 

11.4 

n.a. 

12.1 

11.6 

n.a. 

n.a. 

11.9 (2012) 

26.2 (2012) 

n.a. 

n.a. 

n.a. 

2.5 (2012) 

Indicator 
GDP per capita 
GDP growth rate 
Budget deficit as % 
of GDP 
Government debt 
as % of GDP 
Unemployment 
rate as percentage 
of the labour force 
GERD in €m 

GERD as % of the 
GDP 
GERD (EUR per 
capita)  
Employment in 
high- and medium-
high-technology 
manufacturing 
sectors as share of 
total employment  
Employment in 
knowledge-
intensive service 
sectors as  
Share of total 
employment  
Turnover from 
innovation as % of 
total turnover  
Value added of 
manufacturing as 
share of total value 
added 
Value added of 
high tech 
manufacturing as 
share of total value 
added 

p: provisional data 

Source: Eurostat GDP.xls file, GERD.xls file 

1.2  Structure of the national research and innovation system and 
its governance  

1.2.1  Main features of the R&I system 

Cyprus  is  a  single  region  and  policy  is  drafted  and  implemented  centrally.  Local 
authorities,  namely  districts,  municipalities  and  communities  only  exceptionally  play  a 
role  in  implementing  RTDI  policies.  Research  organisations  are  concentrated  in  the 
capital area (Nicosia). There are initiatives to reach out to smaller municipalities mainly 
through awareness raising events. 

14 

 
 
 
 
 
 
The  system  is  persistently  dominated  by  public  funding.  Universities  account  for  the 
major and increasing part of public research execution. HERD and GBAORD account for 
about 68% of GERD (last available data 2013). GBAORD declined by 8.3% in the period 
2009-201345. 

1.2.2  Governance 

RTDI policy is not a priority at the moment, as financial consolidation is absorbing most 
of the energy of economic policy. The R&I strategy is adopted by the Council of Ministers 
upon proposal of the National Council for Research and Innovation (NCRI). The NCRI is 
supported by the Cyprus Scientific Council (CSC). NCRI is composed of cabinet ministers 
from  6  Ministries,  namely  Finance,  Energy-Commerce-Industry  and  Tourism,  Education 
and Culture, Transport, Communications and Works, Agriculture, Rural Development and 
Environment and Health. CSC is a technical advisory board composed of 19 high calibre 
scientists,  responsible  for  strategy  and  planning.  This  structure  was  devised  more  than 
five  years  ago  and  has  never  been  really  activated  with  the  exception  of  few  meetings 
before the crisis. 

The design of the overall national Research and Innovation policy, in cooperation with all 
interested  stakeholders,  is  carried  out  by  the  Directorate  General  for  European 
Programmes, Coordination and Development (DG EPCD), an independent governmental 
body under the Minister of Finance.  The latest major policy initiative undertaken was the 
preparation of the Smart Specialisation Strategy for Cyprus. 

DG EPCD is also responsible for the representation of the Republic Cyprus in the relevant 
European  institutions,  bodies  and  working  groups,  including  bodies  dealing  at  strategic 
level  with  the  implementation  of  HORIZON  2020.  DG  EPCD  is  also  responsible,  at 
technical  expert  level,  for  the  preparation  of  bilateral  and  multilateral  transnational 
agreements on the promotion of Research and Innovation Cooperation.  

DG EPCD defines the multi-annual financial programming for RTDI (with the exception of 
funding to higher education institutions and to some research institutes falling under the 
competencies  of  specific  ministries)  and  provides  institutional  funding  to  Research  and 
Innovation  Bodies  as  well  as  Research  Institutions.    More  specifically,  the  annual 
budgetof  the  Research  Promotion  Foundation  (RPF)  is  provided  through  DG  EPCD. 
Moreover DG EPCD provides funding at the Institute of Neurology and Genetics and the 
Cyprus Institute and is responsible for monitoring their budgets. 

The Industry and Technology Service of the Ministry of Energy, Industry, Commerce and 
Tourism is responsible for the formulation of industrial policy, including the promotion of 
technology and entrepreneurship and the implementation of Business Innovation Policy. 
The  “Industry  and  Technology  Service”  launches  among  others  the  innovation  policy 
measures which are included in the action plan of the Smart Specialization Strategy.  

Implementation  is  mainly  entrusted  to  the  Research  Promotion  Foundation  (RPF),  the 
main funding agency under the supervision of the DG EPCD. 

In  the  current  governance  scheme  there  are  no  dedicated  bodies  for  policy  advice.  DG 
EPCD  organises  policy  advice  internally.  The  Technology Unit  of  the  Ministry  of  Energy, 
Commerce,  Industry  and  Trade  (MECIT)  launches  innovation  policy  measures.  Public 
policy is backed up by networks of stakeholders through public consultation processes. 

The RPF is an autonomous agency under private law.  Its operation is supervised by DG 
EPCD and its Board of Directors is chaired by the Permanent Secretary of DG EPCD.  The 
main Ministries involved in RTDI matters, as well as representatives from the business, 
academic and research community also participate in this Board. 

45 COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC 
AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS, Research and innovation as sources of renewed growth, 
June 2014, pg.4 

15 

 
 
                                          
The RPF is responsible is (a) to provide funding for the implementation of research and 
technological  development  projects  and  innovation  activities  through  the  development 
and  monitoring  of  competitive  programmes and  (b)  managing  European  research  and 
innovation  projects  by  establishing  the  network  of  National  Contact  Points  for  Cyprus’ 
participation in the EU Framework Programmes, thus it provides assistance to applicants 
for research funding and implements international agreements in S&T. 

The  NCRTDI,  which  was  appointed  in  2013  to  come  up  with  proposals  for  a  more 
effective governance, delivered a report in March 2014 proposing that NCRI evolves into 
a  National  Council  of  Research,  Innovation  and  Entrepreneurship  (NCRIE)  and  a  new 
independent Directorate General of Research, Innovation and Entrepreneurship (DG RIE) 
is  created  for  coordinating  innovation  efforts  across  all  Ministries  and  DG  EPCD.  At  the 
operational  level,  RPF  is  to  evolve  into  an  Organisation  of  Research  and  Technology 
Transfer (ORTF) to include technology transfer and spin off policies. Political decisions on 
the adoption of the recommendations are still pending at government level. 

A Unit for Administrative Reform was established in 2015 by the Council of Ministers for 
the  monitoring  of  growth  issues  and  the  progress  of  the  public  administrative  reform. 
The  Unit  prepared  the  National  Reform  Programme  for  2015  and  operates  under  the 
supervision of the Presidency of the Republic46. 

A  major  problem  on  effective  policy  design  is  the  complete  lack  of  RTDI  evaluations. 
There  have  been  no  formal  evaluations  of  R&I  programmes  or  measures.  The  RPF 
launched  an  international  RTDI  evaluation  tender  in  2012  but  the  response  from  a 
number of European consortia was not considered to be meeting the requirements of the 
ToR,  hence  it  was  not  awarded..  The  (then)  Planning  Bureau  considered  the  idea  of  a 
thematic evaluation focusing on competitiveness but it was eventually not launched. 

There is no macroeconomic model assessing R&I impact on economic growth. 

1.2.3  Research performers 

Research  performers  are  the  Higher  Education  Institutes  (HEIs),  Research  Performing 
Organisations (RPOs), enterprises and the private non-profit sector.  

The  role  of  the  3  public  universities  (University  of  Cyprus,  Cyprus  University  of 
Technology,  Open  University)  is  pivotal  for research. The  Open  University  has very  few 
R&D projects. HEIs account for more than 50% of total GERD from 2011 onwards.47.  In 
the  period  2009-2014,  R&D  performance  shifted  further  from  the  business  enterprise 
sector and the government to the HEI, accounting at the end of 2014 for 52.7% of total 
GERD  (€47.1m),  as  opposed  to  46.1%  at  the  end  of  2009  (€38.3m).  There  are  five 
accredited  private  universities  (Frederick  University  (www.frederick.ac.cy),  European 
University  Cyprus  (www.euc.ac.cy),  University  of  Nicosia  (www.unic.ac.cy),  Neapolis 
University – Pafos (www.nup.ac.cy),  and the University of Central Lancashire - Cyprus. 
They  focus  more  on  teaching  and  to  a  lesser  degree  on  research.  The  third  mission  is 
emergent,  as  HEIs  increasingly  recognise  cooperation  with  the  business  sector  and 
attracting funds from abroad or companies as a positive aspect for the career of faculty 
members.  

The  three  State  Universities  of  Cyprus  (University  of  Cyprus,  Technology  University  of 
Cyprus  and  Open  University)  follow  an  RTDI  policy  that  to  an  extent  agrees  with  the 
national  policy  priorities  of  the  Smart  Specialisation  Strategy,  so  as  to  be  eligible  for 
funding under the various schemes implementing this Strategy.   At the same time, they 
also  set  and  pursue  RTDI  goals  based  on  their  own  interests  and  research  capacities 
through  funding  they  receive  from  the  Ministry  of  Education  and  Culture.    Same  goes 
with  the  Agriculture  Research  Institute  funded  by  the  Ministry  of  Rural  Development, 

46 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 1 
47 Eurostat, Total intramural R&D expenditure (GERD) by sectors of performance (rd_e_gerdtot) 

16 

 
 
                                          
Agriculture and Environment and the State General Laboratory financed by the Ministry 
of Health. 

Major  RPOs  undertaking  research  are  the  Agricultural  Research  Institute  (ARI),  the 
Cyprus  Institute  of  Neurology  and  Genetics  (CING),  the  Cyprus  Institute  (CyI) 48 which 
operates  three  Research  Centres49,  the  State  General  Laboratory,  the  Department  of 
Fisheries  and  Marine  Research  and  the  Meteorological  Centre.  Additionally  the  Cyprus 
International Institute (CII) for the Environment and Public Health, a joint venture with 
the Harvard School of Public Health, implements research in the respective sectors.  

Research  in  the  business  sector  is  dominated  by  a  few  large  domestic  companies  in 
pharmaceuticals  as  well  as  medium-sized  companies  and  start-ups  in  ICT  (total  R&D 
expenditure of pharma and ICT in 2011 approximately €4m each). Multinationals do not 
invest in research in the country.  

and 
level 

Political 
level 
high 
cross 
cutting 
policy level  

Ministry 
mission 
centered 
coordination 

R&D 
Funding 
allocation 

Research 
performers 

Council of 
Ministers 

National Council for 
Research and 
Innovation 

Cyprus 
Scientific 
Council 

Ministry of Energy Commerce, 
Industry and Tourism 

DG for European Programmes, 
Coordination and 
Development 

Research Promotion 
Foundation 

Businesses 

HEIs and RPOs 

Private non profit 

Figure 1 Governance of R&I system 

48 Including the MIT, the University of Illinois and Centre de Recherche et de Restauration des Musées de France 
49 The  Energy,  Environment  and  Water  Research  Centre  (EEWRC),  the  Science  and  Technology  in  Archaeology  Research 
Centre (STARC) and the Computation-based Science and Technology Research Centre (CSTRC) 

17 

 
 
 
 
                                          
2.  Recent Developments in Research and Innovation Policy 
and systems 

2.1  National R&I strategy 

In the past the de facto strategy was reflected in RTDI programmes (DESMI) of the RPF, 
which  included  a  policy  mix  of  measures  addressing  academic  research,  business 
research,  the  R&D  cooperation  programme,  support  of  infrastructure  and  human 
resources  development.  MECIT  played  a  limited  role  until  2012;  its  main  contribution 
was  the  idea  of  a  Cyprus  Technology  Park.  This  changed  in  2012,  with  the  active 
involvement  of  MECIT  through  a  pilot  project  supporting  business  innovation.  This 
developed into a fully operational innovation policy in the current programming period. 

NCRTDI  provided  the  guidelines  for  a  new  strategy  for  Research,  Innovation  and 
Entrepreneurship  (RIE)  in  its  final  report  in  spring  2014.  The  proposed  strategy  was 
structured around nine axes reflecting proposals for new governance and policy focus50. 
The  Unit  for  Administrative  Reform  has  formulated  certain  proposals  for  the 
strengthening  of  the  current  governance  system  at  technocratic  level,  which  only 
partially  coincide  with  all  the  study’s  recommendations.  Political  decisions  on  making 
changes to the governance system have not been taken. 

The  main  findings  and  recommendations  of  the  NCRITD  study  as  regards  the  national 
priorities have been identified as well in the Smart Specialisation Strategy (S3CY). As a 
result, their application/implementation is promoted through the S3CY Action Plan, which 
will be implemented over the period 2015-2022, with measures amounting to €139,5m 
(ESIF €82,3m + €57,2 m national funds).  

Furthermore,  the  Action  Plan  for  Growth  prepared  by  the  Presidency’s  Unit  for 
Administrative  Reform  provides  support  to  the  R&I  ecosystem  through  relevant 
measures/actions in various areas, the most important of which being entrepreneurship. 
The  National  Policy  Statement  of  the  Entrepreneurial  Ecosystem 51  includes  concrete 
measures  for  the  enhancement  of  research  conducted  by  enterprises,  the  creation  of 
Technology  Transfer  Centres,  the  promotion  of  academic  laboratories'  utilisation  by 
enterprises, the promotion of linkages with foreign Excellence Centres. 

The National Strategy is now identical with the Smart Specialisation Strategy, prepared 
by  DG  EPCD  (hereafter  referred  to  as  S3CY)  with  the  support  of  RPF  and  a  research 
group from the Cyprus University of Technology (CUT). S3CY was adopted by the Council 
of  Ministers  on  26/3/2015.  Its  priority  areas  are:  Energy,  Tourism,  Structured 
Environment, Construction, Transport-Maritime Services, Agro-Food and Health. ICT, the 
Environment  and  Human  Resources  are  horizontal  priority  areas.  The  S3CY  is  currently 
the main source of strategic direction for R&I policy until 2020. 

In  July  2015,  the  RPF  published  a  draft  new  RTDI  programme  (DESMI  2015-2020)52, 
which will implement the national Smart Specialisation Strategy. The proposed DESMI is 
structured  upon  3  pillars  (Smart  Growth,  RTDI  Sustainability  and  Modernisation  of 
RTDI).  Each  pillar  includes  Strategic  Axes,  which  are  themselves  broken  down  into 
programmes and measures. The total budget amounts to € 98.7 m, 44.3% out of which 
(€ 43.8 m) will be covered by the ERDF53. Smart growth will receive more than 55% of 
available  funding,  followed  by  RTDI  Sustainability  (37.4%)  and  Modernisation  of  RTDI 

50 Innovate  Cyprus,  Proposal  for  the  creation  of  a  new  Integrated  National  Framework  for  Research,  Technology 
Development  and  Innovation  in  Cyprus,  (National  Committee  for  Research,  Innovation  and  Technological  Development, 
March 2014 - in Greek), pg. 224-244 
51 https://issuu.com/presidency-reform-cyprus/docs/fc7917ffc2122a 
52 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015 
53 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 8-9 

18 

 
 
                                          
(7.4%),  as  presented  in  Annex  2B.  The  proposed  programmes  were  open  to  a  public 
consultation  process,  which  ended  in  September  2015.  They  were  expected  to  be 
officially launched in December 2015. DESMI is traditionally open to EU and international 
cooperation; however details of the new DESMI are not yet announced in that respect.  

Despite  past  efforts,  policy  recommendations  and  study  findings  (of  which  the  NCRTDI 
proposal  is  the  most  recent  example),  the  problem  of  lack  of  effective  coordination 
remains. 

The  budgetary  framework  follows  the  7-years  cycle  of  the  Structural  Funds  (SF).  The 
European  Structural  and  Investment  Funds  (ESIF)  will  be  the  main  sources  of  R&I 
funding in the period 2014-2020. There are no systematic budget evaluations (ie every 6 
months) but there are clear guidelines for flexibility. 

2.2  R&I policy initiatives 

The  last  three  years  have  not  been  particularly  active  in  RTDI  policies,  as  all  policy 
energy  was  absorbed  in  order  to  be  able  to  deal  with  the  crisis.  No  new  R&I  law  or 
regulation  was  adopted  in  2015.  R&D  measures  by  the  RPF  and  innovation  support 
measures  launched  by  the  MECIT  were  completed.  Preparations  for  launching  new 
programmes by the RPF have started.  

The long awaited Science and Technology Park (STP) is taking a new form; the austerity 
budget has provoked a shift of strategy towards looking for a strategic private investor 
to co-fund the Park in the form of a real estate development project. To this end, MECIT 
launched  an  Expression  of  Interest  (EOI)  addressed  to  investors  wishing  to  undertake 
the establishment and operation of the STP54. Tender documents were initially expected 
to  be  published  in  2015  for  the  selection  of  a  strategic  investor 55 ;  this  has  been 
postponed to 2016 

A  total  of  €11.2m  is  envisaged  in  the  proposed  S3CY  for  investments  in  new  research 
infrastructures (RI) 56. The budget is broken down into initiatives for: 

 

 
 
 

the  development  of  new  RI  in  the  designated  thematic  priorities  (proposed 
programme  New  Strategic  Infrastructure  Units  -  New  Scientists  undertaken  by 
RPF); 
the upgrading of existing RI through additional grants programme; 
the enhancement of open access to RI; 
the  facilitation  of  access  to  foreign  RI  of  high  calibre,  which  are  non-existent  in 
Cyprus57. 

for  the  enhancement  of 
The  government 
entrepreneurship  in  the  country 58 .  Digital  schemes  are  also  envisaged  in  the  period 
2015-2017 for increasing ICT use by SMEs59. 

forming  a  new  national  policy 

is 

Public action in all relevant policy areas is currently not designed and implemented in a 
strategic,  coherent  and  integrated  framework,  but  a  change  is  expected  through  the 
implementation of the S3CY. 

54 Cyprus National Reform Programme 2014 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2014, pg.13 
55 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 13 
56 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,, pg. 336 
57 SSmart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,, pg. 328 
58 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 25 
59 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 30 

19 

 
 
                                          
The House of Representatives has adopted the law for the establishment and operation 
of the Cyprus Agency of Quality Assurance and Accreditation in Higher Education on the 
9th  of  July  2015.  The  new  Agency  assumes  the  responsibilities  of  three  pre-existing 
councils  /  committees  and  it  is  expected  to  ensure  the  quality  of  higher  education  in 
Cyprus.  In  addition,  the  Agency  will  identify  weaknesses  and  disadvantages  of  the 
Cypriot  higher  education  institutions  and,  consequently,  will  enable  them  to  enhance 
their  quality.  It  is  also  the  competent  authority  of  the  Cyprus  Republic  to  evaluate  the 
cross-border education offered in member states or third countries by local institutions. 
The legislation of the Cyprus Agency is consistent with the procedures and the evaluation 
and  accreditation  criteria  of  the  European  Standards  and  Guidelines  (ESGs),  which  are 
the  most  basic  requirement  for  membership  in  the  European  Network  of  Quality 
Assurance (ENQA)60. 

The first national policy document on open access is expected to be approved in the first 
months of 2016 (see section 4.5.2 below. 

Evaluations, consultations, foresight exercises 

The country lacks an evaluation culture and RTDI policies have not been evaluated in the 
last  10  years.  Similarly  there  was  no  foresight  exercise.  Reporting  was  extensive  only 
regarding the participation to FP7: 

Statistics  of  FP7  funded  programmes  for  the  period  2007-2013  were  analysed  in  the 
context of S3CY for Cyprus. The overall success rate of Cypriot companies in securing EU 
funding  was  among  the  lowest  in  EU  at  15.53%  (21.9%  EU  average)61.  Key  results  of 
the programmes are summarised as follows: 

- 

-  COOPERATION received the bulk of funding (46% of total) and recorded a rather 
low  success  rate  (13.1%).    Most  popular  was  the  thematic  priority  Information 
Technologies  and  Communications  which  received  52%  of  the  funding  of  the 
programme (€ 19 m). A Cypriot coordinator was only in 2 out of 65 projects62; 
IDEAS  received  16.4%  of  EU  funding  (€  13  million)  with  only  5%  of  submitted 
proposals  by  Cypriot  companies.  All  projects  had  a  Cypriot  coordinator  and  the 
University of Cyprus was the prime contractor in 7 out of total 9 projects63; 
PEOPLE  recorded  the  highest  success  rate  (20.9%)  and  the  highest  number  of 
Cypriot  coordinators  (36  in  a  total  of  54  projects)  in  Cypriot  projects  among  all 
FP7 funded projects64; 

- 

-  CAPACITIES  had  a  success  rate  of  19.8%  and  a  high  number  of  Cypriot 
coordinators  (50  in  a  total  of  98  projects).  The  activity  Research  Infrastructures 
had a success rate triple the programme average (54.6%). An equally important 
activity  was  Research  for  the  benefit  of  SMEs,  which  received  more  than  half  of 
available programme funding (€ 8.7 m)65. 

The University of Cyprus received about 34% of available funding (€ 27 m), followed by 
the Cyprus Institute (€ 8.5 m). Participation from the private sector was also significant 
but with low success rates66. 

60 http://www.highereducation.ac.cy/en/cy_agency_quality_assurance_aaccre.html  
61 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,,pg. 120-126 
62 http://www.dgepcd.gov.cy/dgepcd/dgepcd.nsf/page44_gr/page44_gr?OpenDocumentIbid.pg. 121 
63 Ibid. pg. 123 
64 Ibid,. pg. 123 
65 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg. 124 
66 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,, pg. 126 

20 

 
 
 
 
                                          
Table 2 Statistics of FP7 funding programmes 

FP7 FUNDED 
PROGRAMMES 

COOPERATION 
IDEAS 
PEOPLE 
CAPACITIES 
EURATOM 
TOTAL 
Source: Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 117-118 

FUNDING 
PARTICIPATION 
(%) 
46.0% 
16.4% 
15.6% 
22.0% 
0.0% 
100.0% 

AVERAGE 
SUCCESS 
RATE 
13.1%  
7.0% 
20.9% 
19.8% 
n/a 

TOTAL EU 
FUNDING 
( € million) 
36.5 
13.0 
12.4 
17.2 
0.3 
79.4 

NO. OF PROJECTS 
WITH CYPRIOT 
COORDINATOR/TOTAL 
3/169 
9/9 
36/54 
50/98 
n/a 

Consultations  were  extensive  during  the  year  for  the  preparation  of  RPF’s  National 
Framework  Programme 
for  2015-2020..  Public  and  private  universities,  RPOs, 
enterprises,  chambers,  investors,  utilities  and  NGOs,  as  well  as  researchers  and  policy 
makers in their individual capacities were invited to participate in a consultation process 
which  was  concluded  in  September  2015,  following  two  consecutive  rounds  of 
discussions: 

-  April  9th-May  15th  2015:  Main  topics  of  discussion  were  the  Action  Plan  for 
Dialogue  and  Consultation,  the  approved  Smart  Specialisation  Strategy  and 
supporting  documents  of  the  programmes  (proposal  evaluation,  programme 
monitoring, participation rules, general and legal issues); 
July  30th  –  September  30th 2015:  In  this  period  the  proposed  programmes  were 
reviewed  and  discussed  through  structured  questionnaires  of  maximum  10 
questions each. 

