Backgound paper on “Which priorities for national research policies post 2010?”
October 5, 2009Main speaker session 2.1
This background paper is the preliminary version of the draft Executive Summary of the final report of the “3% Objective: progress made and post-2010 policy scenarios” Expert Group
A year before the deadline of the Lisbon Strategy, Europe is poised at an important crossroads. In the face of growing competition in a multi-polar world and a range of global challenges, Europe needs to step up its efforts towards the transition to a knowledge economy, if it is not to be relegated to low-tech growth and jobs. The EU is lagging behind the USA in nearly all dimensions of competitiveness, R&D and education expenditures. Whilst certain progress has been made since 2000, the gap is still significant, with the EU standing at about 70% of the performance of the USA. As 2010 approaches, it is clear that the Lisbon Process has failed in terms of Europe achieving the 3% R&D intensity target. In fact, only two member states (Finland and Sweden) have R&D intensities of more than 3% and only three member states (Denmark, Germany and Austria) have R&D intensities of between 2.5% and 3.0%. The EU target for the share of R&D financed by the private sector (two thirds) has not been achieved. At EU level only 55% of R&D is currently financed by the private sector and only three member states (Germany, Luxembourg and Finland) have shares of more than two thirds.
Drawing on lessons learnt and in response to the identified challenges of structural reform, globalization, the economic crisis, climate change and ageing, the Report takes a forward look at what a new vision for the Lisbon process could address. The emphasis is placed on the need for a more proactive role for member states as well as the EU as a whole (i) to create an environment for business to flourish both at national and European level and (ii) to implement increased efforts at the three levels of the Knowledge Triangle.
O face increased global competition and enhance efficiency, the EU’s post-2010 strategy for structural reform – what one could name as the European Strategy 2020 – should, on the one hand, represent a continuation of the Lisbon Process launched almost a decade ago. It should remain focused on increasing the EU’s competitiveness in the world.
It should, on the other hand, introduce knowledge and innovation into the very heart of its economic, social and environmental development, with a quantitative jump in diffusion and innovation in all parts of the public and business activities, but also a radical qualitative change to respond to societal needs.
Europe’s transformation towards a knowledge economy is the most effective response not only to the long-term challenges ahead but also to the challenges emerging from the ongoing crisis. Experience from similar crises indicates that Knowledge Triangle policies – addressing R&D, innovation and education – are essential for boosting the economy’s long-term growth. The EU’s sustained productivity growth depends largely on policies to stimulate R&D and innovation systems. A high level of educational attainment is also positively correlated with a productive, skilled and adaptable workforce and is a precondition for lifelong learning as well as for higher labour market participation rates. In short, Knowledge Triangle policies represent the cornerstone of the European Strategy 2020.
Increasing the long-term potential of the EU’s economy by focusing on the Knowledge Triangle involves considerable investments in R&D, education and innovation. In circumstances of tighter public finance, the achievement of these objectives will depend on three equally important factors: increased prioritization, efficiency and effectiveness of public spending and efforts to ensure a stronger role for the private sector in these areas.
The Report’s recommendations not only set a quantitative target but combine this with a qualitative target to ensure that investments in R&D, education and innovation are rendered optimally effective by improving the framework conditions. It is the effective inter-linkage of all three pillars that makes the difference. A key advantage of combining quantitative and qualitative targets is that it encourages member states to place a complementary emphasis on Knowledge Triangle investments with policies to improve the effectiveness of their R&D, higher education and innovation systems, including ways in which they may mutually reinforce each other.
First, a new 5% target is proposed, combining R&D and higher education expenditure/investment, “knowledge intensity”, which should be reached by 2020. It is important to note that the 5% target does not render the 3% target invalid; rather, it reinforces the effectiveness and impact of the R&D investments by supplementing them with investments in higher education. A key advantage of the 5% Knowledge Triangle target is that it encourages member states to define the appropriate balance of investments in R&D, education and innovation based on their national context, absorptive capacity and priorities. Member state implementation of the targets should be based on a well-defined approach entailing an assessment of the national situation in relation to structural change and the integration of the national research system at the European and global level. Rather than having their performance ‘evaluated’, a more learning–driven approach is recommended, whereby member states receive European-level support in implementing the roadmaps. The European Strategy 2020 governance should include improvement in the Commission’s process of the evaluation of national strategies and roadmaps through an improved methodology for assessing these programmes and through more systematic benchmarking and peer pressure. Furthermore, these activities should be closely coordinated with macroeconomic policy coordination at the EU level.
Two, and equally important, the new Vision sets a new qualitative target that emphasizes the need to create a more innovation-friendly and competitive environment for business by providing attractive conditions for corporate research, innovation and entrepreneurship. There is an urgent need to accelerate current efforts to implement the Single Market and Community patent and improve regulation, as a means of reducing the costs of doing business in Europe and thereby stimulating investment from both within and outside Europe. A more supportive environment for new technology and innovative spin-offs and start-ups has become a matter of priority.
