SPEECH/08/47
Janez Potočnik
European Commissioner for Science and Research European Innovation Policy Challenges: The Commission Perspective
International Conference on Innovation Policy Strategy
Helsinki, 29 January 2008
Minister Pekkarinen,
Distinguished guests,
Ladies and gentlemen,
For a southern European, it always gives a strange feeling to visit the very north of Europe in the darkest period of the year. But I accepted with pleasure to come to Helsinki today because I was confident I would see the light of innovation shine brightly here.
Usually, when I am invited to speak about innovation policy, my intervention is organised in two parts: first explaining why innovation is important, then sharing views on how innovation can be boosted.
My job today is easier than usual, because I think I can easily skip the first part. I believe there is a strong awareness in Finland about the importance of innovation for sustaining your prosperity in the future. And I have the impression that this awareness is broadly shared by the public opinion.
As a result, you do not only make the right analysis, but you also have a strong willingness to act in Finland.
I have experienced this before. Esko Aho's report on Creating an Innovative Europe has been a true factor of inspiration for many in Europe. And during the Finnish presidency of the EU in 2006, I have not only witnessed Minister Pekkarinen's commitment to see the 7th Framework Programme decided on time, but also a consistent and coherent drive to push the innovation agenda across the whole Council.
If there is one thing we need to promote innovation in Europe, it is precisely this: consistency and coherence.
The latest edition of the European Innovation Scoreboard (to be published in the coming weeks) will show a persistent, though declining, innovation gap with the US and Japan.
The reasons for the existence of this gap have been long debated.
People have highlighted a series of factors, from cultural explanations, the existence of a so-called "European paradox", to a lack of world-class universities or a deficit in IT investment and the weakness of venture capital markets. Lately, more attention has turned to non-R&D innovators or service sector innovations.
All of these factors – and others I did not mention here – no doubt contain part of the answer. But in truth, the situation is more complex than any single factor explanation.
What we see are a whole series of interdependencies and a diverse situation across the Member States.
Such a conclusion may seem disappointing and it certainly makes our lives as decision-makers harder. But it shows that there is no silver bullet. There are no quick wins for politicians who work on innovation policy.
Instead, we need to take action across a whole range of policy areas. We need consistency and coherence.
We need to press ahead with investing in people and modernising labour markets at the same time as unlocking the business potential of our SMEs and investing more in research and education. We need to look at flexicurity, child care, life-long learning, reducing red tape and modernising public administration at the same time as increasing the mobility and career prospects of researchers. Strengthening competition in Europe's services sector is as much part of our innovation policy as pushing ahead with a new generation of research infrastructures.
All matter. Each element reinforces the others, while lack of progress in one holds back progress in the others.
Innovation policy presents quite a challenge to policy-makers. It requires policy-makers and politicians to innovate in the way they conduct and implement policy.
The new Finnish innovation strategy, from what I have seen of it, responds to this challenge. I would like to extend my compliments to its authors for this effort.
At the European level, we try to respond to this challenge as well, together with the Member States.
We call it the Lisbon strategy. It is a strategy that has knowledge and innovation at its top.
When I talk about knowledge and innovation, I think of much more than research and technology.
What probably matters most if we want to boost innovation is to create the right framework and market conditions so that incentives are given for people and companies to innovate, in whatever sector they work.
For companies, this means that they must have a reasonable perspective of return on investment - otherwise they don't take risk, they don't invest. In their report on an innovative Europe, Esko Aho and his co-authors have rightly pointed to the need for action on the demand-side, in complement to the supply side.
We have to create market conditions which prevent sagas such as that of the MP3 technology. That technology was developed in Europe, but first commercialised in the US and then successfully in the rest of the world.
Within the framework of the Lisbon strategy, the Commission has embarked on a wide programme to realise the single market for the 21st century. The creation of innovation-friendly market conditions is a central pillar in that programme.
In fact, what we are trying to do is to introduce the fifth freedom in Europe, namely the freedom of movement of knowledge in the widest sense of the word. If that freedom is added to that of goods, services, capital and people, then I am convinced we will create the innovation ecosystem that Europe needs for the future.
And if we link our efforts to the big societal challenges we are facing now and in the future, then I think we can create additional incentives for innovation. The climate change and energy package which the Commission adopted last week is obviously a good case in point. At the Commission, we believe that this package of measures will mean a boost for innovation and technological development. Creating a low carbon economy may impose a cost in the short run, but it is a tremendous opportunity for Europe's economy in a longer time perspective. I believe that there are other societal challenges looming which could be turned into an opportunity for innovation. Ageing is for example often cited in this regard.
In our broad-based European innovation strategy, we are looking at all the instruments at the disposal of public authorities, such as regulation, standards, public procurement, IPR rules, risk capital and others, to help create incentives or demand for innovation. One exciting new development in this regard is the initiative for lead markets, which we launched earlier this month and which was first advocated by Esko Aho and his colleagues.