- 

Discussions were supplemented by 2-3 workshops during each round67. A separate web 
link on the RPF website has been created for facilitating the public consultation68 through 
the upload of all related documents and interactive exchange of information. 

In  August  2015,  RPF  launched  a  new  public  consultation  for  the  Social  Innovation 
Programme69.  Social  innovation  is  part  of  the  planned  new  DESMI  and  may  as  well  be 
adopted  by  the  Ministry  of  Labour  in  the  context  of  the  ESF  share  of  funding.  No  calls 
have been launched yet. 

2.3  European Semester 2014 and 2015 

Innovation  is  a  priority  in  the  current  programming  period  (2014-2020).  The  grant 
scheme for innovative products and services implemented in 2012 progressed smoothly. 
The scheme covers innovative products and processes. It is addressed to newly created 
companies,  encouraging  cooperation  between  enterprises  and  research  centres  and 
within  the  corporate  sector  itself.  It  is  expected  that  the  scheme  will  help  develop 
approximately  100  innovative  products,  services,  and/or  processes,  30  cooperation 
agreements  of  enterprises  with  research  centres,  create  80  new  jobs,  raise  €5m  in 
private  funding  and  help  establish  30  new  SMEs70.  About  35  innovative  products  were 
expected  to  enter  the  market  in  2015.  Based  on  the  knowledge  accumulated,  a  new 
grant  scheme  with  certain  improvements  has  been  launched  in  2015 71 and  is  in  the 
process of project selection. 

67 Action Plan for Dialogue and Consultation, Research Promotion Foundation, New RPF Programmes 2015-2020, pg.5-6 
68 http://www.research.org.cy/EL/cy_research_fund/dimosios-dialogos.shtm 
69 http://www.research.org.cy/EL/news/3847.html 
70 Cyprus National Reform Programme 2014 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2014, pg.12 
71 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 12 

21 

 
 
 
 
 
                                          
Innovation  Houses  will  be  established  in  2015  to  provide  guidance  to  the  unemployed 
and  students.  It  is  expected  that  the  scheme  will  help  create  40  new  SMEs  by  its 
completion (see section 3.5.1 on direct funding for private R&I)72. 

The  Scheme  for  Supporting  Business  Innovation  between  universities  and  enterprises 
received 15  applications  for cooperation  in  March  2015. They will  be  evaluated in  close 
cooperation with academia73. 

In  addition,  funds  were  allocated  to  schemes  for  the  enhancement  of  collaboration 
between secondary education graduates, university graduates and the enterprise sector.  

Vocational  training  and  Industry  Liaison  Offices  (ILOs)  are  expected  to  increase 
collaboration between academia and the university and narrow the gap between supply 
and demand.  

2.4  National and Regional R&I Strategies on Smart 
Specialisation 

The preparation of the new National Innovation Strategy on Smart Specialisation (S3CY) 
for  Cyprus  started  in  2014  by  DG  EPCD,  the  RPF  (as  a  Coordinator)  and  Cyprus 
University of Technology (CUT) research group74. S3CY was peer reviewed in May 2014 
in  the  context  of  S3  platform  EU  project,  with  the  participation  of  9  EU  countries 
(excluding Cyprus) at national level and 6 EU countries at a regional level75. The study 
was endorsed, in November 2014 by a Governing Board composed of representatives of 
stakeholders  (MECIT,  the  Ministry  of  Education  and  Culture,  Ministry  of  Agriculture, 
Natural  Resources  and  Environment,  RPF,  the  University  of  Cyprus,  CUT,  The  Open 
University  of  Cyprus,  the  CSC,  the  Rectors  Committee,  the  Association  of  Research 
Organisations,  the  Cyprus  Productive  Centre,  the  Human  Resource  Development 
Authority,  Cyprus  Employers  &  Industrialists  Federation,  the  Cyprus  Chamber  of 
Commerce  and  Industry,  the  Association  of  Cyprus  Banks,  the  Cyprus  Consumers 
Association and the Technical Chamber of Cyprus) and chaired by the Secretary General 
of  DG EPCD  and Chairman  of  RPF76.    The  report  on  Smart  Specialisation  Strategy  was 
finalised,  published  and  adopted  by  the  Council  of  Ministers  in  March  2015.  Its 
implementation  includes calls from MECIT, the RPF and two smaller calls by the Ministry 
fo  Agriculture.  As  yet  one  call  by  MECIT  has  been  launched  (see  2.3).  There  is  no 
governance mechanism for following up the SSS progress. 

S3CY distinguishes between general and thematic priorities. Expanded innovation, Social 
Innovation, General Application Technologies77, Sustainability-Environment and ICT78 are 
acknowledged  as  general  priorities,  while  Tourism,  Energy,  Agriculture–Food  Industry, 
Urban development-Construction, Transportation, Shipping and Health are the thematic 
priorities.  The  policy  mix  is  structured  upon  3  pillars;  smart  growth,  sustainable  RTDI 
system and support of the RTDI system79. 

For each of the three pillars, S3CY has identified specific measures. Explicit programmes 
address  these  measures  and  for  each  programme  there  is  an  indicative  budget  and  an 
annual  allocation  of  budget  for  the  period  2015-2022.  All  R&D  funding  is  co-funded  by 

72 Cyprus National Reform Programme 2014 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2014, pg.13 
73 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 13 
74 Smart Specialisation Strategy for Cyprus, Executive Summary, Nicosia May 2014, pg.7  
75 http://s3platform.jrc.ec.europa.eu/portoroz-may-2014, November 2014 
76 Smart Specialisation Strategy for Cyprus, Executive Summary, Nicosia May 2014, pg.6 
77 IT, Communications, Biotechnology, Biomedicine, Agroscience, Industrial Technology, Advanced materials, 
Nanotechnology, Advanced Manufacturing and processes, Emerging Technologies 
78 Hardware, Software, Networks, Digital Tourism, Education and Quality of Life 
79 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 298 

22 

 
 
                                          
ESIF80.  Public  funding  is  provided  through  fiscal  measures  (tax  incentives)  and  grants 
and there is a proposed budget allocation per measure and type of public funding81.  

S3CY  also  includes  measures  to  stimulate  private  investment  under  the  pillar  for  the 
support  of  the  RTDI  system  through  programmes  promoted  by  MECIT  (Entrepreneurial 
Innovation Centres, innovation Packages and Innovation Houses) with a total budget of 
€ 10.8 m. R&I infrastructures are included in S3CY under the smart growth pillar a with 
a total budget of € 11.2m for the development of new infrastructure units82. 

The  S3CY  foresees  monitoring  and  evaluation  mechanisms  based  on  result  indicators, 
namely  general  ratios  (number  of  beneficiary  companies,  employment  increase, 
participation of new scientists etc.), research, technological development and innovation 
ratios  (total  R&D  expenditure,  number  of  patents,  percentage  of  employees  trained  in 
new  technologies  etc.)  and  social  ratios  (poverty  level,  development  of  social 
entrepreneurship, percentage of crimes per 1000 inhabitants etc.)83. It proposes that DG 
EPCD undertake monitoring of the implementation of S3CY84. 

2.5  Main policy changes in the last five years 

Main Changes in 2011 

  Creation  of  a  Technology  Unit  in  MECIT  for  the  promotion  of  technology  and 

entrepreneurship 

Main changes in 2012 

  Involvement of MECIT in the absorption of structural funds 

Main changes in 2013 

  Planning  Bureau  changed  its  name  to  Directorate  General  for  European 
Programmes, Coordination and Development (DGEPCD) and its role was extended 
to  the  coordination  and  implementation  of  the  MOU  between  Cyprus,  IMF  and 
ECB,  the  implementation  of  Europe  2020  strategy,  the  coordination  and 
implementation  of  EU  programmes  and  the  establishment  of  an  information 
centre for the public and businesses for all the horizontal EU Programmes 

  Ministry of Commerce, Industry and Tourism (MECIT) was renamed to Ministry of 

Energy, Commerce, Industry, Tourism (MECIT) 

  Appointment of a National Committee for Research, Innovation and Technological 
Development (NCRITD) to recommend new, more effective RTDI governance 

Main Changes in 2014 

  Finalisation of NCRITD report on new RDI governance 

  S3CY report was presented to EU 

  Merge of the Technology Unit with the Industrial Unit of MECIT 

  Publication of Law 115/2014 introducing the definition of innovative business 

Main Changes in 2015 

  Release of Final Report on S3CY 

  Release  and  public  consultation  of  the  first  national  policy  document  on  open 

access  

80 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 336 
81 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg. 341-343 
82 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 336 
83 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg. 350-352 
84 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg. 348 

23 

 
 
                                          
3.  Public and private funding of R&I and expenditure 

3.1  Introduction 

In spite of the recent financial crisis and the shortage of R&D public funding it entailed, 
still  the  government  represents  the  largest  source  of  funding,  constantly  contributing 
over 62% of total GERD in the period 2010-2013.  In absolute numbers, public funding 
of  GERD  has  been  steadily  decreasing  from  2011  onwards,  from  €62.7m  in  2011  to  
€55.3m  in  2012  (11.9%  annual  decrease)  and  €52m  in  2013  (5.9%  annual  decrease); 
R&D  intensity  increased  slightly  from  2012-2014  because  of  the  GDP  decline.  The 
government predominantly funds HEIs and RPOs, albeit at a decreasing pace. At the end 
of  2013,  total  funding  to  HEIs  and  RPOs  was  at  €  41.7,  80.0%  of  total  government 
funding, compared to 81.8% of total government funding at the end of 2012. 

In the same period (2010-2013), the business sector steadily contributed about 12% of 
total  R&D  funding,  about  0.05%  of  GDP,  far  below  than  the  EU28  average  (1.12%). 
Private  non  profit  organisations  are  practically  non-existent.  The  business  sector  funds 
almost  exclusively  intramural  R&D  activities,  namely  (€9.8m  out  of  a  total  €10.2m 
(96.4% of total) in 2013).  

Indicator 

2011 

2012 

2013 

2014 

Table 3 Basic indicators for R&D investments 

EU average 
(2014) 

GERD (as % of 
GDP) 
GERD (Euro per 
capita) 
GBAORD (€m) 

R&D funded by 
BES (% of GDP) 
R&D funded by 
PNP (% of GDP) 
R&D funded from 
abroad (% of GDP) 
R&D performed by 
HEIs (% of GERD) 
R&D performed by 
government sector 
(% of GERD) 
R&D performed by 
business sector (% 
of GERD) 

0.5 

0.43 

0.46 

0.47p 

2.03 

105.8 

96.7 

96.8 

96.4p 

558.4 

80.605 

69.851 

60.297 

61.401 

0.05 

0.05 

0.06 

0 

0 

0 

0.06 

0.08 

0.09 

n.a. 

n.a. 

n.a. 

53.5% 

56.0% 

56.2% 

52.7% 

92,828.145 
(Total for 
EU 28) 
1.12 
(2013) 
0.03 
(2013) 
0.66 
(2013) 
0.2  
(2013) 

16.6% 

16.4% 

14.7% 

13.7% 

0.47 

14.4% 

14.4% 

15.9% 

17.3% 

0.25 

Total FP7 funding that accrued to Cyprus in the  period 2007-2013 was at € 91.7 m, as 
opposed to €132.3 m accrued from Structural Funds85. 48.6% of FP7 funding came from 
the  Cooperation  Programme,  21.9%  from  Capacities  (SME  Measures,  Research 
infrastructures initiatives etc.), 15.4% from Ideas, 14% from People (mobility) and just 
0.1%  from  EURATOM86.  Higher  or  secondary  education  institutions  received  the  bulk  of 
FP7  funding  in  the  period  2007-2014,  accounting  for  51.4%  and  37%  respectively  of 

85 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus (CY), Facts & 
Figures, July 2015, pg. 4 
86 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus (CY), Facts & 
Figures, July 2015, pg. 8 

24 

 
 
 
 
                                          
total  EU  contribution87.  A  total  of  64  SMEs  (29.6%  of  FP7  budget)  participated  in  FP7 
cooperation programmes88. 

Compared  to  FP6,  participation  in  FP7  improved,  totalling  442  participations  and  73 
project coordinations. The FP7 financial contribution per inhabitant (111.9 €/inhabitant) 
was higher than the EU15 average (95.2 €/inhabitant)89. 

A  total  of  €612m  from  Structural  Funds  were  allocated  to  Cyprus  in  the  2007-2013 
programming  period.  RTDI  accounted  for  8%  of  the  total  Structural  Funds  allocated  to 
Cyprus in the period 2007-2013(€ 50 m).90 

3.2  Smart fiscal consolidation 
3.2.1  Economic growth, fiscal context91 and public R&D 

During  the  financial  crisis  the  Cypriot  economy  registered  a  relatively  small  loss  of  its 
real  GDP  of  2%.  However,  after  a  weak  recovery  in  the  subsequent  two  years  the 
economy  fell  back  into  recession  in  2012-14,  losing  an  additional  11.5%  of  income 
during  these  years.  However,  the  recession  is  gradually  losing  momentum  and  the 
economy  is  estimated  to  have  grown  by  1.4%  in  2015  driven  by  domestic  demand 
supported by euroland low inflation. Growth is forecast to gradually gain further strength 
in 2016 (1.5%) and 2017 (2.0%). 

Cypriot public finances were improving before the crisis, with low headline deficit (2005: 
2%) turning into surpluses (2007: 3%). Coupled with strong economic growth (2005-08: 
4-5%) this maintained public debt on a declining path (45% of GDP in 2008 from 65% in 
2005). The crisis had a strong negative impact, the government deficit reached 5.6% in 
2009  and  it  has  practically  "stabilised"  at  this  level  until  2012,  decreasing  slightly  to 
4.9%  in  2013  (Figure  2).  It  worsened  again  to  8.9%  in  2014,  but  this  worsening  may 
reflect the impact of Eurostat's decision to treat the recapitalisation of cooperative banks 
as  part  of  the  government  deficit 92.  As  a  result  of  protracted  deficits  and  weak  GDP 
growth public debt increased to 108.2% of GDP by 2014. 

In 2014 the primary budget balance has performed better than expected as a result of 
both  higher  outturn  of revenues (dividends  from  the  Central  Bank  and  stronger private 
consumption),  and  lower  expenditures  (due  to  consolidation  measures).  As  a  result  of 
phasing-out  of  consolidation  measures  and  improving  economic  conditions  further 
adjustment is expected in 2015 (headline deficit estimated to be 1.0%) and in 2016-17 
when  a  balanced  budget  as  well  as  a  small  surplus  (0.5%)  is  expected.  Public  debt  is 
expected to peak in 2015 (108.4% of GDP) and to gradually decline to 95% by 2017. 

Figure 2 Government deficit and public debt. Data source: Eurostat 

87 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus (CY), Facts & 
Figures, July 2015, pg. 14 
88 Ibid. pg. 14 
89 Ibid. pg. 4 
90 European Commission, Research and Innovation Performance in the EU, Innovation Union progress at country level, 
2014, pg. 62 
91 Sources: DG ECFIN, Country report for Cyprus http://ec.europa.eu/europe2020/pdf/csr2015/cr2015_cyprus_en.pdf, RIO 
92 More details on this discussion: http://ec.europa.eu/eurostat/documents/1015035/3991219/Final-findings-EDP-
dialogue-visit-CY-24-25-Sep-2014.pdf/6ed78cd1-6c1a-499e-97d5-53bac3a10bec, p. 15ff. 

25 

 
 
 
 
                                          
Total  GERD  in  Cyprus  was  €83.3m  in  2013  and  €82.7m  in  2014.  There  are  three  main 
sources  of  R&D  funding  (2013  figures):  the  business  sector  (€10.2m),  the  government 
(€52m),  and  foreign  funding  (€16.4).  Direct  funding  from  the  government  goes  to 
business  enterprises  (€1.9m),  the  government  (€11.9m),  the  higher  education  sector 
(€30m) and the private non-profit sector (€8.5m). 

Table 4 Key Cypriot Public R&D Indicators 

GBAORD, % of gov. exp. 
GERD, % of GDP 
out of which GERD to public, % 
of GDP 
Funding from GOV to, % of GDP 
   Business 
   Public (GOV+HES) 
   Total 
EU funding, % of GDP 
Source: Eurostat 

2007  2009  2013 
0.92  0.97  0.72 
0.40  0.45  0.46 

0.28  0.30  0.33 

0.02  0.02  0.01 
0.22  0.25  0.23 
0.26  0.31  0.29 
0.04  0.05  0.08 

3.2.2  Direct funding of R&D activities 

The  sources  of  R&D  funding  according  to  the  Frascati  manual  are:  Government  sector 
(GOV),  Higher  education  sector  (HES),  Business  enterprise  sector  (BES),  Private  non-
profit sector (PNP) and Abroad (including EC). In this analysis the public sector as source 
of  funds  is  given  by  the  GOV  part  of  the  total  intramural  R&D  expenditure  (GERD), 
whereas  the  public  sector  as  a  sector  of  performance  is  the  aggregation  of  GOV  and 
HES.  Because  of  the  small  size  of  the  country  and  its  economy,  even  small  changes  in 
the amounts can have visible and significant impact on the trends analysed. 

Figure 3 Funding of the total GERD. Data source: Eurostat 

Figure  3  shows  the  evolution  of  GERD  financing  in  current  prices  in  Cyprus.  GERD 
followed  an  upward  trend  from  2005  to  2011,  including  the  financial  crisis  period,  but 
dropped  in  2012  during  the  sovereign  debt  crisis,  due  to  the  simultaneous  decrease  in 
the funding from the public and private sectors. 

R&D  expenditures  in  Cyprus  are  financed  mainly  by  the  government.  The  contribution 
from  the  business  sector  has  been  low  and  even  decreasing  between  2010  and  2012. 
During  the  same  period  funding  from  abroad  and  particularly  from  the  European 
Commission  has  increased,  but  it  was  not  sufficient  to  counteract  the  negative  trend. 
Between 2012 and 2014 total GERD stagnated slightly below the 2011 peak. The lack of 
detailed  data  does  not  allow  to  draw  conclusions  on  the  source  of  this  evolution,  i.e. 
changes in the public or private sector financing. 

26 

 
 
 
  
 
 
 
 
 
 
 
Direct public funding from the government 

Figure 4 R&D appropriations and government funded GERD in millions of national currency.  

Data source: Eurostat 

Regardless  of  the  metric  deployed,  (current  prices  or  %  GDP)  the  budget  for  R&D 
(GBAORD) shows a continuous increase from 2005 to 2009 at various paces, followed by 
a  decline  along  the  subsequent  years  and  in  particular  after  2011.  The  levels  of  2014, 
despite the small rise, are still inferior to those of 2007. Similarly, the GERD funded by 
the government in absolute volumes grows linearly from 2004 to 2011 and declines from 
the following year (i.e. later than the GBAORD). This behaviour reflects the crisis in the 
Cypriot economy due to which R&D expenditure was reduced in terms of both GBAORD 
and GERD funded by the government. 

Figure 4 shows that the difference between the civil and total appropriations is negligible 
which indicates the marginality of the military R&D in Cyprus. 

The  gap  between  the  government  funded  GERD  and  the  R&D  allocations  progressively 
closes from 2010 onwards. This is an indication that the cuts in the budget for R&D were 
more  severe  than  the  cuts  in  the  actual  investments.  It  can  also  be  seen  that  the 
contribution from the EC is substantial and its importance has increased in recent years. 
As  a  result  in  201293,  the  public  funding  for  R&D  provided  by  the  Cypriot  government 
and the EC together almost equals the R&D budget. 

Direct public funding from abroad 

Table 5 Public Funding from Abroad to Cypriot R&D (millions of national currency, i.e. euro from 
2008) 

Source from 
abroad 

Total 

BES 

EC 

GOV 

HES 

International 
Organizations 
Total as % 
GERD 
EC as % 
GOVERD 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

5.95 

0.58 

4.65 

0.12 

0.03 

7.43 

10.19 

10.75 

10.01 

12.90 

12.51 

14.57 

16.41 

0.68 

5.91 

0.07 

0.33 

0.34 

7.53 

0.35 

0.72 

0.32 

8.05 

0.21 

0.87 

0.31 

0.18 

0.23 

0.10 

0.10 

8.30 

11.68 

10.93 

12.79 

14.31 

0.04 

0.71 

0.11 

0.45 

0.08 

0.33 

0.47 

0.33 

0.61 

0.48 

0.55 

0.41 

1.08 

0.84 

0.37 

0.27 

0.42 

0.46 

0.42 

10.93 

12.11 

14.55 

14.65 

12.06 

14.97 

14.07 

17.48 

19.58 

12.76 

14.48 

16.64 

17.12 

14.49 

19.83 

17.42 

23.12 

27.49 

93 Last available data for all variables involved in this analysis 

27 

 
 
 
 
 
                                          
Depending on the year, external funding for the Cypriot R&D activities accounts for 11-
17 % of the total GERD. EU funding plays an important role since  most of the external 
funding  comes  from  Structural  Funds  for  R&D  and  participation  in  the  Framework 
Programmes. 

Table  5  shows  an  increasing  trend  in  the  support  from  the  European  Commission.  In 
2012 funding from Abroad-EC accounted for more than 23% of the direct public funding. 

Based on data from DG REGIO, the total Structural Funds for the period 2007-2013 for 
Cyprus amounted to 612.4 million Euros of which 33.2 million, i.e. 5.4%,  is dedicated to 
'Core'  R&D  activities94.  This  percentage  is  below  the  corresponding  share  at  EU28  level 
(9.4%, see Annex). 

Distribution of public funding  

Figure  5  below  shows  how  the  distribution  of  public  funding  to  sectors  of  performance 
evolved over time: 

Figure 5 Government intramural expenditure by sectors of performance.  

Data source: Eurostat 

The  public  sector  receives  the  lion's  share  of  the  government  R&D  funding.  Despite  its 
marginality,  direct  public  support  to  the  business  sector  R&D  increased  from  2005  to 
2007  and  declined  afterwards.  Public  support  to  the  Private  Non  Profit  sector  (PNP) 
follows exactly the reverse trend and in 2011 it represents more than 18% of the total 
GERD funded by the government. 

Aggregating  the  Business  and  the  Private  Non  Profit  sectors,  Figure  6  shows  that  the 
public  support  to  the  private  sector  R&D  has  increased  from  11%  in  2005  to  21.6%  in 
2011. Public support to private sector R&D has increased in those years both in absolute 
numbers and as a share of the total governmental support. 

Figure 6 Government intramural expenditure by sectors of performance 

94 The definition of 'Core' R&D activities, is provided in the study "Cohesion policy and regional research and innovation 
potential"http://ec.europa.eu/invest-in-research/pdf/download_en/rkf5th_brochure.pdf 

28 

01020304050607020052006200720082009201020112012Millions National CurrencyYearsCY: R&D funding from governmentAll sectorsPrivate sectorPublic sector 
 
 
 
 
 
                                          
3.2.3  Indirect funding – tax incentives and foregone tax revenues 

Government funding is mostly direct, but in 2014 tax exemptions for R&D and innovation 
expenses have been introduced. To be eligible, companies must have allocated at least 
10%  of  their  operating  expenses  on  R&D  over  the  past  3  years,  or  be  vetted  by  an 
expert committee as being capable of producing innovative/improved results.  

