Despite having significant numbers of highly qualified scientists and researchers across a wide range of disciplines and home to numerous pioneering research institutions, Cyprus has historically been slightly behind the curve when it has come to research and development across Europe. However, 2020 was a milestone in reversing the tide with the establishment of the Deputy Ministry of Research, Innovation and Digital Policy. This underlined the government’s recognition of research and innovation as a fundamental pillar of a new model for growth to expand the productive base of the Cyprus economy.

Unprecedented government investment in the sector combined with an unparalleled per capita base of skills and expertise mean that Cyprus is a rising star in this field, producing world-class research and innovation with tangible benefits for society. The country also ranks fifth among EU countries in the progress achieved in research and innovation, which saw a 25% performance improvement. Cyprus’ innovation performance saw the second-best progress in across the European Union in 2020.

Further evidence of the high calibre of research and development (R&D) being undertaken in Cyprus is the fact that the country ranked first among the EU member states in relation to the per capita absorption of funds from Horizon 2020, the biggest EU research and innovation programme with a budget of nearly €80 billion. With the Horizon 2020 programme now closed, the EU has since launched its most ambitious R&I programme to date branded as Horizon Europe, which will run from 2021-2027 with a budget of €95.5 billion, keeping the EU – and Cyprus – at the forefront of global research and innovation. The strong focus placed on this sector today will further support applied sciences and basic research that have the potential to facilitate future innovations and disruptive tech – and truly establish Cyprus as an R&D powerhouse in the East Med.

A New Focus on Innovation 

Cyprus has truly embraced R&D and its importance in the development of a robust and stable economy capable of meeting the needs of future generations. Equipped with a national strategy on research and innovation, the goal is to bring academic research to the market in order to release its economic potential, a process that involves building bridges between the worlds of academia and commerce. Brandishing the slogan ‘Innovate Cyprus’, a range of specific incentives were introduced, including the expansion of a pilot programme offering start-up visas to third-country nationals who want to establish and develop innovative start-ups in Cyprus. In addition, the government has committed to doubling its expenditure on developing technology, promising to assign €400 million to R&D infrastructure, matched by a corresponding injection of private finance. These funds are expected to bring the country’s total contribution to R&D up to 1.5% of GDP over the next five years – aligning it more closely with EU averages.

In addition, the Research and Innovation Foundation (RIF) – the national authority in charge of supporting and promoting research, technological development and innovation in Cyprus – has developed extensive activities at both a national and international level towards supporting the local ecosystem. One of its most important activities is the development, launch and monitoring of research and innovation (R&I) funding programmes. It has funded numerous programmes across the country, including €15 million to improve the sector, promote private investment in research and innovation and boost cooperation between the public and private sector. It funded an additional €13 million in the framework of Cyprus’ recovery and resilience plan, with three programmes for pre-seed targeting start-ups at the stage of cultivating an innovative idea. The seed portion was directed toward start-ups wanting to promote their products and services, while the innovate section sought to support the productivity aspect and promoting services abroad.

The state budget for the Deputy Ministry of Research, Innovation and Digital Policy amounted to €99.7 million expenditure for 2021, with a projected budget of €101 million for 2023. Large projects spanning two to five years have a €236 million budget.

Tackling Climate Change 

Climate change and environmental degradation has become a primary and existential threat to Europe and the world. To overcome these challenges, a new growth strategy is needed to transform the EU into a modern, resource-efficient and competitive economy. As a country seriously affected by climate change, Cyprus’ R&D landscape has taken a strong approach in finding solutions and introducing cutting-edge monitoring systems to gather vital data.

Thanks to €15 million in Horizon 2020 funding, one of Cyprus’ top-tier institutions for research and development, the Cyprus Institute (CyI), expanded its vital work monitoring atmospheric pollution as an indicator of regional climate change and established the Centre of Excellence for Eastern Mediterranean and Middle East Climate and Atmosphere Research Centre (EMME-CARE). The EMME region has long been recognised as an area subject to rapid environmental change and increasing demand for dwindling resources such as water. The rate of temperature change in summer in the EMME for example, is more than twice the global average. Through continuous comprehensive measuring of levels of airborne atmospheric pollution, along with advanced computer modelling, the research centre is building up a unique database to develop a portfolio of regional-specific strategies for climate change mitigation. Meanwhile, the Institute’s Energy, Environment and Water Research Center (EEWRC) has carried out well-documented work on the development of solar power and on monitoring climate change.

The CyI is a key player in developing Cyprus as a key R&D hub in the East Med with over 1,000 partnerships with prominent universities and institutes in over 65 countries, and more than 50 MoUs with major partners around the world. Some of the more notable partnerships are with the Massachusetts Institute of Technology (MIT), the University of Illinois at Urbana- Champaign (UIUC), the Centre de Recherche et de Restauration des Musées de France and the Max Planck Society.

