Vol.IX(LXXII) 1 - 11 Economic Insights – Trends and Challenges No. 4/2020

Scientific and Innovative Potential at National and Regional Level in

Corneliu Russu

Centre for Industry and Services’ Economy, Romanian Academy, 125 Calea Victoriei, Sector 1, 010071, , Romania e-mail: [email protected]

Abstract

The paper deals with the main aspects of the scientific research, technological development and innovation activities carried out in Romania at national, development regions and some counties level compared to the corresponding ones in some member countries of the . The paper presents developments in 2007-2017 of R&D expenditures per inhabitant and as a share of GDP, the personnel from the respective activities and the results of carrying out these activities in terms of patent applications. The conclusion of the analysis is that the mentioned activities present numerous deficiencies, and the effort devoted to them varies widely between the development regions and the counties analyzed, also influencing in very different proportions their economic growth.

Keywords: scientific research; technological development; innovation; patent applications.

JEL Classification: O31; O32; O34.

Introduction

The results of the activities of scientific research, technological development and innovation give the measure of the scientific and innovative potential, respectively of the capacity of generation, assimilation and diffusion of the technological progress in all the activity sectors of the society, determining the pace of their development and modernization. The increase of the competitiveness of the economy of a country is dependent, to a decisive extent, on the activities of research - development and innovation (R&DI). The increasing importance of this determining factor of the economic and social development of the countries and their component regions in the contemporary world is convincingly illustrated by the fact that a good part of the countries of the world, especially the developed ones, pay special attention to the intense stimulation of the respective activities, materialized in focusing their development strategy on such a coordinate.

2 Corneliu Russu

The Financial Effort to Support R&D Activities at National and Regional Level

In contrast to the trends that are manifesting strongly on a global level, in Romania, the field of science and technology does not enjoy the necessary attention to make it capable of substantially increasing its contribution to the development and modernization of the economy and society. Illustrative in this regard are the R&D expenditures per capita and as a percentage of the GDP, which in Romania are the lowest in the European Union, as the following two figures show in comparison with some member countries of the European Union.

624.2 EU28 594.1 460.8490.9 1286.9 Austria 1223 829.1 965.9 1045.5 Belgium 900.4 600.6690.7 54.7 60.4 18.429 324.5 Czech Republic 308.4 175.6200.3 1121.7 Finland 1109.5 1183 1302.7 757.7 France 749.9 617.5672.3 1206.4 Germany 1093.4 747.1 855.9 392.7 Italy 364.5 313.1331.6 857 The Nederlands 810.4 632.2657.1 127.3 Poland 113.6 46.368.6 590.8 United Kingdom 671.9 491.6598.1 48.1 Romania 39.4 28.230.9 137.8 Slovakia 171 46.977.2 302.2 Spain 283.6 297.9313.8 1615 Sweden 1504.3 1270.81273.7 170.8 Hungary 153.3 97.1112.4 0 20040060080010001200140016001800

2017 2015 2010 2007

Fig. 1. R&D expenditure per inhabitant in some member countries of the European Union, 2007... 2017 (euro) Source: EUROSTAT. Intramural R&D expenditure (GERD) by sector of performance and NUTS2 regions; Code [rd_e_gerdreg] Scientific and Innovative Potential at National and Regional Level in Romania 3

2.07 2.03 EU28 1.92 1.77 3.05 3.05 Austria 2.73 2.42 2.66 2.43 Belgium 2.06 1.85 0.74 0.95 Bulgaria 0.57 0.43 1.79 1.93 Czech Republic 1.34 1.3 2.73 2.87 Finland 3.71 3.34 2.21 2.27 France 2.18 2.02 3.07 2.93 Germany 2.73 2.46 1.37 1.34 Italy 1.22 1.13 1.98 1.98 The Nederlands 1.7 1.67 1.03 1 Poland 0.72 0.56 1.65 1.65 United Kingdom 1.65 1.61 0.5 0.49 Romania 0.46 0.51 0.89 1.16 Slovakia 0.61 0.45 1.21 1.22 Spain 1.36 1.24 3.37 3.23 Sweden 3.17 3.26 1.33 1.35 Hungary 1.14 0.96 0 0.5 1 1.5 2 2.5 3 3.5 4

