CORDIS Archive

February
2003

Marking progress on the chart

Across Europe, governments have been introducing initiatives to foster innovation through a range of means. With the European Trend Chart on Innovation, all stakeholders can see what others are doing, and learn from their successes and experience. The latest annual report on activities within the Trend Chart programme shows that much has been achieved in Europe, yet undoubtedly much more remains to be done.

Some 30 countries are participating in Trend Chart activities, and there are now over 700 separate policy measures included in the database that is central to the 'policy-learning' process the Trend Chart promotes. Of course these measures vary enormously in scale and aims - what is needed in a large Member State may well be inappropriate in a small candidate country. But by publicising the various measures that are in place, and giving contact information for the people who have implemented them, the Trend Chart helps governments identify and compare options for their own situations and needs.

The report suggests that the rationale for sharing information and comparing policies across borders is now widely accepted. However, so far there are few instances of governments making systematic attempts to learn from best practice in other countries, with most examples being ad hoc exercises to find a solution for specific policy needs. In general, the smaller Member States appear more open to learning from abroad than the biggest countries.

Some progress has been made in most countries to develop a more co-ordinated approach to innovation policy, given the wide range of government departments - at national and regional levels - whose activities influence firms' behaviour. But so far, this has tended to focus on technological innovation, with ministries responsible for science policy often given the lead role. For the wider development of innovation policy - diffusion of new technologies or organisational innovation, for example - this need for co-ordination, across areas such as regional, fiscal, competition, and public procurement policies, will be much greater. As will the political commitment needed to make it effective.

Many administrators understand the importance of innovation, but not everyone does. According to information collected in the Trend Chart, many Member States have set up initiatives to raise public awareness of the issues involved, and to involve stakeholders in discussions on innovation policy. This has been particularly the case in 'foresight' exercises, where wide-ranging participation is critical to success.

One of the biggest challenges in Europe is to improve the regulatory environment for business, reducing the administrative burden and the costs of setting up and running a firm. Of course these types of measure will benefit all companies, and go well beyond the borders of innovation policy. Two areas in particular were identified as essential in fostering innovation - the take-up of new ideas by industry and tax incentives for research - and the report lists a number of relevant measures.

Europe's public research institutions and universities are often at the forefront in research terms, but when it comes to translating new technologies into commercial products Europe is far behind its competitors. Of course research bodies are not designed to manufacture and market goods, so Europe needs to find ways to encourage the take-up of new research results by industry - which can turn them into successful products. In recent years, many European countries have changed their rules on the ownership of research results generated in public institutions, specifically to encourage their exploitation. Rather than resting with individual researchers, the trend is towards institutions themselves having the rights. These are generally in the stronger position to commercialise results, through licensing or marketing them, or even through spin-off companies where appropriate.

Across Europe, governments are encouraging closer relationships between universities and industry in their local regions. In fact it is widely agreed that co-operation with industry should be seen as a third mission for universities after education and research. More and more schemes are being introduced to encourage researchers to move between the academic and industrial worlds, and in many cases governments are looking again at administrative rules, and fiscal barriers, which discourage this.

Fiscal incentives can be very effective in encouraging companies' behaviour, and many Member States give tax credits against firms' R&D spending. However, innovation is much wider than just R&D, and few countries have been able to design tax incentives to foster other types of innovation support. One problem with R&D tax credits is that they tend to be of little or no value to the smallest companies - which are often those that most need the help. So some Member States have preferred to focus their financial help on grants and loans, which they believe can be targeted more efficiently.

Small high-tech enterprises are widely seen as the drivers of innovation and economic growth, but the successful ones should not stay small for long. Just as important in maintaining a dynamic economy is a constant stream of new businesses, set up by entrepreneurs with ideas. Europe needs to make it easier for people to start companies and make them grow. That means reducing the red tape and administrative hassles for small businesses. But it also means developing more effective and extensive means to support young companies.

Europe's venture capitalists are often reluctant to work with start-up companies, because they find it difficult to make a high enough return, so government are offering incentives to encourage them to invest. Some have set up direct seed-financing schemes using public money, but their operation is restricted, by resources and by state-aid rules.

Innovation support services such as incubators, business angels and technology transfer agencies are also widespread. These tend to work best when the services are provided locally, but backed up with resources from a wider national or European network. Training in entrepreneurship skills relevant for business management is being developed and extended in many countries.

Next year, following agreements at the Copenhagen European Council, ten new Member States will join the EU, so European innovation policy will need to encompass them. All ten are already full participants in the Trend Chart programme of activities, and by sharing information in this forum, they will be able to develop their own national innovation policies. None yet has a fully-fledged innovation policy, but it is encouraging that the likes of entrepreneurs, business associations and science parks are contributing strongly to the debate on innovation.