Recent developments in Cyprus according to the latest tax report from Deloitte suggest 
that  Cyprus  is  now  seeking  to  align  its  incentives  more  with  the  rest  of  the  EU. 
Potentially these incentives could have an impact on local innovation in services e.g. by 
introducing new forms of intangible assets into existing service activities95. 

In  2012  Cyprus  introduced  the  Intellectual  Property  Rights  Box.  It  provides  for  tax 
exemption of dividends resulting from IP exploitation, and 80% tax deduction of profits 
from selling IP rights. By setting up a Cyprus International Trust, total tax exemption of 
IPR income can be achieved, provided that the owner of the shares held by the trust is a 
resident in Cyprus. Given its recent nature there is no evidence as to the impact of the 
policy  on  business  practice  in  Cyprus.  So  far  it  appears  that  the  scheme  rather 
encourages transfers of IPR acquired elsewhere to a Cypriot trust, than setting up R&D 
activities in Cyprus proper. 

3.2.4  Fiscal consolidation and R&D 

Post-crisis  fiscal  consolidation  in  Cyprus  is  still  ongoing.  Figure  7  below  shows  the 
scatterplot  of  the  structural  balance  and  GBAORD  as  %  GDP  (first  panel)  as  well  as 
GERD as % GDP (second panel)96: 

Figure 7 Fiscal consolidation and R&D.  

Data source: AMECO, Eurostat 

While the structural deficit shrank and turned into a surplus during 2010-2014, GBAORD 
decreased  by  ca  0.06%  of  GDP  (Figure  7,  left).  Government-financed  GERD  also 
decreased between 2010 and 2013 although less in relative terms, by ca. 0.03% of GDP 
(Figure  7,  right),  amid  improvements  in  the  structural  balance.  Data  on  foregone  tax 
revenue  is  not  available,  but  as  Cyprus'  use  of  R&D  tax  incentives  is  at  a  low  level, 
adding  indirect  funding  to  the  calculation  would  practically  have  no  impact.  Post-crisis 
fiscal  consolidation  thus  had  a  negative  impact  on  total  public  support  to  R&D.  EU 
funding plays an important role but is not increasing strongly enough on an annual basis 
to compensate for the losses in direct public support. 

95 DG TAXUD: A Study on R&D Tax Incentives (August 2014) 
96 Structural balance data comes from the AMECO database the other indicators were taken from Eurostat and OECD. 

29 

 
 
 
 
 
 
                                          
3.3  Funding flows 

3.3.1  Research funders 

Institutional funding to HEIs and PROs is provided by the government for the salaries of 
teaching and research staff. As presented in Chapter 2, DG EPCD is responsible for the 
allocation of research funds for project funding. The RPF and MECIT are then responsible 
for  distributing  the  funding  according  to  their  priorities  and  programmes.  The  business 
sector  is  only  marginally  contributing  to  research  funding  and  the  collapse  of  the  local 
banking sector has further deteriorated funding opportunities from the private sector. 

Private not-for-profit funding is minimal, amounting to about €0.5m in 2013. 

3.3.2  Funding sources and funding flows 

Public  funding  comes  principally  from  the  government  but  at  a  decreasing  pace;  the 
share  of  national  public  funding  decreased  from  68.3%  of  GERD  in  2010  to  62.1%  of 
GERD  in  2013  (last  available  data).  In  the  same  period,  the  share  of  EU/FP  funding 
increased from 15% to almost 20%. 

In  Cyprus,  10.4%  of  Structural  Funds  goes  to  RTDI  (€  73m),  compared  to  a  EU-28 
average  of  12.1%.  Most  of  these  funds  (32.9%)  are  channeled  to  “Investment  in 
infrastructure,  capacities  and  equipment  in  SMEs  directly  linked  to  research  and 
innovation  activities  (code  056)”,  followed  by  “Technology  transfer  and  university-
enterprise  cooperation  primarily  benefiting  SMEs  (code  062)”  and”  Research  and 
innovation public infrastructure  (code 058)”, which account in total for more than 78% 
of total available Structural Funds for RTDI. 

3.4  Public funding for public R&I 

3.4.1  Project vs. institutional allocation of public funding97 

Although  there  are  no  official  statistics  for  the  allocation  between  institutional  and 
project-based  funding  of  R&D,  it  is  estimated  that  about  40%  of  the  funding  is  project 
based (2012 data)98. 

3.4.2  Institutional funding  

The  Cyprus  government  plans  institutional  funding  annually  through  the  state  budget. 
Block funding follows historic and size criteria (number of students and researchers) and 
is not associated to performance indicators. It is directed to HEIs and RPOs. 

HERD per capita increased from € 41.3 in 2008 to €56.9 at the end of 2013, compared 
to an EU-28 average of €125. GERD performed by the government decreased steadily in 
the period 2008-2013 from €21.7 per capita in 2008 to €14.3 per capita in 201399.  

97 Institutional funding is defined as the total of national budgets in a given country, attributed to an institution, with no 
direct selection of R&D project or programmes and for which money the organisation has more or less freedom to define 
the  research  activities  to  be  performed.  Institutional  funding  can  be  in  the  form  of  non-competitively  allocated  Block 
funding. Institutional funding may also be allocated in a  variable/competitive manner tied to  institutional assessments. 
Project funding  is  defined  as  the total of national budgets  in  a given country, attributed  to a group or an  individual to 
perform an R&D activity limited in scope, budget and time, normally on the basis of the submission of a project proposal 
describing the research activities to be done (Steen, J. v. (2012), “Modes of Public Funding of Research and Development: 
Towards Internationally Comparable Indicators”, OECD Science, Technology and Industry Working Papers, 2012/04, OECD 
Publishing. http://dx.doi.org/10.1787/5k98ssns1gzs-en). 
98 Based  on  the published  budget of R&D for  2012, 40% of  the funding came  from  the State,  27% from HEIs, 15.5% 
from  the  private  sector  and  17.5%  from  abroad.  Out  of  these  funds,  competitively  were  allocated  15%-20%  of  state 
funds, 2%-3% of private funds and 17.5% of foreign funds, in total about 40%. This is a rough estimate undertaken for 
the purposes of this report. In the European Research Area, Progress Report 2014 the responses of 13 RPOs suggest that 
100% of its funding is project based; however, this cannot be accurate since public sector R&D salaries and operational 
costs are block funded with no assessment mechanism.  I consider the rough estimate more accurate (European Research 
Area, Progress Report 2014, pg. 104). 
99 Eurostat, Total intramural R&D expenditure (GERD) by sectors of performance (rd_e_gerdtot) 

30 

 
 
                                          
HEIs  have  introduced  mechanisms  within  the  universities  (specialised  offices)  for  the 
selection  and  management  of  research  proposals  and  an  internal  HEI  Committee  bases 
project selection on a review process. Based on a study on the degree of diversification 
of university budgets and the share of project funding, 86 % of the university budget of 
the  University  of  Cyprus  comes  from  block  funding,  2  %  comes  from  national  project 
funding and 12 % comes from EU funds (all project funding) (data collected in the period 
May 2009-January 2010)100. 

There are no evaluation mechanisms related to HEI/PRO funding in place . 

3.4.3  Project funding 

The major sources for project-based funding of R&D activities are the programmes of the 
RPF  and  recently  MECIT  (for  innovation).  Grants  are  distributed  through  the  RPF’s 
National  Framework  Programme.  Project  funding  addresses  both  basic  and  applied 
research  in  the  context  of  the  RPF’s  National  Framework  Programme  for  2015-2020. 
Additional project funding comes from the recently adopted MECIT programmes, mainly 
funding innovation but also partly entrepreneurship (although the majority of the latter 
does  not  go  to  innovation-oriented  companies).  Indicative  programmes  include 
Excellency  Islets,  New  Strategic  Infrastructure  Units,  DIDAKTOR,  Research 
in 
corporations,  European  Initiatives-Local  Development;  presented  in  summarised  format 
in  Annex  2.  There  are  no  evaluations  of  these  programmes.  Data  on  FP7  absorption  is 
presented above under section 2.2.1. 

Peer review principles are implemented in some of the calls for project  funding and are 
performed by national funders101. 

Project selection is systematically and meticulously organised: Because of the small size 
of  the  national  research  community,  evaluations  are  organised  in  Athens  using  Greek 
peers to avoid any conflicts of interest. As from 2011, RPF has been using the European 
Commission’s  evaluators  database  for  the  selection  of  experts  to  perform  remote 
evaluation of Proposals submitted. 

For  MECIT-funded  projects,  selection  is  done  by  local  evaluators.  They  are  mainly 
academics, in order to give them the opportunity to get to know the business research 
community  of  Cyprus.  The  contact  of  academics  and  business  through  the  evaluation 
process  has  naturally  led  to  cooperation  in  projects.  MECIT's  new  call  for  innovation 
projects  has  attracted  approximately  30  cooperative  proposals  between  business  and 
universities (that is 15% of all proposals). 

Second-chance  programmes  have  been  introduced  for  ERC  Programmes,  Marie  Curie 
fellowships  and  the  SME  Instument.  A  representative  from  RFP  has  assumed  the 
responsibility  of  monitoring  partnerships  between  Cypriot  agencies  and  the  EC  on  R&I 
programmes.  In  total  €5.5m  are  foreseen  for  2nd  Chance  programmes  (including  the 
SME Instument for the private sector). 

3.4.4  Other allocation mechanisms 

GERD  performed  by  the  private  non-profit  sector  is  minimal  and  fluctuated  around 
€11m,  with  a  peak  of  €13.8m  at  the  end  of  2011.  There  are  no  other  forms  of  public 
funding for public R&D. 

100 JRC Scientific and Technical Reports, European university funding and financial autonomy, A study on the degree of 
diversification of university budget and the share of competitive funding, ( Dominicis L.,Susana E., Zubieta A.F., 2011), pg. 
30 
101 European Research Area, Progress Report 2014, pg. 23 

31 

 
 
 
                                          
3.5  Public funding for private R&I  

3.5.1  Direct funding for private R&I 

Direct  funding  included  in  the  past  R&D  support  schemes  from  the  RPF  and  Innovation 
(JESSICA, 
support  measures 
JEREMIE, ESIF initiatives) were adopted in the previous programming period for the first 
time.  In  the  last  years  there  were  limited  calls  but  recently  the  ESIF-supported  actions 
started to be gradually announced: 

from  MECIT.  Financial  engineering 

instruments 

 

 

In  June  2015,  RPF  invited Cypriot  SMEs  to  express  their interest  in  participating 
in  the  programme  “Enhancing  the  Innovation  Management  Capacity  of  Cypriot 
SMEs”102. 
In  June  2015  RPF  invited  research  organisations,  researchers,  SMEs  and  public 
benefit organisations established in Cyprus to submit patents for funding of up to 
€20,000/proposal. Total budget for the call was at €100,000 and the deadline for 
the submission of proposals is at the end of September 2015.103 

  The SME instrument-2nd Chance with a total budget of €1.5 m (proposed DESMI 

 

 

2015-2020) has been adopted. 
In addition, RPF has launched in June 2015 a new call for Innovation Vouchers104. 
SMEs (Host Organisations) were invited to submit by December 2015 applications 
for the request of innovation services up to the amount of up to €5,000/company. 
Innovation  services  could  include  advisory  services  for  the  development  of 
technological  applications,  technology  transfer  services,  feasibility  studies, 
measurements,  testing  and  certification,  access  to  databanks  and  technical 
libraries,  protection  and  trade  in  Intellectual  Property  Rights  (IPR),  hosting  of 
research  personnel,  subcontracted  research  and  prototype  development. 
Corporations,  RPOs,  academic  institutions  and  public  benefit  organisations 
established in Cyprus are acknowledged as Knowledge Providers and can redeem 
innovation vouchers up to the amount of € 15,000/organisation. Total budget of 
the  initiative  is  equal  to  €  70,000105.  The  call  received  great  response  from  the 
market and by August 2015 the budget was oversubscribed106. 
In  the  structural  funds  period  of  2007-2013  the  Ministry  had  only  one  grant 
scheme  for  supporting  innovation  entrepreneurship  of  €4m.  By  mid-2015  all 
projects had concluded their activities and by the end of 2015 all final reports had 
been submitted,. The results are very encouraging, since 37 of the 39 SMEs have 
finished  successfully  and  have  introduced  37  innovative  products  or  services  in 
the market.   

from  MECIT, 

  A number of schemes in the form of grants were made available since December 
2014 
the  enhancement  of  Youth  and  Women 
Entrepreneurship,  the  scheme  for  the  enhancement  of  SMEs’  competitiveness  in 
the  manufacturing  sector  and  other  specific  economic  activities  and  the  scheme 
for  strengthening  Business  Innovation  Development  for  Products,  Services  and 
Processes107. 

including 

102 http://www.research.org.cy/EL/news/3830.html 
103 RFP Call for the Submission of Proposals, Patenting  
104 http://www.research.org.cy/EL/news/3831.html 
105 Call for Proposals under the Programmes of the Research Promotion Foundation, Innovation Vouchers 
106 http://www.research.org.cy/EL/news/3846.html 
107 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 27 

32 

 
 
 
                                          
  MECIT  also  supports  innovation  through  the  Business  innovation  grant  scheme 
addressed  to  both  established  and  newly  established  SMEs  for  the  support  of 
innovative  products/services.  Grants  may  cover  up  to  60%  of  the  proposed 
budget for the established SMEs and 80% for the newly established SMEs with a 
maximum  of  €50,000  per  new  newly  established  SMEs.  For  established  SMEs, 
grants  may  cover  up  to  60%  of  the  proposed  budget  with  a  maximum  of 
€250,000  per  SME 108 .  The  Scheme  received  30  applications  for  cooperation 
between universities and businesses109 , which represents 15% of all projects.  
  Cyprus  supports  the  participation  of  national  companies  in  EUREKA  cooperation 

proposals. 

By mid-2013 an amount of €22.7 m had been disbursed from JEREMIE funds to around 
315 eligible SMEs, € 10 m out of which came from the ERDF. In the period January-April 
2015,  an  additional  €16  m  was  made  available  to  SMEs  and  by  end  of  February  2015, 
105  more  companies  had  been  supported  with  approximately  €  6  m  of  new  loans. 
Maximum loan size is at € 100,000 but there are considerations to raise this amount to € 
300,000  and  also  include  medium  size  companies110.  The  implementation  of  Financial 
Engineering  Instruments  will  continue  in  2015.  The  government  has  announced  a  new 
call of Cyprus Entrepreneurship Fund (CYPEF) in November 2014. Total funding is €200 
m, 50% of which will come from the Cyprus government through an EIB loan while the 
rest will be provided by local banks111. EIF has been appointed as manager of the CYPEF 
and  the  maximum  loan  size  for  each  company  has  been  set  to  €  1.5  million 112.  The 
system became operational in April 2015. 

Looking into the future:  

  DESMI  2015-2010,  the  main  public  programmes  which  stimulate  research  and 
innovation in the private sector may be found under the pillar Smart Growth and 
are  the  programmes  “Research  and  innovation  in  Enterprises”  (for  existing  and 
newly  established  enterprises),  “Investigation  of  Industrial  Applications  of 
Technology/Technical  know”.  All  programmes  covered  the  thematic  priorities 
identified by the Smart Specialisation strategy (see chapter 2.4). 

  The  programme  Research  and  Innovation  in  Enterprises  aims  at  assisting 
enterprises  in  the  development  of  new  products,  services,  high  added  value 
production  methods  and  to  enhance  their  participation  in  RTDI.  SMEs  are  the 
principal  beneficiaries  of  products  and  services  provided  by  other  Cypriot 
enterprises and research organisations. Maximum funding per project is equal to 
€500,000  and  projects  are  selected  based  on  predefined  evaluation  criteria 
(Innovation,  excellence  of 
the  business,  added  value  and  benefit, 
implementation).  Funding  may  cover  up  to  60%  of  the  recognised  expenses. 
Three calls are expected in the period 2015-2020113.  

  A  similar  programme  is  planned  for  newly  established  enterprises  (less  than  5 
years  life  span)  and  a  maximum  funding  of  €50,000  per  project.  Funding  may 
cover  up  to  80%  of  the  recognised  expenses.  One  call  is  expected  in  2015  and 
another one will be scheduled soon after. Total budget of the programme is set at 
€ 4.5m 114. 

108 http://www.mcit.gov.cy/mcit/mcit.nsf/All/640363631A687F1DC2257DC1002A9A20?OpenDocument 
109 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 13 
110 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 27 
111 http://www.fundingprogrammesportal.gov.cy/easyconsole.cfm/page/prog/prog_id/2660, November 2014 
112 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 27 
113 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 23-24 
114 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 24-26 

33 

 
 
 
                                          
  The  programme  Investigation  of  Industrial  Applications  of  Technology/Technical 
knowhow  aims  at  supporting  SMEs  in  investigating  the  feasibility  of  their 
proposed solutions through pilot proofs of concept. Maximum funding per project 
is  set  at  €25,000.  Funding  may  cover  up  to  70%  of  the  recognised  expenses. 
Projects  are  selected  based  on  predefined  evaluation  criteria  (Excellency,  added 
value and benefit, implementation). One call is expected in 2015 and another one 
will be scheduled soon after. Total budget of the programme is set at € 1m115. 
  EUREKA and EUROSTARS Programmes with a total of €3,7m are included in RPF’s 
National  Framework  Programme  for  2015-2020,  aim  to  encourage  local 
enterprises  to  participate  in  international  consortia  and  involve  in  R&I  activities 
for the development of new products, processes and services to be commercially 
exploited for the benefit of the participating enterprises.   

All other RPF Programmes to be included in the RPF’s Framework Programme for 2015-
2020 are open to enterprises.  

As  indicated  in  the  proposed  DESMI  2015-2020,  funding  streams  will  cover  all  R&I 
stages/aspects  from  fundamental  research  to  market  innovation.  Under  the  RTDI 
modernisation  axis  there  are  two  dedicated  programmes  “Commercialisation  of  R&D 
results  by  RPOs”  and  “Commercialisation  of  R&D  results  by  Enterprises”  analysed  in  2 
phases (business plan, innovation) with a total budget of € 1.3 m each programme116. 

Public private cooperation is encouraged under the programme Research and innovation 
in  Enterprises  both  for  established  and  new  enterprises  since  it  is  structured  upon  the 
cooperation of Enterprises with RPOs (private and public).  

A number of schemes have been announced by MECIT for the period 2015-2020 for the 
financial support of innovation through collaborations rather than grants: 

  The  funding  of  RTDI  of  SMEs  with  a  total  budget  of  €  18  m  (45%-70%  funding 
from Structural Funds). The first call is expected in 2015 and the programme will 
last  2-3  years.  The  target  is  to  finance  210  companies  by  the  end  of  the 
programme117. 

  The  establishment  of  Innovation  Houses,  addressed  to  the  unemployed  and 
students,  and  aiming  to  provide  guidance  and  training  for  the  establishment  of 
innovative businesses. The programme is expected to last 2-3 years with a total 
budget  of  €  1.2m.  It  will  bring  together  academics  and  successful  businessmen 
for  training  young  people.  It  is  envisaged  that  4  innovation  houses  will  be 
established by the end of the programme, encompassing 100 groups of 5 people 
each118; 

  The establishment and operation of Business Innovation Centres (BIC) accredited 
by the European Business Network, which will provide advisory services to public 
and  private  businesses  for  the  development  of  competitive  products.    The 
foreseen budget is € 1.3 m and the programme will last 2-3 years; the first call is 
expected in 2015119.  

  The  provision  of  Innovation  Packages  to  innovative  businesses,  businesses 
cooperating with RPOs, start-ups and joint ventures. The programme will provide 
limited  funding  (€5,000,  €10,000  or  €  20,000)  for  a  specific  purpose  and  it  will 
run for 2-3 years, with the first call expected in 2015. Total funding will amount 

115 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 27-29 
116 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 69-76 
117 Information provided by the Ministry of Energy, Commerce and Industry 
118 Smart Specialisation Strategy Cyprus, September 2014 pg. 371 
119 Smart Specialisation Strategy Cyprus, September 2014 pg. 369 

34 

 
 
                                          
to €4.0 m. The target is to have offered 200 Innovation Packages by the end of 
the programme120. 

In  terms  of  policy  processes:  Peer  review  is  ensured  through  the  participation  of 
international  independent  evaluators 121.  The  weakness  of  the  system  is  that  funding 
schemes are neither regularly evaluated nor benchmarked against comparable schemes 
in  other  countries.  Policies  are  based  mainly  on  internal  assessments  in  the  funding 
agencies.  The  RPF  and  the  Industry  and  Technology  Service  of  the  Ministry  of  Energy,  Commerce 
Industry  and  Tourism  are  working  on  certain  simplification  measures,  i.e.  adopting  the 
Horizon  2020  procedures  but  changing  the  weightings,  adopting  the  eligibility  rules  of 
the  ESIFs  (to  avoid  double  reporting),  and  making  budget  transfers  within  categories 
easier. 

3.5.2  Public procurement of innovative solutions 

The  total  value  of  R&D  public  procurement  contracts  in  Cyprus  was  about  €1,5m  in 
2011, 43% less than in 2010 (€13,3m)122. 

Cyprus  transposed  the  two  2004  Directives  on  public  procurement  (2004/17/EC  and 
2004/18/EC)  into  national  law  in  2006  with  Law  11(I)2006  on  the  Coordination  of  the 
Contracting  Process  For  Supplies,  Work  And  Services  in  the  Water,  Energy,  Transport 
and  Postal  Services  Sectors  and  other  related  items,  and  Law  12(I)2006  on  the 
Coordination of the Contracting Processes for Commissioners, Projects and Services and 
other  related  items.  A  law  that  transposes  Directive  2007/66/EC  ("improving  the 
effectiveness  of  review  procedures  concerning  the  award  of  public  contracts")  had  not 
yet  been  adopted  by  the  Cypriot  Parliament  at  the  beginning  of  2015.  Directives 
2014/24/EU and 2014/25/EU have not yet been transposed into Cypriot law. 

There  has  never  been  a  dedicated  national  PPI  or  PCP  policy  in  Cyprus.  A  PPI  scheme 
was being planned in 2012, but the project was abandoned following the public budget 
reductions  triggered  by  the  financial  crisis123.  Interestingly,  in  the  2011  Innobarometer 
survey  45%  of  companies  in  Cyprus  nevertheless  responded  that  their  public 
procurement  activities  included  the  possibility  to  sell  one  of  their  innovations  to  public 
bodies,  which  puts  Cyprus  on  rank  two  in  this  indicator  after  Denmark  (48%) 124 . 
Whereas  these  survey  results  are  partly  based  on  firms'  perceptions  and  need  to  be 
interpreted with caution, general public procurement might thus have had a stimulating 
effect on innovation, even in the absence of a PPI/PCP policy. 

