Policy paper by the Commission services ERAC Plenary Meeting : how to improve national research and innovation systems of Member States and associated countries

The Directorate-General for Research & Innovation (DG RTD) of the European Commission regularly carries out policy-oriented in-house analyses. This paper provides background information and analysis to stimulate a policy debate on two key policy issues for which important evolutions have been noted over the past years: Performance Based Research Funding and R&D tax incentives. The introduction of a Performance Based Research Funding is one of the central mechanisms through which many countries have in recent years tried to increase the effectiveness and performance of their public research systems. While Performance Based Research Funding helps improve system performance in interaction with other policy instruments, they differ widely among countries and there is an ongoing debate regarding their potential unexpected or undesired effects. In parallel, the majority of OECD and EU Member States are using R&D tax incentives as a policy response to tackle the deficit in business R&D investment. While in most EU Member States R&D tax incentives have increased both in relative and absolute terms and there is evidence that they directly increase private R&D expenditure, the wider innovation and economic impacts of these schemes cannot be adequately assessed. The paper draws on information and expertise accumulated in the Commission services through a range of activities and notably the report Science, Research and Innovation Performance of the EU 2018 and the outcomes of several Horizon 2020 Policy Support Facility activities, among others. The policy paper was drafted in view of a strategic policy debate on how to improve national Research and Innovation systems of Member States and Associated Countries that took place in the European Research Area Committee plenary on 17-18 September 2018in Salzburg, Austria.