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I3U Report Summary

Project ID: 645884
Funded under: H2020-EU.3.6.

Periodic Reporting for period 1 - I3U (Investigating the Impact of the Innovation Union)

Reporting period: 2015-03-01 to 2016-02-29

Summary of the context and overall objectives of the project

The I3U (Investigating the Impact of the Innovation Union) project is developed under the Research and Innovation Actions funding scheme of the European Commission Horizon 2020 Framework.

The project moves from the central role assigned to innovation in the Europe 2020 strategy, set out by the European Union in 2010 in order to ensure a smart, sustainable and inclusive economic growth strategy for the coming decade.

More specifically, the Innovation Union Flagship Initiative which is part of the EU2020 strategy aims to create a vibrant, innovation-based economy. In that context the European Union defined 34 commitments. According to the work programme Horizon 2020, “[a]s its 34 policy commitments have been turned into action and the European Research Area Partnership for Excellence and Growth has been reinforced, it is time to assess the economic impact as well as to foster new forms of innovation. New knowledge on business models innovation and business models for SMEs in any sector of the economy can highly impact on European competitiveness and job creation. Open innovation and engagement of citizens and civil society are also important dimensions of innovative societies.”

The objective of this project is to deliver a system of assessment for the Innovation Union commitments. The approach starts from the evaluation of the state of achievement of the individual commitments, but puts crucial emphasis on their effects in the innovation system as a whole, as well as on the economy-wide effects of innovation. The basic idea is to retrace the entire chain of effects of the commitments, from their implementation to their final impact in terms of competitiveness, growth or employment. This objective demands an extended methodology for several reasons:
• The 34 Commitments cover a wide range of issues, from education and human capital to market efficiency;
• The Commitments overlap and interact a lot, so that their effects must be assessed taking this consideration into account;
• One of the Commitments focuses on the spreading of benefits of innovation across the Union; this implies that an assessment system must give results not only at European level but also at the national level and provide insights at regional level, on which the question of the Structural Funds will be debated.
• The assessment must also be both ex-ante and ex-post type. Ex-post because since the launching of the Euro 2020 strategy almost three or four years of results on the indicators of implementation of commitment are available; this will therefore allow to carry out an ex-post assessment not only on the extent to which these commitments are achieved but also on their effect on the entire innovation system and on the social and environmental variables. On the other hand, an ex-ante assessment is necessary to form proper expectations of the future achievements of the Commitments: if the objectives are reached totally or partially, what will be the consequences on economic and social variables?
• The assessment system ought to be able to give a measure, a quasi-metric on qualitative aspects of the Commitments.
• The assessment system must also be flexible as one the objectives of the project is to design a methodology that would be able to deal with future innovation policy assessments. For instance, it could be adaptable to a modification of the European Flagships or of the Commitments.

Accordingly, the specific tasks that project sets out to undertake are:

1) To collect data collection and identify mechanisms;
2) To develop a theoretical and econometric models in order to estimate the impact of the commitments;
3) To develop a conceptual model of the innovation system, leading to a reference tool on which the impact analysis of the commitments individually and as a whole will be based, and which will also play a role of interface between the assessments of the commitments impact and the macro sectoral econometric work
4) To carry out a quantitative analysis of the commitments carried out with the NEMESIS model, which is an existing macro-structural econometric model, but which will be modified and extended for the tasks at hand;
5) To carry out an ex-ante and ex-post policy assessment of the economic effects of the Innovation Union at European, national and regional levels;
6) To present policy conclusions and recommendations on the validation or the efficiency of the policies implemented.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

"The I3U (Investigating the Impact of the Innovation Union) reporting period covers the first year of the project from March 2015 (month 1) to February 2016 (month 12).

The work carried out in the first period of the project has been dedicated to setting up the foundation of the overall assessment, on the basis of an extensive literature review and analysis of the Commitments (WP1,2,3,4,5,6,7,8), the horizontal analysis of the European Innovation System (WP10) and the preliminary analysis of the macro sectoral model (WP11).