The University of Cyprus (UCY) FOSS Research Centre for Sustainable Energy also carries out cutting-edge research in the field of renewable sources of energy, with emphasis on solar energy, smart grids, smart buildings, grid integration and enabling technologies. FOSS has been highly successful in competing for funds, so far securing €16 million from more than 50 EU, national and industrial-funded projects. Well-known international players in the field of energy such as Honeywell, Hanwa Q Cells, Gantner Instruments and IBM amongst other leading international brands are already collaborating with FOSS and are testing their products in Cyprus.

A key aim is to make Cyprus a hub for solar innovation, technology transfer, industry start-ups and job creation where ideas can grow and achieve their full potential. Cyprus was also a testing ground for an innovative community project delivered by a German electric utility company Autarsys, where 30 kW/50 kWh was connected to a conventional distribution substation in Nicosia. State-of-the-art high-voltage lithium-ion batteries were used, and the battery system provided services to the distribution network, such as power balancing, network and frequency support, as well as services that stabilise and protect the seamless operation of the network and are considered essential for modern power networks. The project received funding from the European Union’s Interreg Mediterranean research and innovation programme under the project StoRES – a €2 million project of the MED Programme of the EU’s European Regional Development Fund.

In regional cooperation, Cyprus saw the creation of the Paphos Innovation Institute in 2020, which is a non-profit joint venture between one of Israel’s leading institutions IDC Hezliya and the city of Paphos. The learning and training institute has the aim to encourage intellectual and entrepreneurial cooperation to generate solutions to challenges of water, energy and food security.

Cyprus’ climate research is also well aligned with the European Commission’s (EC) European Green Deal, an action plan to boost the efficient use of resources, cut pollution and restore biodiversity. The ultimate goal is for the EU to be climate neutral in 2050. Part of the action plan is investing in eco-friendly tech and green innovation, and it will mobilise funding of over €100 billion in 2021-2027 to the most affected regions. Cyprus has begun working in collaboration with key ministries towards the realignment of its projects and initiatives portfolio to be aligned with the EC Green Deal plan. Projects based on the Green Deal for Cyprus can focus on climate change, quality of water, soil exploitation, food and smart cities, energy, solar energy exploitation – and with the necessary technology and intellectual capital needed already in place, Cyprus is sure to accomplish its targets.

Fostering Start -Ups 

Creating a vibrant community of start-ups is a key priority for Cyprus, and to achieve this it is essential to provide programmes and incentives specially-designed to respond to the needs of early-stage entrepreneurship. Cyprus already has high-quality human capital and world-class academic and research centres, however, it still needs to embrace creativity in order to fuel cutting-edge ideas and build a culture of innovation. A key challenge is to create better links between innovative academic research centres and businesses that excel in transforming ideas into commercially viable products and services.

There are private R&D companies which are commercially driven, and a flagship example is the Cyprus Research and Innovation Center (CyRIC). Its core areas are mechanical engineering design and prototyping, electrical and electronics engineering, robotics and wearables, biomedical engineering and information communication technologies. CyRIC has been involved in more than 35 R&D projects – mostly funded by the EU and industry – worth over €40 million. It also founded an international venture-building incubator branded Gravity, which focuses on developing start-ups from early-stage to mature ventures by assisting them in all the necessary steps on their journey.

To better connect research talent with businesses and to support ways to commercialise novel solutions is of strategic importance to the aforementioned Research and Innovation Foundation (RIF). The Foundation has set up a Knowledge Transfer Office, which operates as a central hub linking industry with research organisations and support high-level knowledge transfer activities such as patent protection and licensing. Another project in the works is to set up an Innovation Factory to offer mentoring, coaching and assessment services as well as enable networking with investors. One of the core RIF activities is to also keep a record of expatriate Cypriot researchers on a central database, with the purpose of keeping them informed about R&I activities in Cyprus, updating them with available networking and financing opportunities and encouraging the development of new partnerships.

A Transformation in Progress

With renewed focus from a government level to support and develop a thriving research and innovation sector, the country is diversifying into a more sustainable and knowledge-based economy. With a multitude of innovative projects up and running, new centres of excellence and cutting-edge multidisciplinary research being undertaken, Cyprus is well on its way to achieving its ambition of becoming a leading innovation hub in the region. The vast pool of talent, experience and state-of-the- art facilities are attracting bright minds from around the world and the growth in this area is also attracting those wanting to invest in emerging technologies and solutions of the future. Situated at the crossroads of three continents and already established as a solid EU business centre, Cyprus is the ideal location for research and innovation projects that can easily reach millions of potential customers in the EMEA region. The future of Cyprus is one of transformation and the synergy between scientific research and industry is fundamental for the creation of a productive R&I environment with multiple benefits for the economy.

For more information, contact Cyprus' investment promotion agency, Invest Cyprus.

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November 2022