October 27, 2009
Dear friends of innovation. Let me share this article with you. I wrote this piece for ‘Projects Magazine’. Your comments are welcome.
Lisbon and the reality check in our regions
The Lisbon agenda, i.e. the goal set at the Lisbon Spring Council in 2000 to transform the EU into the world’s most competitive economy by 2010, was in many ways a wake-up call for the fragmented policy-making of the EU and the compartmentalized approach to much of its economic development agenda. Since 2005, its focus has become oriented towards jobs and growth, while the follow-up and coordination of policies were monitored much closer, e.g. through annual implementation reports of the Member States.
Lisbon was extremely helpful in getting the EU to focus on policy priorities and starting a process of better policy coordination. However, it has also helped to bring the regions more into the centre of considerations of how to best deliver EU policies for research, innovation and competitiveness on the ground. There can be no doubt about this: regional know-how in preparing the right place-based policies on innovation and research, is both crucial and necessary, if the EU wants to make real progress on its goal to become the leading knowledge-based economy in the world.
From a regional perspective, where all the EU’s goal-setting and related policy-making converges and gets its reality check through the actual policy delivery on the ground and the related interactions between the stakeholders, this article highlights some of the issues at stake about the EU’s RTD and innovation policies that are currently being discussed within ERRIN.
The vision-thing: sun and bytes vs. coal and steel
“The future of the EU will be about sun and bytes rather than coal and steel”, said a leading EU thinker recently at a Brussels roundtable discussion about the EU’s innovation strategy. While this seems pretty obvious, we may ask ourselves how far the EU as an entity and its different Members States and regions have evolved towards the reality of the knowledge society and economy. Not that we lack meaningful initiatives or have a lack of thought on what needs to be done. “At 30000 feet everybody agrees” said another of these leading thinkers.” The devil, as usual, lies in the detail and in how we deliver these policies on the ground.
The EU’s RTD and innovation policies and related instruments are oriented towards providing guidance and financial incentives, as well as, to a certain extent, towards standard setting and coordinating policies. The main EU policies and programmes in this respect are sectoral and, thus, compartmentalized and treat their target audiences in silos. Although there are inter-service consultations and information exchanges between different Commission DGs involved in science, innovation and research, there is still a lack of integrated policy-making and of coherence between different EU programmes (e.g. FP, RTD, CIP, SF). This policy-making in silos encourages non-communication within and among the regions when preparing and delivering the policies, even when addressing the same thematic challenges (e.g. energy policy in different EU programmes).
From a governance point of view this situation clearly prevents us to reach a sufficient level of efficiency, of leverage, and of a general optimal policy mix. Hence efforts, budgets and time are wasted and potential synergies are not achieved. The symptoms of this rather unsatisfactory situation, are different funding criteria, lack of integrated policy making and transparency, different budgetary levels, complicated procedures, overlaps, to name but a few.
Do we have the right policies and programmes?
To be more coherent and to create real synergies and, thus, maximise the economic benefit of EU funding is a challenge not limited to the EU level, in fact MS and regions also have to do their homework. Good governance is as crucial as setting the proper policies and related budgets. That is, of course, more easily said than done but issues of concern are plentiful, of which three spring to mind:
1. Targeting and involving SMEs: As the evaluation of the past Framework Programme (FP6) shows, EU funding benefits primarily the big players in industry and the research community, the ‘usual suspects’, that are already well served by national and regional programmes. However, where are the SMEs and how can small research labs, maybe situated in less advanced regions, benefit? While it is being said that the current programme has made some important strides in this direction, which does not say much about the actual quality of the SMEs involvement, it is equally clear that he complexity and slow administration of the programme are clearly not in sync with business reality. The first evaluation of FP7 of April 2009 confirmed this pattern with the yearly 15% target for SME participation being still not reached.
On the other hand, it is not so clear, whether, while offering participation opportunities for high-tech SMEs, it is really the role of the FP to also attract lower capabilities SMEs or whether this shouldn’t be better left to other programmes and policies. What is the right division of labour, what is the role of the different policies/programmes in this respect? To be able to answer this, we would need an integrated impact assessment tailored at the regional level, focusing on the receiving end, where the different policies come together, are implemented and need to make sense.
2. Absence of place-based strategies in EU research policy: Notions of place-based policies and the knowledge triangle still not feature as prominently as one would expect in EU’s research policy, with one notable exception: the Regions of Knowledge initiative (though not all EU MS participate in this initiative), which is a good instrument to strengthen regional research-driven clusters and link them transnationally. While the programme provides a crucial link between research and regional policy, it is minuscule in terms of funding. It has a budget of only € 126 million and should be strengthened in financial terms.
