More R&D investment needed to boost ICT industry's competitiveness, says report
Europe needs to invest more in research and development (R&D) to ensure its future competitive role in the information and communication technologies (ICT) sector. This is just one of several recommendations made in a report published by the European Commission's Task Force on ICT competitiveness and uptake. According to the report, the ICT sector relies on R&D more than any other industrial sector, and the very nature of the industry requires short innovation cycles, which respond to new market demands. 'This intensity is outstanding compared to other important industries such as the automobile and chemical sectors. ICT is also the innovative driver of applications in other key sectors. Its effects are therefore horizontal on society and business at large,' reads the report. Yet, despite ICT accounting for more than 25% of total EU research and half of the EU's productivity gains over the last 10 years, the report warns that this is not sufficient to ensure the future development of the sector and improve the EU's global competitiveness. Overall, Europe is currently investing less than other major regions in innovation, and R&D. According to statistics, in 2003, EU R&D intensity was 1.93% of GDP, well below the US (2.59%) and Japan (3.15%), but above China (1.31%). But If the EU continues investing at the same rate, China will soon catch up, warns the report Given the ICT sector's critical role as a driver of growth and competitiveness, the report argues that the focus for the future should be on investing in the development of 'next generation-access and core network infrastructures, service platforms, and new service propositions' for the delivery of 'new services to professional, residential and public service markets'. 'Their success will largely determine the future competitive position and welfare state of Europe and the success of its ICT industry and European industry as a whole in the global competitive environment,' claim the authors of the report. To encourage greater spending and to capitalise on existing R&D, the report recommends the following: - introducing tax schemes for innovation in R&D and supporting technology clusters as global poles of competitiveness; - prioritising and supporting effective collaborative R&D partnerships such as the European Technology Platforms and Joint Technology Initiatives, and making use of the funds available under the Seventh Framework Programme for ICT; - prioritising leading edge markets and developing a European public procurement policy to stimulate business demand for R&D; - providing research funding for innovation in ICT services at EU and national levels; - creating an academic discipline and research area aimed at improving the teaching of services innovation; - encouraging longer-term R&D relationships between companies and universities; - reforming EU state aid policy to create a single category 'industrial R&D' to allow aid of up to 50%; - introducing measures to secure a global level playing field in key ICT sectors, such as the semiconductor industry, to strengthen ICT clustering potentials; - creating a venture capital friendly environment to support the entry and growth of new entrepreneur companies, or creating single venture capital fund, as suggested in the Aho Report on innovation. The report also calls for prioritising interoperability; strengthening the internal market; lowering patent costs and developing an effective intellectual property rights regime that fosters ICT investment; and bridging the e-skills gap of Europe's labour force. Launched in June 2006, the taskforce is just one of several Commission actions looking into ways to create a more favourable EU business environment under the Growth and Jobs initiative. The Commission says that it will follow up on the task force's recommendations in 2007 with proposals for specific actions. Commenting on the report, Commission Vice-President Günter Verheugen, responsible for enterprise and industrial policy, said: 'The Task Force has delivered a clear picture of where effort should be concentrated to boost the competitiveness of the ICT sector, which is the backbone of innovation and growth.'