2017 2015 2010 2007

Fig. 2. R&D expenditure as a percentage of GDP in some member countries of the European Union, 2007 … 2017 (%) Source: EUROSTAT. Intramural R&D expenditure (GERD) by sector of performance and NUTS2 regions; Code [rd_e_gerdreg] The difficult situation of the Romanian R&D domain is reflected both by the low level of the two indicators analyzed compared to the one achieved by the other countries taken in comparison, and by the fact that the share of the respective expenditures in the GDP remains approximately constant in the interval covered by the analysis, in the conditions in which in most other countries present in the table it has increased (mostly in Slovakia, Poland and Bulgaria); for the whole EU28, the growth in the analyzed period was about 17%. The levels of the same two indicators presented for the development regions in Romania (EUROSTAT does not provide statistical data for the NUTS3 regions) clearly highlight the 4 Corneliu Russu significant gaps existing between the most developed and least developed regions, illustrated by the figures in the following two figures.

300 268.6

250

200 177.4 168.5 150.3 150

100

36.138.9 50 29.3 21.3 21.1 24.724 21.5 21 22.425 17.2 13.2 17.5 12.114.2 17.414.3 8.810.4 10.1 10.4 8.5 7.5 5.8 5.5 8.9 7.4 0

2007 2010 2015 2017

Fig. 3. R&D expenditure per inhabitant in the development regions of Romania, 2007… 2017 (euro) Source: EUROSTAT. Intramural R&D expenditure (GERD) by sectors of performance and NUTS2 regions Code [rd_e_gerdreg]

1.4 1.23 1.22 1.2 1.08

1 0.91

0.8

0.6 0.41 0.44 0.44 0.43 0.38 0.37 0.38 0.4 0.33 0.33 0.36 0.350.33 0.25 0.26 0.28 0.27 0.210.21 0.22 0.18 0.18 0.18 0.20.17 0.2 0.15 0.16 0.080.07 0

2007 2010 2015 2017

Fig. 4. R&D expenditure as a percentage of GDP in the development regions of Romania, 2007 … 2017 (%) Source: EUROSTAT. Intramural R&D expenditure (GERD) by sectors of performance and NUTS2 regions Code [rd_e_gerdreg] Scientific and Innovative Potential at National and Regional Level in Romania 5

The hierarchy of the regions established according to the level of both indicators is the same, namely Bucharest-Ilfov, West, South , Center, North-West, South-West Oltenia, North-East and South-East. The upper half of the hierarchy comprises three developed regions and the fourth - South Muntenia - which, with respect to R&D spending, has remarkable performances, due to the existence in the region of large companies with such activities and of university centers. In this field the special position of the Bucharest-Ilfov region must be noted, by the fact that the Capital presents levels of the two indicators much higher than all the other regions, in these conditions deforming much the country averages. At the county level, the national statistics provide data on the total expenditures of the R&D activity in territorial profile and by categories of expenses, expressed in current prices. As the presentation of these data at the level of all the counties and of the Bucharest municipality would occupy an excessive space in the economy of this article, we limited the respective presentation to the first five most developed counties - in descending order Cluj, Timiș, Constanța, Brașov and Ilfov -, and to the last least developed - in ascending order , Vaslui, Botoșani, Teleorman, Suceava. The county hierarchy was made according to the level of the county GDP / inhabitant indicator registered in 2017, the last one presented by EUROSTAT. In order to avoid distorting the real value of the respective expenditures by inflation, we will present the share of the expenditures realized by the selected counties in the total value of the R&D expenditures in the country, and the evolution of this weight during the analyzed period. Table 1. Share of R&D expenditures in the counties selected in the total value per country of these expenditures, 2007 … 2017 (%) Categories of Country / County 2007 2010 2015 2017 expenditures Total 100 100 100 100 Romania Current 100 100 100 100 Of capital 100 100 100 100 Total 7,110 7,307 6,965 5,193 Cluj Current 6,376 7,579 5,575 5,003 Of capital 10,054 5,799 12,333 7,095 Total 3,376 3,802 7,191 5,533 Timiș Current 3,056 4,136 6,587 5,435 Of capital 4,656 1,945 9,524 6,516 Total 7,110 7,307 6,965 5,193 Cluj Current 6,376 7,579 5,575 5,003 Of capital 10,054 5,799 12,333 7,095 Total 0.908 1,131 0,830 0,585 Constanța Current 0,911 1,044 0,929 0,588 Of capital 0,894 1,303 0,448 0,558 Total 2,234 2,662 0,635 0,604 Brașov Current 2,239 2,132 0,752 0,615 Of capital 2,214 5,601 0,184 0,490 Total 13,263 18,617 18,365 33,628 Ilfov Current 13,289 15,536 21,669 34,440 Of capital 13,160 35,722 5,599 25,511 Total 0,010 - 0,110 0,002 Giurgiu Current 0,010 - 0.060 0,002 Of capital - - 0,320 - Total 0,209 0,188 0,212 0,204 Vaslui Current 0,256 0,221 0,266 0,217 Of capital 0,022 - - 0,071 Total 0,132 0,081 0,042 0,045 Botoșani Current 0,153 0,096 0,049 0,048 Of capital 0,049 - 0,016 0,009 6 Corneliu Russu

