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					      Trends in innovation policy:
        the European perspective

European TrendChart on Innovation
         Policy workshop
       16 November 2005


            Some thoughts on a few myths:

• The myth that “The USA” is more
  innovative, richer and faster
  growing than the EU;
• The myth that US innovation
  performance is achieved without
  public intervention;
• The myth that policy makers
  across the EU are all committed to
• The myth that the most innovative
  EU regions/states are those
  following the anglo-saxon model;
• Finally, the myth that we don’t
  need a European level innovation
                        The myth that ”the USA” is more innovative,
                              richer and growing faster than the EU

                                    •   Innovation intensity (R&D
                                        spending/GSP) across the
                                        states is significantly different;
                                    •   Share of high-technology
                                        employment ranges from 2.4 to
                                        12.6 % amongst the states,
                                    •   Yet we talk as if « THE U.S.A »
                                        is homogenously beating us…

•   Growth rates vary markedly
    at state level;
•   The least well-off state has
    only 47% of the p.c. income
    of the most well-off state
    and social exclusion is rife.
•   Yet we never hear a word
    about cohesion policy…
               The myth that public policy is non-
                       interventionist in the US.
•   Federal level:
     – A range of long-running Federal programmes:
       SBIR, MEP, ATP,….
     – Significant growth in Federal R&D budget -
       dominated by defence related R&D but recent
       non-defence R&D outlays are greater than the
       average over the past three decades;
•   State level:
     – A dynamic “Tech-based” economic development
       community exists;
     – “annually, (U.S.) states and localities across the
       country spend hundreds of millions of public
       dollars on a variety of tax incentives and
       spending programs (business subsidies) whose
       use has fuelled a virtual ‘incentives race’ among
       these jurisdictions”;
     – “It is clear that not only have R&D tax credits
       been offered by an increasing number of states
       over the last 25 years, but also the average
       generosity of the credits that these states offer
       has grown greatly”.

        The myth that all EU governments are
                     committed to innovation
• Recent trends suggest a mismatch
  between policy targets / hoped for results:
   – Most EU Member States/regions have
     signed up to 3% GERD/GDP “input target”,
     unrealistic and confused with “becoming
     more innovative/competitive”.
   – Plus side is increased analysis of what can
     be expected from raising R&D investment.
• Europeanisation of policy is also evident in
  terms of dominance of Structural Fund in
  total RTDI spend in certain Member
   – Policy options are often driven by what
     Member States/regions consider fits with
     EU rules and guidelines rather than what
     would would be optimal;
   – Plus side is imposition of programming and
     evaluation cycle !

        The myth that the anglo-saxon model
                                   rules ok…
• Need to avoid sirens of simplistic formula
  of de-regulation, flexible labour market,
  non-interventionist models allegedly based
  on the “US model”.
   – undermines long-run investments in
     innovation in favour of short-run profits.
• Ignores evidence of other models which
  suggest that innovation thrive in
  environments based on co-operation,
  trust, timely adaptation of ’social
  contracts’, sizeable public intervention
  (financial and non-financial), etc.
   – See EIS 2003 Technical paper n°5
• There is no single European model for
  innovation policy, however:
   – it is precisely the ability to identify trends
     and learn from richness of diversity of
     situations that is (or should be) our

                             Key policy trends across EU25
•   A significant effort to increase the availability and
    competencies of skilled innovative people:
     –   strengthen linkages and knowledge flows both nationally and
•   A growing regional role in the implementation of many
    recent initiatives, fuelled by the Structural Funds in the new
    Member States
     –   corresponding need for coordination with national targets and
•   A push to increase the overall intensity of innovation
    activity through stimulating private enterprises to invest
    more in R&D, specifically, and other forms of innovation
    more generally.
•   An emphasis on the role of regulations, public
    procurement and other ‘business ‘environment factors
    influencing the performance of the innovation systems of the
    Member States.
•   Partnership based initiatives to create linkages aimed at
    improving the functioning of innovation systems
     –   “triple-helix”, clusters, competitiveness poles, etc.
     –    new platforms for policy design and delivery.

                Governance of innovation policy in the EU

• Argument 1: EU role in innovation policy
  has been primordial since mid-nineties:
   – From Green Paper to Lisbon to ‘a new
     (sectoral) industrial policy’…
   – EU promoted regional innovation strategies
     improved policy design and boosted
     regional funding for RTDI;
   – EU a catalyser in ‘integration’ of national
     agendas and transnational learning in face
     of ‘not invented here syndrome’.
• Argument 2: the respective roles of
  Member States and regions are becoming
  increasingly complex with a delicate trade-
  off between:
   – more effective policy design and delivery
     through stronger partnerships & increased
     proximity of agencies to innovation needs
     of enteprises;
   – versus
   – Risk of fragmentation of ‘national &
     European innovation systems’.
            Do we need a European innovation
• US ‘model’ suggest there is not only room
  but necessity for EU level action:
   – Industrial policy options which create
     critical mass of technology and business
     punch at EU level to compete globally (did
     someone mention Airbus…);
   – Role of EU regulations/standards twinned
     with R&D excellence and major enterprises:
      • e.g. GSM standard which built up EU technology
        lead now continued with 3G, etc.;
   – Equally need to promote understanding on
     impact EU action has on innovation at
     sectoral/technology levels (REACH,
     Software patent directive, etc.)
   – Avoiding ‘policy competition’ while
     maximising learning from diversity of
• EU policy benchmarking and inter-regional
  co-operation frameworks offer good
  practice elements for US states.                       9

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