The lead market initiative is an attempt to apply these instruments in a joint and coherent way to create new European markets for innovation intensive goods or services. We have proposed to start work in six areas, for example eHealth or sustainable construction. Creating new markets with a European size and strong innovation incentives, while at the same time meeting societal goals, should enable our industry to lead future global markets.
This is what I like to call a new, modern industrial policy.
Let me briefly turn to my area of work, that of research and development.
Innovation policy is about much more than research and technology. But obviously, research policy remains of fundamental importance and the European Research Area which we are trying to build is also a central pillar of Europe's Lisbon ambition.
Having a public research base of global excellence will even more than in the past become of critical importance for a region's economic success in an era of open innovation.
The progress that the European Union is making in R&D policy can be seen in many activities that we have started:
We have boosted the average annual funding for the Framework Programmes by 40% in real terms, providing a total of € 53 billion during 2007 – 2013; We have responded to the calls for support to basic research by creating an independent European Research Council; We have overseen the creation of more than 30 European Technology Platforms that bring together various stakeholders, led by business, around specific research agendas; We have set up new public – private partnerships through Joint Technology Initiatives; We have agreed the creation of a European Institute of Technology, which will be laboratory for integrating research, education and innovation; We have boosted funding for knowledge and innovation in the structural funds.
I could go on for while.
However, it is important that we all understand that these measures are not nearly enough. It is not EU efforts alone that can lead to a strong European Research Area. The impact of all of the initiatives I have mentioned depend crucially on the support and contributions of the Member States. It is there that the greatest efforts in public research are made and where the bulk of public resources lie.
It is also there, at the national and regional levels, that structural reforms should continue.
With the Lisbon strategy and the Lisbon National Reform Programmes, we now have in Europe a partnership between the Member States to drive these structural reforms to make our societies more innovative and more knowledge-based.
One emblematic objective in this regard is the R&D investment target of 3% of GDP. Since the year 2000, Finland has consistently performed beyond that target, investing about 3,5% of GDP on R&D with approximately 70% coming from business. Your government last year set a target of 4% by 2011. I would call this a very healthy ambition, which I applaud.
I would also call on the Finnish government and all other actors to help create a true European Research Area. A lot of work still remains to be done and it will only be done if the Member States and the European Commission work together in partnership, with each accepting their responsibility for making it happen.
That is why the Commission has proposed to assess the Member States' National Reform Programmes not only in terms of the measures they take to reach the R&D investment targets but also in terms of how well they are exploiting the potential of the European Research Area.
In other words, non just the actions that Member States take to boost investment in research and innovation nationally, but also whether they are able to raise their horizons and see the benefits of increased openness, cooperation and competition with partners in Europe and beyond.
I am discussing with the Slovenian and French presidencies how we could improve the political steering by the Competitiveness Council of the European Research Area. The message coming from ministers is that the future of ERA depends on the Member States contributing to it. I think this message is right. But we need to create the dynamic for this to happen, also by an increased ownership and steering by national governments.
This is only one aspect of a broader agenda which will determine the EU's innovation DNA in the future. I would also like to mention a couple of other aspects:
Firstly, the recently-agreed Lisbon Treaty will provide an explicit legal basis and specific instruments for the establishment of the European Research Area. Secondly, we will review the EU's budget, which will determine the Union's spending priorities in the future; Thirdly, we will start examining the impact of the 7th Framework Programme and how it and future Framework Programmes should evolve over time; And following the results of a major public consultation last year, I will bring forward new initiatives to shape the European Research Area, for example to promote the mobility of researchers or the joint programming of research between Member States.
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Ladies and Gentlemen,
The new Finnish innovation strategy gives me good reasons to believe that Finland will be a strong ally for realising Europe's broad innovation agenda.
I am convinced that innovation stems from the encounter of different ideas, people and economic opportunities.
As policy makers, this means that we have to strive for a good balance between competition and cooperation.
An equally important factor, I believe, is to have a strong international openness and outlook. This is exactly what the European Union is offering, through the internal market it builds and through the many funding programmes it implements.
If there is one area where we can clearly see that national and European interest increasingly match, it is in the area of innovation policy.
It is clear to me that the more we can foster an innovation-friendly Europe, the more it will become evident that the European Union is not a zero sum game for individual Member States, but a win-win situation for all.
This is my strong wish for Europe's future, which includes your future. This is what I am working for as European Commissioner and as a European citizen.
I take today's conference and the development of your innovation strategy as a sign that Finland shares this ambition.
I feel energised by the bright light of innovation that I see shining in Finland and I wish you every success with the further development and implementation of the innovation strategy.
Thank you for your attention.
