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Greece - RIO Country Report

RIO Country Report Greece 2015

The annual RIO Country Report offers an analysis of the R&I system in Greece, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Greek research and innovation system and assesses the policy response.

R&I Challenges
Improve R&I governance, in particular evaluation mechanisms
Challenge description: 

The Greek R&I governance system has long been characterised by a lack of strategic vision and weak coordination between governmental bodies. An Innovation Council including representatives from academia and industry was set up in 2013 to provide R&I advice on strategic level and facilitate coordination between government agencies responsible for R&I activities and stakeholders. However, it produced very few recommendations and decisions so far. Supervision of the General Secretariat for Research and Technology (GSRT), the main body responsible for policy implementation and funding, was transferred back and forth twice from the Ministry of Development, Competiveness, Infrastructure, Transport and Networks to the Ministry of Education and Religious Affairs between 2009 and 2012. These shifts created inefficiencies and delays in policy implementation.

Until 2013, no systematic evaluations of policies and funding programmes were carried out, which means the knowledge base for policy learning and improvement is still very small. Universities and public research organisations are regularly evaluated, but evaluation results are not taken into account for budget allocation. Reporting of statistical indicators related to R&I was was not systematically organised and led to lack of data from 2011 to 2013, leading to discontinuities in time series that complicate performance analysis.

Policy Response: 

In February 2015 the government created the post of Alternate Minister for research and innovation within the Ministry of Education and Religious Affairs and established an R&I sector within the ministry in March. This role is expected to bring more top-level political guidance to R&I governance. After the September 2015 elections, the Ministry was renamed "Education, Research, and Religious Affairs", which may signal a commitment to put more emphasis on R&I.

A draft National Strategy for Research, Technological Development and Innovation (ESETAK) was adopted in 2014. In terms of planned programmes ESETAK is identical with the national smart specialisation strategy, but this may change in the future. A law to implement it was passed the same year, but has been under revision at the initiative of the Alternate Minister for R&I since spring 2015. Among other things, the revision aims to redefine evaluation regimes, improve working conditions for publicly employed researchers, and to facilitate timely absorption of SF funding. Furthermore, the country's high-level advisory body, the National Council for Research, Technology Development and Innovation (NCRTDI), is to provide recommendations on the formation of the national R&I strategy. The revisions emphasise the need to establish it in a non-bureaucratic and transparent way. Furthermore, Regional Research and Innovation Councils are to be created, which will have a major role in implementation of RIS3 strategies. They are intended to provide the link between GSRT's policy implementation at the national level and regional smart specialisation.

ESETAK and the corresponding implementing law introduced new methods to evaluate RPOs. Evaluations will take place every 5 years by committees of 5-7 (Greek and foreign) external evaluators. In 2015, GSRT was tasked also with project and programme evaluation, until it had completed creation of a registry of certified evaluators, which would then take over these responsibilities. The National Documentation Centre has started to regularly evaluate funding programmes. It has also embarked on a more systematic monitoring of the R&I system, with regular publication of related data and results. Problems with reporting statistical indicators have been resolved with a reorganisation of data collection mechanisms in 2013.

Policy assessment: 

An assessment of the new R&I strategies' impact is not yet possible, as the corresponding law is still under revision which effectively stalls the implementation process. The changes in the R&I governance structure proposed in ESETAK have been judged largely positively by the European Commission as well as by independent consultants, but it remains to be seen to what extent these recommendations are modified in the ongoing revision. Continuing political instability might delay swift implementation of institutional changes. At the same time, severe budget cuts and personnel reductions negatively affect staff motivation for organisational change within government agencies.

Regarding evaluation and policy learning, the monitoring and data publication activities of the National Documentation Centre are a step in the right direction. However, the extent to which these results will influence policy making is not clear yet. For this aspect, design and implementation of new evaluation mechanisms mandated from GSRT will likely be crucial. Mandatory evaluations in the context of Structural Funds Operational Programmes may in the longer term also improve evaluation culture in general. The Evaluation Plan submitted to DG Regio, which is mandatory for the current Programming Period (2014-2020) lists a number of RTDI evaluations at national and regional level. They are not expected to start before 2017.

