Transcript Unfriendly framework conditions

Dr. Arie van der Zwan
Directorate General - Research
European Commission
Brussels
Dr. Arie van der Zwan
• European Commission (2002-Present)
• Ministry of Netherlands Economic Affairs (16 yrs)
• Directorate-General for Innovation
• DG for Economic Structure, Technology Policy
• DG for Industrial Policy
• DG for Energy Policy
European Research Policy
Knowledge based society and Economy
Arie van der Zwan
European Commission, DG Research
Strategic and policy aspects; investment in research
Innovation and Competitiveness
Workshop
Istanbul, 19 April 2004
Content
• Europe’s technological (under)
performance
• Lisbon goals: to become the most
competitive and dynamic knowledge
based economy in the world
• Important issues in Lisbon Process:
– the Barcelona 3% objective and action
plan
– issues for new Member States
– the open method of co-ordination
(OMC)-cross-country dialogues to
formulate strategies for research
policies
Europe’s sombre
technological
performance
• Can be no denying Europe’s persistently poor
technological performance
– and the negative impact that has on the overall
economy
• Many indicators of this under-performance, e.g.
– relative weakness of our high-technology and
knowledge-intensive sectors
– relative slowness to absorb new technologies
– inferior rates of labour productivity growth
• If Europe continues to under-perform this way, we will
never achieve the Lisbon goals: to become the most
competitive and dynamic knowledge based economy in
the world
Why technological
under-performance?
• Many contributory causes
– for example, Europe’s very different mix of industries
• with a much smaller high technology sector
• with many fewer large companies
• Defence oriented R&D
• But, a major cause has to be the deep-rooted
structural
weaknesses
affecting
our
research and innovation systems
– research inputs are too low
• both financial and human
– unfriendly environment for research and innovation
– excessive fragmentation of public research
Structural weaknesses
affecting Europe’s research
system
• Financial inputs
• Human inputs
• Unfriendly framework conditions
Financial inputs
•
Europe substantially under-invests in research
– less than 2% of GDP and stagnant
– compared with nearly 3% in US (also ~3% in Japan and Korea)
•
EU-US R&D Gap
growing from € 71.6 bn in 1995 to € 117 bn in 2000
decreasing to € 111 bn in 2002
– increasing public funding gap from € 17 bn (2000) to € 26 bn (2002)
– decreasing business funding gap from € 104 bn (2000) to € 87 bn (2002)
•
An input gap of that magnitude cannot be bridged
– by being more clever
– nor by importing technology from others
• because of our poor absorptive capacity
First policy conclusion: to be technologically competitive, Europe,
particularly European business, must invest much more in
research)
Human inputs
• Research is particularly labour-intensive
• If our goal is to increase investment substantially, we
have to find large additional numbers of researchers
• Europe’s career pipeline is however increasingly leaky
and made worse by unfavourable demographics
– so the future supply of European-trained researchers
may be insufficient even to maintain the status quo
– and could therefore impede attempts to increase
investment in research
Second policy conclusion: as we cannot invest more
without employing more, we must plug holes in the
pipeline and make Europe much more attractive to
(third country) researchers
Unfriendly framework
conditions
• Regulatory shortcomings
– incomplete internal market, ill-adapted IPR regimes,
excessive costs of new company registration,
outdated bankruptcy and insolvency laws, unfriendly
standards, barriers to mobility of researchers …
• Financial weaknesses
– underdeveloped venture capital markets, particularly
for early-stage finance, relatively weak fiscal
incentives …
• Networking failures
– weak science-industry linkages, weak cross-linkages
between innovation actors …
• Unfriendly social environment
– poor acceptance of new technologies, attitude of the
young, weak culture of entrepreneurship …
Unfriendly framework
conditions (cont’d)
• Conditions vary from country to country, but,
from an overall European perspective, these
unfriendly framework conditions
– seriously inhibit business investment in research
– reduce absorptive capacity for new technologies,
wherever generated
– lead to ineffective exploitation of our public research
base
(Third policy conclusion: it is urgent to improve the framework
conditions, but this will require a wide portfolio of policy
measures, many outside “research” policy)
Fragmentation in
public research
• Majority of public research in Europe (>80%)
is executed in a purely national frame
– with rather low levels of co-operation between
different countries at either the programming or
policy levels
• This combination (of fragmentation and
compartmentalisation) often results in
– much uncoordinated parallel work
– wasteful duplication
– insufficient competition always to ensure excellence
– teams that lack critical mass
(Fourth policy conclusion: countries must co-operate more in their
research policies and programmes, if we are to make effective
use of limited public resources available for research)
The Barcelona 3%
objective and
Action Plan
3 % Action Plan
A Systemic Approach
• Industry will invest more in R&D in Europe only
if it can expect improved returns on
investment
• A drastic reappraisal of current policies and a
major structural change towards more R&D
intensive sectors + enhanced innovation in
existing sectors
• All factors affecting performance of R&I
systems need to be addressed e.g. from
research to the market place
• A broad range of policies need to be mobilised
in a coherent way e.g. R&D&I, internal market,
competition, Regional, etc.
