Dear Council Members,
As leaders in business and academia, we are pleased that you are meeting to prioritise innovation in Europe. New ideas, products, services and business models will be critical to bring Europe out of economic malaise. But innovation, as underlined in the European Commission’s recent Innovation Union strategy, requires a consistent, coordinated effort. That has been lacking in Europe.
The challenge is daunting for governments, private sector and academics alike. Europe, where the modern scientific method was invented, is falling behind in both quality and quantity of ideas. The R&D intensity of the European economy, at 1.9% of gross domestic product, lags dangerously behind the US and Japan and is being overtaken by China. Just a quarter of international patents come from the EU, compared to 35% in the US and 31% in Japan. Relatively few European universities score at the top of world league tables. On current trends, within a generation as little as 10% of the world’s new ‘ideas’ – measured in varied ways – may originate in Europe.
We strongly believe this trend can be reversed if we:
1) Stimulate private investment in R&D and education. Higher education – the ultimate source of talent and ideas – gets 1.3% of GDP in the EU compared to 3.3% in the US. R&D funding is also inadequate. Given the current budget crises, there is only one realistic remedy: Create conditions for the private sector to step into the breach.
2) Free innovators to act. In many EU countries, universities cannot freely determine curricula, set entrance requirements or seek private funding. Business innovators and private investors are hampered by tax policy, labour regulations and fragmented markets. It is a handicap that, for instance, innovators in Europe have a third as much early-stage capital available for investment as in the US. The EU must reduce ‘frictions’ that slow investment and innovation.
3) Stimulate public-sector demand for innovation. Much US technology – indeed, the Internet’s creation – was stimulated by innovative government procurements; in Europe, the same technology ‘pull’ should be applied. National health systems should be cutting-edge buyers of new technologies, to raise efficiency. Public authorities should lead the way in standards and procurement of low-carbon technologies, a potential €500 billion opportunity for European industry in the next 40 years.
4) Get the European act together. Despite recent attempts at reform, patent costs in Europe are still too high. If an innovative company here recruits a star researcher from China or the US, visa restrictions make it difficult to transfer that person from one lab to another within the EU. There is no consistent rationale for which kinds of R&D the EU should support and which the Member-States should handle. We welcome the Commission’s new Single Market plans, and its proposals for public-private, EU-national ‘European Innovation Partnerships.’
5) Target public support where it can make a difference. Public R&D programmes today are so broadly written that they risk distorting the market. Research funding should be for research, not late-stage product development. It should back winners, not pick them. It should be tailored by sector, not one-size-fits-all; the innovation cycles in energy, ICT, biopharma, chemicals are all different.
6) Support excellence. As global competition in technology mounts, Europe must stand for the best ideas, products and services. That means that public research funding, national or EU, must be allocated in open, competitive reviews by international experts. Only the very best innovation clusters and regions should get research support; there are other ways to support regional development than diverting scarce R&D funds. To attract international investment, Europe must be a constellation of excellent research stars, not a diffuse cloud of dull mediocrity.
These are not easy policy choices. But we welcome the Commission’s attempt to spur action for innovation, and we urge that you not leave the Summit without an agreed roadmap for how you will address these issues. Europe’s future depends on your decisions.
Members of the Science|Business Innovation Board:
- J. Frank Brown, Dean, INSEAD
- Jean-Philippe Courtois, President, Microsoft International
- Pat Cox, President, European Movement
- David Eyton, Group Head of Research and Technology, BP
- Sir Keith O’Nions, Rector, Imperial College London
- Philippe Pouletty, General Partner, Truffle Capital
- Alfons Sauquet, Dean, ESADE Business School
- John Wood, Secretary General, Association of Commonwealth Universities
About the Science|Business Innovation Board AISBL
The Board is a non-profit scientific association, based in Belgium, formed to improve the climate for innovation in Europe. Its members are some of Europe’s leading innovators, in industry, academia and policy. They meet regularly with key EU and national officials to discuss important aspects of innovation policy. They commission policy research from leading academics. They support Europe’s best university spin-outs with annual prizes. And they speak and write regularly on the results of their work – all with the intent to broaden and deepen the policy debate in Europe over innovation. The Board is a source of new ideas, backed by deep personal experience, to sharpen Europe’s innovation agenda.The Board, which began meeting in 2007, was founded by international business school INSEAD, ESADE Business School, and Science Business Publishing Ltd., with the support of Microsoft Corp., BP PLC and Imperial College London.
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