RIO Country Report Cyprus 2014

The RIO Country Reports, co-authored by JRC policy analysts and independent experts, give an update on the performance of the national research and innovation systems, and examine policies to address key R&I challenges, assessing their effectiveness. They serve as a tool to inform EU and national policy-makers, and support policy learning in Member States (MS).

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The annual RIO Country Report analyses and assesses the development and performance of the Cypriot national research and innovation system and related policies in the perspective of EU strategy and goals.

The report highlights recent national policy and system developments occurring and assesses the match between national policy priorities and the structural challenges of the research and innovation system. It addresses among others:

  • The progress of Cyprus towards achieving the Innovation Union, focusing on areas where action is needed.
  • Progress in responding to the ERA actions, particularly in light of the ERA progress report findings published in September 2014.
  • Country specific R&D and innovation recommendations as indicated in COM(2014) 400 final '2014 European Semester: Country specific recommendations, Building Growth' adopted by the Commission on 2 June 2014 and endorsed by the Council on 27 June 2014.
  • Progress in tackling research and innovation system challenges beyond those outlined above.
  • Areas highlighted by the Commission's Communication on 'Research and innovation as sources of renewed growth' (COM(2014) 339 final) and its accompanying Staff Working Document 'State of the Innovation Union, taking stock 2010-2014' (SWD(2014 181 final).

The RIO Country Report 2014 builds on the experience of the ERAWATCH project. The ERAWATCH Country Reports from previous years are also available for download on this page. 

Report year
2014
Official publication date
03/09/2015
Geo coverage
Document type
EU Report or Publication

Country Report file

RIO Country Report 2014_Cyprus.pdf
English
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National economic and political context

In 2013, Cyprus continued to suffer from the impact of the financial crisis, with GDP contracting by 5.4% and expected to decrease further by 4.3% in 2014.  The liquidity of the local banks was severely affected by an outflow of deposits and a rise in non-performing loans. Unemployment was at 16.9% at the end of 2013 and it is expected to reach 19.2% by the end of 2014. Economic growth is expected to benefit from the on-going gas drilling programme in the Cyprus Exclusive Economic Zone (EEZ).

ERA priority 2: Optimal transnational co-operation and competition

The small size of Cyprus and its location are barriers to transnational cooperation projects.  It is estimated that only 0.7% of national funding is dedicated to joint research agendas (ERA-NET calls, JPIs and 6 Art. 169/185 network projects), compared to an EU average of 1.42%. There is no R&D budget for collaboration programmes with third countries (EU average equal to 2.4%). There are no common ex post evaluation procedures.

National R&I strategies and policies

The R&I strategy is de facto the part of the Operational Programme for Competitiveness, which addresses R&I. A National Committee for Research, Innovation and Technological Development (NCRITD) was appointed in 2013 and proposed a new RDI strategy and governance. In parallel a Smart Specialisation Strategy was released in 2014. The budgetary framework follows the 7-years cycle of the Structural Funds. In the new programming period there will be a follow up of most of the traditional R&D support measures, enhancement of business innovation support schemes and new measures are proposed for innovation infrastructure (Innovation Houses, Business Innovation Centre and Innovation Packages) in 2015.

National Reform Programmes 2013 and 2014

The Cyprus National Reform Programmes for 2013 and 2014 prioritise innovation and the increase of youth employment. No significant achievements were recorded in the research sector in 2013. The R&D intensity target of 0.5% by 2020 seems feasible and could even be revised upwards, taking into account the forthcoming changes in RDI governance and the new RTDI strategy.

ERA priority 3: An open labour market for researchers

Introduction:

Cyprus has medium-low organisational and hiring autonomy, medium-high academic autonomy and the lowest ranking in financial autonomy among the 29 higher education systems examined by the University Autonomous Tool (UAT). Supply of skilled and medium-skilled labour increased more rapidly than demand in the decade 2000-2010 and it is expected to continue increasing more rapidly than demand in the current decade.

Open, transparent and merit-based recruitment of researchers:

The market for researchers in Cyprus is highly regulated by laws applicable to public and private universities. Recruitment is open, transparent and merit-based and positions are widely advertised (Government Gazette, in local press, websites and EURAXESS Cyprus portal), often in English. Researchers are regularly peer evaluated. Based on the University Autonomous Tool, Cyprus received a 50% weighting on organisational autonomy. There is a trend of outflow of researchers but there are no official data.

