Republic of Cyprus Second Voluntary National Report - Sustainable development goals

76 NARRATIVE In today’s world, digital transformation and innovation are a necessity that presents an enormous growth potential for countries across the globe. Through its digital transformation agenda, Cyprus aims to implement a wide range of technological, economic, and societal innovations that will result from the overall policy and strategy of the newly established (since March 2020) Deputy Ministry of Research, Innovation and Digital Policy (DMRID). The Deputy Ministry is responsible for enabling and accelerating Cyprus’ digital transformation, while leveraging technology and innovation to stimulate sustainable growth and vibrant economic activity, and help solve the numerous pressing challenges of our time. Cyprus’ new Industrial Strategy, which also includes the circular economy, will give a boost to the industrial ecosystem, increasing its export capacity and growth potential. ANALYSIS Cyprus is placed among the last countries within the EU in regards to R&D expenditures, even though the country has experienced considerable progress (see Figure 24). Specifically, the gross domestic expenditure on R&D is 0.62% of the GDP, placing Cyprus 25th among EU members (the EU average is 2.2%). Importantly, R&D expenditures show a positive trend between 2010 and 2019, indicating the effectiveness of Government efforts toward the increase of the stock of knowledge, which comes from R&D. A similarly low performance is observed. in terms of relative position and trend, in the R&D expenditures deriving from the business enterprise, the Government, and the higher education sectors. In terms of various other R&D and innovation indicators, Cyprus in most indicators ranks at the lower end among EU countries. Exceptionally, it is placed 10 th in the percentage of active population aged 25-64 who are employed in science and technology (52.5% relative to 46.9% in the EU (see Figure 25). However, it ranks 26 th in the percentage of persons employed directly in R&D (0.4% relative to 1.4% in the EU), 21 st in the percentage of persons employed in high- and medium-high technology manufacturing sectors and in knowledge-intensive service sectors (39.6% relative to 45.2% in the EU). Finally, it ranks 14 th in the number of patent applications to the European Patent Office per million inhabitants (53.7 relative to 148.7 in the EU). Noteworthily, all indicators have a positive trend from 2010 onwards, indicating a continuous improvement in R&D and innovation in the country. The performance of each EU member state as to its digital transformation is expressed in the Digital Economy and Society Index (DESI) issued by the European Commission every year. According to the latest DESI 2020 results, Cyprus placed 27 th among EU members with a connectivity score of 38.5, compared to the 50.1 EU average. Cyprus lags behind in ultrafast broadband coverage, fast broadband uptake and ultrafast broadband uptake, and the broadband price index. Additionally, the Cyprus Competitiveness Report 2019 finds that connectivity is a weak spot for Cyprus, along with digital skills, which are both below the EU average. While Cyprus performs well in the household with broadband access, and gap in broadband access indicators, it demonstrates very low fibre deployment for very high-capacity networks. 0.63 0.26 0.05 0.25 2.20 1.46 0.25 0.48 All Sectors Business Enterprise Government Higher Education % of GDP 0.0 0.5 1.0 1.5 2.0 2.5 Cyprus EU Figure 24.: Gross Domestic Expenditure on R&D 38 40 42 44 46 48 50 52 54 % of active population aged 25- 64 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 44.0 47.1 48.5 47.9 48.8 49.3 51.0 50.9 52.0 52.5 Figure 25.: Human Resources in Science And Technology