University association calls for increase in public procurement budgets for R&D
Member States should use a greater proportion of their research and development (R&D) public procurement budgets to encourage businesses to draw on the university-research base, a new report by the League of European Research Universities (LERU) has argued. The LERU report, 'Universities and Innovation: The Challenge for Europe', notes that in 2004, governments across Europe spent in excess of €170 billion on public procurement. But only €1.64 billion of this went towards procuring R&D, and tended to be for well-tried, low cost technologies from major suppliers, rather than novel technologies and products coming from small and medium-sized enterprises (SMEs). This lack of investment in R&D public procurement, the report argues, has had a knock-on effect on the success rate of knowledge-intensive start-up companies and SMEs, which are seen as the drivers for growth in Europe. It has also impacted on universities, since there are not enough incentives to stimulate business demand for university research. The report makes the case that by using a greater proportion of the R&D budgets to purchase contracts, Member States would encourage firms to draw on the university research base, increase the number of start-ups and boost the growth of knowledge-intensive companies. More broadly, governments should introduce tax reduction schemes for expenditure on R&D and innovation. For its part, the Commission should ensure that the state aid rules do not conflict with the use of public procurement to support innovation. The report suggests the creation of a European version of the US Small Business Investment Research Program (SBIR), which requires all state departments to reserve 2.5% of their extramural R&D budget for procurement contracts for small firms developing technologies. 'Because of the demand that the programme creates for tomorrow's, rather than yesterday's technology, it has converted billions of dollars of US taxpayer funded research into high value goods and services, stimulated the growth of many knowledge-intensive companies, helped thousands of academics to become entrepreneurs, and created a dynamic, highly interactive environment between business and universities that has stimulated innovation,' claims the report The paper goes on to note that the programme has led to the employment of many more skilled researchers, and created an environment where PhD graduates are more highly prized than in Europe, since they are seen as a vital link between the new knowledge created in the research base and its application in business. Also key to stimulating innovation is the diversification of Europe's higher education system. Too much emphasis has been placed on the single model of basic research-focused universities, argues the report. Instead, research should be cross-disciplinary and have stronger links with industry. The report outlines a number of case studies of how universities have engaged effectively with industry. These range from highly educated graduates and fundamental research results that serve as the basis for innovation through to applied knowledge that can transform industry. The presence of universities may also provide incentives for companies to relocate to a particular area, or an industry that has little or no precursor in a region may develop out of a university's research activities, suggests the report. It gives the example of Wolfson Microelectronics, which started life as a microelectronics research group spin-out at the University of Edinburgh. After flotation on the London Stock Exchange in October 2003, it now employs 300 staff, is valued in excess of €500 million, and sponsors five PhD studentships annually.