The future is in knowledge and technology. Why do we keep missing It?

We knew the situation was bad. Eurostat data for 2024 confirms it with uncomfortable precision: Romania has the lowest R&D intensity in the EU — 0.46% of GDP, last place, tied with Malta. In government R&D spending per capita, Romania is also last in the EU, at roughly €19-22, compared to an EU average of around €285 — a ratio of more than 13:1. The corporate picture follows the same pattern: private research and development allocations remain among the lowest in the bloc.

This isn’t just an economic statistic. But before drawing conclusions about “what this gap means,” it’s worth putting it in the right context — including comparisons with countries in structurally similar situations, not just with Europe’s leaders.

The full ranking published by Eurostat shows not just the distance from the average, but also the shape of the progression — a gentle slope from Bulgaria and Latvia (€73-81) upward, followed by a considerable jump once you enter the group of Western European states:

Romania’s position isn’t just “last in the EU” in the abstract — it’s last by a visibly wider margin even compared to the second-to-last country in the ranking (Latvia, €73), which suggests we’re not looking at a gradual tail of the distribution, but at a genuinely isolated statistical case.

Regional context, not just the aspirational one

Comparing directly with Sweden (3.57% of GDP) or Belgium (3.36%) is fair as a benchmark for “where we want to get to,” but it can distort the diagnosis if it’s the only comparison. A more honest picture also includes neighbors with comparable development trajectories:

• Poland: has steadily increased R&D investment over the past decade, helped by dedicated fiscal policies and a more diversified industrial base.
• Czechia: benefits from a denser network of industrial production with a technological component (automotive, electronics), which attracts private R&D directly tied to manufacturing.
• Hungary and Bulgaria: face challenges similar to Romania’s, though Hungary has allocated significant resources to attract R&D centers of multinational companies.

The gap relative to this group is smaller than the gap relative to Sweden — which suggests the explanation isn’t (only) a “Romanian” peculiarity, but rather part of a broader pattern among Eastern European economies still transitioning from an assembly/outsourcing model toward one based on added value. This doesn’t diminish the problem, but it shifts the question from “why are we like this” to “what did the countries that managed to advance faster from the same starting point do differently.”

What economic literature says, with caution

Econometric studies generally show a positive association between R&D spending and long-term economic growth, mediated mainly through total factor productivity (TFP). The exact size of this effect varies considerably across studies, depending on country, period, and methodology — figures sometimes cited in the press (of the type “1% increase in R&D = 2-2.8% GDP growth”) come from specific models and shouldn’t be treated as universal laws. What appears relatively robust in the literature:

• The effects of R&D on growth appear with a lag, not immediately — the horizon typically discussed is several years, not a few months.
• Public R&D generates spillovers into the private sector, but the magnitude depends on the quality of university-industry links.
• The return on R&D investment depends critically on available human capital and on firms’ capacity to absorb and apply new knowledge — generous R&D in a system with weak absorptive capacity produces results well below potential.

Precise figures applicable to Romania would require studies dedicated to the local economy, rather than extrapolating average EU coefficients.

Structural factors that go beyond mentality

The cultural explanation (“Romanian entrepreneurs prefer cheap services”) is partly true, but insufficient on its own. At least as relevant are structural factors, which are easier to measure and to correct through public policy:

• The structure of the economy. A significant share of large companies in Romania are subsidiaries of multinationals that do their R&D at headquarters, not locally — the money for research exists, but it’s allocated elsewhere, not necessarily due to a lack of local “vision.”
• Insufficient or hard-to-access fiscal incentives. Many states with higher private R&D have direct tax credits, substantial deductions, or co-financing grants that are easily accessible to SMEs; in Romania such mechanisms exist partially, but are often administratively difficult to access.
• Limited access to venture capital. Without a mature venture capital ecosystem, small innovative firms have no way to finance high-risk early-stage R&D.
• Absorption of EU funds earmarked for research. The absorption rate and the quality of funded projects matter as much as the amount available.
• Underdeveloped university-industry links, which limit technology transfer even where public research does produce results.

These elements are testable and correctable through public policy — unlike purely cultural explanations, which are hard to verify and offer little direction for action.

Underexplored root causes

The discussion above still remains incomplete unless it goes one level deeper, toward the concrete mechanisms through which weak institutional structure translates into reduced R&D.

Corruption, political instability, and excessive bureaucracy. Access to public or European funds earmarked for research isn’t just a matter of the amount available, but of the predictability of the process. Frequent changes of government and of leadership in the institutions managing research funding (ministries, agencies, managing authorities) produce discontinuity in priorities and in project evaluation criteria. Cumbersome bureaucracy — multiple reports, justification requirements disproportionate to the funded amount, long reimbursement timelines — discourages small firms in particular, which lack teams dedicated to grant administration. The perception of corruption or favoritism in the allocation of public research contracts (even when it doesn’t materialize into concrete cases) further reduces private firms’ appetite for partnering with the state. These elements aren’t “mentality” — they are real transaction costs, which make R&D investment riskier and administratively more costly in Romania than in states with more stable institutions.

