New EU Innovation Strategy

A coherent, business-oriented research and innovation policy is what the Commission says it has proposed with its newly presented Innovation Union policy paper. The Communication from the Commission sets out a strategy comprising what the Commission says are the key European, national and regional initiatives needed to create the Innovation Union by 2020.

These initiatives, including legislative initiatives, are to be undertaken by Member States and by the EU, as relevant, over the next couple of years. The Strategy thus presents a clear distribution of tasks between the EU and the Member States which will be needed in order to make the Innovation Union a reality.

The Strategy aims to protect and reward investments in innovation and encourage bringing ideas to the market. Research and innovation should present solutions in areas presenting rising challenges such as climate change, energy and resource scarcity, health and ageing. The Commission proposes ways to overcome the existing lack of finance, fragmented research systems and markets. In addition the proposed Strategy addresses the under-use of public procurement for innovation and slow standard setting, which have been identified as main barriers to turning Europe into an Innovation Union.

The Innovation Union policy forms part of the EU’s 2020 Strategy and sets out a planned approach to innovation in order to strengthen Europe’s competitiveness in the coming years.

Strengthening the Knowledge Base and Reducing Fragmentation

Education

The EU and the Member States need to continue to invest in education, research and development and information and communication technologies where excellence must become the guiding principle. Businesses should engage in so-called ‘Knowledge Alliances’ by collaborating in the development of university curricula in order for graduates to better match industry needs.

European Research Area

The proposed Strategy intends to set up a unified European Research Area to be completed within 4 years. This should allow public and private actors to operate freely, meaning that they can cooperate across the EU as easily as within national borders putting in place a truly free movement of knowledge. The system of support to research and development has to be simplified and high priority has to be given to setting up coherent procedures and conditions for the access to funding.

EU Funding Instruments

With support from the European Investment Bank, the access to EU programmes has to be streamlined and the leverage effect on private sector investment has to be improved. Funding opportunities should be opened in particular to small and medium enterprises with the potential of turning the results into new products and services. Cooperation between the worlds of science and business must be enhanced in order to get more innovation out of research.

European Institute of Innovation and Technology

The creation of the European Institute of Innovation and Technology has been able to put education, research and innovation under one hat promoting new forms of financing research within the EU. By mid-2011 the European Institute of Innovation and Technology should present a Strategic Innovation Agenda to expand its activities.

Getting Good Ideas to Market

Access to finance for innovation companies

Ground-breaking research requires world-class infrastructures. It is primarily the role of the private sector to invest in research which ultimately will lead to the development of good ideas. It is necessary for the EU to put in place financial instruments to attract a major increase in private investment.

Many innovative companies have faced difficulties in getting loans since banks lack the ability to value knowledge assets such as intellectual property. The current regulatory framework regarding intellectual property rights needs to be modernised making it more attractive to invest in innovation.

Single Innovation Market

A Single Innovation Market should replace the current fragmented national markets and their costly procedures. Improvements have to be made as regards the existing EU Patent which is too costly largely due to translation and legal fees. The current absence of a cheap and simple EU Patent results in a tax on innovation.

Smart and ambitious regulation should be a key driver for innovation. For example the rules on CO2 emissions from vehicles set out challenging objectives which provide a major boost for eco-innovation. In addition, standards play a decisive role for innovation when they allow for the development of new technologies. For instance, the opening of the telecommunications market combined with the GSM standard has lead to Europe’s success in mobile phones.

Promoting Openness and Capitalizing on Europe’s Creative Potential

Innovation can be reached by conducting research and development, by developing new technologies, by basing innovation on existing technologies or by coming up with new business models driven by users and suppliers. The proposed innovation policy aims to support all these various forms of innovation.

As a consequence of the growing complexity and cost of innovation, firms tend to increasingly more often collaborate with each other. It is vital not only to promote the free movement of researchers, but also the free movement of innovative ideas. Future research Framework Programmes have to assure that, large companies, small and medium enterprises, universities, research centers and communities of scientists and practitioners exchange knowledge and ideas.

Maximising Social and Territorial Cohesion

Spreading the Benefits of Innovation Across the Union

The benefits of the Innovation Union have to cover all regions, avoiding as far as possible the development of gaps between the strongest innovating regions and the others. A substantial investment in research and innovation is provided by Structural Funds which have to be used more effectively. A possibility is to set up public procurements co-financed by the Structural Funds in order to increase demand for innovative products and services.

Increasing Social Benefits

Social innovation is a new field which has to be nurtured by meeting social needs and tackling social challenges. Social innovation should be promoted through the European Social Fund building on the significant investments in social innovation which have been made over the last decade. The main focus in the next generation of European Social Fund programmes should be on social innovation.

European Innovation Partnerships

The proposed Strategy includes the launching of European Innovation Partnerships which should mobilise stakeholders - European, national and regional, public and private - behind well defined goals in areas which present societal challenges such as the effects of climate change or the increasing ageing of population.

The Partnerships will act across the whole research and innovation chain and essentially step up research and development, coordinate investment, speed up standards and mobilise demand. They will also streamline, simplify and better coordinate the existing instruments and initiatives and complement them with further action where necessary.

Innovation Partnerships should be set up in areas where combining EU, national and regional efforts allows to achieve the goals set quicker and more efficiently. They should be result-oriented bringing important benefits for citizens and the society as a whole before 2020.

By early 2011 a first pilot project on active and healthy ageing is planned aiming to extend by two years by 2020 the proportion of our lives in which we enjoy good health. In order to achieve this target it is indispensable to improve the sustainability and efficiency of the social and healthcare systems. More partnerships will follow on areas such as energy, ‘smart’ cities and mobility, water efficiency, non-energy raw materials and sustainable and productive agriculture.

Leveraging EU Policies Externally

The competition on the research and innovation markets is becoming ever more global. The EU has to reverse the current trend and be more attractive to companies and investors in order to keep up with the fierce competition on the global stage, namely coming from the US and Asian countries. Europe’s universities and research centres have to become places of global excellence in order to attract foreign students.

Making it Happen

Reforming Research and Innovation Systems

According to the Commission national and regional policies have to be reformed since they are crucial for promoting business and citizens’ capacity and willingness to invest. Only if the quality of the national and regional research and innovation systems is satisfactory they will be able to interact and keep up with the action taken at EU level.

Measuring Progress

The progress of the establishment of the Innovation Union should be measured at European Council level. The main indicators of the achievements made are the research and development investment target and a new Innovation Indicator as requested by the European Council. The proposed Strategy assembles 25 indicators in an Innovation Union Scoreboard and developed a checklist of the features of successful innovation systems. In the coming 2 years a new indicator will be developed on the share of fast growing innovative firms in the economy.

A Commitment by all to turn Innovation Union into Reality

The EU institutions, the Member States and other stakeholders have to cooperate closely in order to turn Europe into an Innovation Union.

The Council is responsible for adopting the necessary measures to improve the current framework conditions and assure the well functioning of the European Innovation Partnerships. The European Parliament has to give priority to proposals and initiatives involving the Innovation Union including the identification and success of the European Innovation Partnerships. The European Commission is responsible for taking the necessary steps to put the Innovation Union in place and assist the Member States when reforming their national and regional systems.

The Member States have to carry out the necessary reforms to their systems in order to foster close co-operation with the EU. The stakeholders - business, local authorities, social partners, foundations, NGOs – shall interact with the Member States and the EU in order to support the Innovation Union.