Call to adapt research and innovation policy to drive EU competitiveness post-pandemic

The European Commission has put research at the heart of its pandemic recovery plan, saying policies will need to adapt to ensure that R&I contributes to sustainability whilst driving EU competitiveness.

The 2020 science, research and innovation performance (SRIP) report, published as the commission presented its post COVID-19 budget, sets out 11 policy recommendations through which research and innovation can underpin progress to a green, prosperous and digital future.

This is the commission’s third biennial assessment of Europe’s research and innovation dynamics and performance in a global context, but the first one to include a political spin and policy recommendations.

“Research and innovation is a new frontier for the European project,” said EU research commissioner Mariya Gabriel. “The findings of the SRIP 2020 outline a clear set of policy actions. Our policies should ensure scientific leadership and freedom of ideas that benefit the whole union and beyond.”

The recommendations stretch across three areas: R&I for a green and equal future; R&I for global leadership; and R&I for economic and societal impact.

Regional differences persist

The first set of recommendations sets out policies to ensure innovation can drive the green transition without leaving fossil fuel dependent regions, countries, people, or companies behind.

But as ever, the huge disparities in R&D investment that persist across Europe are hampering growth in regions that are already lagging behind.

According to the latest data, half of all research money in the EU is concentrated in 10 per cent of the EU’s regions, and things are not improving. “We see no positive convergence between the regions,” said Julien Guerrier, director of the policy & programming centre at DG Research & Innovation, presenting the report.

Similar inequalities exist at a country level, with Germany, France, and Italy accounting for 61 per cent of the EU’s 2018 R&D spending. “There is clearly a strong concentration of R&D efforts in northern and western Europe,” Guerrier said.

Money is inevitably drawn to countries and regions with high levels of human and technology capital, noted William Maloney, chief economist for equitable growth at the World Bank. “Research is going to be concentrated in areas where there is an installed technical capacity,” he said.

The new data also point to a widening gap in corporate productivity, two-thirds of which is driven by R&I, further underlining stark differences in technological capacity. There is a “lack of technological diffusion along value chains,” said Guerrier.

To end the vicious circle of poorly resourced regions falling further and further behind, SRIP recommends place-based policies to strengthen local innovation systems, increasing EU competitiveness as a whole and narrowing the research and innovation divide.

Global leadership

On a global level, the EU spend less on research than Korea, Japan and the US, but is slightly ahead of China, investing 2.19 per cent of GDP on R&D, compared to 2.83 per cent in the US and 4.53 per cent in South Korea. 

The gulf between the US and EU in availability of capital for forming and growing technology-based SMEs persists, with the report finding the US invests eight times more than Europe in early stage companies.

US science and technology companies also invest far more in research than EU counterparts, accounting for most of the research money in the country. In Europe, on the other hand, public investment accounts for a third of R&D investment.

Policy changes are key in catching up with competitors, the report says. “We have to adapt our research and innovation to the digital age,” said Guerrier. This means modernising R&I policy to take full advantage of big data and artificial intelligence, a field where China is taking the global lead.

The commission has taken steps in this direction, publishing three reports outlining its plans for future legislation on AI and the creation of a European data economy in February, as the pandemic took hold.

“If we want to foster deep tech, science-driven innovations we need the right policy mix, the right policy environment,” said Guerrier.

Despite geographical disparities and foreign competition, the report paints a positive picture of some aspects of R&D in Europe, saying the EU is a leader in open science, climate research patents and publications, and start-up support systems.

“Europe, with its limitations, is a particularly strong actor in science, very strong actor in research, and increasing[ly] demonstrating that in innovation also. There is not that much [difference] between the EU and other competitors, the US particularly,” said Jean-Eric Paquet, director general of DG Research & Innovation.