Transcript EU Competitiveness (2) - The Economics Network

EU Competitiveness
(2)
Where does the EU stand now?
• Analysis of outcomes of Lisbon
objectives : the Sapir Report
• Mid-Term Review of Lisbon Agenda:
Facing the Challenge (Report from
the High Level Group chaired by
Wim Kok)
The Sapir report: findings
GDP and Productivity in EU (US=100)
Source: European Commission, New Cronos database.
Copyright
• © Sapir, 2003
2005
The Lisbon Agenda ‘Revived’
• Focus on two main areas:
– Productivity
– Employment
Make objectives of social cohesion
and environmental protection
achievable
- The latter reinforce growth and
employment
The Renewed Lisbon Action Plan
• Aims:
–EU as a more attractive place
to invest and work
–Promoting knowledge and
innovation for growth
–Creating more and better jobs
EU as a more attractive place to invest and
work
• Extend and deepen the internal
market
• Improve European and national
regulation
• Ensuring open and competitive
markets inside and outside Europe
• Expand and improve European
Infrastructure
Knowledge and innovation for growth
• Increase and improve investment in
Research and Development
• Facilitate innovation, the uptake of
ICT and the sustainable use of
resources
• Contribute to a strong European
industrial base
Creating more and better jobs
• Attract more people into
employment and modernise social
protection systems
• Improve the adaptability of workers
and enterprises and the flexibility of
labour markets
• Investing more in human capital
through better education and skills
The Competitiveness and Innovation Framework
Programme (CIFP)
• Brings together support
programmes towards:
–Higher EU productivity
–Innovation capacity
–Sustainable growth
–Environmental concerns
The crucial areas
• ICT Policy support programme (eEurope)
• Entrepreneurship and Innovation
(especially SME geared)
• The Intelligent Energy – Europe Programme
(energy/environment and sustainable
development)
eBusiness Watch (c)
Geographic Differences in e-Business
0
20
40
60
80
100
100
FI
DE
89
UK
88
77
IT
FR
75
68
CZ
HU
56
(for selected countries, based on 10 sectors)
Based on data in % of firms (thus emphasizing small companies).
The index aggregates 16 component indicators
eBusiness Watch (c)
Perceived ICT impact on the business
-10
0
10
20
30
40
50
60
44
Revenue grow th
57
Process efficiency
61
Work organisation
Procurem ent costs
38
Product quality
38
52
Custom er service
55
Productivity
Negative
Positive
eBusiness Watch (c)
Where ICT will have an impact in the future?
0
10
20
30
40
40
24
R&D
29
18
20
22
37
Marketing
Custom er support
70
30
Accounting
Logistics
60
33
Managem ent
Production
50
27
25
25
34
Expect high im pact
24
Expect m edium im pact
Read: "Firms representing …% of employment in the sectors
surveyed expect that ICT will have a high / medium impact on
management / accounting / … in the future."
Base: EU-10, 10 sectors. N = 7237.
EU R&TD Policy
(supporting the Lisbon Agenda)
Contents
• Industrial Policy and Components
• Science and Technology Policy
Rationale
• Research and Technological
Development Policy in the EU
• Innovation Policy
• Enterprise Policy
EU Industrial Policy
Industrial Policy
• M. Bangemann (1994):
– Industrial Policy ‘should promote adaptation to
industrial change in an open and competitive market’
• Instruments:
– Subsidies
– Tax breaks
– Protection from foreign competition
• Specific versus ‘general’ industrial
policy towards the competitive function of the
market
• Industrial agglomeration and support
for R&D
Industrial Policy
The analysis of world trends and of Europe’s
position highlights the need to:
– adapt its industrial policy
– spread the enterprise culture
– encourage risk-taking
– promote the emergence of innovative
companies able and willing to conquer the
world market.
New forms of competition
require:
• the mastery of technologies,
• access to global markets,
• speed of action,
• innovation, and
• intangible investment.
EU firms implications
The ambition of European firms
should be:
• to improve their competitiveness on
all the World's markets, and
• to be present in the leading
industrial and service sectors.
Resulting priorities
• rapid adaptation,
• active cooperation, and
• a sharing of responsibility between
the EU's different economic, social
and political players.
Economic rationale for R&D Policy
• Arrow (1962):
–Problems inducing market failure
for invention processes
•Uncertainty
•Indivisibility
•Inappropriability
Science and Technology Policy
• The USA, Japan and the EU have realised that
an effective research and technological
development (R&TD) policy is crucial in order
to build up firms’ competitive potential.
