RIO Country Report Romania 2014
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The annual RIO Country Report analyses and assesses the development and performance of the Romanian 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 Romania 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.
Country Report file
The Romanian economy has exited the crisis and, starting 2013, has entered a period of relatively steady growth rate of approx. 3% of GDP. Considering that GDP per capita is half of EU average, and that the share of education and research remains very low, this rate is a sign of entering a middle income trap rather than one of convergence with EU countries. Under these circumstances, the brain-drain continues (with devastating consequences in systems such as health), but islands of competitive excellence remain, especially in ICT.
Romania is involved in one major, pan-continental project, the Extreme Light Infrastructure – Nuclear Physics (ELI-NP). Other partnerships include several research cooperation programmes with countries or groups of countries in Western Europe; contributions to European organisations (including ESA and CERN); participation in JPI and JTI projects, the EUREKA programme, and others.
There have been efforts to boost the internationalization of research, such as twinning projects and the funding of bilateral calls, but their overall impact remains unclear, especially given the cuts in R&D over the last half a decade.
The National RDI Strategy 2014-2020 has ambitious targets, includes smart specialisations and priorities of national interest, and a large spectrum of instruments and policies able to support the development of an innovation ecosystem. However, the strategy remains solely a document, as the budgetary commitment was already broken and the main implementation instrument (i.e., the National Plan) was not adopted by May 2015. Romania adopted a set of additional strategies which include a broad range of innovation-related objectives and measures (e.g., for competitiveness, for the SME sector), but their resources and the implementation plans remain unclear. Broader coordination of innovation policies is still missing, but an important tax deduction of 50% for R&D expenditures is finally ready for implementation (starting 2015).
The National Reform Programme (NRP) 2014 is weakly connected to the policy action lines envisaged in the recent RDI Strategy. While there are, in this respect, some overlaps between the two strategic documents – including, inter alia, a roadmap for RDI infrastructures, IPR training –, the NRP remains unspecific or vague. The targets set in the outgoing RDI Strategy (2007-2013, but still underway) are not mentioned in the NRP, whose assessment of this strategy’s implementation glosses over the most critical issues.
With a number of researchers per population four times below the EU average, Romania has set the strategic objective of doubling their number as well as increasing their share in the business sector. This implies reducing the massive brain drain, increasing inter-institutional mobility in both universities and institutes, and making career progression in public research organisations more flexible. In the context of smart specialisation, the government has committed itself to facilitate the integration of PhD students in projects in the relevant fields.
There are no Council Country Specific Recommendations for Romania related to R&I for 2013-2014.
In the period 2006-2013, the academic community in Romania enjoyed access, free of charge, to important databases, both bibliographic and bibliometric, through several projects financed by the budget or EU funds, among which the ANELIS project (2009-2011), followed by the project ANCS-UEFISCDI (2012-2013).
For the period 2006-2013, 5.3% of Romanian publications in scientific journals had green open access (compared with the EU average of 9.4%), and 9.5% had gold open access, which is above the EU average of 8.6%. The National RDI Strategy 2014-2020 encourages the gold open access standard for publishing the results of publicly-financed research.
The tax deduction for R&D expenditures became operational in 2015. A tax deduction of 20% was introduced in 2011 and raised to 50% in 2013, but, because the new implementation norms were missing, the deduction was not applicable until a new order of the Finance Minister clarified matters in 2015.
Because of the budgetary cuts, important innovation support instruments under the National RDI Plan (e.g., innovation vouchers) were stopped. The project-based innovation financing supported by structural funds met with an increasing demand after several years of reticence from the business side.
In Romania, entrepreneurship is in general much less dynamic than in other EU countries, and science-based entrepreneurship is almost absent. An important tax incentive for investors in start-ups was adopted in 2015: the Business Angels Law sets out, among others, that income received as dividends by individuals from acquired shares shall be exempted from taxation for a period of 5 years.
