Viewpoint: In the next Framework, the EU needs to get back to economic basics

07 Dec 2023 | Viewpoint

With its misguided ‘missions’ and ‘bottom-up’ funding, Horizon Europe isn’t delivering the economic prosperity and industrial competitiveness Europe needs, argues a Washington think-tanker

Robert D. Atkinson, president of the Information Technology and Innovation Foundation in Washington DC

As an American who has been engaged in technology policy for over four decades, I want to thank the EU for its Framework R&D programmes. By focusing on basic research at universities and social policy-oriented research missions, the EU is helping make progress in a wide array of areas that could benefit me, and much of the rest of the world.

But if the EU really wants to help itself, rather than the world at large, it should be crafting a different kind of programme. It should be focused instead on supporting technological innovation to boost EU productivity and international competitiveness, especially against the Chinese technological juggernaut. And most of that research should be done in partnership with industry, especially large companies.

Missions are a small but controversial part of the current EU programme, Horizon Europe. The idea is simple enough: set a few, politically popular targets at which researchers can aim for EU funding. They are modeled on the US Apollo mission to the moon, and were promoted most prominently by Mariana Mazzucato, an innovation professor at University College London.

But the idea is based on a fundamental misreading of US R&D history. To be sure, NASA research enabled an array of commercial innovations; but dollar-for-dollar, sending a man to the moon was far from the most effective use of funds. The NASA mission spurred innovation because going to the moon—actually, beating the Soviets—provided motivation for spending tens of billions of dollars. But spending that money directly on technology innovation related to economic growth and competitiveness would have been much more efficient and effective.

The wrong targets

A second problem with missions is that the EU chose the wrong ones. Its current mission targets of climate adaptation, climate-neutral cities, healthy oceans, fertile soils, and fewer cancer deaths reflect social policy goals, not growth and competitiveness policy goals. This is because Horizon takes as inspiration the UN Sustainable Development Goals. Astoundingly, only two of the UN’s 17 goals have anything at all to do with what I regard as the most important goal: productivity growth, the sine quo non of all the other goals. Helping low-income nations get richer is the key to enabling reduced poverty, cleaner water, better education, decent work, zero hunger and others. As such, both the UN Sustainable Development Goals and the EU Horizon missions should be abandoned and replaced with a single-minded focus on productivity growth plus, for the EU, competitiveness with China.

Given the EU’s almost stagnant productivity growth and lagging techno-economic competitiveness, these are the most important challenges to be addressed by a science and technology programme. Taking these challenges seriously means shifting more funding to areas like robotics and autonomous systems, new materials, “smart manufacturing” and other advanced manufacturing technology areas. In addition, the EU now lags both China and the US in computer science generally; AI in particular needs much more focus.

In short, missions were a faddish mistake. But a mistake can and should be corrected. It is noteworthy that the EU member states are slowly correcting course, by downgrading what would have been a sixth Horizon mission to a smaller, €20 million funding stream.

The EU also needs to reduce its focus on basic research at universities. In this, they are channeling Franklin Roosevelt’s science advisor, Vannevar Bush, and the linear model of innovation: pour resources into university basic research based on the interest of university researchers, and out comes commercialisation and production. But most contemporary scholars have long recognised that this is a flawed model that, even if it once was true, is no longer so. This is why strategic basic research (basic research directed toward a goal) and applied research are critical. Moreover, there are significant international spillovers from research, with higher ones from basic research. This means that many of the benefits of EU-funded basic research help other nations, including China. Research policy is not necessarily innovation and competitiveness policy, especially when it is directed by individual principal investigators at universities.  Yet Horizon’s Pillar 1, funding Excellent Science, is based on this notion.

Industry, not academia, should lead

Indeed, I believe industry, not university researchers, should be in the driving seat for what gets funded and what does not. In particular, the Commission should craft a university R&D funding system that lets industry decide the cooperative research areas which are most important. It does this, to a certain extent already, in its public-private partnerships, the governing boards of which often include industry representatives. But it should go much further. For instance, to get Horizon funding, the Commission could require university researchers to obtain at least some matching funds from industry.  This will serve as a test for the commercial relevance of the research. At the same time, rather than the Commission identifying missions, it should work collaboratively with industry to identify areas where the EU can more effectively innovate and compete globally.

Finally, the Commission should also move from “retailer” to “wholesaler”.  The Commission should reduce its role as a “retail” funder of individual investigators, and greatly expand its funding of industry-university R&D centres which, in turn, would decide who gets the money. One model could be the US National Science Foundation’s Industry University Cooperative Research Center (I/UCRC) programme, which forges partnerships between universities and industry, featuring industrially relevant fundamental research, industrial support of and collaboration in research and education, and direct transfer of university-developed ideas, research results, and technology to incumbent and start-up firms. 

In short, it’s time for the EU to make a fundamental turn in the Horizon programme, taking it back more to its roots of winning global technological competition, and away from a university-dominated, mission-oriented social policy programme. China’s R&D programmes are not oriented to global goods; they are oriented to dominating a wide array of advanced industries, many of which are now EU strengths, such as automobiles, fabricated metals, machinery and equipment, aerospace, and biopharmaceuticals. The EU can no longer afford to be a bystander on this core, almost existential challenge for its techno-economic future.

Robert D. Atkinson is president of the Information Technology and Innovation Foundation, a Washington DC-based think tank focused on public policy for industry and technology.

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