R&D in Norwegian businesses 1970-2014
A historical journey
It has more or less been a continuing real growth in Norway's R&D investment from 1970 until today. The business enterprise sector has had by far the highest growth over the whole period with a seven-fold increase in constant prices. In relation to the other sectors, growth has been high from the mid-1990s. The growth in business sector has been somewhat uneven with some highs and lows. The impact of the financial crisis hit in 2009 and 2010, but was still far less than in most European countries. After 2010, there has been marked growth every year, but particularly high in the past few years.
R&D activity has, however, developed differently in the various industries. In Extraction of petroleum and natural gas the level has been fairly stable for a long period. Service sector overall has had more or less steady real growth in the period from 1995. There was only a slight decline in 2009. Just before the financial crisis (2008) the R&D activity in the service sector exceeded the level in manufacturing as a whole and has since increased its lead. R&D activity in manufacturing has varied, but the trend is clear. Essentially there has been real growth in most of the period up to the financial crisis. In the same period, it has more or less been sustained decline in employment in manufacturing. This means that performed R&D man-years in the manufacturing sector as a percentage of total man-years performed in manufacturing has increased over the period. The financial crisis turned more significant for R&D activity in manufacturing than in services, but the trend has stabilized in recent years.
R&D intensity can be measured in several ways. The most common measure is R&D costs as a percentage of value added in the industry. Another measure is the share of enterprises performing R&D activity. The total R&D activity in the absolute sense by industry is naturally also an important indicator. These different measures will provide somewhat different ranking of the most R&D-oriented industries. However, industries with low activity score mostly low on all targets.
On average there are slightly more than 20 percent of the enterprises with R&D activity. This share is clearly increasing with the size of enter¬prises. Large enterprises contribute significantly to the country's total R&D activity. Enterprises with at least 500 employees accounted for 42 percent of total R&D in 2014.
Looking at the 100 largest R&D enterprises, these contribute with about 60 percent of total R&D. Also within the individual industries there is largely the same trend to high concentration. It is also worth noting that among the 35 enterprises with the highest R&D activity, 18 different industries (2-digit level) are represented. This shows that R&D activity in Norway is as much influenced by individual enterprises than the industry structure.
R&D expenditure in the business sector as a percentage of GDP is low for Norway compared to the Nordic countries and other EU countries. This can partly be explained by the fact that Norway has a high GDP, but also that Norwegian industry is to some extent based on raw materials and with low production in industries with typical high R&D intensity. Norwegian industry has nonetheless achieved stronger growth in R&D activity in recent years than the other countries. It is also interesting to note that there are clear structural differences across the Nordic countries. In both Sweden and Finland, the manufacturing industries contribute with more than 70 per cent of total R&D activity, while the corresponding proportion for Norway is only 30 percent. For Norway the service sector contributes with nearly 30 percent; in addition, the oil- and gas- and other industries represent 10 percent. Denmark is in an intermediate position with relatively equal division between manufacturing and services.