STEM talent migration (brain drain). Over the past two to three decades, Romania has exported a significant volume of engineers, researchers, and IT specialists to Western Europe, North America, or international companies with research offices in other countries. The effect is twofold: on one hand, it directly reduces the critical mass of people available to build high-performing local research teams; on the other, it creates a self-reinforcing cycle — with fewer local centers of excellence, the best graduates have even fewer reasons to stay. The technical diaspora represents, in theory, a resource (knowledge transfer, investment, mentorship), but capturing that value depends on the existence of local structures attractive enough that returning or collaborating remotely is worthwhile — which brings us back to the same structural factors (incentives, predictability, research infrastructure).

Multinational organizational culture vs. local entrepreneurship. Many of the largest employers of technical personnel in Romania are subsidiaries of foreign corporations, oriented predominantly toward services, custom software development, or support centers — not toward proprietary research generating locally-owned intellectual property. This model offers competitive salaries and stability, but rarely builds local innovation capacity: intellectual property, strategic product decisions, and R&D budgets remain at headquarters. In parallel, the local entrepreneurship ecosystem remains underdeveloped compared to other Eastern European markets, partly due to a lack of venture capital, partly because the best talent is often absorbed by multinationals before ever considering the risk of a startup of their own. The result is a technical labor market mature in volume but oriented toward execution rather than the generation of intellectual property — which partly explains why high individual competencies (documented separately) don’t automatically translate into greater private R&D.

The role of human capital and absorptive capacity

Without quality human capital, R&D produces limited returns. Studies show a clear complementarity: high-level skills (STEM, specific expertise) drive radical innovation, while basic skills facilitate the adoption of existing technologies. Romania has remarkable IT talent, but faces low retention of that talent and weak university-industry links, which limits the conversion of individual competencies into institutional innovation.

Absorptive capacity — a firm’s or an economy’s ability to recognize, assimilate, and apply external knowledge — mediates the relationship between R&D, technology imports, and productivity. Access to global knowledge exists; what’s often missing is the internal infrastructure (teams, processes, an organizational culture of experimentation) that turns that access into economic outcomes.

What a concrete course correction could look like

Rather than rhetorical questions, a few testable directions, aligned with what has worked in other countries in the region:

1. An administratively simplified R&D tax credit, with a significantly reduced application process for SMEs (a model close to what’s used in Poland or Czechia).
2. Targeted co-financing for university-industry partnerships, with measurable success criteria (patents, products brought to market), not just budget spent.
3. A public-private venture capital fund dedicated to early-stage, high-risk R&D, complementary to existing EU funds.
4. Technical talent retention policies, paired with programs to draw the technical diaspora into applied research roles, not just outsourced IT services.
5. Public monitoring of the absorption rate of EU funds earmarked for research, with periodic reports and institutional accountability.

Conclusion

Romania’s R&D gap is real and documented by Eurostat, and most of the explanation for it is structural and institutional, not a matter of “collective mentality” in the sense of a national character trait. The comparison with regional neighbors shows the problem isn’t unique to Romania, but reflects a broader pattern among Eastern European economies in transition — some of which have advanced faster through specific public policies.

Still, it would be an equally risky oversimplification in the opposite direction to treat mentality and institutional trust as negligible factors simply because they aren’t the primary cause. Policies of the kind proposed above (simplified tax credits, venture capital funds, absorption monitoring) aren’t implemented in a vacuum: their success depends on the quality of the administration putting them into practice, on their continuity beyond a single electoral cycle, and on firms’ willingness to trust that the rules of the game won’t change midway through. Where institutional trust is low — and in Romania, surveys consistently show this to be the case for public institutions — even a well-designed policy on paper risks a low adoption rate, because firms weigh not only the incentive offered, but also the probability that it will remain stable and be applied correctly.

In other words: institutional structure explains how we got here, but any exit trajectory inevitably also requires a change in behavior at the level of firms and decision-makers — one that doesn’t happen automatically just because a fiscal instrument or a fund is, at last, available. Proper institutional reform is a necessary condition, not a sufficient one; without a parallel rebuilding of trust that rules are applied predictably, the risk is that well-intentioned policies remain underused — exactly the pattern already observed in the current absorption of available European funds.

Beyond the direct economic effects, this gap also carries a broader, strategic stake. A country that depends almost entirely on imports of technology, know-how, and innovation cannot claim full autonomy in the decisions that matter most — from cybersecurity and critical infrastructure to industrial capacity in times of crisis. Technological sovereignty isn’t just a geopolitical slogan: it rests concretely on the existence of internal research and development capacity, capable of reducing dependence on external suppliers for key technologies. Without private and public R&D at a minimally functional level, strategic independence remains, at best, a statement of intent — not a real capacity to decide and act independently when it matters.