Devote regional development money to research and innovation

Competitiveness and innovation should be put at the heart of the new EU’s new Regional Policy, allowing it to become a platform not merely for regeneration, but for making Europe’s regions more competitive and attractive to business.

The Commission is proposing several ways to achieve this when the new policy comes into effect in 2014, says Johannes Hahn, Commissioner for Regional Policy.

For a start, Regional Policy will be strongly aligned with the EUROPE 2020 Strategy, aiming to contribute to the objective of promoting smart, sustainable growth.

“To achieve this, we have introduced the concept of thematic concentration for the funds. This means that, at least 80 per cent of all available resources in more developed regions and 50 per cent in less developed regions, will be allocated to things such as research and innovation, ICT and low carbon economy,” Hahn told the Fourth Bruges European Business Conference on Tuesday (23 April).

Another novelty will be the requirement to have a Regional and Innovation Strategy for Smart Specialisation, which must be put in place before any funds can be spent on research and innovation. “The objective is to ensure that the right environment exists for efficient and effective research and innovation actions,” Hahn said. This will guarantee that all investment fits into a carefully-thought out and well-designed strategy.

University research to reflect the needs of the regions

The strategy will help to ensure all those involved in regional policy and development share the same goals and lay the foundations for an inclusive process. As a result, “Government policy and research at universities will better reflect the needs of the enterprises and of the regions,” Hahn claimed. The strategy will mobilise and bring together different government departments, helping to ease bureaucratic obstacles and integrate different policy objectives.

The strategy will also help an individual region to identify and focus on the sectors with the highest potential for growth, global competitiveness and attractiveness. “This is a much better approach than simply supporting unrelated individual projects that have no synergy, or any impact on the industrial and economic structure of [a] region, Hahn told delegates.

In this respect, fostering the creation of clusters that have a strong base of research and innovation, plus the resources to commercialise research outputs, is of paramount importance.

The development of regional research and innovation strategies is dependent on an inclusive process, in which business representatives have a key role to play, Hahn said, calling on delegates, “to get involved in this process in your regions.”

The depth and length of the economic crisis is challenging Europe’s competitive standing and calling into question its attractiveness as a place to do business.  “In responding to these challenges, Europe has to regain the lead in research and development and innovation,” Hahn said, adding that combining a focus on specific areas with a considered regional research and innovation strategy, are two important tools to improve things.

Climbing the ladder of competitiveness

In designing the new Regional Policy for 2014 – 2020 the Commission has identified some particular areas that could make a specific contribution to recovering from the crisis and making Europe an attractive place for business.

Among others, these include energy efficiency and Key Enabling Technologies (KETs). “I believe that if Europe is to start climbing up the ladder of competitiveness and attractiveness, it has to address the issue of energy security and [end] dependence on imports of raw materials,” Hahn said, noting Europe is increasingly reliant on imports. “Our trade deficit of €156 billion in 2011, would have been a €237 billion surplus, were it not for these imports,” he said.

This is where Hahn sees KETs coming into play. “They can lead to new materials which could substitute [for] imported, scarce or not re-usable raw materials.” KETs could also be the source of new and better products and processes, generate economic growth and employment, and strengthen the competitiveness and attractiveness of the EU and its regions.

KETs including advanced materials, nanotech, micro- and nanoelectronics and biotechnology have have been singled out as being important technologies in their own right but also as underpinning a wide range of innovation, including the development of new goods and services and the restructuring of industrial processes which is needed to modernise EU industry. 

Closer to market assistance

“[KETs] have enormous market potential. With growth rates between 6 per cent and 15 per cent in the next 4 years, it is expected that the global market for KETs will grow to over €1 trillion in 2015,” Hahn said.

Backing from the Regional Policy Structural and Investment Funds can help to realise this potential, supporting the take-up of KETs by promoting fast and 'closer to market' assistance and contributing to the development and testing of products and production methods.

In addition, Hahn said Regional Policy can foster the adoption and diffusion of KETs in industry and encourage investment in their development for the creation of pilot production lines, allowing regions to maintain manufacturing jobs.

By encouraging adoption of KETs, Regional Policy can also help Europe limit its dependency on imported raw materials, or at least counterbalance the trade deficit created by their import.

Sustainable energy use

Another critical field where Regional Policy can play a role is energy efficiency. While there is not much that can be done in terms of increasing the availability of natural resources of gas and oil, “There is a lot we can do in terms of promoting sustainable use of energy and energy efficiency,” Hahn believes.

This is an emerging market where demand is gathering speed. The global market is currently estimated at €1.15 trillion per year and is expected to reach at least €2 trillion Euro by 2020.

The European Structural and Investment Funds will allow European regions to enter and compete in this expanding market, supporting investments in research and innovation and entrepreneurial capacity in sustainable energy, including marine and solar, ecosystem services, eco-innovation and low-carbon economy.

In addition to supporting KETs and energy efficiency, the new Regional Policy will support investment in infrastructure, such as broadband networks, and in people, providing them the necessary skills.

The details of the Regional Policy and other investment frameworks and their budgets are currently being finalised. Hahn said that as the Commissioner responsible for Regional Policy, his aim is to make it more relevant to the circumstances and needs of the regional economies. “I am very pleased that there is an emerging consensus between the European Council and the European Parliament about our proposals. As a matter of fact, it became clear that in terms of financial allocations, Regional Policy will [have] the biggest share of investment funds in a range of areas including innovation and support to enterprises,” said Hahn.