R&D intensity by source of
funding&D intensity by source
of funding
‘3%’ Objective
What is at stake?
Long term gains : by 2010 and by 2030
EU-US R&D Gap
growing from € 71.6 bn in 1995 to
€ 117 bn in 2000
decreasing to € 111 bn in 2002
– increasing public funding gap from
€ 17 bn (2000) to € 26 bn (2002)
– decreasing business funding gap
from € 104 bn (2000) to € 87 bn
(2002)
Estimated gains
if EU reaches 3% in 2010
– Until 2010 :
+0.25% GDP (annual average)
+2 million jobs over 2004-2010
– After 2010 :
+0.5% GDP every year
+400,000 net jobs every year
Growth
Jobs
Productivity
Product
quality
0%
5%
10%
15%
Gains from reaching 3% R&D by 2010
compared to statu quo
2010
2030
Lisbon progress
(Spring Report 2004)
• Undeniable progress after 4 years but
insufficient implementation at MS level
• “Improving investments in knowledge and
networks” as key priority for 2004 (Growth
Initiative)
• Spring Council has seized opportunity of
economic recovery and the coming enlargement
to increase impetus
The impetus of Enlargement
(Spring Report 2004)
• Increased trade & investment opportunities
• Good growth potential (av. 4 % p/a)
• Experience of reform and commitment to the
process in the new MS will increase EU
momentum
• Accession comes at a critical & timely moment –
Mid-Term Lisbon Review [+First report on
progress of 3 % Action Plan]
Issues and Actions
for new MSs
(Informal Seminar, Brussels, March ‘03)
• Promote R&D in domestic firms: raising their
awareness of opportunities, improving their
access to capital and raising their profile for
investors.
• Orientate FDI towards knowledge and R&D:
accentuating spill over effects, innovation and
capability transfer, linkages with local knowledge
infrastructure, etc.
• Counter the brain drain: improving the
attractiveness of the research career
accompanied by actions to address the demand
for R&D and technology.
Issues and Actions
for new MSs
(Informal Seminar, Brussels, March ‘03)
• Upgrade research infrastructure and
rebalance the distribution of large S&T facilities
to the benefit of new MSs, to offer domestic
opportunities for R&D teams.
Establish systemic innovation policies which
aim at balanced progress on R&D capability,
demand, diffusion and absorption factors, and
stronger co-ordination between R&D, education,
economic, and other relevant policies.
New MSs and the
Barcelona Targets
•
•
•
•
•
(3 % Action Plan/ OMC Snapshot)
Politically committed to Barcelona objective
(R&D intensity targets), but budgetary
commitments difficult
Public investment decline reversed; many
showing substantial growth;
New fiscal measures (HU, LV);
Participating in OMC 3%
Efforts must be sustained
The Open Method
of Coordination
(OMC)
What do we mean by
OMC?
• OMC was introduced at the Lisbon Summit as a
“soft” form of European governance
– to fill the gap between simple cooperation at MS-level
and full legislative integration at Union-level
• for use particularly in fields where the prime responsibility for
policy-making lies with MS
• OMC offers an adaptable voluntary coordination
framework that assists MS progressively to
develop their own national policies
– to tackle common challenges
– with the aim of achieving collectively agreed Unionwide goals
How does OMC
function?
• OMC functions through an iterative cycle, involving
– at Union-level: the collective setting of Union-wide
objectives and a timetable
– at individual MS-level: the translation of these common
objectives into national action plans and targets
– MS collectively: regular multilateral monitoring and
collective self-assessment
• allowing the cycle to be closed and repeated with
progressively increasing intensity
• To be effective, the whole process needs support with
operational tools
– such as foresight, scoreboarding, benchmarking …
• particularly to promote mutual learning and selfimprovement
OMC-topics
• Public research base and its links
with industry
• SMEs and research
• Fiscal measures for research
• IPR and research
• Public research spending and policy
mixes
• Human resources and mobility
Conclusions:
• Absolute need for EU to invest more
in R&D
• Strategy and goals set by 3% action
plan
• Cross-country dialogue by OMC