Servicio de Información Comunitario sobre Investigación y Desarrollo - CORDIS

European integration and national systems of innovation: Policy implications

An innovation system perspective on economic policy implies, roughly, that policies should emphasise dynamic efficiency rather than static efficiency and explicitly try to improve the performance of the relevant systems of innovation. The performance of a system of innovation reflects how the system functions as an environment for the evolution of economically useful knowledge-how it produces, distributes, and utilises such knowledge. It reflects technical, organisational, and institutional learning, which are the main sources of innovation.

There are close connections between the performance of the different national systems of innovation and the European system of innovation. Since a European system of innovation still only exists rather selectively and in the narrow sense of the term, it may be premature to evaluate its performance. It should also be noted in this connection that an improvement in the performance of the European system of innovation primarily becomes evident through the improved innovation performance of the firms in the individual member countries and thus as improvements in the performance of national systems of innovation.

Innovation policy is here defined as those parts of economic policy that are concerned with improving the performance of systems of innovation. There are at least two characteristics of innovation policy to be taken into account. First, innovation policy should be regarded as a process of ‘policy learning’. Continued weak macro-economic performance in many countries in combination with theoretical doubts about the efficiency of fiscal policy and new types of institutional restrictions on the policy options in Europe increasingly force innovation policies onto the agenda of economic policy. Gradually, and in interaction, the theories, practices, and institutions of innovation policy develop and become a permanent and “natural” part of economic policy.

Second, there is also “unintended policy” in connection to innovation. Policy decisions in the fields of labour markets, education, social security, income distribution, etc., as well as traditional fiscal and monetary stabilisation policies strongly-but in the form of unplanned side effects-influence the production and diffusion of new knowledge in the economy. The implication is that the policy-makers should be more aware of the important indirect effects their policies may have on innovation and that inter-ministerial co-ordination is necessary in connection to innovation policy.

In the report, five types of innovation policies are identified:
1. Policies to develop and strengthen the knowledge infrastructure.

2. Policies to develop some basic, formal as well as informal, institutions that affect interactive learning.

3. Policies to create specific organisations that support innovation activities.

Policy types 1-3 can be termed framework condition policies. They work indirectly by contributing to a better environment for processes of learning and innovation.

4. Policies directly and selectively supporting the development of science and technology (RTD policy).

5. Public technology procurement policy.

These policies are sensible from a systems of innovation perspective. They all potentially support different kinds of learning processes. However, they could be targeted much more directly at interactive learning than is the case today. Procurement policies could be used more systematically to shape patterns of user-producer interaction. Government support of R&D could be connected to organisational as well as technical learning and, especially, to the interactions between organisational and technical change. The knowledge infrastructure and intellectual property rights could be developed to support research and development co-operation, etc.

Today, the policy mix still puts too much weight on R&D subsidies and the idea of supporting nodal points and strategic patterns of interaction within systems of innovation does not yet seem to have been understood by policy-makers. Furthermore, all these types of policy could be systematically monitored from a policy learning perspective and they could be better co-ordinated and sometimes integrated with education policy, labour market policy, employment policy, etc.

In addition to these five types of “established” innovation policy, there are two yet unexplored innovation policy areas, which follow from the innovation systems perspective. First, innovating firms interact with each other in complicated and changing networks of users and producers, of sources of labour skills, finance, knowledge and so on. It is an important task for innovation policy to identify and support important interconnections and nodal points in these networks.

Second, innovation policy should pay attention to the learning and innovation capability of firms. This implies giving organisational and management aspects increased attention. Further, it implies that policies to promote innovativeness of firms should be combined with policies, which develop human resources and support changes in work content and the upgrading of skills and competencies of employees. Innovation policy-makers should recognise that what is required are often combinations of technical, organisational, and sometimes, institutional innovation.

The policy implications above apply to national systems of innovation. What are the possibilities for an innovation policy learning process at the European level? What are the prospects for the five types of innovation policy?
- Policies to develop and strengthen the knowledge infrastructure can be fruitfully developed much further on the European level than is the case today.

- Policies to develop some basic institutions which affect interactive learning have been pursued for some time. Development and harmonisation of intellectual property rights, for example, are feasible fields for Community action.

- Policies to create specific organisations that support innovation activities take longer time to develop. There is more scepticism and resistance in different member countries to these kinds of somewhat more visible policy instruments. To build a completely new organisation will always raise questions about its necessity as well as its physical localisation.

- Policies directly supporting the development of science and technology (RTD) will probably continue to expand. However, the existence of underlying system diversity poses important challenges for RTD policy at the European level; diversity implies that policy actions will have widely different effects according to the nature of innovation systems and production structures at national and regional levels. The pursuit of policy programmes in this field leads to such strong inter-European informal network building that it will seem more and more natural to finance increasing amounts of R&D support over the community budget. The informal network building is thus an important effect of formally coordinated European research co-operation.

- Technology procurement policy is a less obvious community activity in the sense that European policy-makers probably will stick to rule-making and leave the actual procurements to member countries. By co-ordinating some very expensive procurement programmes at the European level, it may, however, be possible to avoid some unnecessary duplication of research activities. This concerns primarily technology procurement as opposed to off-the-shelf procurement.

All five kinds of community innovation policy discussed here will affect the member countries unevenly. This is a consequence of persistent differences between countries in terms of income levels, institutional set-ups, and specialisation patterns. Given the lack of convergence between European countries in these respects, it is impossible to design a European innovation policy, which is neutral in the sense that it does not favour some countries more than others. There is thus a risk of violating the principle of cohesion.

Finally, the report raises the question of different main directions in the process of policy learning. Which are the alternative “visions” and strategies that can be pursued in the development of a European innovation policy? Is building systems of innovation an option? In that case, should the policy support particular selected national innovation systems or should it try to support all of them? Or should the efforts be concentrated on building European systems of innovation, maybe concentrated to particular aspects of it and maybe coordinated with particular national systems of innovation to form a kind of “system of systems” or a “co-ordinated system of innovation”? Questions like these follow naturally from the systems of innovation approach.

To formulate policy aims in relation to national and European systems of innovation raises all the difficulties inherent in the idea of planning for innovation. There is no such thing as an optimal system of innovation (and even less an optimal system of systems). The best one can do is to, step by step, develop common infrastructures and institutions: for example, co-ordinate R&D and education and training; strengthen different communication channels; increase the production and distribution of information; help build networks; take initiatives to establish institutions for discussion and exchange of information and ideas between different actors in the process of innovation (entrepreneurs, labour market organisations, researchers, policy-makers, venture capital organisations). Such an approach might be called “indicative planning in a European system of innovation”, i.e. building and using information and interaction infrastructures and institutions, and is thus to be considered as a necessary part of a process of innovation policy learning.

Reported by

Linkoping University
581 83 Linkoping
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