Increase focus and prioritisation in funding allocation
Challenge description: 

At the funding level, complex administrative rules, inefficient management structures, and low administrative capacity limit the system's efficiency. Most importantly under the current austerity regime, funding decisions lack focus and prioritisation. Structural Funds represent a large share in Greece's R&D expenses (20.8% in 2012). The amount of funding that could be acquired appears to have sometimes superseded the expected impact of projects as a decision criterion. This led the administration to often follow broad EU Framework Programme priorities without much regard as to how well these matched national and regional needs.

The absorption rate of Structural Funds over the 2007-2013 period was 51%, which put Greece at 11th rank (EU27 average: 42%). However, since the onset of budget austerity, absorption has become increasingly problematic due to the Greek government's difficulty to provide sufficient co-financing.

The lack of prioritisation has been an obstacle to achieving economies of scale or critical mass in research areas where the country is strong. It also constrains the potential for science-business cooperation, as it reduces the range of attractive cooperation partners on both sides.

Policy Response: 

In the Ministry for Economy, Development and Tourism, two deputy minister posts were created for entrepreneurship and for managing the National Strategic Reference Framework for funding allocation. As regards funding allocation, the National Strategic Reference Framework for 2014-2020 (following the Structural Funds programming cycle) explicitly prioritises mostly areas where Greece has a competitive advantage, namely tourism, agriculture, logistics, health, ICT, creative industries and culture; as well as environment, energy, and materials. These priorities are also set out by the national R&I strategy ESETAK. On the public research side, the university reform programme Plan Athena is being implemented since 2013. It aims at making HEIs and PROs more efficient, above all by incentivising greater specialisation on local research strengths and elimination of redundancies between research institutes.

Smart specialisation strategies have been developed since 2013 for all Greek regions. They were mostly drafted by independent consultants and are now at various stages in the process of entrepreneurial discovery process and peer review. All regional strategies and the national strategy were adopted in 2015. Definitions of priority areas are being developed further in regional action plans, which also detail investment areas and monitoring/evaluation mechanisms.

To facilitate access to remaining funds allocated for 2007-2013, the 3rd Economic Adjustment Programme (EAP) provides for a significant easing of co-financing requirements, conditional on Greece's fulfilment of a list of ex-ante obligations. The EAP was scheduled to enter into force mid-October 2015. The co-financing issue has also been a focus in the RIS3 peer review of Eastern Macedonia and Thrace, the structurally weakest region of Greece.

Policy assessment: 

The influence of the new Deputy Ministers for funding allocation and entrepreneurship will only be possible to evaluate after a few years.

Smart Specialisation seems to be viewed by the national and regional administrations as having high potential to drive structural transformation and help exiting the economic crisis, thus political commitment to this process is high. The number of national specialisation priorities appears rather broad, but priorities in regional strategies have been already more concrete and specific. It remains to be seen how well the national strategy integrates the regional ones, and how well its implementation will be monitored. Positive signs are that it lists planned instruments to finance the support of private R&I investment according to the regional strategies, and that it sets out detailed financial requirements for these initiatives. A limiting factor might prove that regional authorities can decide on the allocation of only a small share of SF funds.

Nurture private R&I activity and remove related obstacles
Challenge description: 

Business demand for R&D, as well as private spending on research and innovation, is low compared to other EU Member States of similar size and development. BERD stood at 0.28% of GDP in 2013, placing Greece at 21% of the EU median. Nevertheless, this represents a recovery to €489m after a sharp drop down to €459m in 2012. Sectors with relatively high innovation performance have focused mainly on organisational and marketing innovations. Greece occupies rank 5 in the corresponding IUS indicator. It also scores high on knowledge-intensive services exports (rank 7), which is largely due to the sizable share of maritime transport in the economy. The country lacks world-leading corporate R&D investors, with only three firms among the top 1000 EU companies that invest in R&D. In 2014, some multinational companies headquartered in Greece expressed their intention to relocate if political instability continues, which further depresses the outlook for BERD. The acquisition of 2.5% of total FP7 funds by Greek applicants (rank 11, almost on par with Denmark and Austria) seems to have been unsuccessful in inducing more private R&D activity.