In 2015, the preparation of an action plan on smart regulation has been started. General 
rules for the public procurement process will likely be revised in this context, but it is not 
yet clear whether these revisions will consider PPI/PCP125. 

120 Smart Specialisation Strategy Cyprus, September 2014 pg. 370 
121 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 102 
122 European Commission, DG CONNECT, 2014, "Quantifying public procurement of R&D of ICT solutions in Europe". 
Forthcoming. 
123 Tsipouri and Athanassopoulou, 2015, RIO Country Report Cyprus 2014. 
124 European Commission, DG Enterprise and Industry, 2013, European Public Sector Innovation Scoreboard 2013, p. 48. 
125 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, p. 27 

35 

 
 
 
                                          
3.5.3  Indirect financial support for private R&I 

Government  funding  is  mostly  direct  through  grants.  Indirect  financial  support  to 
business  R&I  comes  through  tax  incentives  on  R&D  and  innovation  expenses  (Law 
118(I)/2002  and  Law  115(I)  2014).  Law  115(I)/2014  introduced  the  definition  of 
innovative  companies 126  and  allowed  tax  exemptions  on  the  purchasing  shares  of 
innovative companies127. 

In  2012,  tax  incentives  were  introduced  to  boost  intellectual  property  rights,  including 
accelerated  amortisation  (five  years)  for  the  acquisition  or  the  development  of  an  IPR, 
up to four-fifths revenue deduction from exploitation of IPRs (maximum tax of 2.5% on 
income  earned  from  IP  assets  based  on  the  low  tax  rate  of  Cyprus),  tax  exemption  of 
dividends resulting from IPR exploitation, four-fifths deduction of profits on disposal of IP 
rights.  In  addition,  total  tax  exemption  on  IP  rights  may  be  achieved  through  the 
introduction  of  a  Cyprus  International  Trust  that  could  hold  the  shares  and  provide 
financing to the Cypriot IPR owner128. 

The  revision  of  the  tax  system  is  among  the  objectives  of  the  Unit  for  Administrative 
Reform  in  the  context  of  the  revision  of  the  National  Action  Plan  on  Smart  Regulation, 
expected within 2015129. 

No evaluation has been undertaken on the impact of these tax incentives. 

3.6  Business R&D 

3.6.1  The development in business R&D intensity 

Since  its  accession,  Cyprus  has  had  the  lowest  BERD  intensity  among  the  EU-28.  As 
Figure 8 shows, BERD intensity has declined by one third during and after the financial 
crisis  of  2009-2012,  but  given  the  low  absolute  amounts  involved,  this  drop  is  not  as 
substantial  as  it  appears.  Since  the  inception  of  the  Economic  Adjustment  Programme 
agreed  between  Cyprus  and  the  European  Commission  in  2013,  BERD  intensity  has 
recovered somewhat and was back at 0.08% of GDP in 2014. 

Per-sector BERD data is available only from 2008 onwards. The services sector was the 
most R&D-intensive until 2012, when it was overtaken by the manufacturing sector. This 
outcome is largely the result of a continuous fall in services' R&D intensity, and only to a 
small degree due to a rise in the manufacturing sector. One reason for this development 
is  the  long-term  dominance  of  the  Cypriot  economy  by  financial  intermediary  services, 
which suffered heavily in the wake of the financial crisis. Few of these companies carried 
out  highly  knowledge-intensive  activities,  but  their  relative  contribution  to  the  overall 
low  BERD  was  nevertheless  substantial.  Human  health  and  social  work  activities  have 
increased  their  R&D  intensity  noticeably  in  recent  years  from  a  starting  point  close  to 
zero, equalling manufacture's BERD intensity in 2013. 

126 Companies acknowledged by experts as capable of producing innovative/improved results or companies that allocate 
at least 10% of their operating expenses on R&D in the last 1-3 years before the year the exemption is claimed. 
127 Law 115(I)2014 
128http://www.mondaq.com/x/243428/Trademark/The+Cyprus+Intellectual+Property+Rights+x0027Box, November 2014 
129 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 27 

36 

 
 
                                          
Figure 8 BERD intensity broken down by most important macro sectors (C= manufacture, 
G_N=services, Q=Human health and social work activities). 

The private sector has been the largest contributor to Cypriot BERD for the whole period 
under  study.  Its  contribution  has  however  declined  strongly  after  2009  during  the 
financial  and  sovereign  debt  crises,  and  has  only  slightly  recovered  in  2013,  reaching 
0.05% of GDP. 

Funding  of  BERD  from  Abroad  is  almost  negligible,  having  flat-lined  at  0.01%  of  GDP 
since  2005.  Due  to  its  remote  geographical  situation  vis-à-vis  the  rest  of  the  EU 
territory,  and  a  tiny  domestic  market,  the  island  is  an  unattractive  location  for 
multinational companies to set up R&D facilities. 

Funding by government, which had slightly increased shortly after Cyprus' EU accession, 
has fallen back to 0.01% since the financial crisis set in. The public contribution to BERD 
has  stagnated  since  then,  due  to  fiscal  austerity  measures  and  an  R&D  policy  tradition 
that favours academia over business. 

Figure 9 BERD by source of funds 

3.6.2  The development in business R&D intensity by sector 

In  2013, Cyprus  ranked  last  in  the  EU  in  terms of  R&D expenditure as a percentage of 
GDP, both in the manufacturing (0.03%) and the services sector (0.02%). 

37 

 
 
 
 
 
 
Figure 10 Top sectors in manufacturing (C10-C12: Manufacture of food products; beverages and 
tobacco products; C20= Manufacture of chemicals and chemical products; C21= Manufacture of 
basic pharmaceutical products and pharmaceutical preparations). 

Within manufacturing, the pharma industry is by a wide margin the top investor in R&D. 
Whereas its R&D expenditure in absolute terms is still small compared to EU countries of 
similar  size,  at  least  spending  seems  not  to  have  been  affected  by  the  crisis  and  has 
slightly increased since 2011, to €2.2m. The expenditure of the second and third largest 
sectors in terms of R&D spending, food and chemicals manufacture, has been below €1m 
already in 2008 and declined continuously to around €200,000 in 2013. 

Turning  to  the  service  sector,  Figure  11  clearly  shows  the  decline  of  information  and 
communication  services,  which  had  been  the  largest  overall  R&D  investor  until  2012. 
This  drop  was  connected  to  the  losses  and  closures  of  financial  intermediary  services 
already mentioned in section 3.6.1. Still, this sector remains the top R&D spender within 
services,  closely  followed  by  professional,  scientific  and  technical  activities,  whose 
expenditure  is  rather  stable  between  2008  and  2013.  The  wholesale  and  retail  trade 
sector's  R&D  expenditure  has  fluctuated  slightly  during  the  period  under  study  and  it 
shows a small increase in 2012 and 2013. 

Figure 11 Top service sectors (J=information and communication, G=wholesale and retail trade; 
repair of motor vehicles and motorcycles, M=professional, scientific and technical activities). 

38 

 
 
 
 
 
 
 
Identification of the biggest R&D investors in Cyprus is difficult, as no Cypriot company is 
large  enough  (in  terms  of  R&D  investments)  to  be  included  in  the  EC's  Industrial  R&D 
investment Scoreboard.  

3.6.3  The development in business R&D intensity and value added 

R&D  intensity  is  not  reflected  in  sectors'  share  of  Gross  Value  Added  in  the  Cypriot 
economy (Figure 12). Whereas the leading sectors in terms of GVA share, wholesale and 
retail  trade,  is  the  third-largest  R&D  investor  within  services,  its  absolute  R&D 
expenditure in 2013 was small (€614,000). 

Figure 12 Economic sectors as percentage of the total GVA. 

Top  6  sectors  in  decreasing  order:  1)  Wholesale  and  retail  trade;  repair  of  motor  vehicles  and 
motorcycles;  2)  Real  estate  activities;  3)  Public  administration  and  defence;  compulsory  social 
security; 4) Financial and insurance activities; 5) Professional, scientific and technical activities; 6) 
Education. 

When  further  disaggregating  the  manufacturing  sector,  manufacture  of  food  products 
turns  out  to  be  the  leading  sector  in  terms  of  share  in  total  GVA  (1.9%)  by  a  wide 
margin.  This  is  the  sector  with  the  second-highest  R&D  expenditure,  which  in  absolute 
amounts  is  nevertheless  small.  The  largest  manufacturing  R&D  spender,  the  pharma 
sector, generates less than 0.5% of total GVA, ranking 4th. 

Figure 13 GVA in manufacturing.  

Top 6 manufacturing sectors: 1) Manufacture of food products; beverages and tobacco products; 
2) Manufacture of fabricated metal products, except machinery and equipment; 3) Manufacture of 
other  non-metallic  mineral  products;  4)  Manufacture  of  basic  pharmaceutical  products  and 
pharmaceutical  preparations;  5)  Manufacture  of  wood  and  of  products  of  wood  and  cork,  except 

39 

 
 
 
 
 
 
furniture;  manufacture  of  articles  of  straw  and  plaiting  materials;  6)  Repair  or  installation  of 
machinery or equipment. 

This picture does not change much when analysing sectors' value added at factor cost in 
nominal  terms  (Figure  14).  Here,  manufacture  of  pharmaceutical  products  exhibits 
rather  low  values  over  the  whole  period  under  study.  Information  and  communication 
services,  which  spent  the  most  on  R&D  among  service  sectors,  generate  a  somewhat 
higher  value  added  at  factor  cost,  but  are  still  topped  by  other  non-R&D  intensive 
sectors. 

Figure 14 Value added at factor cost for the leading manufacture and service sectors in Figures 
10 and 11. 

3.7  Assessment  

RTDI  policy  is  more  recent  than  in  other  Member-States  and  had  attracted  attention 
before the crisis. However, due to the financial difficulties it is running out of steam. On 
a  positive  note,  during  the  economic  distress  there  was  a  shift  from  R&D  to  innovation 
support. Plus, in 2015 the creation of the Agency of Quality Assurance and Accreditation 
in Higher Education is a sign of increasing emphasis on education and skills. A revival is 
necessary  and  a  new  governance  scheme  will  be  central  to  such  a  revival.  Despite 
several  recommendations,  of  which  the  most  recent  one  coming  from  a  specially 
appointed Council by the government, the political decision on it is still pending. 

Funding  of  RTDI  is  limited  and  suffering  from  the  crisis.  The  decline  is  most  visible  in 
GBAORD.  Business funding  is  marginal.  BERD has  been persistently  low (15.4%  GERD) 
and  steadily  decreasing  since  2008  but  picked  up  in  2013.  BERD  per  capita  had 
decreased from € 21.6 at the end of 2008 to €13.9 at the end of 2012, compared to an 
EU-28 average of €338.1. BERD per capita increased to € 15.4 at the end of 2013 (same 
level as in 2011). 

The  current  balance  between  project  and  institutional  block  funding  follows  a  historic 
rationale.  Project  based  funding  has  increased  over  the  years  and  has  contributed  to 
raising  the  level  of  research  output.  As  yet  no  competitive  institutional  funding  is 
adopted. Improvements are slow, in particular after the outbreak  of the financial crisis, 
which  shifted  policy  interest  away  from  development  support  towards  the  consolidation 
of public finance. 

The  new  politically  responsible  agency  for  RTDI  (if  and  when  appointed)  will  need  to 
review this situation in cooperation with the Ministry of Education. 

The effects of indirect public financial support on leveraging business expenditures in R&I 
 are yet to be measured.

40 

 
 
 
 
 
4.  Quality of science base and priorities of the European 
Research Area  

4.1  Quality of the science base 

Cyprus appears to have a good science base with a research output well above its peers. 
More specific: 

-  Cyprus ranks 11th among EU-28 countries in terms of number of publications per 
thousand  of  population  with  1.99  publications,  compared  to  1.08  of  Malta  and  a 
EU-28 average of 1.43 (2013 data); 

-  Citations  per  document  are  high  with  25.65  per  document  in  2002,  higher  than 

Greece (20) but significantly lower than Denmark (35) in the same year130. 

- 

-  The  small  size  of  the  country  has  fuelled  international  collaborations,  raising 
International  co-publications  at  the  high  level  of  61.6%,  only  surpassed  by 
Luxembourg (72.7%), compared to Malta (50.4) and a EU-28 average of 36.4% 
(2013 data); 
International publications per thousand of population were at 1.23 at the end of 
2013, more than double compared to Malta (0.54) and EU-28 average (0.52); 
-  11.83% of Cypriot publications were among the top 10% most cited publications 
in the period 2000-2013, compared to 9.92% in Malta. It is worth observing that 
there  is  a  downward  trend  of  this  indicator  in  Cyprus,  at  least  from  2008 
onwards, if not earlier. This comes in contrast to Malta and EU-28 average where 
the indicator is rising, albeit with small fluctuations; 

-  The  share  of  public-private  co-publications  remains  low  at  0.7%,  compared  to 
1.2% in Malta and an EU-28 average of 1.8 %. It is yet another evidence of the 
lack of strong collaborations between the public and the private sector. 

No specific measure was taken in the last three years to improve the governance of the 
science systems. 

Table 6 Science base indicators131 

Indicator 
Number of publications per 
thousand of population 
Share of international co-
publications 
Number of international 
publications per thousand of 
population 
Percentage of publications in 
the top 10% most cited 
publications 
Share of public-private co-
publications 

Year (2013) 
1.99 

EU average (2013) 
1.43 

61.6% 

1.23 

11.83* 

0,7** 

36.4% 

0.52% 

12.25% (2010) 

1.8% 

* Percentage of publications in the top 10% most cited publications (FULL, 2000-2013) 
** Share of public-private co-publications (SciVal, 2011-2013) 

130 http://www.scimagojr.com/countrysearch.php?country=CY, http://www.scimagojr.com/countrysearch.php?country=GR  
and http://www.scimagojr.com/countrysearch.php?country=DK  
131 Source: JRC IPTS RIO elaboration on Scopus data collected by Sciencemetrix in a study for the European Commission 
DG  RTD  (Campbell,  2013).  The  share  of  public-private  co-publications  is  derived  from  the  Scival  platform  and  is  also 
based  on  Scopus  data  (September  2015).  SciVal  ®  is  a  registered  trademark  of  Elsevier  Properties  S.A.,  used  under 
license.  The  data  on  public-private  co-publications  is  not  fully  compatible  with  the  data  included  in  the  IUS,  due  to 
differences in the methodology and the publication database adopted. 

41 

 
 
 
 
                                          
4.2  Optimal transnational co-operation and competition 

4.2.1  Joint programming, research agendas and calls 

In the proposed National Framework Programme for 2015-2020, € 8 m are allocated to 
calls  for participation  in  Joint  Programming  Initiatives (JPI), ERA-NETs and  Art.169/185 
network  projects  (Smart  Specialisation  pillar-Strategic  axis  of  Extroversion  and  Open 
Horizons)132. All JPIs follow the priorities set by S3CY.  

More specific, Cyprus is currently involved in 3  ERA-NET and ERA-NET COFUND projects 
of  Horizon  2020  (M.ERA-NET:  Materials-Energy,  SOLAR  ERA-NET:  Solar  Energy,  and 
MED  ERA-NET:  Research  cooperation  with  Mediterranean  Countries 
in  Energy, 
Environment  and  Tourism  sectors),  2  Art.  185  Initiatives  (Ambient  Assistant  Living, 
EUROSTARS) and 4 JPI Water Challenges for a Changing World, URBAN EUROPE: Global 
Challenges  –  Local  Solutions,  Agriculture,  Food  Security  and  Climate  Change  and 
Cultural  Heritage  and  Global  Change:  A  New  Challenge  for  Europe.  Total  funding  per 
project  may  not  exceed  €  175,000  unless  Cypriot  companies  assume  coordinating  role 
whereby maximum funding could reach up to € 200,000 per project. One call per year is 
expected133 for each  Initiative and  two  projects  per call  are  expected to  be  selected for 
funding by RPF. 

Each  of  the  above-mentioned  initiatives  applies  its  process  for  proposal  evaluations 
within the evaluation procedures applicable to HORIZON 2020 programmes134. 

The  new  S3  strategy.provides  for  support  for  innovation  clusters  through  calls  for 
Integrated  Projects  expected  at  the  end  of  2016  by  the  RPF  and  calls  for  clusters  by 
MECIT. 

There is no participation in Joint Technology Initiatives (JTI), most likely because of the 
limited interest from the side of the business sector. 

Cyprus  has  signed  bilateral  agreements  with  Greece,  France,  Slovenia,  Italy  and 
Romania  and  programmes  are  expected  within  the  Bilateral  Collaborations  programme 
analysed below under 4.3135. 

There are no specific actions for the alignment of national research systems at European 
level or with other European countries. 

RPF has decided to streamline important procedures such as the evaluation with H2020, 
using similar evaluation criteria and scoring method. 

4.2.2  RI roadmaps and ESFRI 

The  proposed  National  Framework  Programme  for  2015-2020  includes  funding  for  the 
upgrading  of  Research  Infrastructures  in  the  areas  of  IT  and  Communications,  Key 
Enabling Technologies KETS and applications in at least two priority sectors identified by 
S3CY  or  two  specific  fields  of  the  same  priority  sector.  The  programme  will  provide  to 
research  organisations,  businesses  and  third  parties  a  total  funding  of  between  €8.2  m 
to  11.2  m  depending  on  whether  Cypriot  beneficiaries  will  secure  funding  for  this 
purpose from HORIZON 2020 or not136. Maximum funding per project is set at € 1m137. A 
total of 8-11 calls are foreseen. 

132 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 10 
133Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 38-41 
134Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 40 
135 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 29 
136 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 12 

42 

 
 
                                          
Consultations  and  discussions  on  the  ESFRI  roadmap  have  started  on  the  development 
of explicit policy. However no schemes and funds are committed for the participation in 
any  ESFRI  Projects  or  Landmarks  yet.  DGEPCD,  started  the  process  for  devising  a 
national ESFRI roadmap based on the national priorities identified by the S3CY and the 
financial constrains.  

The  Roadmap  will  include:  (i)  a  mapping  of  the  research  facilities  and  the  existing 
Research Infrastructures in Cyprus for further development based on the capabilities and 
needs,  taking  into  account  the  priorities  of  the  Smart  Specialization  Strategy  and  (ii)  a 
needs  assessment  for  participation  in  ESFRI  infrastructures  (European  Strategic  Forum 
for  Research  Infrastructures)  and  the  assessment  procedures  and  conditions  for 
participation and access of national bodies in these infrastructures. 
Currently  Cyprus  participates  at  the  following  ESFRI  Infrastructures  and  projects: 
European  Social  Survey  (European  University  of  Cyprus),  PRACE  (Cyprus  Institute), 
DARIAH (Cyprus University of Technology), KM3NeT (University of Cyprus), EU SOLARIS 
(Cyprus Institute), BBMRI-ERIC (University of Cyprus and Cyprus Institute of Neurology 
and Genetics). Furthermore, DG EPCD, provided a letter of support for the participation 
in  the  preparatory  phase  to  the  Cyprus  Institute  Limited  for  the  new  ESFRI  projects, 
namenly,  ACTRIS  and  E-RIHS  as  well  to  Agriculture  Research  Institute  for  the  ESFRI 
project  EMPHASIS. 

Cyprus participates in the European portal of Research infrastructure services with 3 RI; 
CyGrid  in  the  area  of  Grid  computing  facilities,  Nanomanufacture  in  the  area  of  micro 
and  nanotechnology  facilities  and  Agricultural  Research  Institute  in  the  area  of 
environmental management138. 

4.3  International cooperation with third countries 

The  proposed  DESMI  2015-2020  allocates  €  2.8m  to  cooperation  with  third  countries, 
broken down into two programmes; Bilateral Collaborations (€ 1.6 m) and International 
collaboration-Dual targeting (€ 1.2 m)139. A budget of € 3,7m is allocated to EUREKA and 
EUROSTARS Programmes which are open to international cooperation (Section 3.5.1). 

The programme Bilateral Collaborations supports funding of Industrial or Basic Research 
and is addressed to research organisations, businesses and third parties from countries 
that  have  signed  bilateral  research  agreements  with  Cyprus.  The  programme  will  also 
support  collaborations  with  European  countries.  RPF  will  fund  the  Cypriot  counterparts 
and funding per project cannot exceed € 100,000. Bilateral agreements have also been 
signed with Egypt and Israel140.  

The  programme  International  Collaboration-Dual  Targeting  is  addressed  to  research 
organisations,  businesses  and  third  parties  from  Cyprus  and  third  countries  with  which 
bilateral  agreements  for  research  cannot  be  signed  and  there  is  no  other  way  of 
providing funding. The programme distinguishes between funding collaboration with USA 
and  collaboration  with  other  third  countries,  with  a  maximum  funding  of  €  80,000  per 
project141. 

137 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 19-21 
138 http://www.riportal.eu/public/index.cfm?fuseaction=ri.result 
139 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 10 
140 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 29-31 
141 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 32-34 

43 

 
 
                                                                                                                                 
Cyprus  actively  participates  in  the  preparation  of  a  Joint  Programme  for  the 
establishment of PRIMA (Article 185 Initiative) for strengthening R&I cooperation in the 
fields of Water and Food for the Mediterranean region142. 

Cyprus does not participate in Multi-Annual Roadmaps for international cooperation. 

4.4  An open labour market for researchers 

4.4.1  Introduction 

Cyprus  is  a  highly  regulated  research  market  with  no  institutional  autonomy.  Based  on 
the  University  Autonomous  Tool  (UAT)143,  Cyprus  scored  medium-low  to  organisational 
and staffing autonomy and medium-high to academic autonomy. The lowest ranking was 
received in terms of financial autonomy. Regulations of internal academic structures are 
unusually  strict  and  neither  faculties  nor  departments  may  be  established  within  HEIs 
without government agreement144. 

Researchers  accounted  for  0.46%  of  total  employment  in  Cyprus  (2012  data).  Most  of 
them  work  for  HEI  (48%),  20%  work  for  the  public  sector,  19%  work  for  private 
companies and 13% work for non-profit organisations. About 38% of researchers hold a 
PhD  degree,  29%  hold  postgraduate  degree,  and  18%  hold  a  graduate  degree  while 
about  16%  do  not  have  a  graduate  degree145.  The  recent  financial  crisis  resulted  in  a 
“freeze”  of  all  hiring  in  the  public  sector,  which  became  official  by  Law  21(Ι)/2013. 
According  to  this  law,  the  prohibition  was  foreseen  to  remain  in  force  until  the  end  of 
2014146. It has not been formally lifted since then, but in several cases (including hiring 
researchers  to  undertake  research  activities  funded  by  Horizon)  there  are  ad  hoc 
provisions which have eliminated problems in HEIs and PROs. 

Supply of skilled and medium-skilled labour increased more rapidly than demand in the 
decade  2000-2010  and  it  is  expected  to  further  increase  more  rapidly  than  demand  in 
the current decade147. Unless there is a serious restructuring and increasing investments 
this is likely to nurture outmigration of skilled and semi—skilled labour. 

