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European Commissioner for Research, Innovation and Science
"Putting research and innovation policy at the heart of Europe's future growth"
ERAC mutual learning seminar on Research and Innovation Policies
Berlaymont, 24 January 2012
Ladies and gentlemen, dear colleagues,
A year ago almost to the day, I had the pleasure to close the first ERAC mutual learning seminar organised under the new Europe 2020 strategy.
At that time, the focus was on fiscal consolidation, albeit "smart consolidation", protecting, where possible, investment in research and innovation, and other growth-enhancing areas.
Today, public finances are still a major focus. But there's a change of emphasis. People recognise that, vital though it is, fiscal discipline isn't enough to solve Europe's problems. It must be complemented by action for growth.
That's what the Heads of State and Government will be talking about at the European Council next week. They will take as their basis the Annual Growth Survey – or AGS - adopted on 23 November 2011, in which the Commission issued clear policy guidance to Member States as part of the EU's anti-recession strategy.
The European Council will certainly underline the importance of structural reforms, like opening up closed professions, pressing ahead with the single market for services and the digital single market. As a liberal politician, and the Innovation Commissioner, I am firmly behind this agenda. Competition, I believe, is the greatest spur to innovation. And market opening is particularly critical for another reason – because it allows high-growth, highly innovative firms to flourish.
In the past, firms grew slowly and came to dominate markets for many decades. Now, we're seeing a new breed of company, able to grow so rapidly that they quickly become world leaders, able to generate disproportionately large numbers of jobs.
This is a fascinating phenomenon which is happening throughout the world, but sadly, not enough in Europe.
This has massive implications for policy. It hasn't received sufficient attention so far. If we're serious about growth, we've got to back these precocious upstarts.
That means creating a more attractive environment for venture capital, getting banks lending to smaller, riskier firms again, increasing SME participation in funding programmes, as we are determined to do in Horizon 2020 and making sure that a greater proportion of procurement budgets are spent with the so-called "gazelles."
This is still an important area of economic research and I am very glad that Dr. Erkko Autio will introduce you to the subject and highlight the particularities of the policies that can support these highly dynamic firms on which our future jobs and prosperity depend.
Of course, there is one supply side reform which is still not mentioned enough. Yet, its impact is potentially enormous. Indeed, I believe it is one of the biggest contributions we can make to Europe's growth agenda. I am talking, of course, about ERA.
Europe undoubtedly needs to get better at transforming its scientific knowledge into products and processes. This is a key priority for the Commission and the Member States – and rightly so. But we mustn't assume that knowledge transfer is our only problem. We mustn't be complacent about the strength of our science base.
In fact, Europe has a deficit e vis-à-vis the US, not in terms of scientific publications per se, but at the very upper end of quality, particularly in fast moving new fields – indeed, precisely those fields where the US has been most able to generate research-based growth.
And, of course, the competition is intensifying all the time, as China and other emerging economies enter the race. In an increasingly globalised and competitive research landscape, only genuine world class excellence can cut it – and we in Europe need more of it.
No one would disagree with this. But we must do more than pay lip service to the idea of excellence. If we're serious about it, we have to ask our selves some pretty tough questions. For example:
I am a practical politician. For me, ERA is not an end in itself, but the means of generating more research excellence in Europe, and ultimately more economic growth.
Just as the single market for goods, services and capital has improved the competitiveness of our industries, ERA will boost the competitiveness of our research system.
That's why I am so committed to putting in place the measures necessary to complete it by 2014.
Equally, I want to see excellence developing in places it has not existed up to now. ERA can help to spread excellence by triggering a process of "smart specialisation", with more regions and universities thinking critically about where their strengths lie and choosing to focus on those areas. The European Commission is committed to supporting this process, both through Horizon 2020, the proposed new instrument for research and innovation funding at the European level, and by developing the synergies between the Structural Funds and Horizon 2020.
And in this light, I would like to thank Ken Guy, whom I also congratulate for his new position as lead innovation expert in the OECD, for bringing us up-to-speed on how to increase the efficiency of the European science base.
Ladies and gentlemen,
While there is lot to do on the supply side, our policies on the demand side are even more underdeveloped.
This acts as a major brake on business investment in research and innovation. Companies simply won't invest unless they are reasonably confident that there will be a sizeable market for the products of their research.
So, we need to correct this imbalance between the two, and we also need to make sure they are better co-ordinated.
Otherwise, results may fall short of expectations. For example, while policies created a massive demand for solar cells in Europe, the failure to match these with appropriate supply-side measures meant that other economies seized the manufacturing opportunities presented.
You will discuss later this morning the range of policies that need to be addressed and how to combine them with public funding into integrated strategies. I would like to thank Dr Lena Tsipouri for leading us through the intricacies of the subject.
But let me address one point in particular. Innovation Union proposes that the EU and its Member States commit to increase public procurement of innovation to 10 billion Euro per year by 2020. I believe that this is a vital instrument to stimulate business investment in research and innovation. More Member States need to develop the policies necessary to reach that goal.
Liberals like me tend to downplay the role of government. But I have seen how our competitors use procurement as a lever for innovation. Even in the free-wheeling American economy, government plays a strategic role. The Canadians and others are following their lead. We mustn't get left behind.
Ladies and gentlemen,
After your work today, I am counting on you to brief your respective Ministers on the outcome of your discussions, because this seminar and the ERAC opinion that will shortly be adopted lie at the core of the top-level discussions that will take place at the European Councils on 30 January and 1 and 2 March.