In order to achieve this aim, an explicit target was introduced whereby each country was to spend at least 3% of GDP on research and development (R&D) by the year 2010. The data clearly show that progress in this direction has in fact been very limited (Chart 4).
Among the largest four euro area countries, Italy ranks the lowest, and its level of R&D intensity has increased marginally since 1996. 1 At the other end of the spectrum, China more than doubled its investment in R&D over the same period. The role of human capital Together with R&D, the economy’s ability to innovate crucially depends on human capital.