Research and Development Industry in the European Union

The Research and Development sector of the European Union is one of the largest sectors that attract Foreign Direct Investment (FDI). It consists of various individual sectors, such as pharmaceutical, ICT, automotive, energy and other individual sectors.

It has been the top-most sector in the European Sector for investment and has attracted foreign investment worth billions of Euros. According to the EU Industrial R&D Investment scoreboards, the investment in the EU in the R&D sector is high even than US and Japan. The growth rate of EU companies has been higher than the US companies and Japanese companies. It is mush higher than the nominal GDP growth rate.

It is the only sector in the European Union which has lots of investment opportunities for investors in all the member countries of the European Union. This is mainly because of the friendly investment policies implemented by a majority of the member states of the European Union.


Despite the global financial downturn, the R&D investment growth trend is still high in the European Union as compared to other countries such as the United States and Japan. This positive growth trend in the sector is mostly due to the more than the expected investments coming from the developing economies such as India and China.

Market size:

With more than 27 countries in the European Union, the market size would not get any larger than any other place than in European Union. The market size in the EU is huge for R&D sector especially in the individual sectors such as pharmaceutical and automation sector.

Key players:

The major players in the European Union in the Research and Development sector include Volkswagen and Nokia followed by the Switzerland’s Roche and Novartis. There are also various other players from the United States that really invest in all the individual sectors in R&D in EU. Some of these include Microsoft, Johnson & Johnson, General Motors and Pfizer.

Growth figures and FDI figures:

The Foreign Direct investment (FDI) in the R&D sector of the European Union has increased substantially and has even surpassed the investment in domestic R&D. The majority of the foreign investment has gone in elements such as applied research, basic research and experimental development with a major chunk of it going in the pharmaceutical and biotechnology sector. This has mostly happened due to the strategic alliances which have helped businesses to gain easy access to foreign investment and has also minimized risk and has also overcome the massive costs of technological development.

Key investment areas:

The Research and Development sector in the European Union offers lots of investment opportunities to investors in plenty of individual sectors. These individual sectors are being categorized into various groups such as the high intensity sectors which receive the maximum investment, the medium intensity sectors which receive 2-5% of the investment and medium and low intensity sectors which account for 1-2% of the investment and finally the low intensity sector which receives an investment of less than 1%.

Out of these, the most promising individual sectors for investors are the pharmaceutical and biotechnology which falls in the high intensity sectors and attracts major amount of foreign investment among all the individual sectors. It holds the number one position in R&D investments. The other individual sectors include the chemicals followed by the aerospace and defence and car manufacturing Information and Communication Technology, Electronic and Electrical Equipment and Automobile and parts. There is also rapid growth in the energy sector for Research and Development in the European Union.

FDI/ Investment policy:

The European Union is pro-investor and hence has devised a foreign investment policy that is more conducive to attract more and more foreign investment in the Union. The Policies of attracting FDI in the R&D sector has a special importance and has become a source of competition in the EU. Majority of member states of the European Union offer attractive tax benefits and other investment incentives as part of their foreign investment policies to attract investment in the R&D sector. The governments of the member states offers grants and funds to investors who are willing to invest in the Research and Development sector.

Special incentives:

Majority of the member states of the European Union offer attractive tax incentives to investors willing to invest in the R&D sector. Apart from tax incentives the governments of the member states also provide grants and funding to attract foreign investors in the sector. They also provide tax benefits, Bank loan support to fund the Research and Development projects and also provide structural funds to foreign investors.


The European commission’s Directorate General for Enterprise that provides information to investors about the various opportunities in the EU. Apart from these, majority of countries in the European Union that have government sponsored agencies that help foreign investors gain free information about the investment opportunities in the R&D sector of the country. They provide all the necessary information to investors free of cost.

An investor-friendly government, investment friendly policies, numerous incentives and a positive growth trend all these factors really make the Research and Development Sector one of the best sectors worth investing in the European Union. If you are an investor who wish to expand your business in the R&D sector then you will not find a better place to invest in this sector than the European Union.


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