In 2013, Romania spent only 0.48% of its GDP on R&D. The governmental expenditures reached their lowest level in 2013 (similar figures are estimated for 2014 and 2015), at odds with the objective and multiannual planning approved under the National RDI Strategy 2014-2020. BERD is very low and decreasing (0.12% of GDP in 2013, from 0.19% in 2012), but one may expect a reversal of the trend in the future, given the newly adopted tax deduction of 50% for R&D expenditures.
While the national rate of absorption of structural funds for 2007-2013 was still under 40% by 2015, the absorption of RDI funds was complete. However, for the period 2014-2020 the allocated amount does not exceed €1b, which is an increase of less than 20% compared with the previous cycle.
Project vs. institutional allocation of public funding:
Most of the public funding for R&D in Romania (59%) is allocated institutionally, and the figure has been increasing over the recent period. The main recipients are the Romanian Academy and its institutes, and the distinct class of National R&D Institutes (NRDI). Universities receive no institutional funding for RDI, and the impact of adding a set of research-based indicators to determine their apportionments has been minimal. There is limited transparency in the assessment of Romanian Academy institutes, while the evaluation of NRDIs did not reveal substantial differences in performance (all assessed institutions received high scores).
Project-based funding has been allocated primarily under the National RDI Plan 2007-2013, which is open to all research and innovation actors; and under the RDI axis of the Operational Programme Competitiveness, whose impact has been estimated as mixed, among others due to the reluctance of business actors.
While the National RDI Plan 2007-2013 launched a broad spectrum of innovation-targeting instruments and was off to a good start, allocations were cut dramatically. By the end of the programming period, only one third of the planned disbursements had been provided.
Indirect funding has been similarly unsuccessful: the 2010 R&D 20% tax deduction, subsequently raised to 50%, first proved impracticable for bureaucratic reasons and, later on, due to the absence of implementation procedures.
Romania has a very recent smart-specialisation strategy for RDI at national level (the RDI Strategy 2014-2020) but, as yet, no regional S3s. The latter are scheduled to be delivered by the end of 2015, however, given the very limited autonomy of the country’s development regions, their focus and impact are unlikely to extend beyond allocations under the Regional Operational Programme.
The national RIS3 contemplates a broad range of from-idea-to-market instruments, a roadmap of research infrastructures, as well as the concentration of doctoral and postdoctoral education in the smart specialisation fields, among others.
Romania updated its legal framework on service inventions in 2014, in an attempt to respond to complaints from multinationals that the protection of individual owners inhibited patenting activity. The Unitary Patent was ratified the previous year.
So far, patenting remains very limited in absolute numbers, with physical persons accounting for almost 45% of the total. Overall, the number of annual patents has been decreasing – with noticeable fluctuations – compared with the early 2000s. The number of international patents awarded is exceedingly small.
All three main categories of public research organisations are subject to various assessments. However, these exercises are either insufficiently transparent (the case of Romanian Academy institutes), or incapable of clearly distinguishing among levels of performance (the National R&D Institutes assessment), or widely contested (the classification of universities and ranking of academic programs). As a result, the impact of these evaluations has probably been minimal so far.
The elaboration of the national RDI Strategy 2013-2020 was the result of a major foresight exercise which, among others, identified a relatively small number of national thematic priorities in RDI. Other recent foresight exercises targeted higher education.
The public network for innovation and technological transfer (ReNITT) has 45 accredited entities, among which roughly a dozen technology transfer centres and a similar number of centres for technological information and of technological and business incubators. Four scientific and technological parks complement ReNITT. The activities of these entities are still rather modest, usually limited to non-inventive engineering services. Better support for the development of the technology transfer infrastructure has been provided by RDI regional structural funds.
While there are early signs of a resurrection of interest on the private side, the main challenge remains that of channelling funding in ways that serve the demand rather than the supply side.
Romania has been converging with the EU in some respects, such as the number of doctorate graduates and publications per researcher, the latter actually being noticeably higher than the EU average figure. However, considerable gaps are visible in the research and innovation activity of firms (e.g., BERD is 11 times lower) and in patenting (EPO patents are 33 times fewer in number than the EU average).
