The 5% question: Cyprus spends 0.68% of GDP on research, and the EU average is 2.26%

Cyprus should be aiming to invest 5 per cent of GDP in research and innovation by 2032, according to an analysis published in the Cyprus Mail by Panis Pieri — a target that sits a long way from where the island currently stands.

The numbers set the scale of the gap. Cyprus spent €213.6 million on research and development in 2023, equal to 0.68 per cent of GDP, with provisional 2024 figures slipping to roughly 0.65 per cent. The EU average is 2.26 per cent. Public R&D intensity sits at 0.29 per cent of GDP and business R&D at 0.28 per cent — the latter around five times below the EU average, pointing to a private sector that has yet to treat research as a core investment.

The shortfall is not for want of people. Tertiary education attainment among 25- to 34-year-olds runs at 60.1 per cent in Cyprus against an EU average of 44.1 per cent, one of the highest rates in the bloc. The argument is that a well-educated workforce is being underused because the financing and incentive structures around research are thin.

The proposed route to the target is not simply a bigger public budget line. It calls for mobilising public and private capital across the whole economy through R&D tax incentives, co-investment programmes, research infrastructure and venture capital frameworks, on the reasoning that research spending is economic policy rather than a discretionary extra, and that productivity gains from innovation demand systemic restructuring rather than marginal increases.

The piece follows the Cyprus Computer Society's submission of 33 recommendations on the National AI Strategy 2032, which likewise pressed for a single costed implementation plan and clearer accountability for national targets.

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