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

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.