What we do

Economics of Industrial Research and Innovation is a team running the IIC – Industrial Innovation and Competitiveness science-to-policy project, carried out within the Directorate B - Fair & Sustainable Economy, at the European Commission's Joint Research Centre (JRC).

The project aims at providing EU policymakers, academia, and other institutional and economic actors with robust empirical scientific evidence and analysis on the: 

• contribution of private-sector R&D to sustainable competitiveness and prosperity in the EU;
• EU R&D top players and positioning compared to global competitors;
• innovation potential of countries and regions in the production of competitive trade and goods;
• drivers of investment flows to foster innovation;
• impact of industrial policies on firm dynamics.

The project provides support to the JRC Work Programme thematic portfolios 10 - Drivers of competitiveness, 11 - Strategic Technologies, and 6 - Transport and mobility. Sources of information include: data from statistical offices and the Commission (national, Eurostat, COR&DIP, DGTES, OECD, EPO, etc.), commercial datasets on companies' annual financial reports, surveys (access to CIS, and other surveys), experts opinions, published reports and scientific papers, and trade and patenting activity datasets (UN COMTRADE and PATSTAT).

The research methodologies are based on quantitative economic and financial analyses using statistics, econometrics, modelling, input-output matrices, data panels, complex networks methods and machine learning algorithms. Qualitative analysis as such expert-panels complements quantitative approaches.

The outputs of the project lead to the elaboration of medium and long-term evidence-based policy options to support the development and implementation of industrial EU policies that considers investment in knowledge and innovation a main driver for achieving a smart, sustainable, and inclusive growth. Besides, the project provides a platform for the long-term collection, monitoring, analysis, and reporting of information on private-sector research and innovation activities in the EU, with particular emphasis on the relation between research, innovation, and economic and sustainability performance. An important element in this context is our activity in organising and hosting the biennial CONCORDi conferences at the JRC Seville. 

Policy context 

Research and Innovation (R&I) is the main driver of productivity, growth and living standards, as well as resilience. It is key for transformation, to develop a circular economy, to achieve carbon-neutrality, and the basis for a fair society. However, EU R&I investments fall persistently short of their aspirations and still compare poorly to global competitors (2.2% of GDP, well below the 3% objective). 

“The future of European competitiveness” also known as the Draghi report, published in September 2024 and at the heart of the 2024-2029 mandate of Commission’s President Von der Leyen, urges EU policy measures to regain global competitiveness by closing the gaps to our competitors, requiring annual investment into the new competitiveness strategy of EUR 750-800 billion. Based on this, the February 2025 Competitiveness Compass places innovation and removing barriers at the heart of European renewal. It sets out a roadmap for European policies, in parallel to expected long-term budgetary decisions for the next EU Multiannual Framework.

Closing the investment gaps requires substantial contributions from the private sector. In the EU, private Research & Development (R&D) spending accounts for less than 60% of the overall R&D spending, lagging behind global peers like the US and China. At the same time, the EU is caught in the mid-tech trap. Globally, industry has been undergoing a profound structural transformation due to technological, business and social innovation, also exacerbated by geopolitical tensions and AI-related structural changes. Other economies have been highly successful in creating and growing firms in high R&D intensity sectors, such as ICT and health. Nonetheless, by designing proper policies, the EU has the potential to boost its productivity by exploiting its existing capabilities to innovate and improve performances, leading to an enhanced investment environment. Especially relevant is increasing business dynamics and leveraging private investment into innovation uptake and scaling up deep tech innovations.

The current relaunch of the EU industrial policy emphasizes the epochal transformation of industry, society and policies that should be dealt with up to 2030 and beyond. Such transformations can be enabled by various aspects of innovation and include novel policies and instruments