Expenditure on research and development increased last year

Estonia’s research and development expenditure has been under sharp focus in recent years. One of the reasons for this is the competitiveness goal in “Estonia 2020” to increase the share of R&D expenditure to 3% of gross domestic product (GDP) by 2020. The results of previous years have not reached the target threshold, but there is still time for that.

In 2016, R&D expenditure decreased compared to the previous year, but the 2017 results are much more positive – total expenditure on research and development increased by 13% compared to 2016. The growth in the non-profit institutional sector was 23% and in the business enterprise sector 3%.

In international comparison, the R&D intensity index – the ratio of expenditure on R&D to GDP – is a decisive indicator. In 2017, Estonia’s R&D intensity index was 1.29. Despite the increase in total R&D expenditure, the R&D intensity index did not improve significantly. One reason for this is that Statistics Estonia adjusted upwards the gross domestic product for 2014–2016. On the basis of preliminary results, in international comparison, Estonia retained its intermediate position among the EU Member States, which is a better result compared to Latvia and Lithuania, but still significantly behind Finland and Sweden.

In 2017, government funding of R&D expenditure amounted to 122 million euros, or 40%. In 2017, 72% of the research and development expenditure of the non-profit institutional sector and 4% of the business enterprise sector came from the state budget. It should be noted that the funds allocated for research and development through the state budget include finances granted under the Structural Funds, which are included in the state budget, and are therefore counted as government allocations. The share of R&D financing in general government expenditure was 1.32%. The share of foreign funds in research and development spending was 15% in 2017.

In 2017, slightly more than half of the total R&D expenditure was allocated to experimental development, the share of basic research was 28% and the share of applied research was 21%. By sectors, the distribution is different. In the higher education sector and public sector, contributions to basic research accounted for the largest share. In the business sector, however, putting knowledge into practice was preferred – 82% of research and development expenditure was related to experimental development. As in previous years, in 2017, labour costs accounted for the largest share (56%) in research and development expenditure and investments accounted for 11%. In the business sector, the share of labour costs in research and development expenditure was 60% and the share of investments was 14%.

In 2017, the number of full-time equivalent persons employed in R&D was 6,048, which is 5% more than the year before. Full-time equivalent researchers and engineers numbered 4,674, which is 8% more than in 2016. In 2017, as in 2016, women accounted for 45% of persons employed in R&D, and 41% of researchers and engineers.

For the statistical activity “Research and development”, the main representative of public interest is the Ministry of Education and Research, commissioned by whom Statistics Estonia collects and analyses the data necessary for performing this statistical activity.