A main factor that currently constrains business R&D expenditure is the low financial liquidity of SMEs (which make up 99.9% of all companies) and persistently low lending from banks, many of which are undercapitalised and grapple themselves with liquidity problems. 42% of SMEs reported access to finance to be their most pressing problem in 2013/2014. Private equity is not an alternative source of funding, with private venture capital levels and business angel investments both close to 0% GDP in 2013. While access to funding may currently be the largest obstacle to private sector R&D, institutional deficiencies also play a role, above all regulatory framework conditions unfavourable to risky entrepreneurial activity, and a complex and inefficient system of public support for private R&I. The latter issue is compounded by the capacity deficit of SMEs and regional research organisations for navigating application procedures and drawing up good grant applications.

The root of this challenge lies thus largely on the demand side. The Greek public research system performs more or less on EU average in terms of excellence. It scored 55.27 on highly cited publications in the Excellence Composite indicator in 2012 (EU average 55.38) and 81.31 on ERC grants (EU average 81.77 ) – although budget austerity is jeopardising the sustainability of research excellence. Nevertheless, commercialisation of research results is another weak aspect of the country's R&I system that contributes to the low private R&I activity. Public support for commercialisation activities within HEIs and PROs is low and there are no incentives for individual researchers to engage in entrepreneurship or cooperation with industry. While there are a number of "venture cup" type competitions and measures to support spin-offs, business ideas often do not reach a stage where they would become commercially viable. This is due both to insufficient funding of such instruments and failure to support a more entrepreneurial culture in public research organisations.

Policy Response: 

The government recognises low private R&I activity as a significant challenge and has included it among the objectives of the 2015 National Reform Programme. The Operational Program for Competitiveness, Entrepreneurship and Innovation currently being drafted will include new measures to promote business R&I investment.

The development of RIS3 priority areas is also intended to support and grow the specific strengths of regional private R&I performers. Cross-cutting strategic priorities of the RIS3 process explicitly include support to increase private R&I investment, development of an innovation culture, and the fostering of knowledge transfer and open science. The national RIS3 strategy provides for a concrete measure to support commercialisation, namely a public-private Patent Pool Fund (co-financed through ERDF), which will be implemented if and when the background study required by the financial instruments regulation has been completed..

Several instruments in the 2014-2020 programming period have been outlined in the national RIS3 strategy and are supposed to be operationalised through the OP for Competitiveness and Entrepreneurship. However, no new calls for the programming period 2014-2020 have been issued yet. Among others, there will be a grant scheme for supporting establishment and development of innovative start-ups (indicative budget €540m), a programme supporting innovative clusters where business collaborate with academia (€300m), and a grant scheme to support private RTDI projects (€318m). Within the overall envelope of €20b of European Structural and Investment Funds available to Greece for 2014-2020, €1.3b has been earmarked for investments in research and innovation, with which extensions of some of the measures mentioned above are planned to be co-financed.

Tax rebates on R&D expenses were introduced in 2013. R&D expenses of up to 30% of taxable income can be deducted, with the total amount of deductions spread over 3 years. Since 2010, profits derived from patented products and services are tax exempt for a period of 3 years.

To counteract the lack of investment capital for SME R&D, the Greek government established a fund for regional development and innovation in cooperation with the German state-owned development bank KfW in 2014 (€100m contribution each). The Onassis Foundation will contribute an additional €30m to the fund. There are currently 4 public-private innovation funds co-financed through JEREMIE with a total capital of about €47m.