Access to and portability of grants:

In Cyprus portability of national grants to other EU countries is not allowed.

EURAXESS:

The EURAXESS portal of Cyprus is managed by the Research Promotion Foundation. In 2013, 65.5 of researcher posts per thousand researchers in the public sector were advertised through the EURAXESS Jobs portal, compared to an EU-27 average of 43.76.

Doctoral training:

HEIs are free to develop their doctoral training programmes. There is limited funding of doctoral training and almost no funding of post-doctoral research. There is no explicit policy regarding the Principles for Innovative Doctoral Training (IDT) neither at the national level nor at the institutional level but most of them are de facto practiced.

HR strategy for researchers (HRS4R) incorporating the Charter and Code:

At the end of 2014, all HEIs and research organisations had endorsed the Charter and Code. Its application has not been evaluated but it is formally monitored. The Research and Promotion Foundation and the Directorate General for European Programmes, Coordination and Development organise promotional activities for the Human Resources Strategy for Researchers (HRS4R).

Education and training systems:

There are no special education and training systems dedicated to the fields of science, technology, engineering and mathematics. The recent establishment of the Cyprus University of Technology is expected to address demand in these fields. Innovation was addressed by specific competitions in 2009-2010 and new measures are foreseen in the period 2015-2020. Excellence in education will be addressed through the programme Islands of Excellence (Nisides Aristeias) that will be managed by the Research Promotion Foundation and will run in the period 2015-2017 with a budget of €17m.

Policy developments related to Council Country Specific Recommendations

In the EU/ECB/IMF financial assistance programme for Cyprus there are no direct R&I commitments. R&I will be indirectly affected by the on-going structural financial reforms, the restructuring of the banking sector, the on-going fiscal consolidation and the efforts for the enhancement of youth employment.

ERA priority 5: Optimal circulation and access to scientific knowledge

e-Infrastructures and researchers' electronic identity:

In 2012, a Digital Strategy was adopted for the period 2012-2020, putting emphasis on digital entrepreneurship and the modernisation of public administration. In November 2014, there were 3 open access repositories in Cyprus, all in HEIs (Cyprus University of Technology, Open University of Cyprus, Cyprus University). Cyprus is neither a member of an identity federation nor of eduGAIN service and there is no national strategy to address personal data security.

Open Access to publications and data:

There is no national policy on open access. Green open access is de facto the main modality of public policy.The library of the University of Cyprus (UCY) has been designated as the Cyprus OpenAIRE National Open Access Desk and open access initiatives are undertaken by HEIs and research organisations. 

Framework conditions

There are no specific framework conditions designed to address R&I, except for tax incentives. Policies are supply-driven and demand-side measures are limited to the energy sector. More innovation measures are expected in the period 2014-2020.

Science-based entrepreneurship

There are no explicit measures supporting science based entrepreneurship. Measures are planned for 2015 (grant scheme for innovative products and services, Innovation Packages, Innovation Houses).

Funding trends

During 2011-2012 there has been a shift of funding from the government to EU funding due to the severe fiscal restrictions. The Cyprus Partnership Agreement (adopted in June 2014) provides that a total of €72.1m will be allocated to the thematic objective "Strengthening research, technological development and innovation" in the period 2014-2020 and will be split between the Research Promotion Foundation (65%) and the Ministry of Energy, Commerce, Industry and Tourism (35%). Total R&D budget in the current programming period will reach €132m, including national contributions.

Funding flows:

The government is the principal funder of R&D activity, covering 66.4% (€55.3m) of total GERD in 2012. Funding from abroad comes second in order of importance, covering 17.5% of total GERD (€14.6m). The business sector provided about 11% of total R&D funding (€9m), while HEIs and the private non-profit sector accounted for 4.6% and 0.7%, respectively, of total funding in 2012.

Project vs. institutional allocation of public funding:

There is no competition via assessments in institutional funding, which is purely block funding. Although there are no official statistics, it is estimated that project funding accounts for 40% of total funding (2012 data). Project funding is allocated through the Research Promotion Foundation and the Ministry of Energy Commerce, Industry and Tourism. Other sources of funding include the Cyprus Entrepreneurship Fund (€200m), a Trade Finance Facility from EIB dedicated to SMEs (€150m), and JEREMIE Cyprus (€8m).

R&I funding:

Government funding of innovation in the period 2007-2013 was mainly through the framework programme DESMI. Tax exemptions are offered for R&D and innovation expenses and there is also favourable tax treatment of Intellectual Property Rights.