More globally, research-friendly ecologies, which structure the environmental features in ways that can marshal competencies and demonstrate the critical roles of education and research within the knowledge infrastructure and provide a focus on the distribution of research performers, interactions and transaction costs, should become a key organising principle for the European Research Area (ERA). Successful ecologies, like Boston and Silicon Valley in the US, are characterised by their lower transaction costs among actors for the world of Open Innovation. We cannot achieve low transaction costs by addressing the problem purely from a central perspective. We, thus, clearly need a new approach to ERA, which enable these enabling environments to flourish. From this perspective it also become clear that regional policy is central to the future of ERA.
3. Spending funds more intelligently and efficiently: As concerns the EU’s regional policy it is often said that, even if a stronger innovation focus has been incrementally introduced since the beginning of the 1990s, the bulk of the funding still goes into opening roads (transport and infrastructure projects), rather than into opening minds (knowledge economy and innovation). On the other hand, it could be argued that getting more innovation out of the SF is not necessarily a question of earmarking ever more funds for innovation but on spending the available funds more intelligently and efficiently, with an eye not only towards technological, but also non-technological innovation.
It is clear that this is a huge task and one that has to be tackled jointly at the EU-level, the MS and the regions, and where stricter EU guidance, better coordination and focusing on the right policy mix is needed, but also more involvement in policy setting from a regional perspective. If we are going to shift more EU resources to innovation and make use of a broader innovation concept, we should make sure they fall on fertilized terrain, which includes better governance and a “contract” with the implementing authorities, as proposed by the Barca report for the EU’s regional policy.
It has also been observed by some that the basic geographical principle for allocation of the EU’s Structural Funds has been driven so far that resources are not allocated on a strictly qualitative basis. So, instead of a healthy competition for the best investment options, these experts see rent seeking and clientelism and allocation of funds according to political/electoral criteria weaken the potential impact of these investments.
Even in regional policy there should be ways to create a more competitive environment through funding that is not necessarily allocated on a competitive basis. One way of doing this would be to set more output and outcome-related as well as innovation-oriented indicators and targets for the programmes, for instance, to set measurable objectives on triggering x amount of private investment for every euro spent of SF money.
We need excellence but also to excel in cohesion
For MS and regions this also means that we have to get away from campanilismo-style, i.e. too localised policies, which is difficult, since everybody wants to build the next silicon valley or open a cutting-edge research centre, even if located next to each other in neighbouring regions. Stronger coordination on research infrastructures, for instance, is needed to be globally competitive. We cannot have a clean lab in every backyard but we can improve access to infrastructures of regional/European/global importance. The same applies to business-oriented clusters. Global competitiveness, as the Commission’s DG Enterprise and Industry rightly underlines, asks for world-class clusters with critical size.
Joint programming and striving for synergies between EU, national and regional level actions are crucial in this respect and key to enhancing critical mass and thus the impact of funds and efficiency of policy-making. The EU’s ERA-Nets, Joint Technology Initiatives, European Technology Platforms, Lead Market Initiative, the European Institute for Innovation and Technology are all steps in the right direction, creating an EU-wide playing field for excellence and bringing industry and academia together for joint projects close to the market. But without strong MS support and a bottom-up push from the regions there will be not enough momentum for these to make a lasting impact on the ground.
From a cohesion point of view there is, however, a risk that these initiatives help to further exacerbate the gap between high-tech and middle-and low-tech regions. Excellence is important but we also need to excel in bringing those regions that are not part of the club into the game. Some of the regions that have geographical, economic or historic handicaps need to be encouraged to move up the value chain.
One way is to build on the knowledge triangle and encourage better governance. However, it is important to ensure that any investments in innovation infrastructure such as science parks or incubators in lagging regions needs to be preceded or accompanied by investments in skills and human resources to allow for proper uptake and realization of the goals associated with this infrastructure. While it is important to get the fundamentals right in the regions before we can internationalize and really benefit from cooperation, it is equally clear that building regional economies and competitiveness is now as much about local capabilities as integration with other centres of innovation and development. It is no longer enough to be good for the home crowd. There is a certain responsibility of the more advanced regions connected to the fact that the ability of regional innovation centres to act as ‘breeder sites’ for innovation elsewhere leads to greater, not less economic and development gain and more coherence at EU level.
Economic and governance challenge
To sum it up, the challenge is a classical economic one but it is far more a challenge of paradigm, priority-setting and governance. How do we make the best use of scarce resources? What would we do, if we could scrap all existing policies and programmes and start anew, would we create one big “Superministry/DG” and accompanying “Superfund”, merging the plethora of existing EU programmes or at least the ones dealing with innovation and targeting and supporting different activities all across the innovation cycle or along the grand challenges? Or would we go away from grants and work with tax breaks for R&D investments, and how would we then balance excellence and the need for cohesion and capacity-building? While we are debating about the best way forward and the governance implications, usually opting for European-style incrementalism, China, South Korea, and many other countries are focusing on simply doing the right stuff and are getting ahead of us.
