EU innovation - a view from the USA
One of the barometers for innovation development in the European innovation scoreboard is comparison with the USA. While Europeans have been checking these indices to see how the continent and the EU Member States fare, there has also been interest from the USA to see how Europe is going about fostering innovation. One of those most interested is Senator Eric Reeves of North Carolina, who spent eight weeks in Europe investigating the workings of European innovation, including a three week stay in Brussels involving collaboration with European institutions. Leaving on 16 December, Senator Reeves' tour of Europe was part of an Eisenhower fellowship enabling the Senator to return to the USA with 'a better understanding of the European Union's innovation objectives'. He also has a great interest in the eEurope plan as it echoes moves that he has instigated in North Carolina. While global coverage for mobile systems is important, Senator Reeves also emphasized that North Carolina wants to make sure that global usage can help the whole of society benefit. This is why he introduced a bill to establish the 'Rural internet access authority' in the State, with a $35 million budget. During his stay in Europe, Senator Reeves of North Carolina, USA, amassed a great deal of information about innovation and how it was measured in Europe. In the interview below, CORDIS News asks him how the two continents compare. CORDIS News - Innovation in the 'new economy' has been difficult to gauge due to the new 'intangibles' involved. As the USA is arguably more advanced in the new economy, what lessons can it teach Europe in finding the most important indicators and how should measurement techniques be updated? Senator Reeves - There is little doubt the 'new economic' model took hold in the USA several years ago. EU electronic commerce, which includes m-commerce (mobile commerce), has yet to become pervasive. So, looking at the USA experience and indicators should prove beneficial to policymakers as government (worldwide) tries to catch up with these events. What these indicators are is up to considerable debate and the information in many cases is lacking. In North Carolina, for example, we spent 8 months on a metric study designed to present a picture of the changing economy, but found that much of our data was simply old. Data availability is a huge concern. Therefore, I would urge the EU and the USA government to double their efforts to provide more current data. If Cisco Systems can close their books every three days, then government ought to have numbers that are no more than 12 months old. Science, mathematics and engineering education appears at the top of all studies. The amount of money government and private business put into research and development is also crucial. CORDIS News - What effects have the innovation indexes had - have they been proved to motivate the lowest achievers? Have there been significant changes following their introduction (indicating them acting as a spur to improvement) or do they just reinforce the stereotype of who is the best and worst? Senator Reeves - There is one constant to the new economy; the pace of change is fast. I believe the new economy cycles are rapid and those that are up today can be down in just a few months. Therefore, a premium is placed on those areas that are prime for innovation and can change rapidly. If the indexes are good, then they present an accurate picture in time. For instance, the North Carolina study showed that many of our start up businesses could not rapidly expand due to a lack of second phase financing. Access to capital is a problem in North Carolina. We used our poor ranking as a challenge. Taking this information, we proceeded to address the problem. We've seen venture capital and government early stage capital increase in North Carolina. What an area does with the index is up to them. Ireland and Hungary are great examples of an area refusing to stay the same. They are challenging the stereotypes using the new economy business model to change. Both governments have a long way to go, but they have a vision based upon a new model and they are working on it. I might add that the index studies need to be consistent. It does me little good if I can't compare our progress against other states. CORDIS News - There are many indicators that are used to indicate a favourable environment for innovation in both the US and the European evaluation methods. Are there any in particular that strike you as having proved most significant? Senator Reeves - Privatisation of university ideas. We are trying to speed up the knowledge transfer of our university researchers into the market. Since the currency of the new economy is knowledge, it made sense to us to create a closer link between the lab and the market place. All over the USA we have a good record on this tactic. Most of my EU interviews indicated that the dynamic did not take place. So, research at universities in the EU is solely for knowledge development. This is a worthy goal, but times have changed and I'd suggest that there is an unexplored gold mine in the EU universities. CORDIS News - I am aware of individual innovation indexes for States in the USA, but is there one for the whole country and if so how reliable do you feel its data is? Senator Reeves - Our US Department of Commerce has developed a study and it is a good beginning. Much of the data is old and dated, which undercuts the usefulness of the study. There is also a difficulty with getting up to date reasonable data from all the states. So, the current picture is a little muddled, but this will improve over time. I believe the metrics studied are correct. CORDIS NEWS - What individual characteristics are striking about the States in the USA with the best innovation records? Senator Reeves - a). Job loss/job creation. This cycle is known as 'job churn' and is a mark of a healthy new economy. An innovative economy will replace job almost as quickly as others are lost. b). Capital markets. Turning ideas into jobs requires investment. Innovators need access to financing. c). Internet usage. Use of internet technologies increases efficiency and competitiveness. Those states that are doing best in this economy have a significant amount of data travelling over the internet. d). Scientists and Engineers. The number of such people in an area is an indicator that there is an emphasis on research and development. These are the people working on the next new thing. CORDIS News - What are your feelings concerning the balances required between regulation/market forces, private/public funding, State/Federal initiatives? Have any major lessons been learnt in the US about which mixture works best? Senator Reeves - This is a hard question to answer. I'm not sure we are at the point of having a lessons learned document relating the new economy. Generally, we try to take a hands off approach to the business side. We try to support items like education, early stage capital formation and tax credits for job creation. With regard to communications, we are trying to understand the right approach to take on bandwidth. The free market will put the infrastructure where demand is, but this leaves out a lot of communities. This is an area where I believe the EU leads. While internet usage in the EU remains low, broadband capacity for a high percentage of the EU population is high.