Table 7 Labour market skills forecast-demand and supply (% change) 

Demand highly 
skilled 
(In brackets 
medium skilled) 
62.9  (29.4) 
27.9 (6.6) 

Supply highly skilled 
(In brackets 
medium skilled) 

68.2 (40.8) 
31.3 (14.6) 

Source: Innovation Union Competitiveness Report 2013 

2000-2010 
2010-2020 

142 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 12 
143 UAT was compiled at the end of 2010 using 38 indicators, categorised into four autonomy dimensions (organisational, 
financial, staffing, academic)- http://www.university-autonomy.eu/about/ 
144 http://www.university-autonomy.eu/countries/cyprus/, November 2014 
145 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015,pg.104 
146 Law 21 (I) 2013  
147 Innovation Union Competitiveness Report 2013, pg. 64 

44 

 
 
 
 
 
                                          
4.4.2  Open, transparent and merit-based recruitment of researchers 

Researchers  are  civil  servants  and  their  recruitment  and  promotion  is  highly  inflexible. 
The hiring and promotion of researchers in HEIs in Cyprus is regulated by individual laws 
applicable to public and private universities: 

-  The  law  regulates  the  qualifications,  which  are  necessary  for  the  promotion  of 
researchers  to  a  higher  rank,  and  the  procedure  for  their  appointment  in  the 
University  of  Cyprus 148.  The  law  stipulates  that  researchers  are  hired  through 
open tendering procedures; 

-  The  EURAXESS  Cyprus  portal  is  managed  by  RPF  and  provides  practical 
information.  All  universities  and  research  institutes  in Cyprus have  endorsed  the 
Charter  and  Code.  The  University  of  Cyprus  and  Cyprus  Institute  of  Neurology 
and  Genetics  were  acknowledged  for  their  progress  in  HR  Strategy  for 
Researchers and were awarded the HR Excellence in Research logo in 2010. Two 
more  HEIs  (Open  University  and  European  University)  are  in  the  pipeline  for 
receiving this certification. 
Law  234  (I)  2002  for  the  establishment  and  operation  of  Open  University  of 
Cyprus  specifies  that  researchers  may  be  transferred  from  Universities  abroad. 
Its amendment in 2010 introduced experience in open and distant learning as one 
of the prerequisites for their hiring; 

- 

-  The  qualifications,  which  are  necessary  for  the  promotion  of  researchers  to  a 
higher ranking, and the procedure for their appointment in the Cyprus University 
of Technology are also defined by Law149; 
Law  109  (I)  2005  for  the  establishment  and  operation  of  private  universities 
stipulates that the recruitment of researchers is regulated by the statutes of each 
university  and  should  be  in  compliance  with  the  procedures  applied  by  the 
University of Cyprus. 

- 

Based  on  UAT,  Cyprus  received  a  total  score  of  50%  un-weighted  and  49%  weighted 
terms  in  terms  of  organisational  autonomy 150 ,  with  flexibility  in  the  selection  and 
dismissal  of  the  executive  head  (100%)  and  the  establishment  of  other  legal  entities 
(60%).  In  terms  of  staffing,  Cyprus  received  an  overall  score  of  48%  un-weighted  and 
46% weighted, allowing flexibility in the recruitment procedures of senior academic and 
administrative staff (100%) and the dismissal of senior academic staff (60%)151. 

Recruitment  of  researchers  in  Cyprus  is  considered  open  and  transparent,  with  all 
positions  and  selection  criteria  advertised  in  the  Government  Gazette,  in  local  press, 
websites  and  in  the  Cyprus  EURAXESS  portal.  Most  positions  are  advertised  in  English. 
There  are  clear  rules  for  the  composition  of  selection  panels,  though  the  actual 
composition is rarely disclosed152. The criteria for assessment of postgraduate candidates 
are  the  academic  background,  letters  of  recommendation,  personal  interviews,  written 
examinations and other special criteria set out by each department153. 

148 The unofficial codification of laws for University of Cyprus in the period 1989 – 2007.  
149 The unofficial codification of laws for the Cyprus University of Technology in the period 2003 – 2011. 
150 Weighted by the importance of each indicator included in each of the four dimensions. 
151 http://www.university-autonomy.eu/countries/cyprus/, December 2014 
152 Researchers’ Report 2014 Country Profile: Cyprus, (Deloitte, 2014), pg. 7 
153 European Commission, DG RTD, Study Visit, Institution: University of Cyprus, Country: Cyprus, Case study undertaken in 
the context of the ‘Exploration of the implementation of the Principles for Innovative Doctoral Training in Europe' (Tsipouri 
L. September 2013), pg. 19  

45 

 
 
                                          
Cyprus  had  practically  zero  net  added  researchers  (head  count)  in  the  period  2000-
2010154.  Due  to  the  limited  financial  autonomy  there  is  a  large  number  of  researchers 
coming  from  academic  inbreeding155.  Only  a  minority  of  local  researchers  (about  40%) 
believe  that  research  posts  are  sufficiently  advertised.  About  60%  believe  that 
recruitment procedures are sufficiently transparent and 50% believe they are sufficiently 
on  merit156.  More  than  50%  of  Cypriot  researchers  associated  to  European  universities 
were  'satisfied'  with  the  extent  to  which  research  job  vacancies  are  publicly  advertised 
and made known by their institutions in Cyprus157. 

After  their  selection  following  the  open  tender,  lower  grade  academics,  including 
lecturers  and  assistant  professors,  undergo  individual  peer  evaluations  every  three  to 
four  years and  they  may  be  dismissed,  if  they  receive  a  negative  evaluation  twice  in  a 
row.  Senior  administrative  staff  in  permanent  positions  is  evaluated  and  can  only  be 
dismissed during the first two years of its contract. Higher categories of academic staff, 
such as full and associate professors cannot be dismissed at all158. 

In  the  past  accreditation  was  regulated  by  Law  68  (I)  96  and  performed  by  an 
independent body, supervised by the Ministry of Education, the Council of Recognition of 
Higher  Qualifications  (KYSATS).  There  are  two  types  of  accreditation,  namely 
equivalence  (if  the  duration  of  studies,  the  conditions  of  admission,  evaluation, 
promotion  and  graduation  of  students  and  the  teaching  and  learning  procedures  meet 
the  requirements  of  the  University  of  Cyprus  or  the  other  State  Higher  and  Tertiary 
Education Institutions of Cyprus) and equivalence and correspondence (if, in addition to 
equivalence,  the  specific  programme  of  studies  includes  at  least  two  thirds  of  the 
required subjects including the compulsory subjects of the corresponding programme of 
the institution which is used as the basis for evaluation)159. Accreditation is not an access 
barrier since similar practices apply at a European level. At any rate, the creation of the 
new  Agency  of  Quality  Assurance  and  Accreditation  in  Higher  Education  will  probably 
trigger changes in that respect. 

There  is  a  trend  of  outflow  of  researchers,  which  was  amplified  by  the  crisis,  but  there 
are no official data160. Based on the findings of a study on the condition and mobility of 
researchers,  in  8  Member  States  including  Cyprus  (Austria,  Bulgaria,  Czech  Republic, 
Cyprus,  Greece,  Hungary,  Slovakia  and  Switzerland),  the  main  motive  for  international 
mobility of researchers in Cyprus was future career development (71% of respondents), 
reputation of the host organisation (67% of respondents) and interesting research theme 
(67%  of  respondents).  The  main  discouraging  factor  was  family  and  other  personal 
connections  (70%  of  the  respondents),  while  age  limitations  and  adaptation  problems 
were also mentioned161. 

154 IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 2014),, pg. 
21 
155 IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 2014),pg. 
23 
156 IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 2014),, pg. 
24 
157 157 European Research Area, Progress Report 2014, pg. 5 
158 ERA Communication Fiche Cyprus 2013 
159 http://www.highereducation.ac.cy/en/kysats.html, November 2014 
160 MORE has no data for Cyprus due to the low response rate in the corresponding survey- European Commission DG 
Directorate C-European Research Area Universities and Researchers, Study on mobility patterns and career paths of EU 
researchers, Part I Mobility Survey of the higher educational sector sector, June 2010, pg. 41 
161 Challenges for career and mobility of researchers in Europe, Oxford Journal Social Sciences, Science and Public Policy, 
Vol. 38, Issue 3, (Ivacheva L., Gourova E., )pg 185-198 
The  survey  was  conducted  through  questionnaires  to  researchers  (PhD  students,  Post  Docs,  experienced  researchers, 
university lecturers, etc) and other stakeholders (representatives of industry, research organisations, NGOs, public bodies, 
etc.). The sample size was fixed at 100 researchers and 30 stakeholders, with the exception of Cyprus where the sample 
was much smaller. 

46 

 
 
                                          
Cyprus had a relative high number of researchers (post-PhD) having spent a period of at 
least  three  months  as  a  researcher  in  another  country  in  the  last  10  years  (44.1%) 
compared to the EU average (31.1%). HEIs encourage academic staff to take ‘sabbatical 
leaves’  for  the  purpose  of  expanding  their  research  interests/aspirations,  but  such 
provision  is  not  provided  for  non-academic  research  staff 162 .  Promotion  from  within 
prevents inward mobility163.  Language is also a problem. The need to obtain residence 
and  work  permits  poses  additional  constraints  to  HEIs 164 .The  Proselkysi  (Greek  for 
Attraction)  Programme  (ran  in  2009-2010)  enabled  Cypriot  researchers  as  well  as 
researchers from another EU and third countries to participate in international research 
networks165. 

According to the MORE II study, permanent contracts are the only possibility for leading 
researchers (category R4)166. First grade researchers up to the PhD level have fixed term 
contracts (less than one year), second grade researchers at PhD level but not completely 
independent  have  fixed  term  contracts  of  2-4  years  and  established  researchers  have 
fixed term contracts in excess of 4 years167. 

The financial crisis has created instability in the labour market, primarily affecting young 
researchers. The government placed emphasis on the approval of a National Action Plan 
for  Youth  Employment  (NAP)  and  of  Youth  Entrepreneurship  Programme.  NAP  was 
approved in 2014, and it allocated € 37.6 m (almost 80% of total budget) to the Youth 
Guarantee Implementation Plan (YGIP) for the provision of guarantees to school leavers 
and  newly  unemployed  individuals  in  the  age  bracket  between  15-24  years  old  against 
long  term  unemployment 168 .  A  total  of  €3.1  million  was  allocated  to  the  Youth 
Entrepreneurship  Programme  in  2014,  for  the  benefit  of  170  enterprises,  resulting  in 
about 400 new job positions169. 

The  proposed  Framework  Programme  for  2015-2020  allocates  a  total  of  €  13.4  m  to 
programmes addressed to researchers: 

-  A new DIDAKTOR programme; 3 calls are expected in the period 2015-2017 with 

a total budget of    € 9.4m170; 

-  Young Researchers second change programme (budget € 4m) for the support of 
young  post  doctorate  researchers  who  did  not  manage  to  get  funding  from 
HORIZON 2020171. 

162 2012 data, Researchers’ Report 2014 Country Profile: Cyprus, (Deloitte, 2014), pg. 4 
163 IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 2014), pg. 
27 
164 IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 2014), pg. 
40 
165 Deloitte, Researchers’ Report 2014 Country Profile: Cyprus, pg. 12 
166 MOREII study defines category R4 as leading researchers-researchers leading in their research or field (pg. 16 of the 
study) which is probably the same as established researchers but we use the terminology of the study 
167 MORE2  Remuneration Cross country Report, April 2013, pg. 49 
168 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 5 
169 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 4 
170 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 48-50 
171 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 5--52 

47 

 
 
 
                                          
4.4.3  Access to and portability of grants 

In Cyprus portability of national grants is allowed within the country but not to other EU 
countries 172 .  RPF  Programmes  are  open  to  research  organisations  and  to  individual 
researchers from abroad173. 

4.4.4  Doctoral training 

HEIs/departments  have  full  autonomy  in  designing  doctoral  training  curricula  and 
deciding on the requirements for awarding PhDs. There is no explicit policy regarding the 
Principles  for  Innovative  Doctoral  Training  (IDT)  either  at  the  national  level  or  at  the 
institutional  level 174 .  Funding  and  the  lack  of  employment  opportunities  are 
acknowledged  as  major  barriers  for  the  implementation  of  IDT 175 .  However,  similar 
principles  (excellence  and  international  cooperation)  are  adopted  internally  and 
independently  of  the  IDT.  Departments  try  to  ensure  the  funding  means  for  PhD 
students to attend international conferences. 

The financial crisis in Cyprus has led to limited funding of doctoral training and almost no 
funding of post-doctoral research176.  

4.4.5  Gender equality and gender mainstreaming in research 

In  Cyprus,  the  government,  through  the  Ministry  of  Justice  and  Social  Order  (Woman 
Issues  Gender  Equality  Unit)  and  the  National  Machinery  for  Women’s  Rights,  is 
principally  responsible  for  introducing  gender  issues  in  academic  curricula 177 .  The 
National  Machinery  for  Women’s  Rights  is  a  system  of  four  bodies  established  by  the 
government (Council of Ministers) in 1994 within the auspices of the Ministry of Justice 
and  Social  Order.  This  system  composed  of  representatives  from  organisations,  trade 
unions  and  government  departments  advises  the  Council  of  Ministers  on  women  rights 
issues  and  programmes,  monitors  their  implementation,  subsidises  women  initiatives 
and serves as a liaison between the government and NGO's working in this field178.   

Equal  payment  between  men  and  women  is  ensured  by  Law  177(I)/2002  and  its 
amendments (Law 193 (I)/2004, Law 38 (I)/2009)179 but there is no explicit reference to 
the  R&D  sector.  The  Ministry  of  Labour  and  Social  Insurance  monitors  the  gender  pay 
gap180. 

The  first  National  Action  Plan  for  Gender  Equality  was  approved  by  the  Council  of 
Ministers in 2007. Gender equality in employment, professional training, education, R&D, 
as well as the enhancement of women participation in political, social and financial realm 
were among the six pillars of this Action Plan181. 

172 Researchers’ Report 2014 Country Profile: Cyprus, (Deloitte, 2014), pg. 12 
173 Researchers’ Report 2014 Country Profile: Cyprus, (Deloitte, 2014), pg. 12 
174 European Commission, DG RTD, Study Visit, Institution: University of Cyprus, Country: Cyprus, Case study undertaken in 
the context of the ‘Exploration of the implementation of the Principles for Innovative Doctoral Training in Europe' (Tsipouri 
L. September 2013), pg.10  
175 European Commission, DG RTD, Study Visit, Institution: University of Cyprus, Country: Cyprus, Case study undertaken in 
the context of the ‘Exploration of the implementation of the Principles for Innovative Doctoral Training in Europe' (Tsipouri 
L. September 2013), pg.14  
176 European Commission DG RTD, Exploration of the implementation of the Principles for Innovative Doctoral Training in 
Europe, Final Report, pg. 24 
177 European Commission Gender Equality Policies in Public Research, Based on a survey among 
Members of the Helsinki Group on Gender in Research and Innovation, 2013, pg. 21 
178 http://www.cyprusnet.com/article_cyprus-machinery-for-women--s-rights 
179 Ministry of Justice and Social Order, Gender Equality Legislative Measures 
180 European Commission Gender Equality Policies in Public Research, Based on a survey among 
Members of the Helsinki Group on Gender in Research and Innovation, 2013, pg. 27 
181 Cyprus Government, Ministry of Justice and Social Order, Annual Report 2012, pg. 46 

48 

 
 
                                          
Research  funders  in  Cyprus  believe  in  gender  equality  in  the  evaluation  process  of 
research  projects  and  projects  monitoring182.  Extensions  are  granted  for  the  award  of 
PhD titles beyond the 5year timeframe in case of maternity leaves or military obligations 
to compensate for the respective time spent183. 

27%  of  Cypriot  RPOs  had  adopted  gender  equality  plans  by  2013.  However,  the 
assessment is not representative since it refers to a sample of just 11 RPOs184.  Cyprus 
ranks  third  from  last  in  terms  of  percentage  of  women  PhD  graduates,  accounting  for 
39% of total compared to a EU27 average of 46%185. 

The  proposed  DESMI  2015-2020  makes  reference  to  gender  equality  and  equal 
opportunities  in  research  groups  and  the  selection  of  research  topics 186.  The  way  in 
which this will affect project selection is yet to be determined. 

4.5  Optimal circulation and Open Access to scientific knowledge  

4.5.1  e-Infrastructures and researchers electronic identity 

In 2012, a Digital Strategy was adopted, aiming to provide a comprehensive plan for the 
period 2012-2020 and introduce a holistic approach for the development of information 
society in Cyprus.  

The  Action  Plan  for  the  period  2015-2017,  approved  by  the  Council  of  Ministers  in 
September 2014, describes specific initiatives that will be undertaken in the next 3 years 
for the promotion of the Digital Strategy, focusing on six strategic objectives, (i) Connect 
Cyprus,  (ii)  Modernise  public  administration  and  provide  public  electronic  services,  (iii) 
Digital  Entrepreneurship,  (iv)  Digital  Skills,  (v)  Digital  entrepreneurship,  (vi)  National 
Plan for the Coalition for Digital Jobs187. 

Cypriot  universities  are  neither  members  of  an  identity  federation  nor  of  the  eduGAIN 
service. About 10% of RPOs provide federated identities to their researchers188. 

Collection and processing of personal data within the implementation of RPF’s proposed 
Framework  Programme  for  2015-2020  is  dealt  according  to  the  national  legislation  for 
Management of Personal Data.  

4.5.2  Open Access to publications and data 

In  October  2015,  the  Library  of  the  University  of  Cyprus  (designated  as  the  Cyprus 
OpenAIRE National Open Access Desk), RPF and DGECPD presented the first open access 
national policy document in Cyprus. The policy document was based on support material 
provided  by  the  coordinators  of  the  programme  PASTEUR4OA.  Following  a  public 
consultation, which was closed in November, the document is expected to be revised and 
submitted for approvalin the first months of 2016 by the Council of Ministers189. 

Open access initiatives are undertaken by HEIs and other research organisations: 

- 

INTRA  was  initiated  by  the  Library  of  UCY  to  aggregate  and  record  all  scientific 
publications by the academic staff of UCY190; 

182 European Commission Gender Equality Policies in Public Research, Based on a survey among 
Members of the Helsinki Group on Gender in Research and Innovation, 2013, pg. 33 
183 Ibid. pg. 34 
184 Preliminary results of She figures 2015 
185 European Commission She figures 2012, Gender in research and innovation, Statistics and Indicators, pg. 51 
186 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 141 
187 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 29-31 
188 European Research Area, Progress Report 2014, pg. 55 
189 http://blog.openaccess.gr/?p=4141 
190http://dl114.madgik.di.uoa.gr/openaire/index.php?option=com_content&view=article&id=89&Itemid=211, November 
2014 

49 

 
 
                                          
- 

-  The Cyprus Academic Library Consortium (CALC) signed a nationwide subscription 
contract with BMC (Biomed Central) for an open access model of BMC journals191; 
In  October  2013,  the  Library  of  the  Cyprus  University  of  Technology  and  the 
pharmaceutical  company  REMEDICA 
launched  the  «Cyprus  University  of 
Technology  Open  Access  Author  Fund».  The  Fund  will  provide  total  funding  of 
€14,000  per  year  and  €3,000  per  researcher  for  the  funding  of  academic 
publications  which  will  be  in  compliance  with  OASPA  Code  of  Conduct  and 
published  in  Open  Access  journals.  Books  must  be  published  in  the  Directory  of 
Open Access Books192. 

Green  open  access  is  the  main  modality  of  public  policy  in  Cyprus193.    According  to  an 
ERA  survey  73.7%  of  RPOs  declared  that  they  do  not  support  open  access  to 
publications  and  open  access  data,  while  the  remaining  26.3%  considered  that  this 
question is not applicable for them (2013)194.   

The majority of open access papers in Cyprus in the period 2008-2013 were other type 
(223 papers 67.8% of total OA papers and 53.3% of total accessed papers), based on a 
sample  of  accessed  papers  (584).  Green  journals  came  second,  accounting  for  almost 
22%  of  OA  papers  and  12.3%  of  total  accessed  papers.  OA  papers  were  53.3%  of 
total195. For the future calls it is envisaged that support schemes will accept open access 
fees as eligible costs, leaving the decision on gold or green to the individual researchers 

In  a  survey  conducted  by  Science-Metrix  using  DOAJ,  PubMedCentral,  and  Scopus 
regarding  papers  published  on  open  access  in  the  period  2008-2011  among  EU  27 
countries,  Cyprus  ranked  low  with  only  1,000  records  contained  in  institutional 
repositories.  Only  38  papers  were  published  open  access,  (43%  of  total  published 
papers), surpassing only Latvia, Luxembourg and Malta196. 

In  October  2015,  there  were  3  open  access  repositories  in  Cyprus,  all  in  HEIs  (Cyprus 
University  of  Technology,  Open  University  of  Cyprus,  Cyprus  University)  listing  13,811 
items; 2 of the repositories provide access to digital collections and 1 repository provides 
access  to  research  data  of  the  HEI    (Cyprus  University  of  Technology)197.  Traffic  was 
rather low in the period 2014-2015, with only 532 new items being added, excluding the 
creation of the new repository (see table 8 below). 

Table 8 Open access repositories in Cyprus 

Repository 
name 

Ktisis 

KYPSELI 

LEKYTHOS 

TOTAL  

Num. 
Items 
2014 

3,324 

1,643 

8,312 

Num. 
Items 
April 
2015  
3,800 

1,699 

8,312 

13,279  13,811 

Confs  Theses  Unpub  Other 

+ 

+ 

+ 

+ 

+ 

  + 

Source: http://www.opendoar.org/find.php 

191http://dl114.madgik.di.uoa.gr/openaire/index.php?option=com_content&view=article&id=89&Itemid=211, December 
2014 
192 http://library.cut.ac.cy/el/openaccess_fund,December 2014 
193 European Research Area, Progress Report 2014, pg. 43 
194 Ibid. pg. 110 
195 Proportion of Open Access Peer-Reviewed Papers Papers published in Peer-Reviewed Journals at the European and 
World Levels 1996-2013, October 2014, Science Metrix, pg. 26 
196 Open Access Strategies in the European Research Area, produced for the European Commission DG Research & 
Innovation, (Caruso J.,  Archambault A. , August 2013) 
197 http://www.opendoar.org/find.php 

50 

 
 
 
 
 
 
 
 
 
 
 
 
                                          
 
Framework conditions for R&I and Science-Business 

5. 
cooperation 

5.1  General policy environment for business 

Cyprus  ranks  33.5%  away  from  the  frontier198 constructed  from  the  best  performances 
across  all  economies  and  across  time  in  doing  business  (2015),  and  has  slightly 
improved  compared  to  2014  (34.1%).  Cyprus  ranks  64  out  of  189  economies  in  the 
World Bank indicator starting a business, scoring high in the indicator number of days for 
concluding the process (8 days compared to EU average of 12.1 days and OECD average 
of 9.2 days) and Paid-in min. capital (% of income per capita), which is 0.00 compared 
to  OECD  high-income  average  of  9.6.  Cost  of  starting  a  business  is  relative  high  at 
12.6% of per capita income, compared to an EU and Central Asia average of 5.3% and 
OECD average of 3.4%199. 

