PURPOSE:
Commission Communication presenting Europe 2020 Flagship Initiative
Innovation Union.
BACKGROUND:
this Communication begins by noting that Europe’s capacity to create millions
of new jobs to replace those lost in the financial crisis, and its future
standard of living depends on Europe’s ability to drive innovation in
products, services, business and social processes and models. This is why
innovation has been placed at the heart of the Europe 2020 strategy. The
"Innovation Union" is one of the seven flagships announced in the
Europe 2020 Strategy. The paper outlines both the potential in the EU and its
weaknesses. The latter includes:
Under-investment
in our knowledge foundation: the EU spends every
year 0.8% of GDP less than the US and 1.5% less than Japan in R&D - with major gaps in business R&D, venture capital investments - and
our education system needs reform. Countries like China and South Korea are catching up fast and moving from being imitators to leaders in innovation.
Unlike the EU, they are pursuing a strategic approach to creating an
innovation-friendly environment. Private sector R&D is increasingly
outsourced to emerging economies and thousands of our best researchers and
innovators have moved to countries where conditions are more favourable.
According to recent estimates, achieving our target of spending 3% of EU GDP
on R&D by 2020 could create 3.7 million jobs and increase annual GDP by
close to EUR 800 billion by 2025. Too few of our innovative SMEs grow into
large companies;
Unfavourable
framework conditions: private investment in
research and innovation is being held back and ideas prevented from reaching
the market by poor availability of finance, costly patenting, market fragmentation,
outdated regulations and procedures, slow standard-setting and the failure to
use public procurement strategically. Moreover, barriers in the single market
make it more difficult for different players to work together across border,
using and sharing knowledge from all sources, which is increasingly how
successful innovations are developed.
Fragmentation
of effort: national and regional research and
innovation systems are still working along separate tracks with only a
marginal European dimension. This leads to costly duplication and overlap
which is unacceptable at a time of tight finances. By better pooling our
efforts and focusing on excellence, and by creating a true European Research
Area, the EU can enhance the quality of research and Europe's potential for
major breakthroughs and increase the effectiveness of the investments needed
to get ideas to market.
CONTENT: the
Communication addresses the challenges and opportunities facing Europe in key
areas where urgent and sustained efforts are required. It sets out clearly
the key European, national and regional initiatives needed to create the
Innovation Union
Concretely, to
achieve Innovation Union, the following is needed:
- the EU and
Member States need to continue to invest in education, R&D,
innovation and ICTs. Such investments should where possible not only be
protected from budget cuts, but should be stepped up;
- this should
go hand in hand with reforms to get more value for money and tackle
fragmentation. EU and national research & innovation systems need to
be better linked up with each other and their performance improved;
- education
systems at all levels need to be modernised. We need more world-class
universities, raise skill levels and attract top talent from abroad;
- researchers
and innovators must be able to work and cooperate across the EU as
easily as within national borders. The European Research Area (ERA) must
be completed within four years – putting in place the frameworks for a
truly free movement of knowledge;
- access to EU
programmes must be simplified and their leverage effect on private
sector investment enhanced, with the support of the European Investment
Bank. The role of the European Research Council should be reinforced.
The framework programme's contribution to nurturing fast growing SMEs
must be boosted. The European Regional Development Fund should be fully
exploited to develop research and innovation capacities across Europe, based on smart regional specialisation strategies;
- we need to
get more innovation out of our research. Cooperation between the worlds
of science and the world of business must be enhanced, obstacles
removed and incentives put in place;
- remaining
barriers for entrepreneurs to bring "ideas to market" must be
removed: better access to finance, particularly for SMEs, affordable
Intellectual Property Rights, smarter and more ambitious regulation and
targets, faster setting of interoperable standards and strategic use of
our massive procurement budgets. As an immediate step, agreement should
be reached on the EU patent before the end of the year;
- European
Innovation Partnerships should be launched to accelerate research,
development and market deployment of innovations to tackle major
societal challenges, pool expertise and resources and boost the competitiveness
of EU industry, starting with the area of healthy ageing;
- our
strengths in design and creativity must be better exploited. We must
champion social innovation. We must develop a better understanding of
public sector innovation, identify and give visibility to successful
initiatives, and benchmark progress;
- we need to
work better with our international partners. That means opening access
to our R&D programmes, while ensuring comparable conditions abroad.
That also means adopting a common EU front where needed to protect our
interests.
The
Communication outlines a large number of actions and time-scales which are
designed to meet these challenges. They include the following:
- an
integrated framework for the promotion of e-skills for innovation
and competitiveness, based on partnerships with stakeholders;
- a European
Research Area framework and supporting measures to remove obstacles
to mobility and cross-border co-operation, aiming for them to be in
force by end 2014;
- by 2015,
Member States together with the Commission should have completed or
launched the construction of 60% of the priority European research
infrastructures currently identified by the European Strategy Forum
for Research Infrastructures (ESFRI). The Commission will design future
EU research and innovation programmes to ensure simple access and
stronger involvement of SMEs, in particular those with a high growth
potential;
- by mid 2011-
the European Institute of Innovation and Technology (EIT) should set
out a Strategic Innovation Agenda to expand its activities as a showcase
for Innovation in Europe;
- by 2014: the
EU should put in place financial instruments to attract a major
increase in private finance and close the market gaps in investing
in research and innovation. Contributions from the EU budget should
create a major leverage effect and expand on the success of FP7 and CIP.
The Commission will work with the European Investment Bank Group,
national financial intermediaries and private investors to develop
proposals addressing the following critical gaps: (i) investment in
knowledge transfer and start ups; (ii) venture capital for fast growing
firms expanding on EU and global markets; (iii) risk sharing finance for
investments in R&D and innovation projects; and (iv) loans for innovative
fast growing SMEs and midcaps;
- by 2012, the
Commission will ensure that Venture Capital funds established in
any Member State can function and invest freely in the EU (if necessary
by adopting a new legislative regime). It will endeavour to eliminate
any tax treatment unfavourable to cross-border activities;
- the European
Parliament and Council should take the necessary steps to adopt the
proposals on the EU patent, its linguistic regime and the unified
system of dispute settlement. The objective is that the first EU patents
are delivered in 2014;
Member States
are invited to carry out self assessments based on the policy features
identified in the Annex and identify key challenges and critical reforms as
part of their National Reform Programmes.
Lastly, the
European Parliament is invited to give priority to Innovation Union proposals
and initiatives, including the identification and success of the European
Innovation Partnerships. The Commission would welcome the Parliament holding
once a year a major policy debate on progress with representatives of
national parliaments and stakeholders, to identify key messages and to keep
the Innovation Union high on the political agenda.