The EU budget review should make a clear recommendation for a substantially increased EU-level funding of knowledge-economy measures. The review, should, furthermore, design an effective protection against the erosion of funding for these purposes as experienced in the most recent EU budget negotiations.
The prospect of increased global competition in the higher education sector post-2010, and the shift to the open research and innovation ecosystem, underlines the need for speed, strategic focus and broad engagement in the ongoing efforts to modernize Europe’s universities to compete effectively in the global knowledge society. This calls for the direct engagement of universities, higher education institutions and users in defining the modernization agenda. Universities have a critical role to play. The Report highlights the urgent need to close the gap with the US and a number of fast-emerging economies, through increased public and private sector investments in universities and other higher education institutions, for knowledge generation and diffusion. At European level, there is also an urgent need for the introduction and implementation of clear and robust quality assurance systems Europe-wide. Quality assurance systems are critical for introducing changes in universities from within.
Europe’s relatively weak presence in fast emerging scientific fields with high promise, the lack of growth of a sufficient number of research based innovative SMEs and the lack of effective science and technology linkages in science-intensive technologies largely explain why the US has more patents than the EU in high-tech areas. Europe needs to step up its investments at European and member state level in basic science and key technologies to keep up with its global competitors and partners. Through such investments Europe can develop broad capabilities, which can be rapidly configured and mobilized. A strategic review of Europe’s research strengths needs to be launched at member-state level in order to identify areas of top research excellence. This review can serve as the basis for developing a vision for targeting Europe’s investments into strategic areas of research where Europe can take the lead. The Report recommends that Europe support the development of multi-technology-based clusters, by developing capacities in these areas, and networking to bring top multi-disciplinary teams together. Europe’s public and private sectors need to be able to attract and retain the best brains worldwide, and the Blue Card is an important, yet insufficient means for making this a reality. Increased investments in basic research are critical in supporting this strategy. This will entail sustained, significant increases in the funding for the European Research Council (based on regular reviews of its performance).
Member states should also pursue enhanced links and synergies between national research councils and the ERC. National research councils should be encouraged to increase their budgets for cross-border collaborative efforts focused on European research and innovation priorities based on clear benefit. The ERC and national research councils need to focus on the application of basic research results and exploiting the potential of innovations from basic research. The Report recommends the continuation of various efforts at European level to increase the EU’s budget for research, and supports the process of EU budgetary reform towards greater knowledge spending and the growing complementary use of structural funds with research and innovation funding.
The Report recommends that in order to address this shortfall, Europe needs to invest in the European Strategic Forum on Research Infrastructures (ESFRI) and to develop the mechanisms for mobilizing large-scale research funding, to bring together significant, multinational teams of top researchers and address the chain of translation of research results into industry applications. Europe needs to provide ESFRI with the power and resources to develop close working links with the national authorities responsible for research infrastructures with a view to implementing the roadmaps. Efforts should also be invested in developing research infrastructures in humanities and social sciences.
Combined efforts to boost knowledge intensity and provide the framework conditions for innovation through structural reform are a sine qua non condition as stressed in the Report. The lack of a fully functioning Single Market and an EU wide affordable Community patent among others are key factors preventing Europe’s corporate sector from maximizing their profits. This carries the negative consequence of reduced corporate resources for research and the re-location of European business to more profitable areas outside Europe. Foreign corporate R&D investment in Europe will also be affected. Europe needs to be in a position where its knowledge and business environment is attractive to the European and global corporate sector and the world’s best brains. By not investing in this European Strategy 2020, the alternative scenario is bleak as Europe faces a downward spiral towards diminishing knowledge intensity and poor innovation performance.
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October 29th, 2009 at 7:32 pm
If one keeps missing the target and, after a re-launch, the overall target continues to be missed by a wide margin, would it not be timely to reconsider the approach? It would urge an exploration of the European Research Conundrum, which may be described thus: In the interest of the European Research Dream, the structure and culture of the research organization should be adapted to the mission of achieving scientific and technological breakthroughs but, alas, this mission is first overwhelmed and then deformed by the existing structure and culture of the organization.
The conundrum has been highlighted publicly by the high-level review of the European Research Council (ERC), which “found fundamental problems related to rules and practices regarding the governance, administration and operations of the ERC that are not adapted to the nature of modern ‘frontier’ science management.” The organization threatens to defeat the mission, even though the ERC is new, corresponds to targets, and is well funded.
The prevalent focus on targets, money and policy does little to bring about the required organizational restructuring at the European and at the national level, while allowing the organization to overwhelm the mission, thus threatening a lock-in of ERA as second rate.