Smart Specialisation

A new National Innovation Strategy on Smart Specialisation (RIS3) for Cyprus was prepared by the Research Promotion Foundation (RPF) (Coordinator), in collaboration with a research group from Cyprus University of Technology (CUT) resulting in the prioritisation of Tourism, Energy, Agriculture/Food, Construction, Transportation, Health and ICT. The RIS3 foresees monitoring and evaluation mechanisms based on result indicators (general and social ratios).

Knowledge markets

A series of tax incentives have been introduced for the protection of Intellectual Property Rights (IPR) in Cyprus (IP Box). A new IPR Code of Practice is expected in the period 2014-2020. It is envisaged that the protection of IPR will be entrusted with a National Knowledge Transfer Office.

Evaluations, consultations, foresight exercises

There are no evaluations of R&I programmes or measures except for the evaluations foreseen for the EU Structural funds. An overall assessment of the RTDI system in Cyprus was provided in the report prepared by the National Committee for Research, Innovation and Technological Development (NCRITD) in spring 2014. The main R&I documents are adopted after public consultation.

Knowledge transfer and open innovation

Cyprus does not have a specific strategy for knowledge transfer. Industry Liaison Offices operating at HEIs in Cyprus since 2009 ensure communication between academia and business. In addition, the Business Support Centre (member of EEN) has been established, aiming at providing intermediary services for the transfer of knowledge and technology. Supporting Technology Transfer was identified as a major weakness of the R&D system in the spring 2014 governance report of the National Committee for Research, Innovation and Technological Development.

Performance of the National Research and Innovation system

The R&D intensity of the Cypriot economy is one of the lowest in EU-28 (0.48% of GDP). Public funding of innovation activities is amongst the highest in EU, only surpassed by France (46.2%, 2010 - latest available data). Cyprus ranks low in Western Europe in terms of total citations per document (0.54), only surpassing Luxembourg and Malta. Patenting under the PCT is very low.

Structural challenges of the national R&I system

The following structural challenges can be identified: (i) limited human resources for research, (ii) limited demand for R&D (medium too long term), (iii) limited propensity to innovate through exploitation of research results, (iv) limited number of high-tech companies in the country, and (v) too broad research orientation in need of more prioritisation.

Meeting structural challenges

The government acknowledges the challenges and is already addressing i) limited human resources for research and  (ii) limited demand for R&D (medium too long term), while measures are planned for the enhancement of propensity to innovate (iii). The lack of high-tech companies in the country (iv) is not sufficiently addressed. Research orientation (v) is likely to become more focused taking into account the prioritisation of RIS3.

Innovation framework for SMEs

SMEs are supported by specific schemes (Enhancement of Business Innovation in Cyprus, grant scheme, voucher scheme), and new initiatives are planned for 2015, such as Innovation Houses. There are no special procedures for financial reorganisation of SMEs. Bankruptcy regulations have not been simplified, but are in the process of change.

Venture capital markets

There is no VC market and the angel market is the smallest in the EU-28, with total investment of less than €1m. Crowdfunding is minimal and only for charity purposes.

Innovative public procurement

In Cyprus, there is no specific policy for innovative public procurement.

The country in the European R&I landscape

Cyprus is one of the smallest member states of the European Union with a population of about 860,000 people at the end of 2013 (0.2% of the EU-28). The country is experiencing a financial crisis since 2011 and GDP (74% of EU-28 average) has been shrinking. In terms of R&D intensity, Cyprus ranks last before Romania, with GERD at 0.48% of GDP in 2013 and a target to reach 0.50% of GDP by 2020.

Main features of the R&I system

The R&D system in Cyprus is centralised and dominated by public funding. R&D decisions are taken at central level; consultations and information awareness events are decentralised.

Structure of the national research and innovation system and its governance

Τhe National Council for Research and Innovation (NCRI) and the Cyprus Scientific Council (CSC) are the highest ranking bodies for prescribing R&I policy but have been dormant for some time. A National Committee for Research, Innovation and Technological Development (NCRITD) was appointed to propose a new RDI structure and governance and political decisions following its recommendations are expected. R&I policy and budget allocations are a responsibility of the Directorate General for European Programmes, Coordination and Development (DGEPCD). At the implementation level, the Research Promotion Foundation (RPF), and the Technology and Industrial Development Units of the Ministry of Energy, Commerce, Industry and Trade (MECIT) support entrepreneurship and innovation measures.

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