The innovation ecosystem remains in a state of infancy: the limited RDI financing is directed towards the fragmented public sector, and the business sector is, with some remarkable exceptions, absent from the game. In terms of the innovation value chain, research remains supply-driven and concentrated in basic or applied research, while tech transfer is lacking both mature content and support infrastructure.
The promised hikes in public financing continue to be delayed in the absence of a strong political will and the reform of the public R&D sector is not high on the agenda yet. The 50% tax deduction may contribute to the revival of business interest in R&D, but a clear approach towards developing the tech transfer infrastructure is still pending. The entire RDI public policy mix is blurred, as the main implementation instrument, i.e., the national RDI Plan 2014-2020, had not been adopted by June 2015.
According to international innovation indicators, Romania suffers from problems in investment, competitiveness, and innovation linkages. These were addressed in the outgoing RDI strategy by dedicated funding instruments (totalling €80m over 7+ years) targeting technology and product development, high-tech exports, and innovation vouchers. The new Strategy for RDI envisages programmes for SME access to risk capital, credits with subsidised interest rates, and guarantees for credits. The Government’s recent strategy for SMEs (2014) provides for a broader spectrum of support instruments, yet implementation details are almost completely absent.
A 50% tax deduction for R&D expenditures became functional in 2015, after several years of bureaucratic obstacles had rendered it either impracticable or unappealing.
The culture of innovation is weak in Romania, and the most resourceful entrepreneurs relocate their businesses abroad and/or raise early-stage funding directly outside the country. Venture capital funds are only beginning to emerge, but overall figures remain very low. A law supporting business angels was adopted in April 2015, providing, among others, that income from dividends earned for the transfer of shares shall be tax exempt for a period of 5 years.
The initiative JEREMY of the European Investment Fund launched the risk capital fund 3TS Catalyst Romania, which made its first investments in technology-based companies in 2014. Two other funds set up to support risk investment (up to €1.5m per SME) are announced for 2015.
Public procurement for innovation is a new subject in public policy debate. While not yet an established practice, it occupies an important place in the new RDI Strategy 2014-2020, where it is the subject of several dedicated programmes. A draft law on public procurement includes a new procedure – “partnership for innovation” – which directly targets innovative public procurement.
Romania has a GDP per capita half of the EU average and its R&D expenditures have remained below 0.25% of GDP. The 1% objective was restated by the National RDI Strategy 2014-2020, but the allocation for 2015 has been less than half the planned amount, despite the fact that this happened only a few months after the formal adoption of the multi-annual planning as part of the National RDI Strategy 2014-2020. The number of researchers per population is four times smaller than the EU average and 80% of them are employed in the public sector. At the same time, Romania has one of the largest scientific diasporas among European countries, and continues to add to it as a large part of PhD graduates are not absorbed by the domestic system.
Romania has a centralised R&I system. The main research organisations are the national R&D institutes, most of which are now subordinated to the Ministry of Education and Scientific Research (MESR), the institutes of the Romanian Academy and of the branch academies. They receive institutional funding, highly correlated with the number of researchers, following a rather inertial financing model. Universities are new players, respectable in terms of scientific publication but with very weak connections with industry.
Private research is almost absent and in a chronically underfinanced system, the survivors are usually the organisations receiving institutional public funding. BERD is only a quarter of GERD, and only one third of the R&D business expenditures are devoted to activities performed by universities or research institutes. Romania has a good research infrastructure and relatively large number of PhDs, both underused resources given the low project funding. There is a massive brain drain, especially of top young researchers.
The main actor in the system is the Ministry of Education and Scientific Research (MESR) and its National Authority for Scientific Research and Innovation (NASRI), which coordinates the National RDI Strategy. However, MESR has de facto limited power beyond the implementation of the National RDI Plan and the structural funds it allocates. The innovation policies have no inter-ministerial coordination, as the responsible body at governmental level has remained inactive since its creation.
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