Bridging Europe’s regional innovation gap

With seven months to go before the European Commission unveils its plan for the next framework programme (FP10) for research and innovation, many regional representatives are counting on more financial firepower and greater flexibility.

European policymakers are under mounting pressure to turbocharge financing, streamline the funding process and strengthen synergies with regional development funds when they present details in mid-2025 of FP10, which is set to replace the current Horizon Europe in 2028. These were among the key issues on the table during the 2024 Week of Innovative Regions in Europe (WIRE) Conference, held on 13-14 November in Budapest, under Hungary’s EU presidency.

“Europe has all the resources to lead the global innovation race, but also faces obstacles,” contended Signe Ratso, deputy director general of the European Commission’s DG Research and Innovation (RTD), in her opening remarks. One of the obstacles is financing, with Ratso noting that the bloc invests about 2.3% of its GDP on research and innovation, compared with about 5% in the US, while investment varies widely between and within member states.

Manuel Heitor, who chaired an independent working group on FP10, also underscored the importance of scaling up research investment, stressing that “Europe needs to align on competitiveness and put research technology at the centre of our economy.” As lead author of the Align, Act, Accelerate report on European competitiveness, published in October, Heitor has called for investing €220 billion in the next FP, more than double the original Horizon Europe budget of €95 billion, to drive innovation and reverse the EU’s “brain drain”.

Fit-for-purpose funding

With discussions about future EU funding currently overshadowed by fiscal restraint and sluggish growth in many member states, some conference participants called on policymakers to adopt a more flexible and streamlined approach if the EU is to catch up with pace-setting US and Asian competitors. Attendees also recommended better coordination of the EU’s different funding instruments to level the innovation playing field between advanced EU members and the 15 so-called widening countries. Most of the latter have joined the EU since 2004 and remain at a disadvantage in both resources and capacities.

David Uhlir, chief strategy officer for the South Moravian Innovation Centre (JIC), urged the EU to avoid “mission overload” — overlapping policies and funding programmes that can overwhelm start-ups and emerging innovators. Policymakers should be facilitators, helping entrepreneurs gain expertise and access bigger markets, he said, drawing on the JIC’s 20 years of experience in the southern Czech region. The South Moravian agency also works closely with counterparts in other Czech regions, neighbouring Austria and Slovakia, as well as in other EU member states.

“I'm very dogmatic about not confusing innovation with research, because these are very different things,” Uhlir explained in an interview on the sidelines of the conference. “People want more money for research and they say they will bring innovation, but what they want to produce is more knowledge. And there is no credible plan to actually develop innovation from that research.”

Nonetheless, ensuring that smaller, regional institutions, especially those in widening countries, are not left behind is seen as a crucial component of spurring innovation and development. These countries accounted for around 13% of grants in the first half of the current Horizon Europe programme, a marginal improvement from less than 10% in its predecessor, Horizon 2020.

A balancing act

Panellist Joanna Kubiak, of the Wielkopolska Region Brussels Office, noted that the western Polish province ranks as an “emerging innovator” in the Commission’s Regional Innovation Scoreboard, home to several major universities, two AI centres and a strong innovation network. Yet like many widening regions, Wielkopolska lags behind in Horizon Europe involvement: “There is still an innovation divide and that is one of the big challenges when it comes to R&I in Europe,” Kubiak explained.

Looking ahead to the next FP, Kubiak says emerging regions will need more funding for research. “I am aware of this general tendency right now that we have to streamline the programmes,” she said in an interview, “but I'm afraid that there will be some areas that won't be supported as a consequence. We have to find a balance between streamlining on the one hand … and on the other hand, not have important areas from our placed-based perspective that are not covered at all.”

Providing a ground-up viewpoint, the Mayor of Gabrovo contended that the Bulgarian city has experienced an “innovation transformation” by working closely with local businesses, academics, and citizens, but faces high hurdles in attracting financing and talent. “Every region has its challenges, but also its opportunities. It should be Europe’s goal to help every region develop its opportunities to the best of its abilities,” added Tanya Hristova, who chairs the European Committee of the Regions’ Commission for Social Policy, Education, Employment, Research and Culture.

Bringing educational systems up to speed is another key building block for regional development and innovation. “If you don’t have the skills, obviously companies will go elsewhere,” Martin Kern, director of the European Institute of Innovation & Technology (EIT), told the gathering. Ron Boschma, an expert on regional economics and resilience at Utrecht University in the Netherlands, called for “massive investment” in education and research to help tackle “regional development traps”.

The event also marked an opportunity to highlight the priorities of the Hungarian presidency, which include enhancing European productivity, global economic cooperation and labour market flexibility, as well as regional cohesion. The conference’s main message was to strengthen European competitiveness through research and development cooperation and to reduce the innovation gap within Europe.

There is a need to act on the European scale, concluded Borbála Schenk, head of the international affairs department at Hungary’s National Research Development and Innovation Office (NRDIO), which organised the event. “This conference brought us all together on how to act,” said Schenk, stressing the importance of boosting European competitiveness. “This is only the beginning of this conversation and it will continue.”