Many institutions and corporations allocate large funds to R&D in order to increase technological competitiveness. The importance countries give to R&D can be best measured by GERD, which is the Gross Domestic Expenditures on Research and Development.

The European Union, the world leader in multinational, multi-partnered R&D funding, approved the Common European Research Area and €50.5 billion in funding in the Lisbon Council for the 7th Framework Program (FP7) for the time period 2007-2013. The target of allocating a 3% GERD share until 2010 was set with the 2002 Lisbon Strategy. The 3% target was reiterated in the 2010 Europe 2020 Strategy statement. Despite all these efforts, the average GERD share for EU member countries has remained well below the 3% target.

According to the December 2011 Eurostat research report entitled R&D Expenditures, the highest share of R&D in the GDP in Europe was Finland in 2008 with 3.7%. Countries that had GERD shares above 2% were Sweden (3.7%), Japan (3.45%), Switzerland (2.99%), Denmark (2.85%), the USA (2.79%), Germany (2.69%), Austria (2.67%), Iceland (2.64%), and France (2.12%). The EU’s average share of GERD increased from 1.86% in 2009 to 2% in 2010. The two five year periods between 2000 and 2010 witnessed an increase of GERD shares from 1.15% to 1.23% in the private sector, 0.41% to 0.49% in universities, and 0.25% to 0.27% in the public sector.

As can be seen from these figures, most of world’s R&D spending is made by the private sector. In the EU-27, 54.1% of R&D spending is made in the private sector, while the remaining 34.9% and 8.4% are made by the public sector and by non-national entities, respectively. More than two-thirds of GERD spending is done by the private sector in countries with the highest GERD share in Europe, i.e. Luxembourg, Finland and Germany. In new member countries such as Cyprus, Poland, Lithuania, Romania, and Slovakia, by contrast, the majority of R&D spending is conducted by the governmental sector. The member states with the highest share of non-national spending of R&D are Malta, Austria, the UK, Ireland, and Latvia.

In comparison with European Union member states, the share of GERD spending in Turkey is quite low. Even though the share of GERD almost doubled between 2000 and 2009 (from 0.46% to 0.85%), it remains ¼ to ½ of the EU-27 average. Turkey, however, aims to increase the share of GERD to 2% while also aspiring to increase the number of researcher personnel to 150,000 by the year 2013.