Literature review and analysis of the Commitments

• Work Package 1 - Promoting excellence in education and skills development (Human Capital) – WP leader UiO has investigated the direct and the dynamic effects of the EU policy instruments that promote the development of excellent human capital in the public and private R&D system. In this reporting period a systematic literature review has been carried out addressing the following Commitments: Commitment 1, which intends to develop national strategies to train enough researchers to meet national R&D targets; Commitment 2 seeking to set up an independent multi-dimensional international ranking system to benchmark university performance, Commitment 3, which proposes the development of an integrated framework for the development and promotion of e-skills for innovation and competitiveness; Commitment 4, concerning the delivering the European Research Area Commitment 30, focussing on creating new or improved regulations for increasing mobility of research.
• Work Package 2 - ERA-EU Funds EIT - WP leader WERI-SGH. The main objective of WP2 has been the evaluation of direct and dynamic effects of the EU policy instruments that promote a stronger European dimension of the R&D. The research activity has been directed towards literature review, which has provided the theoretical and empirical context for fulfilling the above objectives, as well as for the collection of data relevant for conducting impact assessment during the next phase of the project.
• The objective of WP3 has been to carry out an impact assessment of the enhanced access to finance for innovation activities (Commitments 10 to 13). In the context of this reporting period, the activity has focused on literature review and data analysis (data collection, definition of indicators and statistical analysis). In order to undertake the evaluation of the policies aimed at increased access to finance, the work done has been set out to: define what is the nature of the direct impacts of each (group of) commitment in this area, collect the relevant data, assess the direct impact of the commitments by econometric method, define how to integrate the commitments in models in order to assess the indirect dynamic impact in the innovation ecosystem.
• Work Package 4 - Creating a single innovation market - WP leader ZEW. The main objective of WP 4 has been to carry out the literature review and identifying potential data sources and data collection with reference to five commitments within the Innovation Union that are aimed at creating a single innovation market. This includes the following five commitments of the Innovation Union: C14 - Deliver the EU Patent (incl. unified system of dispute settlement), C15 - Screen the regulatory framework in key areas, C16 - Speed up and modernise standard-setting, C17 - Innovative public procurement and C18- Present an eco-innovation action plan.
• Work Package 5 - Promoting openness and capitalizing on Europe's creative potential - WP leader ZEW. The main objective of WP 5 to carry out the literature review on the five commitments within the Innovation Union that are aimed at promoting the openness and capitalizing on Europe’s creative potential. More specifically, this includes the commitments: C19 - Creative Industries, C20 - Open Access to Research Results / Research Information Services, C21 - Facilitating Effective Collaborative Research and Knowledge Transfer, C22 - Develop a European knowledge market for patens and licensing, C23 - Safeguard against the use of IPRs for anti-competitive purposes.
• Work Package 6 - Social and territorial cohesion - WP leader WIIW. The main objective of this WP is to evaluate the direct and dynamic effects of the EU policy instruments on the involvement of social partners in the development of knowledge economy. In doing that, WP 6 carries out the analysis of the implementation of Commitments 24/25; 26; 27 and 28 of the Innovation Union targets. Namely: Commitment 24/25: future regulations governing the operation of the European Regional Development Fund; Commitment 26: analysis of the European Social Innovation pilot, which is expected to provide expertise and a networked 'virtual hub' for social entrepreneurs and the public and third sectors; Commitment 27, addressing Public Sector Innovation Scoreboard and a Research Programme on Public Sector and Social Innovation; and Commitment 28 emphasizing the role of social partners in implementing the Innovation Union.
• Work Package 7 - EIP and Leveraging policies externally - WP leader WERI-SGH. WP7 main objective is to evaluate the direct and dynamic effects of the EU policy actions that promote stronger cooperation in innovation activities, both internally (among partners from EU countries) and externally (with third countries). In this reporting period the analysis (literature review) has focused on the Commitment #29 on pooling internal EU resources and efforts through European Innovation Partnerships; Commitment #31 on scientific Cooperation with Third Countries and Commitment #32 dealing with the Roll-out global research infrastructures.
• This WP focuses on the assessment of the state of implementation of the Member States Reform Programmes (IU commitment 33)

Horizontal analysis of the European Innovation System

• Work Package 9 - Integration – The European Innovation System - WP leader UN-MERIT. WP9 is an integrative WP that brings together work from the other WPs, and whose main goal is to provide an analytical description of the European innovation system. In this reporting period, based on the theory of innovation systems, it has been developed an analytical description of the European innovation system that has described the main innovation and knowledge actors in the Member States, their interactions, and the role of policy in the innovation system.

