The EU vs US corporate R&D intensity gap: investigating key sectors and firms

Abstract

Abstract This paper presents a firm-level examination of the European Union (EU) vs US research and development (R&D) intensity differences based on four pictures taken during the time span 2005–2017. It contributes to the literature on the topic by inspecting for the first time which sectors and firms account the most for the aggregate R&D intensity performance of these two economies. Analyzing the top 1250 R&D investors worldwide in four different years, it finds that (i) only few companies within key (for their relative impact on the overall R&D intensity) high-tech sectors determine (positively and negatively) the bulk of the sector’s intensity, (ii) the EU holds a much lower number of both larger and smaller R&D investors than the United States in the key high-tech sectors, and (iii) there is a high heterogeneity in firms’ R&D intensity within such key sectors. These findings are crucial to better understand the aggregate transatlantic corporate R&D intensity gap.