Table 1 (cont.) Total 0,031 0,023 0,009 0,001 Teleorman Current 0,032 0,028 0,011 0,022 Of capital 0,029 - - - Total 0,652 0,549 1,714 0,198 Suceava Current 0,494 0,680 1,048 0,218 Of capital 1,286 0,637 4,288 - Source: Own calculations based on data from NIS. Romanian Statistical Yearbook 2018, Bucharest, 2019, Table 13.41. The indirect way of analyzing the evolution of the R&D expenses made in the selected counties, however, makes it possible to highlight some relevant aspects, some of which are difficult to explain: o The R&D expenses made by the selected developed counties vary greatly from one county to another, but they are incomparable in level with those recorded by the less developed counties, the ratio between the extreme values in 2017 ( / ) being 23415: 1; o Among the developed counties, three - Ilfov, Cluj and Timiș - have registered the highest weights in total, current and capital expenditures at national level, while Brașov and Constanța counties have surprisingly low weights in relation to diversity and remarkable performances of the economic activities carried out in their territories; o Among the less developed counties, only Suceava recorded levels of the mentioned weight well above those of the other counties in this category; however, the performance of this county, which improved significantly in the period 2007-2015, suffered a very inexplicable decline in 2017, all the more surprising since the structure of its R&D expenditures indicates significant weights of capital expenditures. For the rest of the counties in this category, included in the table, in particular Teleorman and Giurgiu, the level of spending on R&D activities is so low that it raises the legitimate question about the usefulness of carrying out these expenses further, given the results of the research expressed in the number of patents and registration of designs applications which is extremely modest; o The appreciable volume of R&D expenditures recorded by Ilfov county, much higher than that reported by the other developed counties included in the table, is explained by its position in the vicinity of the Capital, the connections with the research units from its territory being tight and taking place many relocations of the respective activities from the Capital to the county.

The Staff from the R&D Activities in the Selected Counties

The reduction of the scientific and innovation potential of the selected counties during the analyzed period is also caused by the steep decrease in some counties of the staff of R&D units, first of all the number of researchers, as the figures in the following table show.

Table 2. Number of employees from R&D activities in selected counties, 2007 … 2017 County Indicators 2007 2010 2015 2017 2017/2007 Employees, total 3008 3098 2866 2945 0,98 Cluj Out of which: Researchers 1968 2563 2062 2033 1,03 Employees, total 1007 2805 2748 2697 2,68 Timiș Out of which: Researchers 704 1820 1515 1478 2,10 Employees, total 620 663 1060 1251 2,02 Constanța Out of which: Researchers 402 504 815 1006 2,50 Employees, total 1378 1799 1400 1462 1,06 Brașov Out of which: Researchers 1231 1694 816 853 0,69 Scientific and Innovative Potential at National and Regional Level in Romania 7