• Compared with its leading rivals Europe is at
a disadvantage on three fronts:
– Lower resources and resource growth
– A fragmented, uncoordinated policy
– Less efficient take-up of research results
An EU R&TD Policy
• 1974
– EU Council decides on a common policy in
the field of science and technology
• Policy scope:
– Coordinate the relevant policies of member
states
– Implement research programmes and
projects of common interest
Policy Objectives
• 1977:
–Securing long term supply of
resources
–Promoting internationally competitive
economic development
–Improving living and working
conditions
–Promotion of environment and nature
Focus and instruments
• EC support criteria:
– Cost too high for single nation
– EC program good chance to compete
internationally
– Cases with real potential (e.g. new energy
sources)
– Need for standardization of information
systems
• Since 1984
– Main policy instrument: The Framework
Programme (since January 2007: FP7)
The European Research Area
• 2000 – priorities:
–Networks and centres of excellence
–Strengthening SME technologies
–Improving research infrastructure
(electronic networking)
–Human resource development
–Science and citizens
Research and Innovation
• Research policy focus:
–Developing new knowledge
–Application of new knowledge
–Framework conditions for research
• Innovation policy focus:
–Transforming knowledge into
economic value and commercial
success
European Innovation Policy
• Lisbon and knowledge and innovation
for growth
• 2002 Barcelona European Council goal:
– to increase EU research investment
from 1.9% of GDP to 3% of GDP by
2010
–Increased share of private funding for
R&D, from 55% to 2/3
Requirements for Member States
• Reform and strengthen public
research and innovation
systems
• Help develop supportive
financial markets
• Create attractive education,
training and career conditions
Commission Action focus
• 2005
– Step up dialogue with stakeholders to
identify regulatory barriers to
research and innovation
– Adopt a more research and
innovation-friendly State aid regime
– Support actions on improving the IPR
system, and its effective use
Commission Action focus...
– Support, monitor and further develop
actions under the research human
resources strategy
– Promote the use of public
procurement to stimulate research
and innovation
– Provide guidance to promote an
optimal use of R&D tax incentives
EU Patent System
Patents in Europe
For an enterprise operating on an
open market, intellectual property
like:
• patents, European Patent Office
• trade marks and
• licences
Patents in Europe
are tools for:
• protecting and capitalising on the
results of its research and creativity
• negotiating favourable terms for
technological cooperation and,
• possibly, even dominating the
market.
Inefficiencies
• The imbalance between the US and
Europe in terms of the number of
patents and volume of royalties is
growing
• particularly in research-intensive
sectors, notably
– information technology,
– pharmaceuticals,
– biotechnology.
Inefficiencies
• American SMEs and universities benefit
from cheap and swift patent facilities.
• In Europe, the high cost and complexity
of the procedures for obtaining effective
protection throughout the single market
scare many SMEs and universities away
from taking this course.
View of EU’s progress
• ‘Science, Technology and Innovation” shows that
R&D intensity (R&D expenditure as % of GDP) in
Europe has stagnated since the mid-nineties, while
major competitors such as Japan, China or South
Korea have been able to increase substantially their
R&D effort, shaping a world where knowledge is more
evenly distributed than ever before. Moreover, the
R&D investment deficit against the US has
remained constant over recent years. In particular,
the low level of business R&D in the EU remains
worrying.’
Source: The European Commission (Key Figures),
2007
Reasons of EU lower business intensity of
R&TD
• EU manufacturing and most services more
research-intensive
• Business R&D intensity (business R&D
expenditure as % of GDP): 1.13 % in 1995
vs. 1.19 % in 2003.
Issues:
– Evolution towards service economy  growing
weight for low R&D intensity services sectors.
– R&D intensity predominantly determined by hightech and medium-high-tech industries;
– US benchmark about 20 % higher (in EU it would
imply a business research intensity of 1.27 % of
GDP instead of current 1.17 %)
R&D intensity in comparative terms
Bibliography
• Sapir et al, 2003. An Agenda for a
Growing Europe
• Guellec, D. and B. van Pottelsberghe de
la Potterie, 2007. The Economics of the
European Patent System. Oxford: OUP.
• Competitiveness and Innovation
Framework Programme
• Key figures on Science,
Technology and Innovation