EUROPEAN INNOVATION POLICY:

Innovation policy: updating the Union’s approach in the context of the Lisbon strategy Thursday, 9 October 2003 Sofia, Bulgaria

J.N. Durvy Head of Unit, Innovation Policy

1

THE INADEQUATE PERFORMANCE OF THE UNION : A CHALLENGE FOR THE COMING YEARS

• the European Innovation Scoreboard and other reports and indexes converge • the innovation performance of the Union remains low in comparison with the United States • insufficient innovation activity is a factor behind Europe’s underperformance in productivity growth 2

A TENTATIVE TYPOLOGY OF COUNTRIES

0.9

2. Losi ng momentum

0.8

0.7

JP F I SE US 0.6

UK IS DK 0.5

0.4

0.3

0.2

0.1

N L F R B E DE IT BG IE R O CZ AT ES PL PT LT HU 0.0

0

4 Fall ing further b ehind

10 20 30 N O SI EL LV C Y 40 T R

Average change in trend indicators (%)

1. Moving ahead

EE 50

3. Catchi ng up

60 3

EU SPREAD VS US

Best US Worst 700 600 500 400 300 200 100 0 -100

IRL L FIN P UK EL D L S FIN S P IRL P FIN EL P S FIN L NL S P DK EL E IRL p

4

R&D BASED VS DIFFUSION BASED ?

15 10 5 IT FIN US SW

“Should improve diffusion mechanisms”

JAP F D DK NL

“Should improve R&D base”

B E PT 5 10 15 20 DIFFUSION BASED INNOVATION INDEX

5

A HIGHLY DIVERGING INDICATOR

80 60 40 20 0 160 140 137.6

120 100 95.1

2.3.1 EPO high tech patent applications (per million population)

Spread = 1 : 228 High (Over 20% of EU mean) Average Low (Below 20% of EU mean) 57.9

43.7

FIN S NL D 32.2

27.8 27.5 25.3

21.9 19.8

17.0

DK F UK IRL B L A 27.8

6.2

3.1 0.9 0.6

I E P EL EU 49.0

IS 15.2

NO 49.5

36.6

US JP 2.6 1.5 0.1

MT HU TR 6

THE COMPLEX NATURE OF THE INNOVATION PHENOMENON

• R&D is an essential source of innovation and R&D investments in the European Union need to reach 3% of GDP in the coming years • Innovation encompasses more than the successful application of research results, and if there is no entrepreneurial action, there is no value creation.

7

THE DIVERSE “ROUTES TO INNOVATION”

• Innovation can be incremental or radical • It can result from technology transfer or from the development of new business concepts • It can be technological, organisational or presentational • The speed and efficiency of the diffusion of innovation through the economy is critical to productivity and economic growth 8

THE FIELD OF ACTION OF INNOVATION POLICY

• Cultural factors : entrepreneurship, openess to innovation, customer attitudes, etc.

• Framework conditions : supportive regulatory and fiscal environment, competitive markets and well functioning capital markets • Knowledge base : skilled and mobile human resources, science and technology, lifelong learning 9

THE FIELD OF ACTION OF INNOVATION POLICY

• Diffusion of knowledge : science - industry interfaces, clusters of excellence, platforms, etc.

• Support services : business support services, innovation agencies, local advisors,etc.

• Innovation enterprises : management of knowledge, organisational innovation, presentational innovation (design), new business models, network and platforms, the role of public sector (public procurement, etc.).

10

THE UBIQUITOUS NATURE OF INNOVATION POLICY

• Measurement of innovation performance might be biased towards indicators of technological innovation • The design of public policies is hampered by a perception of innovation that is too restricted • Dealing with a policy without a well-defined territory or an administrative home is a major challenge 11

CURRENT CHALLENGES FOR EU INNOVATION POLICY

• Inadequate performance (European Innovation Scoreboard) • Enlargement and the changes in the Union’s innovation profile • Mismatches between labour supply and demand • Role of the public sector to boost innovation • European diversity brings with it different aspirations and attitudes 12

SOME EU INSTRUMENTS

• Political initiatives : Communication, Action plan, etc.

• Funding instruments : Structural funds, framework programme • Regulations : Competition, State aids, IPR, etc.

• Coordination : benchmarking, transnational policy learning.

• Networking : Paxis and Gate2growth, IRCs • Exchange of good practices : Paxis projects for instance.

13

WHICH ACTION AT EU LEVEL

• A coordinated framework and common objectives • A pro-active interaction with other EU policies • The enterprise and its environment.

• Promoting the innovative enterprise 14

A CO-ORDINATED FRAMEWORK AND COMMON OBJECTIVES FOR INNOVATION POLICY

• Members States and the Commission should define a common vision • Members States must build and strengthen their national innovation strategies • Efforts at Member State and EU level must be supported by upgrading of knowledge on innovation, innovation systems and performance • Improved framework for the mutual learning process between Member States 15

INTERACTION WITH OTHER POLICY AREAS

• Interaction between competition and innovation policy should aim at encouraging the flow of new knowledge • Fiscal policy and more generally state aids to boost components of national innovation systems, in addition to R&D • Well functioning labour markets should provide adequate incentives and flexibility for both firms and employees • Public procurements, performance based standards, etc.

16

THE ENTERPRISE AND ITS ENVIRONMENT

• The Enterprise and its local environment : public administrations, infrastructures, local interfaces and support services.

• The service - industry interface : technology transfer, High tech start ups,etc.

• Clusters of excellence : WHICH ACTION AT EU LEVEL : sharing experience and information, promoting good practices, training, awareness, etc.

17

THE INNOVATIVE ENTERPRISE

• Concept to be defined • Entrepreneurial innovation : management and strategies • Networking of enterprises, linkages between large enterprises and SMEs.

• Private and public funding schemes 18

SOME INFORMATION ABOUT THE FRAMEWORK PROGRAMME

FP6 is implemented by 5 specific programmes: 1. Integrating and strengthening the European Research Area 2. Structuring the European Research Area 3. Joint Research Centre activities 4. Nuclear energy (Euratom) 5. Joint Research Centre activities (Euratom) 19

“INTEGRATING AND STRENGTHENING” SPECIFIC PROGRAMME Priority research themes: € MILLION

1. Life sciences, genomics and biotechnology for health 2. Information society technologies 3. Nanotechnologies and nanosciences, materials, processes 4. Aeronautics and space 5. Food quality and safety 6. Sustainable development, global change and ecosystems 7. Citizens and governance in a knowledge-based society

Specific activities covering a wider field of research Strengthening the foundations of the European Research Area:

Coordination of activities Coherent development of research and innovation policies 2,255 3,625 1,300 1,075 685 2,120 225 1,300 320 20

“STRUCTURING” SPECIFIC PROGRAMME

1. Research and innovation 2. Human resources 3. Research infrastructures 4. Science / society € million 290 1 580 655 80 2 605 21

RESEARCH AND INNOVATION

1. Networking the players and users and encouraging interaction between them 2. Encouraging transregional cooperation 3. Experimenting with new tools and approaches 4. Putting services in place and consolidating them 5. Stepping up economic and technological intelligence 6. Analysing and evaluating innovation in Community research projects 22