34 funding and performance of R&D in France and by businesses

Businesses provide the majority (60%) of funding for gross national expenditure on R&D, with businesses based in France financing around 55% of the country’s gross domestic expenditure on R&D. This level of funding by the private sector is much lower than that recorded in Japan, Germany and the United States.

In 2012, businesses and the public sector provided €48.4 billion in funding for R&D performed either in France or abroad. Businesses funded 60% and the public sector 40% of the country’s gross national expenditure on R&D (GNERD) (diagram 34.01).

In parallel, gross domestic expenditure on R&D (GERD), which covers all R&D performed within France, totalled €46.5 billion in 2012, €30.1 billion of which was implemented by businesses (intramural business enterprise expenditure on R&D – BERD) and €16.5 billion by the government (intramural government expenditure on R&D – GOVERD). GERD was financed through cross-investment by French businesses (55%), the French government (37%) and funding from abroad (8%). The level of funding by the private sector was much lower than that recorded in Japan (76%), South Korea (75%), Germany (66%) and the United States (59%) (chart 34.02). In the United Kingdom, although businesses funded less than half of GERD (46%), 20% of R&D funding came from abroad, as compared with only 8% in France.

Total business enterprise expenditure on R&D (see ‘Methodology’ section opposite) amounted to €33.7 billion in 2012. Self-financing of €24 billion and inter-business funding streams worth €6.8 billion together financed more than 90% of this expenditure in 2012 (chart 34.03a). Funding streams from businesses within the same group accounted for €5.6 billion of these €6.8 billion, while those between businesses belonging to different groups represented only €1.1 billion (chart 34.03b). International organisations, the European Union and above all funding from the French government accounted for the remaining funding for R&D expenditure by businesses (€0.5 billion and €2.5 billion respectively) (chart 34.03a).

Government funding for R&D by businesses is understood to mean R&D contracts signed with dedicated state research institutions, as well as support measures provided by the state, whether direct or indirect. ‘Direct’ support is provided by means of subsidies, calls for proposals and contracts supporting programmes that tackle key issues. ‘Indirect’ government support takes the form of different tax incentives and repayable (where projects result in commercial success) advances, which are not included in this analysis. The most significant form of tax relief is the R&D tax credit (crédit d’impôt recherche – CIR), with a total of €5.3 billion paid out to 15,300 businesses based in France in 2012.

Due to the importance of military R&D programmes, 48% of government funding for R&D contracts signed with businesses came from the French Ministry of Defence. Such funding therefore remained highly concentrated within a small number of research areas. Four branches of activity received almost half of government funding: ‘manufacture of air and spacecraft and related machinery’ (28%); ‘manufacture of communication equipment’ (10%); ‘manufacture of fabricated metal products, except machinery and equipment’ (9%); and ‘manufacture of instruments and appliances for measuring, testing and navigation; watches and clocks’ (9%).

Catherine David