Table 2 (cont.) Employees, total 2760 2379 3997 5238 1,90 Ilfov Out of which: Researchers 1770 1585 2510 2883 1,63 Employees, total 7 - 25 1 0,14 Giurgiu Out of which: Researchers - - 14 1 - Employees, total 88 68 114 124 1,41 Vaslui Out of which: Researchers 59 42 45 42 0,71 Employees, total 71 40 5 4 0,06 Botoșani Out of which: Researchers 46 37 5 4 0,09 Employees, total 23 20 27 11 0,48 Teleorman Out of which: Researchers 9 6 11 5 0,56 Employees, total 512 433 540 595 1,16 Suceava Out of which: Researchers 368 363 345 366 0,99 Source: NIS. Romanian Statistical Yearbook 2018, Bucharest, 2019, Table 13.40. The figures in this last table analyzed in correlation with the corresponding ones from the previous table lead to a first conclusion: the evolution of the staff and the number of researchers does not always follow that of the volume of expenses incurred with the R&D activities; for example, in Constanta county the personnel from these activities and the number of researchers increased continuously during the analyzed period, while the volume of expenses fluctuated and marked, in the last year of the period, a significant decrease of its weight in the total volume of expenses at the level national. In all the developed counties shown in the table, the level of the two indicators presented has increased in various proportions, with the exception of Brașov county in the number of researchers. Regarding the increase of the ratio between the number of researchers and the total number of employees, only the counties of Cluj and Constanța have had positive evolutions (in the sense of increasing the number of researchers in the total number of employees from R&D activities), in the other three counties developed increasing the share of auxiliary staff, evolution obviously inappropriate. In the category of less developed counties, the staff from the R&D activities is incomparably lower compared to the one from the counties of the first category, in accordance with the low volume of specific expenses and with quasi-general decreasing trends (except for Vaslui and Suceava counties in the number of employees). An unexplained situation presents the Giurgiu County, the least developed by the level of GDP / inhabitant of 2017, in which the number of employees in R&D activities and researchers fluctuated within confusing limits, from zero in 2010 to 25, respectively 14 in 2015, so that in 2017 it will be reduced to 1, respectively 1; such a fluctuation cannot be considered as reflecting a real and sustainable scientific and innovative potential existing locally. The increase in the number of employees and researchers in the developed counties, with the exceptions mentioned, is welcoming, proving that they have the resources to increase their scientific and innovation potential indispensable to substantially improve their competitiveness and, thereby, their development.

Outcomes of R&D and Innovation Activities at National and County Level

The differences of R&DI potential existing between the two categories of counties, already shown by the level of the specific indicators of the "inputs" in the respective activities (expenses, personnel), are convincingly synthesized by the situation of the "outputs", therefore the results of the respective activities expressed, among others, by the number of patent and designs applications, as well as the number of patents granted. The figures in the following 8 Corneliu Russu figures are edifying as to the level of the first indicator, both on a national scale, in comparison with member countries selected for our research, as well as in the counties in the two categories that we also selected for analysis.

190.874 Austria 210.745 207.973 115.271 Belgium 139.041 147.951 4.172 Bulgaria 2.287 1.608 17.466 Czech Republic 18.313 18.393 246.342 Finland 258.798 241.118 107.174 France 130.75 135.791 226.074 Germany 284.938 295.739 60.207 Italy 75.657 84 158.046 The Netherlands 183.39 203.733 11.222 Poland 9.477 5.299 66.886 United Kingdom 84.691 91.674 3.002 Romania 1.694 1.541 5.34 Slovakia 8.626 7.175 27.357 Spain 32.37 30.942 247.442 Sweden 298.358 310.216 17.089 Hungary 19.386 19.035

0 50 100 150 200 250 300 350

2012 2010 2007

Fig. 5. Number of patent applications addressed to the European Patent Office at the level of some member countries, 2007 … 2012 (number/1 million inhabitants) Source: EUROSTAT. Patent applications to the EPO by priority year by NUTS2 regions. Code [pat_ep_rtot] Scientific and Innovative Potential at National and Regional Level in Romania 9