A  new  solvency  system  was  part  of  the  reforms  required  by  the  Troika.  Following  the 
approval  of  the  new  insolvency  framework  (Personal  Insolvency  Law,  Personal 
Bankruptcy Law, Companies Law amended regarding companies’ liquidation, Companies 
Law  amended  regarding  companies’  debt  restructuring  and  the  Insolvency  Practitioners 
Law which adopted the Personal Insolvency Plan)200 in April 2015, insolvency regulations 
are being modernised. In particular: the provisions of the Companies Law amended the 
provisions  for  companies’  debt  restructuring  (Law  62  (I)/2015),  viable  companies  may 
be restructured with the help of an examiner (insolvency practitioner)  while its directors 
remain in charge of the business. Debt is discharged. A Cypriot Insolvency Service was 
created by Law 64(I)/2015, aiming to set out the eligibility criteria, training and licensing 
of  insolvency  practitioners 201 .  Secondary  legislation  is  yet  to  be  finalised  for  the 
operation  of  this  Service,  which  currently  operates  within  the  Registrar  of  Companies 
and Official Receiver of MECIT. 

A  major  challenge  for  Cyprus  is  to  enhance  science-industry  collaboration,  despite  the 
absence  of  high  value  manufacturing  in  Cyprus.  Pillar  I  of  the  Smart  Specialization 
Strategy  (S3Cy)  and  the  new  RPF’s  Framework  Programme  aim  at  Smart  Growth, 
focusing  on  selected  priority  areas,  by  linking  academic  and  research  Institutions  with 
the  productive  base  of  the  economy,  enhancing  the  quality  and  effectiveness  of 
Research,  Technological  Development  and  Innovation  system  of  Cyprus,  strengthening 
the extroversion and the links and interaction between the elements of the RTDI system. 

5.2  Young innovative companies and start-ups  

In  the  past  support  to  innovative  start-ups  was  limited  and  mostly  indirect,  i.e.  young 
companies  would  benefit  from  voucher  systems  under  the  same  conditions  as 
incumbents.  MECIT  had  a  Youth  Entrepreneurship  programme  and  it  also  supports 
innovation through the Business innovation grant scheme addressed to both established 
and  newly  established  SMEs  for  the  support  of  innovative  products/services  and  the 
programme  “Enhancement  of  Business  Innovation  in  Cyprus”  (see  details  under  3.5.1 
above).  

In  June  2015  a  new  call  for  Innovation  Vouchers  was  launched 202 (see  details  under 
3.5.1 above).  

198 66.5% Distance to Frontier index 
199 http://www.doingbusiness.org/data/exploreeconomies/cyprus/#starting-a-business 
200 http://www.bakertillyklitou.com/latest-news/2015/april/insolvency-law-2015/ 
201 European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015, pg.27 
202 http://www.research.org.cy/EL/news/3831.html 

51 

 
 
 
                                          
The  proposed  DESMI  2015-2020  offers  several  funding  opportunities  for  young 
innovative SMEs:  

- 

the  programme  Research  and  innovation  in  Newly  Established  Enterprises 
provides  funding  to  companies  with  a  life  span  of  less  than  5  years  for  the 
development  of  new  products,  services,  high  added  value  production  methods 
and to enhance their participation in RTDI203; 

-  Newly  established  companies  may  also  apply  for  funding  from  the  programme 
Investigation  of  Industrial  Applications  of  Technology/Technical  know-how  pilot 
testing of their research ideas204; 

-  Extroversion and the creation of clusters in S3CY thematic priorities are enhanced 

through EUREKA Cyprus205 (see details under 3.5.1 above). 

For  the  commercialisation  of  research  results  of  innovative  companies,  the  proposed 
DESMI  2015-2020  provides  a  total  of  €1.3m,  broken  down  into  two  phases 
(“Preparation”  when  the  feasibility  of  the  idea  is  investigated,  “Investment”  when  the 
idea  is  implemented).  Maximum  funding  per  project  is  €  30,000  for  phase  A  and  € 
250,000 for phase B. All proposals will be selected in phase A, until the depletion of the 
allocated budget for this phase (€ 270,000). In phase B, proposals will be reviewed and 
selected based on the terms specified in the tender documents. Within 2015, one call is 
expected for phase A. The first call for phase B is expected in 2016206. 

An association composed of start-ups was created with a vision and a manifesto trying to 
mobilise forces in favour of the start-ups community207. A variety of events and prizes, 
like  the  Disrupt  Cyprus  Cup208,209,  are  now  active  paving  the  way  for  a  more  start-up 
pro-active policy. 

5.3  Enterpreneurship skills and STEM policy 

In 2014 the tertiary education attainment level increased to 51.1%, compared to 47.8% 
in  2013  and  a  national  target  of  46%  (EU  target  40%) 210.  In  the  fields  of  science, 
technology,  engineering  and  mathematics,  there  is  not  a  sufficient  supply  of 
postgraduates  and  there  are  no  specific  policies  in  place  or  incentives  to  ensure  a 
sufficient supply in the medium-to-longer term.  The creation of the Cyprus University of 
Technology  was  the  main  instrument  to  address  this  need.  There  were  608  active 
postgraduate  students  (MSc  and  PhD)  in  the  academic  year  2013-2014  as  opposed  to 
454 in the academic year 2012-2013211. Private universities are also teaching STEM (ICT 
and Engineering in particular). European University Cyprus operates a School of Sciences 
with  degrees  in  the  fields  of  Computer  Science,  Computer  Engineering,  Information 
Systems  and  Nursing212.  University  of  Nicosia  offers  degrees  in  Computer  Engineering, 
Computer  Science,  Mathematics,  Civil  and  Environmental  Engineering  and  Electrical 
Engineering (School of Sciences and Engineering)213 Frederic University offers degrees in 
Civil Engineering, Computer Engineering, Electrical Engineering, Automotive Engineering, 
Mechanical  Engineering  and  Computer  Science    (School  of  Engineering  and  Applied 
Sciences)214. Neapolis University Pafos offers degrees in Applied Informatics Presentation 

203 Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research Promotion 
Foundation, July 2015, pg. 24-26 
204 Ibid. pg. 27-29 
205 Ibid. pg. 35-37 
206 Ibid. pg. 73-76 
207 http://startupcyprus.org/about/  
208 http://industrydisruptors.org/index.php/cyprus/cyprus-events/disrupt-cyprus  
209 https://www.bestinvestcyprus.com/en/content/BestInvestCyprus-Conference-Agenda  
210 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 3 
211 http://www.cut.ac.cy/studies/postgraduate/statistics/, February 2015 
212 http://www.euc.ac.cy/en/schools--departments/school-of-sciences 
213 http://www.unic.ac.cy/schools-programmes/school-of-sciences-and-engineering/programmes 
214 http://www.frederick.ac.cy/school-of-engineering-and-applied-sciences-postgraduate-programs 

52 

 
 
                                          
(School  of  Information  Sciences)215 and  in  Civil  Engineering  (School  of  Economics  and 
Business)216. 

Cyprus places emphasis on the improvement of the skills of the employment workforce 
and  has  scheduled  for  2015  schemes  for  the  employment  and  training  of  tertiary 
education  graduates,  of  long-term  unemployed,  schemes  for  the  job  placement  of 
unemployed young tertiary education graduates as well as young unemployed graduates 
of lower secondary, upper secondary and post-secondary education of up to two years, 
for  the  acquisition  of  work  experience  in  enterprises/organisations  and  multi-company 
training  programmes  for  the  unemployed 217.  There  are  no  specific  measures  aiming  to 
support staff training in young SMEs. 

HEIs are adapting their curricula to address interdisciplinarity and entrepreneurship but 
this differs from faculty to faculty and HEI to HEI, based on individual  initiatives rather 
than national or institutional policy. 

Vocational  training  and  the  role  of  Industry  Liaison  Offices  (ILOs)  are  expected  to 
increase collaboration between academia and the university and narrow the gap between 
supply and demand. Through the System of Vocational Qualifications (€ 9 m budget) it is 
foreseen  that  80  new  Standards  will  be  developed  and  around  10,000  persons  will  be 
assessed in order to have their vocational qualifications recognised in 2015218. By 2014, 
the existing seven ILOs (in three public and four private Universities) had placed 1,980 
students  in  businesses,  compared  to  about  940  at  the  end  of  2013.  A  total  of  36 
collaboration  agreements  had  been  signed  between  Universities  and  businesses,  6 
workshops  had  been  organised,  756  academic  profiles  from  all  Universities  and  844 
enterprise profiles and 209 research lab profiles had been collected in order to facilitate 
academic-business cooperation219. 

5.4  Access to finance 

In  Cyprus,  there  is  neither  an  organised  VC  market  nor  fiscal  incentives  for  VCs220.  As 
yet  the  JEREMIE  scheme  was  not  used  for  VC  backing.  The  banking  sector  does  not 
differentiate between credits to innovative enterprises and others. 

The numbers for Angel investments are minimal and hence not leading to any trends and 
conclusions. The angel market in Cyprus is the smallest in the EU with less than a million 
of  investments  in  2013  (€600,000)  and  practically  no  activity  in  2012.  Cyprus  was  the 
country  with  the  highest  average  investment  per  company  (€310,000)  in  EU. 
Nevertheless,  the  average  investment  size  per  business  angel  remains  low  at  about 
€16,000221.  

The  Cyprus  Business  Angels  Network  (CYBAN) 222 created  in  2013  is  now  increasingly 
active.  It  is  the  only  Angel  Investment  Network  in  the  country;  it  is  a  member  of  the 
EBAN  and  the  MENA  Business  Angel  Network  indicating  its  global  vision.  Members  are 
successful entrepreneurs and former CEOs, chairmen and non-executives of large private 
and  public  companies.  The  network  assesses  about  100  applications  per  year,  of  which 
20 are presented to CYBAN. The first deals have been concluded. 

215 http://www.nup.ac.cy/school-of-information-sciences/ 
216 http://www.nup.ac.cy/schools/school-of-architecture-environmental-sciences/ 
217 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 6 
218 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 6 
219 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 10 
220EVCA Tax Benchmark Study 2012, June 2013 
221 The European Trade Association for Business Angels, Seed Funds, and other Early Stage Market Players, Statistics 
Compendium 2014 
222 http://www.cyban.com.cy/  

53 

 
 
                                          
5.5  R&D related FDI 

FDI has been a major driving force of economic development in the past, thanks to the 
generous tax regime of investments. But in the past FDI was irrelevant to RTDI: 

1.  The  main  sectors  attracting  FDI  were  tourism,  banking  and  shipping 223,  all  of 

them with no R&D departments in the country. 

2.  The  economic  downturn  has  affected  inward  investments,  which  declined 
significantly  to  679  million  US  $  in  2014,  compared  to  3,497  million  US  $  in 
2013224.  

The Cyprus Investment Promotion Agency225 is active in attracting and supporting FDI in 
the country but has no specific policies for attracting R&D intensive FDI. 

5.6  Knowledge markets 

Cyprus  introduced  in  May  2012  a  set  of  tax  incentives  to  enhance  the  registration  of 
intellectual  property  rights  (IPR),  the  Intellectual  Property  Rights  Box.  The  new  set  of 
rules amended prior legislation (1998 Patent Law, 1976 Intellectual Property Rights Law, 
Trademarks Law Cap. 268) and applied retrospectively from the beginning of 2012. More 
specific, amendments included: 

- 

- 

- 
- 
- 

accelerated amortisation (five years) for the acquisition or the development of an 
IPR; 
four-fifths deduction of revenue from exploitation of IPRs (maximum tax of 2.5% 
on income earned from IP assets based on the low tax rate of Cyprus); 
tax exemption of dividends resulting from IP exploitation; 
four-fifths deduction of profits on selling IPR; and 
total  tax  exemption  on  IPR  through  the  introduction  of  a  Cyprus  International 
Trust that could hold the shares and provide financing to the Cypriot IP owner226. 

The introduction of a new Code of Practice for a uniform approach in the management of 
IPR  lies  among  the  research  priorities  of  the  new  R&I  strategy  in  the  current 
programming period227. The protection of IPR will be entrusted with the NKTO228, if and 
when it will be created. 

Based on the results of a public consultation some years ago, RPOs did not have internal 
IPR policies; it is for this purpose that a tender for a specialised consultant was launched 
by RPF. Following the assignment of the project to ISIS Innovation (Oxford University) a 
number of recommendations are addressed to individual HEIs and RPOs ; it is up to each 
HEI/PRO  to  adopt  them  or  not.  In  the  same  report  there  are  recommendations  for  the 
business plan of the National Knowledge Transfer Office. 

The  number  of  patents  in  the  country  is  low,  though  rising;  there  were  4  patent 
applications  in  2014,  the  same  as  in  2013.  Given  the  size  of  the  IPR  market  and  the 
quasi monopoly of the RPF in the matter there is no specific coordination mechanism. 

223 http://anaktisis.teiwm.gr/7413/  
224 http://unctad.org/sections/dite_dir/docs/wir2015/wir15_fs_cy_en.pdf  
225 http://www.cipa.org.cy/  
226http://www.mondaq.com/x/243428/Trademark/The+Cyprus+Intellectual+Property+Rights+x0027Box, November 2014 
227 Innovate  Cyprus,  Proposal  for  the  creation  of  a  new  Integrated  National  Framework  for  Research,  Technology 
Development  and  Innovation  in  Cyprus,  (National  Committee  for  Research,  Innovation  and  Technological  Development, 
March 2014 - in Greek), pg. 17 
228 Ibid., pg. 305 

54 

 
 
 
                                          
5.7  Knowledge transfer and open innovation 

5.7.1  Indicators  

BES-funded/publicly-performed R&D 

Figure 15 BES-funded public R&D in Cyprus as % of GERD (in €MLN) and % of GDP 

The level of Cyprus business enterprise sector (BES)-funded public R&D expenditure as a 
percentage  of  GERD  decreased  from  2002  to  2005,  then  increased  between  2006 
(0.59%)  and  2009  (0.99%),  then  then  dropped  again  to  0.43%  in  2013.  BES  funding 
never exceeded €1m. 

The  indicator  expressed  as  a  percentage  of  GDP  shows  a  very  similar  movement 
between 2002 and 2013, and never exceeded 0.004% of GDP. Since overall amounts are 
very low, the observed fluctuations in both indicators are not large in absolute terms. 

Figure 16 BES-funded public R&D as % of GERD and as % of GDP in 2013 in Member States229 

229 2013 was chosen as the latest data series providing a full comparison within EU-28.  

55 

0%2%4%6%8%10%12%14%LTROLVNLDEHRELBEESHUBGEU28SKSIPLUKEEFIFRATSECZITDKPTLUIEMTCYPublic R&D financed by business enterprise sector as % of GERD in 20130.000%0.020%0.040%0.060%0.080%0.100%0.120%DELTNLBEFISIEU28ATLVSEHUESFRROEEUKHRDKELCZSKPLBGITPTLUIEMTCYPublic R&D financed by business enterprise sector as % of GDP in 2013 
 
 
 
 
 
 
 
                                          
The  two  charts  in  Figure  16  show  the  values  of  BES-funded  public  R&D  in  all  EU-28  as 
percentages  of  GERD  and  GDP,  respectively.  In  both  indicators,  Cyprus'  has  the  lowest 
level among all EU-28 MS. 

The  low  level  of  the  BES-funded  public  R&D  indicator  can  largely  be  explained  by  the 
extremely low private demand for R&D. Total BES spending on R&D was only €13.3m, or 
0.07% of GDP, in 2013. Underlying reasons for this lack of R&D activity are a structural 
dominance of the non-knowledge intensive service sector, and a small domestic market 
and  peripheral  location  within  Europe,  which  are  disincentives  for  setting  up  R&D 
operations in the country. 

Structural funds devoted to knowledge transfer 

Figure 17 Structural Funds for core R&D activities 2000-2006, 2007-2013 and 2014-2020230. We 
use the categories: 182 (2000-2006), 03 and 04 (2007-2013) and 062 (2014-2020) as proxies for 
KT activities. 

230 Figure 17 provides the Structural Funds allocated to Cyprus for each of the above R&D categories. The red bars show 
the categories used as proxies for KT. Please note that the figures refer to EU funds and they do not include the part co-
funded  by  the  Member  State.  The  categories  for  2000-2006  include:  18.  Research,  technological  development  and 
innovation  (RTDI);  181.  Research  projects  based  in  universities  and  research  institutes;  182.  Innovation  and  technology 
transfers,  establishment  of  networks  and  partnerships  between  business  and/or  research  institutes;  183.  RTDI 
infrastructures; 184. Training for researchers. 
The categories  for  2007-2013  include:  01.  R&TD  activities  in  research  centres;  02.  R&TD  infrastructure  and  centres  of 
competence in specific technology; 03. Technology transfer and improvement of cooperation networks; 04. Assistance to 
R&TD particular in SMEs; 74. Developing human potential in the field of research and innovation. 
The categories for 2014-2020 include: 002. Research and Innovation processes in large enterprises; 056. Investment in 
infrastructure, capacities and equipment in SMEs directly linked to Research and Innovation activities; 057. Investment in 
infrastructure,  capacities  and  equipment  in  large  companies  directly  linked  to  Research  and  Innovation  activities;  058. 
Research  and  Innovation  infrastructure  (public);  059.  Research  and  Innovation  infrastructure  (private,  including  science 
parks);  060.  Research  and  Innovation  activities  in  public  research  centres  and  centres  of  competence  including 
networking;  061.  Research  and  Innovation  activities  in  private  research  centres  including  networking;  062.  Technology 
transfer  and  university-enterprise  cooperation  primarily  benefiting  SMEs;  063.  Cluster  support  and  business  networks 
primarily benefiting SMEs; 064. Research and Innovation processes in SMEs (including voucher schemes, process, design, 
service  and  social  innovation);  065.  Research  and  Innovation  infrastructure,  processes,  technology  transfer  and 
cooperation of enterprises focusing on the low carbon economy and on resilience to climate change 

56 

 
 
 
                                          
 
Cyprus  has  allocated  26%  of  its  structural  funds  for core  R&D  activities  to  "Technology 
transfer  and  university-enterprise  cooperation  primarily  benefiting  SMEs"  (compared  to 
14.3% in the 2007-2013 programming period). In the current programming period this 
value  is  higher  than  the  EU  average  of  15.7%  (the  EU  average  was  30.1%  for  2007-
2013). 

Share of innovative companies cooperating with academia 

Figure 18 CIS survey 2012 – share of enterprises cooperating with academia 

Figure  18  depicts  the  level  of  cooperation  activities  of  innovative  companies  in  the  EU-
28,  according  to  the  CIS  2012.  The  percentage  of  "enterprises  engaged  in  any  type  of 
co-operation" (green dot) in Cyprus is one of the highest in the EU (52.8%), far above 
the  EU-28  average  of  31.3%.  However,  the  percentage  of  enterprises  involved  in 
cooperation  with  universities  or  other  HEIs  (blue  bar)  or  government,  public  or  private 
research  institutes  (red  bar)  is  only  4.6%.  Both  indicators  are  well  below  the  EU-28 
average, which are 13.0% and 8.9% respectively; Cyprus is second-to-last in enterprise-
university cooperation and fourth-to-last in enterprise-government cooperation. 

Technology Transfer Offices (TTOs), incubators and technological parks 

Cyprus  has  seven  Industry  Liaison  Offices,  one  each  in  every  public  and  private 
university.  In  2014  they  placed  1,980  graduates  in  businesses.  A  total  of  36 
collaboration  agreements  have  been  signed  between  universities  and  companies. 
However, ILOs seem to focus more on mere job seeking than on facilitating knowledge 
transfer231. A Science Technological Park in Limassol has been in planning for a decade, 
but in 2015 the search for a real estate investor was still ongoing. 

231 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 175 

57 

 
 
 
 
                                          
Share of public-private co-publications 

Figure 19 Co-publications by field 2003-2013 in Cyprus. Scopus database 

Figure  19  shows  the  2003-2013  average  percentage  of  academia-industry  co-
publications by field in Cyprus compared to the European average. The total share of co-
publications,  displayed  by  the  red "overall"  bar  on  the  left  of  the  chart,  is  1.2%, below 
the  EU-28  average  of  2.2%.  Excluding  multidisciplinary  publications,  the  domains 
recording the highest share of co-publications are earth and planetary science, materials 
science,  computer  science,  engineering,  and  immunology  and  microbiology.  Cyprus' 
share  of  co-publication  exceeds  the  EU-28  average  in  earth  and  planetary science,  and 
agricultural and biological sciences.  

With 13.9 co-publications per million population, Cyprus is far below the EU-28 average 
of 29.0. 

Patenting  activity  of  public  research  organisations  and  universities  together 
with licensing income 

Information on patent applications by scientific institutions in Cyprus is not available. 

Companies 

There is no data available on the number of spin-offs from public research organisations 
or the sectors they are active in. 

5.7.2  Policy Measures 

Cyprus does not have a specific strategy for knowledge transfer. There are no measures 
to  incentivise  and  reward  academics  engaged  in  cooperation  with  industry/users 
(although  academics  are  increasingly  interested in  cooperation  responding  to  the  direct 
grants  from  the  RPF  and  Horizon  2020).  There  is  no  national  regulation  for  university 
spin-offs. 

58 

 
 
 
Cooperation between academia and enterprises is achieved through the implementation 
of Industry Liaison Offices (ILOs). By 2014, the existing seven ILOs (in three public and 
four  private  Universities)  had  placed  1,980  students  in  businesses,  compared  to  about 
940 at the end of 2013. A total of 36 collaboration agreements had been signed between 
Universities  and  businesses  and  6  workshops  had  been  organised 232 .  However,  ILOs 
seem to focus more on mere job seeking than on facilitating knowledge transfer233. 

The  Business  Support  Centre  provides  intermediary  services  for  the  transfer  of 
knowledge  and  technology.  The  Research  Promotion  Foundation,  Cyprus  Chamber  of 
Commerce and European Office Cyprus coordinate the efforts of the Centre, which is co-
founded by the EU via COSME. 

The  establishment  of  a  National  Knowledge  Transfer  Office  (NKTO)  was  proposed  in  a 
2014  report  of  a  task  force  on  improving  R&I  governance  (NCRITD).  The  role  of  the 
NKTO  would  include  providing  information  on  the  commercialisation  of  R&D  and  on  the 
protection of IP rights, facilitating collaboration between the research community (RPOs, 
HEIs) and industry and supporting patent agreements. A central NKTO seems preferable 
to  individual  KTOs  within  HEIs  due  to  the  rather  small  size  of  the  Cypriot  R&D  market. 
The  country's  smart  specialisation  strategy  intends  to  allocate  €1.5m  to  the 
establishment of a KTO which will be linked to the existing Industry and Liaison Offices 
of universities234. 

