Innovation policy between Brussels and The Hague

1
Innovation policy between Brussels and The Hague
Stephan Raes Ministry of Economic
Affairs Directorate-General for Enterprise and
Innovation

2
Structure

• One problem
• Three Main instruments
• The internal market and framework conditions
• Financial instruments market imperfections
• The case for the 7th Framework Programme
• The case for EU risk capital provision
• Policy coordination
• Four issues for discussion

3
Europe and innovation

• Lagging performance
• Ambitious goals
• most competitive knowledge intensive economy in
  the world in 2010
• Variety of instruments
• Framework conditions
• Financial instruments
• OMC

4
The Internal Market and Framework Conditions

• Objective Better allocation, economies of scale,
  incentives for innovation
• Instruments services directive, competition
  policies, etc.

5
Framework conditions and EU research and
innovation policies

• Research and innovation at the heart of EU
  policies
• a more research and innovation-friendly State aid
  regime
• EU guidelines to promote an optimal use of RD
  tax incentives
• identification of regulatory barriers to research
  and innovation
• improvement of the IPR system
• ERA 

6
Financial instruments

• Objective addressing market faillures
• Different types of market failures
• Externalities (spillover effects)
• Economies of scale
• Co-ordination faillures (cross border
  co-operation)
• ? Financial instruments. E.g., subsidy schemes to
  further co-operation between the private sector
  and public knowledge institutes (including
  universities) or measures to stimulate private
  RD and innovation

7
Financial instruments and EU research and
innovation policy

• Research and innovation at the heart of EU
  funding
• support to the development of new technologies
  and their market uptake (FP7)
• use of Structural Funds for driving research and
  innovation
• better access to finance for innovative SMEs
  (CIP)
• mobilisation of national and regional research
  and innovation programmes and other sources of
  funding (e.g Eureka, Eindhoven-Aken-Leuven).

8
The case for the 7th Framework Programme

• FP7 instrument to reach ERA
• Lisbon wider focus (not only research but also
  education and innovation)
• Integral approach knowledge chain
• Access to best European scientific excellence
• Stimulate public private interaction (leverage
  effect on RD investments 3 target)
• Help industry/SMEs access international markets
• Attract best brains to EU and stimulate mobility
  researchers
• InstrumentsTransnational RD projects focussing
  on 10 areas, ERC, Joint Technology Initiatives,
  article 169

9
The case for EU risk capital provision
10
The case for EU risk capital provision (2)

• More technostarters important for EU
  competitiveness
• Market faillure availability of seed capital
  (Valley of Death)
• Government intervention is needed
• Nationally this is the case in many Member
  States, via venture capital funds with government
  participation
• National regulations alone lead to fragmentation
  in the market, so EU participation (via EIF) is
  needed to counter this and to enable crossborder
  cooperation between funds and crossborder
  investments in SMEs
• In the EUs Competitiveness and Innovation
  Programme financial instruments are proposed to
  fill this gap and to stimulate cross border
  cooperation by participating in national venture
  capital funds.

11
Policy coordination

• Objective mutual learning and strengthening
  policy competition
• Instruments Benchmark and exchange of best
  practices on the field of e.g. fiscal measures,
  SMEs, IPR, strengthening links academia and
  industry, policy mix

12
Policy coordination and EU research and
innovation policy

• Improve research and innovation governance in
  Europe 
• support to national research and innovation
  policy developments through the new Lisbon
  partnership for growth and jobs
• development of policy analysis instruments for
  research and innovation
• support to policy learning platforms and
  facilitation of transnational policy cooperation
• the importance of consistency between the
  National Reform Programmes and the National
  Strategic Reference Framework for the use of
  structural funds.

13
Discussion (1)

• Strengthening innovation in Europe requires
  excellent framework conditions and a well
  functioning Internal Market
• But
• how much progress can we expect in the near
  future and what does this mean for stimulating
  innovation?
• Political and societal support
• Economic legitimation and subsidiarity

14
Discussion (2)

• No role for Europe without cross border
  externalities
• or
• should we create them?
• Financial instruments for cross border
  co-operation (SMEs and beyond)
• From a static to a dynamic perspective

15
Discussion (3)

• Imperfect instruments in Brussels should be
  vigorously rejected
• or
• used to the fullest in the interest of Dutch
  citizens and firms
• Negotiations with 25 Member States, European
  Parliament, and the European Commission do not
  always lead to optimal solutions from an economic
  point of view.
• Net contribution
• Looking for the right balance

16
Discussion (4)

• Quo vadis?
• Will externalities be increasingly of an
  international nature?
• Economies of scale versus comparative advantage
  and heterogeneity
• What will this imply for division of labour
  between Europe and member states?
• What do European citizens want?

17

• The best should not be the enemy of the good in
  order to reach the long term objective of
  completing the internal market and a European
  area for research and innovation.