Aho report must be implemented 'before it's too late', says author
According to Esko Aho, former Finnish Prime Minister and chair of the panel that published the report 'Creating an innovative Europe' on 20 January, the measures needed to boost Europe's competitiveness are well known. The real question is how to secure the necessary commitment to implement them, he believes. Addressing a policy discussion forum in Brussels organised by the European Policy Centre (EPC) on 16 February, Mr Aho reiterated the main findings of his group's report, which called for a pact for research and innovation (R&I), and the creation of lead markets in seven strategic sectors, including e-health, energy and security. Mr Aho said that: 'According to Michael Porter of the Harvard Business School, the knowledge base in Europe is roughly the same as in the US, but the main difference is that in Europe the markets simply aren't there for innovative goods and services. Market creation is therefore the most crucial factor to achieving the Lisbon goals.' Investment targets for research and development (R&D), such as the three per cent Barcelona target, should be viewed as indicators of performance rather than goals in themselves, he added. Mr Aho drew parallels with the situation in Finland in the 1980s, when the country began to implement a series of reforms designed to boost competitiveness. 'We increased R&D investment from around one per cent to over three per cent today, but these investments weren't successful without liberalisation of sectors such as telecommunications. We had to create markets for those Finnish companies that had invested in R&D,' he said. Secondly, when moving from a resource-based economy to a knowledge-based model, it is vital that resources become mobile so that they can be quickly moved from old areas to new sectors as required. Policy makers will find some decisions very hard to take, for instance when moving resources away from traditional sectors to new high growth ones, but that is why it is important to have an overall pact for R&I on which they can focus, believes Mr Aho. Most importantly, these measures must be taken 'before it's too late!' according to the former Prime Minister: 'There are a lot of global companies in Europe that have to invest in R&D, and they will do so outside the EU if the conditions are not right. They can survive without Europe, but Europe can't survive without them.' It is clear what needs to be done, but the key is building the necessary commitment to achieve it. 'The next [European] Council will be extremely important for the future of Europe - we can't have another disappointment,' concluded Mr Aho. Other participants in the policy debate agreed with the diagnosis of the Aho report, but raised questions over the action required to address Europe's competitiveness challenge. Luc Soete, Professor of international economics at Maastricht University, warned that some key issues were missing from the report: 'People, for example, such as educated scientists and engineers. Higher education and universities are failing as much as the R&D system is. Higher education is too fragmented and lacking in private investment,' warned Professor Soete. Mr Aho said that another high-level group had been tasked with looking at the challenges facing higher education in Europe, but the Professor responded that such a fragmented approach to innovation is part of the problem. 'The Aho report raises many interesting issues [...] but it needs more links to education policy, competition policy, social policies etc. The lack of such links is possibly a major reason for the current failure of the innovation system in Europe,' said Professor Soete. The EU's Science and Research Commissioner Janez Potocnik agreed with Mr Aho's diagnosis, and said that Europe must move from proposals to commitments, and from commitments to implementation as quickly as possible. 'I'm pleased to say that the Commission is enjoying good cooperation with the Austrian Presidency, and we have a good hope that the Council will also be inspired by the Aho report,' Mr Potocnik said. The Commissioner called on think tanks, industry and other stakeholders to put pressure on national governments to commit to the Aho proposals, and encourage more countries to draw up national pacts for R&I along with France, Germany and the Flanders region of Belgium. 'The Aho proposals are already being translated into commitments, and then hopefully these commitments will be turned into concrete actions. This is not a report that will just languish unread on a shelf,' the Commissioner concluded.