5.7.3  Assessment 

Cyprus  has  not  introduced  any  specific  strategy  on  knowledge  transfer,  and  supporting 
Technology Transfer was identified as a major weakness of the R&D system in the spring 
2014  governance  report  of  the  NCRITD.  The  results  of  open  innovation  and  knowledge 
transfer  policies  cannot  be  easily  assessed  since  there  are  no  available  statistics  on 
invention  disclosures.  The  only  institutions  dedicated  to  supporting  knowledge  transfer 
activities  are  the  Industry  Liaison  Offices  and  the  Business  Support  Centre.  Business 
sector funding for public research is extremely low and the level of cooperation between 
academia and business (as measured by the CIS survey) is one of the lowest in the EU. 
Facilitating  knowledge  transfer  has  been  named  a  priority  in  a  2014  R&I  governance 
review report, and the creation of a National Knowledge Transfer Office recommended. 

5.8  Regulation and innovation 

As  of  2015,  there  are  no  systematic  impact  assessments  of  regulation  on  innovation. 
Concerning  monitoring  implementation  of  the  Small  Business  Act,  there  are  only  initial 
thoughts  on  how to  address  the  subject.  The  introduction  of  a  new Impact  Assessment 
mechanism  (action  also  included  in  the  Action  Plan  for  Better  Regulation,  see  below), 
including  an  SME Test  (analyzing  impact  on  SMEs  and  proposing  mitigating  measures), 
also aims to reduce administrative burden imposed by new regulation/legislation. 

The  new  Action  Plan  for  Better  Regulation,  approved  by  the  Council  of  Ministers  on  29 
October 2015, includes a series of actions aiming to reduce the administrative burden for 
businesses to set-up and operate in Cyprus. These include, amongst others, the overall 
reform  of  the  the  Department  of  the  Registrar  of  Companies  and  Official  Receiver 
(DRCOR) including measures to reduce administrative burden for registering a business 
(e.g.  unification  of  DRCOR  procedures/forms),  further  simplification  measures  (for 
setting  up  and  running  a  company)  by  the  Tax  (e.g.  Single  Registration  to  VAT  and 
Income  Tax  registries),  SI  (e.g.  employer’s  registration)  and  Migration  (e.g. 
entry/resident  permits  for  3rd  countries’  nationals  incl.  for  purposes  of  employment) 

232 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 10 
233 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 175 
234 Innovate  Cyprus,  Proposal  for  the  creation  of  a  new  Integrated  National  Framework  for  Research,  Technology 
Development  and  Innovation  in  Cyprus,  (National  Committee  for  Research,  Innovation  and  Technological  Development, 
March 2014 - in Greek), pg. 304 

59 

 
 
                                          
departments  as  well  as  by  the  Treasury  (e.g.  use  of  bank  transfers  in  all  transactions 
with the government, abolishing checks).  

5.9  Assessment of the framework conditions for business R&I 

The  proposed  DESMI  2015-2020  supports  business  investment  in  research  and 
innovation  through  EUREKA  Cyprus  (see  chapter  4.2.1  above)  and  the  programmes 
“Research and innovation in Enterprises” (for existing and newly established enterprises) 
and “Investigation of Industrial Applications of Technology/Technical know” (see chapter 
3.5.1 above). Innovation Houses will be established in 2015 and are expected to create 
40 new SMEs by the completion of the programme (see chapter 2.3 above). A new grant 
scheme for innovative products and services was launched in 2015, after the success of 
the  scheme  in  2012  (see  chapter  2.3  above).  While  there  is  no  formal  evaluation  of 
these  grant  schemes,  their  subscription  is  satisfactory  and  the  business  sector  has 
expressed positive opinions. 

Supply-side  measures  have  traditionally  been  the  only  ones  applied  by  the  RPF  and 
MECIT.  Demand  side  policies  have  not  been  used  with  the  exception  of  supporting 
energy  saving  projects  in  public  buildings,  which  did  not  trigger  any  innovation  in  the 
energy market. 

60 

 
 
6.  Conclusions 

This  chapter  provides  an  assessment  of  the  performance  of  the  national  research  and 
innovation  system  and  identifies  the  main  structural  challenges  faced  by  the  national 
innovation system. 

6.1  Structural challenges of the national R&I system 

The national innovation system is characterised by a lack of strategic guidance and too 
broad research orientation, limited business demand for R&D, and a limited propensity to 
innovate  with  weak  knowledge  transfer  linkages.  In  addition  to  those  main  challenges 
that  are  also  discussed  in  more  detail  in  the  executive  summary  above,  the  system 
suffers from, a shortage and mismatch of human resources for research. 

Lack of strategic guidance and need for stronger prioritisation 

Funding  in  the  previous  programming  period  (2007-2013)  was  spread  throughout 
different research areas leading to broad research orientation, not justified by the size of 
the  country  and  its  economy  and without  reference  to  its  competitive  advantages.  ICT, 
Security  and  Environment  accounted  for  almost  65%  of  FP7  allocated  funding  in  the 
period  2007-2014 235 .  Tourism,  Energy,  Agriculture,  Construction,  Transportation  and 
Health are the designated Smart Specialisation areas in the period 2014-2020236. 

Limited business demand for R&D  

The composition and the culture of the Cypriot business sector does not favour demand 
for R&D. The economy is dominated by micro, small & medium enterprises, which make 
up 99.8% of the entrepreneurship237. Small and micro – enterprises are oriented mostly 
on  low  value  added  support  services,  hence  are  unlikely  to  invest  in  RTDI.  Despite  the 
continuous  increase  in  national  or  European  funding  opportunities  for  SMEs,  the 
mobilisation of SMEs is lower than national targets. 

There  are  some  encouraging  signs  on  SME  policy  and  performance.  Some  have  stated 
that  their  image  has  improved  and  have  managed  to  attract  new  customers  after 
completing  their  research  because  they  have  proved  that  they  can  do  research 
successfully.  The  small  size  of  companies  is  not  a  limited  factor  for  R&D  I  activities 
taking into consideration that start-ups start as small companies and then through high 
acceleration  they  become  big.    In  almost  all  the  countries  R&D  activities  are  heavily 
subsidized, so that the risk is shared between business and government, in Cyprus the 
only  subsidies  for  R&D  activities  come  from  the  structural  funds  and  from  FP7  and 
Horizon.  Cypriot SMEs have one of the highest share of programs and grants, received 
as compared to research organization and public sector,  proving that the Cypriot SMEs 
are  very  active.  Moreover  the  applications  for  the  innovation  grand  scheme,  call  2014,  
had tripled  compared first  call of 2012, and there was at least 50% of the companies 
that  have  done  applications  on  the  first  call.  It  is  also  important  that  15%  of  the 
proposals have a University in the consortium.  

R&D expenditure from the business enterprise sector has been steadily decreasing since 
2008 and in 2013 accounted for about 15% of total GERD. In 2013, there were signs of 
recovery  with  BERD  per  capita  reaching  2011  levels  (€  15.4  per  capita).  Multinationals 
do not invest in research in the country. 

235 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus (CY), Facts & 
Figures, July 2015, pg. 13 
236 Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus (CY), Facts & 
Figures, July 2015, pg. 11 
237 Smart Specialisation Strategy for Cyprus, Executive Summary, Nicosia May 2014, pg. 10 

61 

 
 
                                          
As  evidenced  by  the  analysis  in  the  context  of  RIS3,  enterprises  do  not  participate  in 
R&D  projects  due  to  bureaucracy,  unawareness  of  the  existence  of  funding  and 
development  programs  and  opportunities238.  Based  on  a  field  survey  conducted  in  827 
Cypriot companies from  all sectors of economic activity, about 67% of the respondents 
believed  that  it  is  very  difficult  to  establish  research  collaborations  with  universities239. 
However, the results of the innovation scheme 2014 call suggest an improvement, with 
15% of the proposals coming from business-university cooperations (see 3.5.1). 

The  challenge  is  compounded  by  the  limited  number  of  high-tech  companies  in  the 
country.  Total  R&D  expenditure  performed  by  high  tech  companies  in  Cyprus  is  the 
lowest in EU, reaching € 13 m in 2013240. Employment in high tech sectors was among 
the lowest in EU at 2.9% of total employment in 2014, compared to an EU 28 average of 
4%241.  High  and  medium  high  technology  sectors  accounted  for  less  than  1%  of  total 
employment in the period 2011-2013242. The lack of seed and venture capital, the small 
size  of  the  market  and  the  peripheral  location  of  the  country  are  important  barriers  to 
high-tech company development. 

Limited  propensity  to  innovate  through  exploitation  of  research  results  and 
knowledge transfer 

Cyprus  is  a  moderate  innovator  with  a  negative  innovation  growth  rate  (-0.1%)  in  the 
period  2007-2014 243 .  Turnover  from  innovation,  has  been  steadily  decreasing  from 
16.1%  in  2008  to  14.7%  in  2010  and  11.4%  in  2012,  compared  to  EU-28  average  of 
11.9%244.  

Cyprus  is  a  medium-low  performer  in  all  categories  of  innovation  output  indicator 
(Number  of  PCT  patent  applications  per  billion  GDP,  PPS,  Employment  in  knowledge-
intensive  activities  in  business  industries  as  %  of  total  employment,  Innovativeness  of 
high-growth  enterprises,  Combination  of  sub-components),  except  for  employment  in 
Knowledge Intensive Activities245. Based on European Patent Office (EPO) statistics, out 
of the total 65,667 patents granted in 2012, only 12 came from researchers established 
in Cyprus246. 

This  is  associated  with  the  lack  of  awareness  (and  culture)  of  enterprises  for  the 
potential  benefits  of  innovation,  the  limited  involvement  of  SMEs,  the  limited 
collaboration  between  business  and  academia  (which  could  encourage  companies  to 
exploit  university  research  results  in  the  market)  and  last  but  not  least  a  divide:  the 
composition  of  the  business  sector  is  dominated  by  services  (80%  of  GDP),  whereas 
innovation  support  is  not  sufficiently  oriented  to  the  service  sector.  The  lack  of 
availability of seed capital and market exit capitalisation for R&D businesses deprives the 
country from an instrument that is effective in other countries. 

Shortage of human resources for research 

The increase in the number of researchers in the country represents a major challenge: 
researchers  in  the  public  sector  suffer  from  reduced  salaries,  whereas  the  business 
sector does not employ research personnel. 

238 Smart Specialisation Strategy for Cyprus, Executive Summary, Nicosia May 2014, pg. 20 
239 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 154 
240 Eurostat, Business enterprise R&D expenditure in high-tech sectors - NACE Rev. 2 (htec_sti_exp2) 
241 Eurostat, Employment in technology and knowledge-intensive sectors at the national level, by sex (from 2008 onwards, 
NACE Rev. 2) (htec_emp_nat2) 
242 Eurostat, Employment in technology and knowledge-intensive sectors at the national level, by sex (from 2008 onwards, 
NACE Rev. 2) (htec_emp_nat2) 
243 European Commission, Innovation Union Scoreboard 2015, pg. 13 
244  Eurostat- Turnover from Innovation as % of total turnover (tsdec340) 
245 European Commission, Research and Innovation Performance in the EU, Innovation Union progress at country level, 
2014, pg. 68 
246 Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015, pg. 106 

62 

 
 
                                          
Still,  at  the  end  of  2012  (latest  available  date),  total  R&D  personnel  and  researchers 
accounted for 0.62% of total active population, the lowest rate after Romania247. Most of 
the researchers are employed in HEI (66% of total)248. 

The  lack  of  adequate  conditions  for  research  (narrow  research  base,  absence  of  large 
research  infrastructures),  the  small  size  of  the  business  market  and  the  low  salaries 
(after the reduction of salaries of the public service) further limit the career choices for 
researchers and leads to significant brain-drain. 

In 2014, the tertiary education attainment level in Cyprus increased to 51.1%, compared 
to 47.8% in 2013 and a national target of 46% (EU target 40%)249. However, brain drain 
and  a  mis-match  of  demand  and  supply  indicate  that,  despite  improvements,  human 
resources  development  is  still  a  challenge  for  the  economy.  In  spite  of  the  exceptional 
tertiary  education  attainment  levels,  unemployment  in  science  and  technology  sector 
(age group 25-64 years old) has increased from 7.6% in 2012 to 9.8% in 2014. Youth 
unemployment (age group 25-34 years old) remains high at 15.4%, compared to 11.2% 
in  2012 250.  Supply  of  skilled  and  medium-skilled  labour  increased  more  rapidly  than 
demand  in  the  decade  2000-2010  and  it  is  expected  to  further  increase  more  rapidly 
than demand in the current decade (see chapter 4.4.1 above). 

Challenges  

Justification 

1. Lack of strategic guidance and 
need for stronger prioritisation 

2. Limited business demand for 
R&D  

3. Limited propensity to innovate 
through exploitation of research 
results and knowledge transfer 

4. Shortage of human resources 
for research 

  Funding in the previous programming period (2007-2013) 
was spread throughout different research areas leading to 
broad research orientation. 

  Existence of micro, small & medium enterprises, unlikely 

to invest in RTDI. 

  Economy oriented towards trade and services that do not 

require research. 

  BERD is low and steadily decreasing though showing signs 

of recovery. 

  The crisis has shifted business focus to survival and not 

long term investments, like R&D 

  Low performance of Cyprus in relation to the production, 

patenting and exploitation of research results. 

  Absence of internal institutional management policies for 
Intellectual Property Rights (IPR) issues in most of the 
research organizations. 

  Limited Technology Transfer infrastructure  
  Low number of patent applications filed under the PCT. 
  Limited collaboration between business and academia 
  Total R&D personnel is one of the lowest in EU in spite of 
the high rank of Cyprus in the number of people with 
tertiary education. 

  Limiting factors are the narrow research base, the 

absence of large research infrastructures, and the small 
size of the business market and the lowering of salaries 
after the crisis. 

247 Eurostat, Total R&D personnel and researchers by sectors of performance, as % of total labour force and total 
employment, and by sex (rd_p_perslf) 
248 Eurostat, Total R&D personnel and researchers by sectors of performance, as % of total labour force and total 
employment, and by sex (rd_p_perslf) 
249 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 3 
250 Eurostat, Unemployed persons by HRST category and age (hrst_st_nuneage) 

63 

 
 
 
 
 
 
                                          
6.2  Meeting structural challenges 

Lack of strategic guidance and need for stronger prioritisation 

The RPF has made successive efforts to limit the areas for which it launches competitive 
calls to avoid thinly spread budgets. This is, however, difficult and meets with resistance 
from the disciplines neglected. This is understandable, since the research budget is very 
low and the country needs to maintain and improve an effective education system, which 
needs  research  funds to  keep  its knowledge basis  up-to-date.  In  addition  the RPF does 
not  have  the  resources  to  devise  such  an  important  decision,  as  there  is  reluctance  to 
dedicate more of the very limited resources; the higher the focus the higher the protest 
from disciplines out of focus. 

When  comparing  scientific  and  technological  specialisation  in  Cyprus,  a  mismatch  is 
observed  in  Environment  and  Health  sectors,  where  the  country  appears  to  have  a 
significant  technological  advantage.  Co-specialisation  is  observed  in  new  production 
technologies, energy and the ICT sector251. 

S3CY  has  for  the  first  time  introduced  very  clear  priorities:  it  distinguishes  between 
general  and  thematic  priorities  (see  section  2.4  above).  Expanded  innovation,  Social 
Innovation,  General  Application  Technologies252,  Sustainability-Environment  and  ICT253 
are  acknowledged  as  general  priorities,  while  Tourism,  Energy,  Agriculture  –Food 
Industry, Urban development-Construction, Transportation, Shipping and Health are the 
thematic priorities.  

Prioritisation will also benefit from a better governance scheme, announced for the near 
future. 

Limited business demand for R&D  

The  government  places  emphasis  on  industry-academia  collaboration  schemes  such  as 
ILOs and the establishment of a Business Support Centre.  

A  cluster  development  policy  is  also  expected  between  competing  or  complementary 
businesses, with the aim to create 5 clusters by the end of the programme and a total 
budget of €3.5m254. EUREKA Cyprus also enhances collaborations and clusters. 

However,  the  problem  of  limited  R&D  demand  is  associated  with  the  structure  of  the 
business sector (sectors, share of traditional  SMEs and size of the market). Changes in 
the  production  structure  need  to  be  addressed,  in  order  for  demand  to  grow.  It  is 
important  to  combine  R&D  support  with  business  opportunities,  if  the  government 
wishes to address deeply rooted business behavioural patterns. 

Regarding the low number of high-tech companies in the country, a few success stories 
exist with the establishment of a number of innovative companies that export to Europe 
and to the USA. Most of these companies have graduated from the business incubators 
programme255. The best way to address the current deficiencies of the business sector is 
through  the  renewal  of  the  productive  capacities  by  developing  high-tech  companies  in 
niche  areas.  Such  initiatives  are  yet  to  be  implemented,  but  the  creation  of  clusters 
through  strategic  partnerships  between  competing  or  complementary  businesses 
(EUREKA  Cyprus)  and  the  establishment  of  the  STP  presented  under  section  2.2  above 
are steps towards the right direction. 

251 European Commission, Research and Innovation Performance in the EU, Innovation Union progress at country level, 
2014, pg. 65 
252 IT, Communications, Biotechnology, Biomedicine, Agroscience, Industrial Technology, Advanced materials, 
Nanotechnology, Advanced Manufacturing and processes, Emerging Technologies 
253 Hardware, Software, Networks, Digital Tourism, Education and Quality of Life 
254 Smart Specialisation Strategy Cyprus, September 2014 pg. 346 
255 Cyprus National Reform Programme 2011 

64 

 
 
                                          
However, more emphasis is needed to increase scale. Measures introduced in 2015 and 
aiming to support high tech creation are the following: 

  University  support  schemes  for  training  of  tertiary  education  graduates,  of  long 
term unemployed,  schemes  for the  job  placement  of unemployed  young tertiary 
education  graduates  as  well  as  young  unemployed  graduates  of  post-secondary 
education  of  up  to  two  years,  for  the  acquisition  of  work  experience  in 
enterprises/organisations  and  multi-company  training  programmes  for  the 
unemployed (presented under 5.3 above)  

  The  enhancement  of  Youth  and  Women  Entrepreneurship  introduced  by  MECIT 

(see section 2.3 above);  

  The scheme for the enhancement of SMEs’ competitiveness in the manufacturing 

sector, introduced by MECIT in 2015 (see section 2.3 above); and 
  The creation of CYBAN  announced by S3CY (see section 5.4 above). 
  Several  measures  supporting  infrastructure  for  Technology  Transfer  and  SMEs 

planned for 2016 

Limited  propensity  to  innovate  through  exploitation  of  research  results  and 
knowledge transfer 

The propped DESMI 2015-2020 addressed the problem with: 

  policies  and  instruments  to  support  the  commercialisation  of  innovative  ideas 
(Commercialisation of R&D results by RPOs and Commercialisation of R&D results 
by Enterprises) 
instruments  to  enhance  pilot  testing  (Investigation  of  Industrial  Applications  of 
Technology/Technical know). 

 

The  grant  scheme  for  innovative  products  and  services,  which  was  launched  in  2012, 
progressed  smoothly.  It  is  expected  that  the  scheme  will  help  develop  approximately 
100  innovative  products-services-processes,  30  cooperation  agreements  of  enterprises 
with research centres and create 80 new jobs, as presented in section 2.3 above. 

Technology  transfer  offices  in  HEIs  have  been  created  to  facilitate  technology  transfer. 
The  governance  report  of  the  NCRITD  calls  for  the  establishment  of  NKTO  to  facilitate 
collaborations also with other parties (i.e. private R&D organisations, industry), promote 
ideas for the commercialisation of R&D results and promote synergies. 

The  Scheme  for  Supporting  Business  Innovation  between  universities  and  enterprises 
received 15  applications  for cooperation  in  March  2015. They will  be  evaluated in  close 
cooperation with academia (see chapter 2.3 above). 

Other  initiatives  announced  in  the  current  programming  period  and  described  under 
section 2.3 above include: 

  The  establishment  of  Business  Innovation  Centres  (BIC)  accredited  by  the 
European  Business  Network,  for  the  provision  of  advisory  services  to  public  and 
private businesses for the development of competitive products; 

  The provision of Innovation Packages; 
  The establishment of Innovation Houses. 

A  public  consultation  for  a  new  programme  for  the  enhancement  of  Social  Innovation 
was  launched  in  August  2015  (see  section  1.2.1  above).  In  June  2015  RPF  launched  a 
new programme for patents (see section 3.5.1 above). 

Shortage of human resources for research 

The  government  has  addressed  the  problem  with  the  continuously  rising  number  of 
postgraduate  courses  in  universities.  The  Cyprus  National  Reform  Programme  2013 
included a target to increase participation in Higher education by 2020 to 46% through 

65 

 
 
 
the expansion and modernisation of HEIs, strengthening links between training and the 
labour market and promoting transnational mobility256. The CUT increased its enrolment 
in  September  2013  by  35  students  and  allowed  up  to  30  students  already  studying 
abroad  but  not  being  able  to  sustain  tuition  to  get  transferred  to  CUT.  UoC  also 
increased  its  enrolment  by  100  students  and  accepted  up  to  200  students  from 
abroad257. The government announced the increase of students enrolled in UoC and CUT 
in 2014-2015 by 486 and 191, respectively258. 

In  addition,  funds  were  allocated  to  schemes  for  the  enhancement  of  collaboration 
between secondary education and university graduates and the enterprise sector. A total 
budget of €17 m was equally allocated to the placement of up to 2,500 secondary school 
graduates 
in 
enterprises/organisations  for  acquiring  work  experience  in  the  field  of  their  studies. 
Success rate was almost 41% (1,023 placements) in the first scheme and over 76% in 
the second scheme (1,916 placements) 259. 

to  2,500  university  graduates 

to  25)  and  up 

(aged  up 

The  Cyprus  National  Reform  Programmes  for  2014  and  2015  do  not  include  explicit 
measures  for  the  increase  of  R&D  personnel  but  focuses  on  more  general  measures 
addressing  overall  unemployment,  including  training  programmes  for  upgrading  the 
skills  of  unemployed  persons,  initiatives  for  the  enhancement  of  cooperation  between 
universities  and  enterprises,  the  development  of  a  competence-based  system  of 
vocational  qualifications  and  the  reform  of  the  curricula  at  the  secondary  and  tertiary 
education260. 

On  a  negative  note,  Law  168  (I)/2012,  as  amended  by  Law  31(I)  2013  introduced 
decreases  in  the  salaries  of  public  sector  employees  that  range  from  0.8%-14.5%, 
depending on the salary level. Salary reductions affected in particular the number of PhD 
students261. Unless salaries and benefits are increased it is unlikely that researchers will  
be attracted.