It seems the EU needs some bold thinking and the tackling of mental barriers and vested interests. We have to ask ourselves whether we have the right instruments and whether we get enough commitment from the European, national and regional policy levels to work efficiently and in a synchronised manner towards the main future challenges? However, getting back to earth, we have to acknowledge the institutional and political realities of the present EU and realise the existence of fierce competition between Member States and regions on technological leadership.
Looking at governance, it seems we are still in the coal and steel community and not yet in the sun and bytes community. The advantage of our Coal and Steel Community heritage being that it set the precedent for close political integration, which I am sure we would not be able to achieve today. We have to be very clear what we mean when we speak about “Europe”. Europe is not the European Commission. It is this multi-layered and complex polity, where it is so hard to find agreement and even harder to implement and deliver policies evenly, particularly the policies where the EU has no exclusive competence, where all levels have to pull at the same end of the rope. Research and Innovation are such areas.
Despite some real improvements in recent years, the medium-term trend in the Community Programmes points towards a continuation of the non-coordinated multi-layer ensemble of programmes, initiatives, budgets, strategies and overall lack of effective governance. For the time being everything points to renationalization, for instance in terms of joint programming and alignment of EU funding with national programmes in the FP for RTD or in the focus on a handful of big macro-regions, the Baltic Sea Strategy being the model, in the Structural Funds.
However, for the Action Programmes, coordinated by the Commission, such as the PRO INNO/EUROPA INNOVA or ROK, the Commission services running these programmes should seek a clearer alignment from fund-taking regions with their Regional Operational Programmes and the strategies of their regional development agencies, research entities and chambers of commerce and should avoid setting up unproductive parallel structures by cooperating more closely and exchanging information and data and aligning criteria for applications and budgetary allocations. And why isn’t there still not a common database containing the data of current and past participants and the outcomes of all research and innovation-related projects independent of the funding source or the Managing Authority, DG or agency in charge? If we continue with this overall lack of horizontal knowledge management a duplication of efforts and a loss of strategic intelligence is unavoidable.
Integrated vision and the European Innovation Plan
The need for more synchronisation in terms of governance between the different layers in the EU and for coherence between different policy areas, was just recently underlined by the Swedish Presidency in the Lund declaration: “Measures are needed to maximize the economic and societal impact of new knowledge in areas such as industrial, environmental and social policies, agriculture and regional development. Links between these policy areas and research policies must be strongly improved”.
Meanwhile Commission President Barroso promised improvement in this area. His recent political guidelines for the next Commission say that: “We need to revise the current Lisbon strategy to fit the post 2010 period, turning it into a strategy for convergence and coordination to deliver on this integrated vision of EU 2020.” A European Innovation Plan is currently being drafted.
It will be interesting to see how it will be integrated with the Post-Lisbon strategy and what it has to say about how to create these necessary synergies, not on paper, but in reality. How, for instance, will the Lead Market Initiatives, the art. 169-171 initiatives (such as ENIAC, ARTEMIS, Clean Sky, IMI, Hydrogen fuels cell, etc), the 34 European Technology Platforms and the EIT and its Knowledge and Innovation Communities be interconnected and how will duplication be avoided to maximise the efficiency and impact? How will the different innovation initiatives of the FP on RTD, the CIP and the SF be coordinated? And what about the valorisation initiatives by DG Education and Culture supporting university/business cooperation and industry/science links? And then we also have research conducted via other channels, such as COST, the European Research Council programmes, Eureka, the Eurostars programmes, not to speak of all the European Agencies related to research and innovation, what about those?
One could assume that this European Innovation will take inspiration at what investors expect from the EU. Investors want the EU to develop a culture of innovation, creativity and entrepreneurship, improve education and training, establish tax incentives for innovative companies, and develop joint research programs at European level. This, at lease, was what the consulting company Ernst & Young found out in their interviews with foreign investors for their annual competitiveness survey, which was published earlier this year. But it should also take inspiration from what the regions need in terms of guidance, support and incentives to do the right thing, whether they are leading, advanced or lagging. In any case it should help to focus EU resources on what’s really needed: An approach of letting 100 flowers bloom, may or may not lead to flowering landscapes, but will not produce the bumper crops needed to make the EU the innovation powerhouse it aspires to become.
(I would like to thank Niko Geerts of the Flemish government, Sylvia Schreiber of the Stuttgart Region and Richard Tuffs, Westmidlands in Europe, for their valuable comments and contributions)
Disclaimer: This article is not an ERRIN position, it is written in a private capacity and reflects solely the views of the author and contributorsAuthor : I-Blogger