Policy assessment: 

The direct support programmes listed above have not yet been launched. In some cases, it seems doubtful whether the relatively high indicative budgets of individual instruments will be actually attained, especially given the strong reliance on co-financing from Structural Funds. R&D tax incentives' effects will only be possible to be assessed robustly once more companies register again profits of a sizable amount. Any measure to support private R&I investment will only have lasting effects if bank lending, equity supply, and company liquidity pick up again.

The RIS3 Action Plans being developed provide for private R&I support that is better targeted to regional industry's needs and capacities, and thus hold potential for effectively boosting business R&I activities.

Structural reforms in competition regulation, labour market legislation, and taxation have been announced or are being carried out at present, but it is too early to judge how far these changes will go and in how far they will improve framework conditions for R&I investment.

Chapters
1. Overview of the R&I system

In 2014, the R&D intensity target for 2020 was raised to 1.21% of GDP, after having been reduced from 2% to 0.69% in 2013 in the face of continuing budget austerity. GERD stood at 0.83% of GDP in 2014, having steadily increased since 2011 (0.67%). R&D funded by the business sector was 0.25% of GDP in 2014, and BERD has slowly increased (2011-2014) to 0.28% (EU-28 average: 1.3%).

2. Recent developments in research and innovation policy and systems

Key developments in the R&I system in 2015 included:

  • Creation of the position of Alternate Minister for R&I within the Ministry of Education, Research and Religious Affairs; and of a corresponding R&I sector at the ministry
  • Release of the national smart specialisation strategy, which so far is the document containing most measures to support private R&D, innovation, and public-private cooperation planned for 2015-2020
  • Kick-off of the creation process of a National Roadmap for Research Infrastructures
  • Adoption of the national and regional smart specialisation strategies
  • Designation of the General Secretariat for Research and Technology (within the Ministry of Education, Research and Religious Affairs) as evaluation and certification authority for R&I project
3. Public and private funding of R&I and expenditure

Austerity policies entailed severe budget cuts in all policy areas, also affecting public R&I spending. As a consequence, lack of funding is currently a critical issue the Greek R&I system faces. However, despite new fiscal consolidation commitments associated to the 3rd Economic Adjustment Programme agreed in July 2015, the government has announced measures to safeguard funding for implementation of research projects.

R&I as a topic has moved more into the focus of government announcements since the Tsipras administration took office in January 2015, but was never a central issue in socio-economic policy planning. The R&I share of the public budget was low already before the crisis and is very strongly dependent on Structural Funds and foreign competitive funding. Greece is a moderate innovator, performing at 66% of the EU median innovation index in 2014, a 5 percentage point drop from 2013.

4. Quality of science base and priorities of the European Research Area

Greek policy favours international cooperation in publicly-funded research. Greek research teams participate extensively in ERAnets and other EU initiatives and often play important roles in research agendas for grand challenges. The labor-market for researchers in Greece is heavily regulated with strict remuneration rules that reward seniority rather than performance. Due to the severe budget cuts in the past years, working conditions have strongly deteriorated in the public research sector, rendering Greece unable to attract talented researchers from abroad and leading to increasing brain-drain.

5. Framework conditions for R&I and science-business cooperation

Framework conditions are not really favourable to business investment in R&I: autonomy of HEIs is limited, state intervention is often made based on budget allocations and not development criteria, the R&I policy cycle is not smooth and lacks strategic targets, monitoring and evaluation is suffering, and the setting of financial incentives is occasionally mismanaged.

Collaboration between academia and the business sector is very limited due to different organisational cultures and the lack of demand from the business sector. Academia-industry co-publications accounted for 1.5% of total publications in the period 2011-2013. A variety of public and private initiatives to support knowledge transfer exists, but most of them suffer from limited funding

6. Conclusions

This chapter provides an assessment of the performance of the national research and innovation system and identifies the main structural challenges faced by the national innovation system.

Geo coverage
Report year
2015
Country Report file
Official publication date
Thursday, 28 April, 2016
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