256 Cyprus National Reform Programme 2013, Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, Planning 
Bureau, May 2013, pg. 14 
257 Cyprus National Reform Programme 2013, Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, Planning 
Bureau, May 2013, pg. 15 
258 http://newpost.gr/post/360723/kypros-ayksanontai-oi-theseis-gia-foithtes-sta-kratika-panepisthmia, December 2014 
259 Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2015, pg. 6 
260 Cyprus National Reform Programme 2014 Europe 2020 Strategy for: Smart, Sustainable and Inclusive Growth, April 
2014, pg. 7 
261 Deloitte, Researchers’ Report 2014 Country Profile: Cyprus, pg. 11 

66 

 
 
                                          
References 

Action Plan for Dialogue and Consultation, Research Promotion Foundation, New RPF Programmes 2015-
2020 

Bankruptcy and second chance for honest bankrupt entrepreneurs, Cyprus (Tsipouri L., 2014) 

Campbell, D., Lefebvre C., Picard-Aitken M., Côté G., Ventimiglia A., Roberge G., and Archambault E., 2013, 
Country and regional scientific production profiles, Directorate-General for Research and Innovation,: 
Publications Office of the European Union. 

Cohesion Policy and Cyprus, June 2014 

Commission Staff Working Document, Assessment of the 2014 National Reform Programme for Cyprus, June 
2014 

COMMISSION STAFF WORKING DOCUMENT, Country Report Cyprus 2015, February 2015 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS, Research and innovation as 
sources of renewed growth, June 2014 

Council of the EU (2012) Council Recommendation on the National Reform Programme 2012 of Cyprus. 

Cyprus Government, Ministry of Justice and Social Order, Annual Report 2012 

Cyprus National Reform Programme 2011 

Cyprus National Reform Programme 2012 

Cyprus National Reform Programme 2014 Europe 2020 Strategy for: Smart, Sustainable and Inclusive 
Growth, April 2014 

Cyprus National Reform Programme 2015 Europe 2020 Strategy for: Smart, Sustainable and Inclusive 
Growth, April 2015 

Economic Adjustment Programme for Cyprus 

Edquist, Charles and Jon Zabala-Iturriagagoitia (2015) The innovation Scoreboard is flawed: the case of 
Sweden – not being the innovation leader of the EU. CIRCLE Papers in Innovation Studies 2015/27. 

Europe 2020 targets Research and Development 

European Commission DG RTD, Exploration of the implementation of the Principles for Innovative Doctoral 
Training in Europe, Final Report 

European Commission (2015a) European Economic Forecast Autumn 2015 

European Commission, Innovation Union Scoreboard 2015 

European Commission, Research and Innovation Performance in the EU, Innovation Union progress at country 
level, 2014 

European Commission, DG RTD, Study Visit, Institution: University of Cyprus, Country: Cyprus, Case study 
undertaken in the context of the ‘Exploration of the implementation of the Principles for Innovative Doctoral 
Training in Europe' (Tsipouri L. September 2013) 

European Commission Gender Equality Policies in Public Research, Based on a survey among 

Members of the Helsinki Group on Gender in Research and Innovation, 2013 

European Commission, The Economic Adjustment Programme. Cyprus, 6th Review – Spring 2015, July 2015 

European Commission, Research and Innovation Performance in the EU, Innovation Union progress at country 
level, 2014 

European Commission She figures 2012, Gender in research and innovation, Statistics and Indicators 

European Research Area, Progress Report 2014 

ERAWATCH Communication Fiche Cyprus 2013 

67 

 
 
ERAWATCH Country Report 2013: Cyprus 

ERAWATCH Country Fiche 2013: Cyprus 

Eurostat, Business enterprise R&D expenditure (BERD) by economic activity and source of funds (NACE Rev. 2) 
(rd_e_berdfundr2) 

Eurostat, Business enterprise R&D expenditure in high-tech sectors - NACE Rev. 2 (htec_sti_exp2) 

Eurostat , Employment in technology and knowledge-intensive sectors at the national level, by sex (from 
2008 onwards, NACE Rev. 2) (htec_emp_nat2) 

Eurostat, GDP (nama_gdp_c) 

Eurostat, Population (tps00001) 

Eurostat, Research and Development Expenditure by Sectors of Performance (tsc00001) 

Eurostat, Total intramural R&D expenditure (GERD) by sectors of performance (rd_e_gerdtot) 

Eurostat, Total R&D personnel and researchers by sectors of performance, as % of total labour force and 
total employment, and by sex (rd_p_perslf) 

Eurostat, Turnover from Innovation as % of total turnover (tsdec340) 

Eurostat, Unemployed persons by HRST category and age (hrst_st_nuneage) 

Eurostat, Total unemployment rate (tsdec450) 

EVCA Tax Benchmark Study 2012, June 2013 

IA study on the Open, transparent, and merit-based recruitment of researchers, (Technopolis group, March 
2014), 

Innovate Cyprus, Proposal for the creation of a new Integrated National Framework for Research, Technology 
Development and Innovation in Cyprus, (National Committee for Research, Innovation and Technological 
Development, March 2014 - in Greek) 

Innovation Union Competitiveness Report 2013 

JRC Scientific and Technical Reports, European university funding and financial autonomy, A study on the 
degree of diversification of university budget and the share of competitive funding, ( Dominicis L.,Susana E., 
Zubieta A.F., 2011) 

Law 68 (I) 96 

Law 118 (I)2002 

Law 177 (I) 2002 

Law 234(I) 2002 

Law 193(I)/2004 

Law 109(I)/2005 

Law 38(I)/2009 

Law 168 (I) 2012 

Law 21 (I) 2013 

Law 31 (I) 2013 

Law 115(I)2014 

Law 62 (I)/2015 

Law 64(I)/2015 

Ministry of Education and Culture (2015) Agency of Quality Assurance and Accreditation in Higher Education. 
http://www.highereducation.ac.cy/en/cy_agency_quality_assurance_aaccre.html. 

Ministry of Justice and Social Order, Gender Equality Legislative Measures 

68 

 
 
MORE2  Remuneration Cross country Report, April 2013 

NCRITD (2014) Innovate Cyprus. Proposal for the Creation of a new Integrated National Framework for 
Research, Technology Development and Innovation in Cyprus (available in Greek only). 

NETWATCH Platform on transnational R&D programme collaboration 

Open Access for Research Infrastructure in Europe 

Open Access Strategies in the European Research Area, produced for the European Commission DG Research 
& Innovation, (Caruso J,  Archambault A. , August 2013) 

Preliminary results of She figures 2015 

Proportion of Open Access Peer-Reviewed Papers Papers published in Peer-Reviewed Journals at the 
European and World Levels 1996-2013, October 2014, Science Metrix 

Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, Research 
Promotion Foundation, July 2015 

RPF – Research Promotion Foundation (2015) Enhancing the Innovation Management Capacity of Cypriot 
SMEs. http://www.research.org.cy/EL/news/3830.html. 

Researchers’ Report 2014 Country Profile: Cyprus, (Deloitte, 2014) 

RIO Country Report Cyprus 

Smart Specialisation Strategy for Cyprus, Executive Summary, Nicosia May 2014 

Smart Specialisation Strategy Cyprus, September 2014 

Smart Specialisation Strategy for Cyprus, Final Report, Nicosia, March 2015 

S3 Platform (2014) RIS3 Peer-Review Report Cyprus. 

Stairway to Excellence Cohesion Policy and the Synergies with the Research and Innovation Funds Cyprus 
(CY), Facts & Figures, July 2015 

The European Trade Association for Business Angels, Seed Funds, and other Early Stage Market Players, 
Statistics Compendium 2014 

The unofficial codification of laws for University of Cyprus in the period 1989 – 2007 

Tsipouri, Lena and Sophia Athanassopoulou (2015) RIO Country Report Cyprus 2014 

WIPO (2013) Statistical Country Profiles Cyprus 

69 

 
 
 
 
Abbreviations 

ENGLISH NAME 

NATIONAL NAME 

BERD 

Business Expenditures for Research and 
Development 

- 

BIC 

Business Innovation Centres 

Κέντρα Επιχειρηματικής 
Καινοτομίας 

CEI 

Commissioner of Entrepreneurship and 
Innovation 

Επίτροπος   ρευνας,  Καινοτομίας 
και Επιχειρηματικ τητας 

CERN 

CII 

CING 

European Organisation for Nuclear 
Research 

- 

Cyprus International Institute for the 
Environment and Public Health 

Διεθνές  Ινστιτούτο  Κύπρου  για 
την  Περιβαλλοντική  και  Δημ σια 
Υγεια 

Cyprus Institute of Neurology and 
Genetics  

Ινστιτούτο 
Γενετικής Κύπρου 

Νευρολογίας 

και 

COOPS 

Cooperative Credit Institutions 

Συνεργατικά Πιστωτικά Ιδρύματα 

CSC 

Cypriot Scientific Council 

CUT 

Cyprus University of Technology 

CYBAN 

Cyprus Business Angels Network 

CyNet 

Cyprus Research and Academic Network 

DESMI 

Research Promotion Foundation’s 
Framework Programme for Research, 
Technological Development and 
Innovation 

DGRIE 

Directorate General of Research, 
Innovation and Entrepreneurship 

Επιστημονικ  
Συβούλιο 
Κύπρου 

Τεχνολογικ  
Πανεπιστήμιο 
Κύπρου 

Κυπριακ  Δίκτυο 
Επιχειρηματικών 
Αγγέλων 

Κυπριακ  
Ερευνητικ  και 
Ακαδημαϊκ  
Δίκτυο 

ΔΕΣΜΗ 

Γενική Διεύθυνση  ρευνας, 
Καινοτομίας και 
Επιχειρηματικ τητας 

DGEPCD 

Directorate General for European 
Programmes, Coordination and 
Development 

Γενική  Διεύθυνση  Ευρωπαϊκών 
Προγραμμάτων,  Συντονισμού  και 
Ανάπτυξης 

EAFRD 

European Agricultural Fund of Rural 
Development  

EPO 

ERA 

European Patent Office 

European Research Area 

- 

- 

- 

70 

 
 
 
 
 
 
ERA-NET 

European Research Area Network 

ESIF 

ESFRI 

European Structural and Investment 
Funds 

European Strategy Forum on Research 
Infrastructures 

- 

- 

- 

ESM 

European Stability Mechanism 

Ευρωπαϊκ ς Μηχανισμ ς 
Σταθερ τητας 

FDI 

FP7 

Foreign Direct Investments 

- 

7th Framework Programme 

7ο Πρ γραμμα 
Πλαίσιο 

GBAORD  Government Budget Appropriations or 

- 

Outlays on R&D 

GDP 

Gross Domestic Product 

Ακαθάριστο Εθνικ  Προϊ ν 

GERD 

Gross Domestic Expenditure on R&D 

Ακαθάριστη Εγχώρια Δαπάνη 
 ρευνας και Τεχνολογικής 
Ανάπτυξης 

GUF 

General University Funds 

- 

HEIs   

Higher Education Institutions 

Ανώτερα Εκπαιδευτικά Ιδρύματα 

HERD 

Higher Education Expenditure on R&D 

Δαπάνη  ρευνας και Τεχνολογίας 
Ανώτερων Εκπαιδευτικών 
Ιδρυμάτων 

HRST 

Human Resources in Science and 
Technology 

Προσωπικ  απασχολούμενο σε 
 ρευνα και Τεχνολογία 

Information Communication Technology 

Τεχνολογία Πληροφορικής 

Industry Liaison Office 

Γραφείο Διασύνδεσης 

International Monetary Fund 

Διεθνές Νομισματικ  Ταμείο 

Intellectual Property Rights 

Διπλώματα Ευρεσιτεχνίας 

Innovation Union 

Innovation Union Scoreboard 

JEREMIE 

Joint European Resources for Micro to 
Medium Enterprises 

JPI 

JTI 

Joint Programming Initiatives 

Joint Technology Initiatives 

- 

- 

- 

Κοινές 
Πρωτοβουλίες 

Κοινές 
Πρωτοβουλίες 

Προγραμματικές 

Τεχνολογικές 

KYSATS 

Council 
Qualifications  

of  Recognition 

of  Higher 

Κυπριακ  Συμβούλιο Αναγνώρισης 
Τίτλου Σπουδών 

MECIT 

NCRI 

Ministry of Energy, Commerce, Industry 
and Tourism 

Υπουργείο  Ενέργειας,  Εμπορίου, 
Βιομηχανίας και Τουρισμού 

National Research Council for Research 
and Innovation 

Εθνικ  
Συμβούλιο 
 ρευνας και 

71 

ICT 

ILO 

IMF 

IPR 

IU 

IUS 

 
 
NCRIE 

National Council of Research, Innovation 
and Entrepreneurship   

NCRITD 

National Committee for Research, 
Innovation and Technological 
Development 

NKTO 

National Knowledge Transfer Office 

NRP 

National Reform Programme 

Καινοτομίας 

Συμβούλιο 

Εθνικ  
Καινοτομίας 
Επιχειρηματικ τητας 

 ρευνας, 
και 

Εθνική 
καινοτομίας 
Ανάπτυξης 

Επιτροπή 

 ρευνας, 
και  Τεχνολογικής 

Εθνικ  
Τεχνολογίας 

Γραφείο 

Μεταφοράς 

Εθνικ  
Μεταρρυθμίσεων 

Πρ γραμμα 

NPL 

Non Performing Loans 

Μη εξυπηρετούμενα δάνεια 

OECD 

OP 

ORTF 

Organisation for Economic Co-operation 
and Development 

Οργανισμ ς 
Συνεργασίας και Ανάπτυξης 

Οικονομικής 

Operational Programme 

Επιχειρησιακ  Πρ γραμμα 

Organisation of Research and Technology 
Transfer 

Οργανισμος 
Μεταφοράς Τεχνολογίας 

  ρευνας 

και 

PA 

Partnership Agreement 

Συμφωνία Πλαίσιο 

PSIVET 

Post Secondary Education Institutes of 
Vocational Education and Training 

Ινστιτούτα 
Δευτεροβάθμιας 
Εκπαίδευσης  και  Επαγγελματικής 
Εκπαίδευσης και Κατάρτισης 

R&D 

RI 

R&I 

RES 

RIE 

RPF 

RPO 

RTDI 

SF 

STP 

SME 

UAT 

UCY 

VC 

Research and development 

 ρευνα και Ανάπτυξη 

Research Infrastructures 

Ερευνητικές Υποδομές 

Research and innovation 

 ρευνα και Καινοτομία 

Renewable Energy Sources 

Ανανεώσιμες Πηγές Ενέργειας 

Research, Innovation, Entrepreneurship 

 ρευνα, 
Επιχειρηματικ τητα 

Καινοτομία, 

Research Promotion Foundation 

Ίδρυμα Προώθησης  ρευνας 

Research Public Organisations 

Δημ σια Ερευνητικά Ιδρύματα 

Research Technological Development and 
Innovation 

 ρευνα  Τεχνολογική  Ανάπτυξη 
και Καινοτομία 

Structural Funds 

Κεφάλαια Διαρθωτικών Ταμείων 

Science Technology Park 

Επιστημονικ  Τεχνολογικ  Πάρκο 

Small and Medium Sized Enterprise 

Μικρομεσαίες Επιχειρήσεις 

University Autonomous Tool  

- 

University of Cyprus 

Πανεπιστήμιο Κύπρου 

Venture Capital 

VET 

Vocational Education and Training 

Κεφάλαια 
Συμμετοχών 

Επιχειρηματικών 

Επαγγελματική  Εκπαίδευση  και 
Κατάρτιση 

YGIP 

Youth Guarantee Implementation Plan  

Σχέδιο Νεανικής Εγγυοδοσίας 

72 

 
 
List of Figures 

Figure 1 Governance of R&I system ..................................................................... 17 

Figure 2 Government deficit and public debt. Data source: Eurostat ......................... 25 

Figure 3 Funding of the total GERD. Data source: Eurostat ..................................... 26 

Figure  4  R&D  appropriations  and  government  funded  GERD  in  millions  of  national 
currency. .......................................................................................................... 27 

Figure 5 Government intramural expenditure by sectors of performance. .................. 28 

Figure 6 Government intramural expenditure by sectors of performance ................... 28 

Figure 7 Fiscal consolidation and R&D. ................................................................. 29 

Figure  8  BERD  intensity  broken  down  by  most  important  macro  sectors  (C= 
manufacture, G_N=services, Q=Human health and social work activities). ................. 37 

Figure 9 BERD by source of funds ....................................................................... 37 

Figure  10  Top  sectors  in  manufacturing  (C10-C12:  Manufacture  of  food  products; 
beverages  and  tobacco  products;  C20=  Manufacture  of  chemicals  and  chemical 
products;  C21=  Manufacture  of  basic  pharmaceutical  products  and  pharmaceutical 
preparations). ................................................................................................... 38 

Figure  11  Top  service  sectors  (J=information  and  communication,  G=wholesale  and 
retail  trade;  repair  of  motor  vehicles  and  motorcycles,  M=professional,  scientific  and 
technical activities). ........................................................................................... 38 

Figure 12 Economic sectors as percentage of the total GVA. ................................... 39 

Figure 13 GVA in manufacturing. ........................................................................ 39 

Figure  14 Value added at factor cost for the leading manufacture and service sectors in 
Figures 10 and 11. ............................................................................................. 40 

Figure 15 BES-funded public R&D in Cyprus as % of GERD (in €MLN) and % of GDP .. 55 

Figure  16 BES-funded public R&D as % of GERD and as % of GDP in 2013 in Member 
States .............................................................................................................. 55 

Figure  17  Structural  Funds  for  core  R&D  activities  2000-2006,  2007-2013  and  2014-
2020. We use the categories: 182 (2000-2006), 03 and 04 (2007-2013) and 062 (2014-
2020) as proxies for KT activities. ........................................................................ 56 

Figure 18 CIS survey 2012 – share of enterprises cooperating with academia ........... 57 

Figure 19 Co-publications by field 2003-2013 in Cyprus. Scopus database ................ 58 

73 

 
 
 
 
List of Tables 

Table 1 Main R&I indicators 2012-2014 ................................................................ 14 

Table 2 Statistics of FP7 funding programmes ....................................................... 20 

Table 3 Basic indicators for R&D investments ........................................................ 24 

Table 4 Key Cypriot Public R&D Indicators ............................................................ 26 

Table  5  Public  Funding  from  Abroad  to  Cypriot  R&D  (millions  of  national  currency,  i.e. 
euro from 2008) ................................................................................................ 27 

Table 6 Science base indicators ........................................................................... 41 

Table 7 Labour market skills forecast-demand and supply (% change) ..................... 44 

Table 8 Open access repositories in Cyprus ........................................................... 50 

74 

 
 
 
 
Annex 1 – List of the main research performers 

NO.  UNIVERSITY/RESEARCH INSTITUTE 

1 
2 
3 
4 
5 
6 
7 
8 
9 

University of Cyprus 
Cyprus University of Technology 
University of Nicosia 
Cyprus Institute of Neurology and Genetics 
Frederick University Cyprus 
European University Cyprus 
Agricultural Research Institute Nicosia 
Higher Technical Institute Nicosia 
Intercollege Nicosia 

Source: Scopus 

NUMBER OF PUBLICATIONS 
(2006-2014) 
8,602 
1,601 
850 
726 
669 
402 
279 
162 
139 

75 

 
 
  
 
 
Annex 2 – List of the main funding programmes 

Timeline 

Budget 

Target group 

Name of the 
funding 
programme 
Completed 
projects 

24-48 
months/project 

20,000,000 

Excellency Islets 

24-36 
months/project 

17,000,000 

New Strategic 
Infrastructure 
Units 
DIDAKTOR 

48 months/project  11,200,000 

24-36 
months/project 

9,400,000 

Research in 
corporations 

12-24 
months/project 

9,300,000 

European 
Initiatives-Local 
Development 

12-36 
months/project 

8,000,000 

Research 
organisations, 
corporations, 
other parties 
Research 
organisations, 
corporations, 
other parties 
Research 
organisations,  
other parties 
Research 
organisations, 
corporations, 
other parties 
Research 
organisations, 
corporations, 
other parties 
Research 
organisations, 
corporations, 
other parties 

Source: Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, 
Research Promotion Foundation, July 2015 

76 

 
 
 
 
Annex 2B – List of all funding programmes under proposed DESMI 
2015-2020 

PILLARS 

STRATEGIC AXES 

PROGRAMMES 

BUDGET (€) 

R&D Partnerships 
Infrastructure 

Corporate Participation 

Extroversion-Open Horizons 

Smart Growth 

Excellency 

RTDI Sustainability  

Researchers, New Ideas, New 
Opportunities 

Business Excellency 

Support Mechanisms 

Modernisation of 
RTDI 

Alternative Methods of 
Funding 

Completed projects 
New Strategic Infrastructure 
Units 

Research in corporations 
Research in newly established 
companies 

Investigation of Industrial 
Application 
Technology/Technology 
Knowhow 

20,000,000 
11,200,000 

9,300,000 
1,000,000 

1,000,000 

Transnational cooperation 

1,600,000 

International cooperation-
Duplication of targets 

EUREKA Cyprus 
European Initiatives-Local 
Development 

Excellency Islets 
Social Innovation 
DIDAKTOR 
Youth-2nd Opportunity 
EUROSTARS Cyprus 
SME instrument-2nd 
Opportunity 

Innovation Vouchers 
Patents 
Participation in International 
Conference 

Encouragement of participation 
in HORIZON 2020 

Commercialisation of research 
from RPOs 

Commercialisation of research 
from Corporations 

1,200,000 

1,200,000 
8,000,000 

17,000,000 
2,500,000 
9,400,000 
4,000,000 
2,500,000 
1,500,000 

260,000 
400,000 
140,000 

1,000,000 

1,270,000 

1,270,000 

RTDI Culture 

Supplementary Grants 
Development of RTDI Culture 

2,500,000 
500,000 

TOTAL  

98,740,000 

Source: Research, Technology Development and Innovation Programmes 2015-2020 Draft Notice, 
Research Promotion Foundation, July 2015, pg. 10 

77 

 
 
  
  
 
 
Annex 3 – Evaluations, consultations, foresight exercises 

No evaluations have taken place. 

Consultations were oral with no public domain documents. 

78 

 
 
 
Europe Direct is a service to help you find answers to your questions about the European Union 
Free phone number (*): 00 800 6 7 8 9 10 11 
(*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed. 

A great deal of additional information on the European Union is available on the Internet. 
It can be accessed through the Europa server http://europa.eu 

How to obtain EU publications 

Our publications are available from EU Bookshop (http://bookshop.europa.eu), 
where you can place an order with the sales agent of your choice. 

The Publications Office has a worldwide network of sales agents. 
You can obtain their contact details by sending a fax to (352) 29 29-42758. 

 
 
 
 
 
 
 
 
 
 
L
F
-
N
A
-
2
7
8
5
6
-
E
N
-
N

JRC Mission 

As the Commission’s  
in-house science service,  
the Joint Research Centre’s  
mission is to provide EU  
policies with independent,  
evidence-based scientific  
and technical support  
throughout the whole  
policy cycle. 

Working in close  
cooperation with policy  
Directorates-General,  
the JRC addresses key  
societal challenges while  
stimulating innovation  
through developing  
new methods, tools  
and standards, and sharing  
its know-how with  
the Member States,  
the scientific community  
and international partners. 

Serving society  
Stimulating innovation  
Supporting legislation 

doi:10.2791/926454 

ISBN 978-92-79-57791-8