Preliminary analysis of the macro sectoral model

• Work Package 10 - Macro-Sectoral Economic Modelling - WP leader SEURECO. The objective of this work-package is to implement in the macro sectoral model NEMESIS the different commitments of the IU in order to carry out a macroeconomic assessment of their socio-economic and environmental impacts. In this reporting period, drawing from the inputs produced by WP 1 to 8, the preliminary analysis on data from the different commitments on the EU innovation system and their link with the innovation mechanisms of NEMESIS have been carried out.

Management (WP 11)

• Work Package 11 - Management, Dissemination, Exploitation & Communication - WP leader ISIS. This WP has monitored the management of the project. Namely:
• 3 project meetings,
• Deliverables submission
• Preparation of dissemination material"

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Setting up of the knowledge-base for the analysis of innovation systems in Europe

• The extensive literature review activity concerning the Innovation Union Commitments was to identify potential data sources and indicators that can be used for the impact assessment and empirical research in the next phase of the project. With respect to the data collection, some data and indicators have already gathered and for some of the commitments while for other commitments data collection and data preparation is ongoing.

Horizontal analysis of the European Innovation System

• The analysis of the European Innovation System so far has focused on three main activities: (i) the formulation of the main ideas for constructing and empirically implementing the model, (ii) data collection, and (iii) implementation of the model to yield insights about the European innovation system.
• With regard to the first of these activities, the basic approach consists of specifying a number of actor roles in the innovation system (e.g., firms, governments, universities), and specifying standard ways in which these actor roles can be fulfilled. Examples of actor roles are science-based innovators vs. opportunistic innovators in the firm group, and facilitator vs. steering role for government policy. The conceptualization of the innovation systems stems from the combination of these roles, with some combinations being particularly effective.
• With regard to data collection, this has been done at the level of Member States, so that the innovation system can be characterized at the country level. Data has been collected from a variety of sources, including the Community Innovation Survey (CIS) database, university rankings, and statistics on research and development. For the government role, data collection has been more difficult than for other actor roles, because the nature government policy is hard to quantify. This part of the data collection is still in progress, with focus on country reports on innovation that were written for ERAWatch. This is still in progress, and will be an important part of the activities in the next period.
• The empirical implementation of the conceptual model has provided a picture of innovation in Europe that is characterized by a lot of heterogeneity. Some of the member States have innovation systems that are largely dependent on science and operate at the global frontier of knowledge. Other Member States have innovation systems that are mostly dependent on non-scientific knowledge sources, including diffusion of knowledge from abroad. Such heterogeneity has important consequences for impact measurement and evaluation of the Innovation Union policies.
• The results show that there is a tendency for geography to influence the innovation system (see the map below). We see broadly oriented systems, in which each actor category has a strong impact in the innovation process in mostly Western and Northern European member States (such as Germany, Netherlands, Belgium, UK, and Sweden). On the other hands, innovation systems that in a developing state, and often driven by the institutes sector, are often found in Eastern and Central Europe, as well as South Europe.

Preliminary analysis of the macro sectoral model

• The preliminary analysis has developed a grid resulting from information collected throughout WP1 to WP8 in relation to their consistency with the mechanisms of the model. The first observation is that many commitments, or sub-commitments - 16 in all - do not follow quantitative objectives that can be translated in terms of NEMESIS mechanisms and have accordingly been excluded from our grid of analysis. For the other commitments - they are 23 - on the contrary, quantitative impacts on the innovation system can be estimated and re-linked to specific mechanisms of the NEMESIS model. We have regrouped them into two tables around five distinct “thematic”: Spillovers, Finance, Actions to market, Research infrastructures and Human capital. The preliminary vision of the main mechanisms of NEMESIS has then outlined, accompanied by the role of commitments and their main effects in the model.

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