4.325 Cluj 2.282 0.649 5.832 Timiș 0.737 7.403

Constanța 0.691

2.875 Brașov 2.925 0.979 6.246 Ilfov 0.221

Giurgiu

0.634 Vaslui

0.609 Botoșani 0.446

Teleorman

1.578 Suceava 0.706 0.707 012345678

2012 2010 2007

Fig. 6. The number of patent applications addressed to the European Patent Office in the selected counties in Romania, 2007 ... 2012 (number/1 million inhabitants) Source: EUROSTAT. Patent applications to the EPO by priority year by NUTS3 regions, international patent classification (IPC) sections and classes. Code [pat_ep_ripc] The comparisons at the international level in Figure 5 show: the large differences between the performances of the Nordic western member countries (Belgium, Finland, Sweden) and the southern ones (Italy, Spain), proportional, broadly, with their level of economic development; the very large differences between Western and Central and Eastern European member countries; the decrease during the analyzed period of the performances of most of the member countries included in the table, including the most developed ones, except Bulgaria, Finland, Poland and Romania, so of three former communist countries which had very low starting levels in 2007; the surprisingly low performance of the UK compared to Germany and France, however, the island country being recognized for its appreciable creative potential; in the hierarchy established according to the level of this indicator Romania occupies the last place between the countries shown in the table, the direct and natural consequence of the existence of the numerous deficiencies mentioned above and highlighted by the low level of the analyzed indicators. At the level of the present in Figure 6, the figures highlight the large differences between the performances of the developed counties and those of the less developed counties, in the latter case the data being for some of them incomplete. Most counties where one can follow the evolution along the whole analyzed period have increased the number of patent applications submitted to the EPO compared to the number of inhabitants in the county, which is a positive reality that denotes a growing awareness of the urgent need to develop the activities of R&D and improve their performance at an accelerated pace. The only county that registered the decrease of the indicator level was Timiș, the one with the number of patent applications in 2012 after that of Ilfov county, the evolution of this level during the period 2007-2012 presenting fluctuations of great amplitude difficult to explain. 10 Corneliu Russu

Although EUROSTAT data refers to a relatively short period and long ago, these clearly outline the profoundly deficient situation of the national R&D and innovation system in Romania and the performances on this level of the selected counties, the developments produced after 2012 giving no arguments in support of the idea that the state could have improved. The official Romanian statistics present until 2017 data on the number of patent applications filed by the Romanian applicants at the State Office for Inventions and Trademarks, which show divergent tendencies manifested by the two categories of counties established according to their level of development (see the following figure) ).

Cluj 62 73 40 86 Timiș 43 52 45 79 Constanța 8 16 2022 38 Brașov 14 36 21 2017 89 Ilfov 78 86 12 2015 Giurgiu 12 1 5 2010 Vaslui 24 4 9 2007 Botoșani 46 7 16 Teleorman 23 24 Suceava 15 29 54 142 0 20406080100120140160

Fig. 7. Number of patent applications filed by Romanian applicants, in territorial profile, 2007 ... 2017 Source: NIS. Romanian Statistical Yearbook 2018, Bucharest, 2019, Table 13.49 During the analyzed period, the developed counties present in the figure registered increases in the number of patent applications (with the exception of Constanța county), although the number remains at a modest level, while the less developed counties recorded all decreases. Among the latter, has a special situation, determined by the number registered during the analyzed period compared to the other counties selected from the same category, which represents the natural consequence of the better situation that it presented regarding the previously analyzed indicators (expenditure on R&D activities, number of employees in these activities and researchers).

Conclusions

Taking into account the analyzes carried out on the state of this determining factor of the counties development, it can be concluded that there are great differences at national and local level, reflected convincingly by the available European and domestic statistics. Contrary to the trends that are most pronounced in most European Union member countries, especially those in Central and Eastern Europe, the predominantly negative developments in Romania prove the reduced capacity of the R&D and innovation system to naturally contribute to the national and local economic and social development. The sometimes considerable decrease in the level of the analyzed indicators is finally reflected in the reduced creative potential of the country and of the counties (expressed in the number of patent applications addressed to EPO), which is very far from that of the western member Scientific and Innovative Potential at National and Regional Level in Romania 11 countries and significantly lower than that of the former communist countries of Central and Eastern Europe. The insufficiently rapid progress and the existence of numerous setbacks regarding this factor, which is added to the account of others factors (foreign direct investments, education) greatly slow down the growth of the country and the counties and thus extend the period of full convergence with corresponding entities holding leading positions in the European Union.

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