Research and development in the business enterprise sector, 2005, final figures

Other current costs than compensation of employees increased by NOK 500 million, while compensation of employees to own R&D personnel only just increased by NOK 175 million due to the slight decrease in R&D man-years. Acquisition of machinery, equipment and buildings went down by NOK 50 million. The number of enterprises performing R&D was somewhat lower at 19 per cent compared with 21 per cent in 2004.

The businesses are expecting a growth in R&D activity in 2006. Estimates given by the enterprises in the second quarter of 2006 indicate a growth in R&D man-years by 4 per cent and in R&D expenditure by 6 per cent (nominal values).

The manufacturing industry has traditionally been the main R&D contributor in the business enterprises sector, as was the case in 2005. Its proportion of total R&D costs was slightly less than 50 per cent, which is more or less at the same level as in 2004. The service industry had a much larger growth and increased its spending by NOK 600 million from 2004 to 2005. Consequently, the service industry increased its proportion of total R&D to 41 per cent in 2005. Oil companies also saw an increase in their R&D activity from 2004 and returned to the level of 2003.

Small and medium sized enterprises, with less than 100 employees, reduced their spending on R&D by 2 per cent in 2005. On the other hand, as a group enterprises with more than 100 employees had an increase in spending by 10 per cent. Enterprises with more than 500 employees had a NOK 500 million rise in spending on R&D and are the main contributors to the total increase.

Own funding of R&D is the most common source of funding in Norwegian enterprises and constitutes slightly less than 80 per cent of total funding. This is the same level as in 2003. Funding from abroad has increased compared with 2003 and now represents 10 per cent of total funding.

There are several sources of public funding. The tax deduction system SkatteFUNN is almost as important as other direct public funding. This is mainly due to reduced reported funding from the enterprises of other public funding in 2005. As a proportion of total funding, funding from SkatteFUNN is fairly low at 4 per cent. However, for small enterprises with 10-49 employees SkatteFUNN represents an important source of funding and constitutes 10 per cent of total funding. SkatteFUNN's primary focus is on the smallest companies and in that respect the system seems to work. However, total own performed R&D shows a decrease for the smallest enterprises. Statistics Norway is currently evaluating the SkatteFUNN system and a final report will be ready at the end of 2007.

In addition to intramural R&D, the enterprises purchase R&D services from other (other enterprises, research institutes, universities). The total amount of extramural R&D increased by NOK 100 million to NOK 4.05 billion in 2005. The largest increase came from other Norwegian enterprises/ groups (NOK 400 million), while purchases from abroad decreased by NOK 150 million.

The R&D statistics are based on information collected from the enterprises. All enterprises with 50 employees or more are included. In addition, a sample of enterprises with 10-49 employees is drawn and, based on this sample, total figures for this group are calculated. As a result, greater uncertainty is connected with the results for the small enterprises.

Total R&D and international comparison

Total R&D expenditure for all sectors, including government and higher education, amounted to NOK 29.6 billion in 2005. This figure represents a nominal increase of 6.5 per cent from 2004. Total R&D as a percentage of GDP was 1.5 in 2005 and significantly lower than the corresponding figure for 2004 and 2003 with 1.6 and 1.7 per cent respectively. This decrease is due to the large increase in GDP, with 11 per cent for 2005 and 9 per cent for 2004. In comparison, the corresponding figure for Sweden was 3.9 per cent, for Finland 3.5 per cent and for Denmark 2.4 per cent, all preliminary figures for 2005. The preliminary figure for the EU15 average was 1.9 per cent for 2004. Both Sweden and Denmark experienced a decrease in relative R&D activity from 2003/2004, while this is unchanged in Finland.

In Norway, it is primarily the R&D share for business and industry that has fallen. In 2005, the share was 0.8 per cent of total GDP, compared with 0.9 in 2004 and 1.0 in 2003. These figures include research institutes serving business and industry. The corresponding figures for Sweden, Finland and Denmark were 2.9 per cent, 2.5 per cent and 1.7 per cent of GDP respectively (preliminary figures).

Tables:

• Table 1 R & D in Business Enterprise Sector. Intramural and Extramural R & D, R & D-personnel and R & D man-years by sector and size classes 2003- 2005. NOK million and number of
• Table 2 R & D in Business Enterprise Sector. Intramural and extramural R & D, R & D personell and man-years, by NACE. 2005. NOK million and number of
• Table 3 Funding of R & D expenditures in the in Business Enterprise Sector, by source and NACE. 2005. NOK million
• Table 4 Funding of R & D expenditures in the in Business Enterprise Sector, by source and size classes. 2005. NOK million