In an era where technological advancements shape economies and societies, the European Union reaches a turning point. The European Association of Research and Technology Organisations (EARTO) has recently released a compelling paper outlining a strategic vision for enhancing economic prosperity across the EU.[1] Central to this vision is the recognition of innovation as a vital catalyst for competitiveness. As Europe navigates complex global challenges, from geopolitical tensions to rapid technological changes, the question arises: How can the EU secure its position as a leading force in the global technology landscape while driving productivity and promoting sustainable economic growth? This blog post explores EARTO’s key recommendations, examining how strategic collaboration, targeted investments, and a focus on emerging technologies can empower Europe to thrive in an increasingly competitive world.
The Case for Increased EU R&D Investment
The paper starts off with a key issue, it suggests that the current EU 3% target of GDP investment in R&D is insufficient and makes the case for increased RD&I investment from both the public and private sector. The EU is especially lagging behind other economic powers in investments from the business sector due to a lack of venture capital, a concentration of investments in lower R&D intensity sectors[2], and regulatory barriers[3]. Additionally, European firms often struggle to convert R&D spending into productivity gains[4], further widening the gap with their international counterparts. These structural challenges hinder Europe’s competitiveness in global innovation and are suggested to be overcome by introducing innovation-friendly regulatory frameworks and increasing public spending schemes to promote and attract private investments.
Aligning RD&I Policy with Industrial Strategy
Although an increase in RD&I investments is an important step forward, the paper stresses that it is not sufficient. The EU is increasingly facing distorted competition on crucial markets caused by heavily subsidized foreign goods. While the EU has started investigating the factors contributing to this distortion and introduced measures, such as the Foreign Subsidies Regulation (FSR)[5] to address some of these issues, these are not always in strategic alignment with industrial policy objectives. EARTO recommends that any EU RD&I policy should take a similar approach to the US Inflation Reduction Act (IRA), creating incentives for companies to locate their investments in the EU and thus translate the investment to industrial deployment within the EU.
Enhancing Research Adoption in the EU
Their third recommendation refers to the lack of uptake in scientific research within the EU. Scientific research is the backbone of breakthrough innovation and despite accounting for 20% of the world’s scientific output, “adoption” of these results remains a challenge in the EU. To overcome the so-called “valley of death” – representing the gap between the development and adoption of new solutions – the paper suggests that collaborative applied research actions should be strengthened, and trusted networks should be established. EARTO itself, and Research and Technology Organizations (RTOs) in general aim to bridge this gap between basic scientific research and marketable solutions. The paper advocates for the further utilization of such RTOs’ capabilities, and for further support to develop and expand organizational capabilities.
Funding Innovation for Industry Uptake
Possibly one of the most pressing challenges is the creation of a pan-EU technology infrastructures to enable the testing, development, and maturation of innovative solutions, and thus aid industry uptake. These infrastructures generally require an amount of capital that even large private actors are not able to fund themselves. RTOs play a vital role in housing these complex technology infrastructures and are thus recommended to further their efforts in creating and maintaining sustainable facilities. Efforts are already being made as part of the European Research Area (ERA) Action Plan[6], but further funding is called for by the paper under the next EU Multiannual Financial Framework (MFF)[7].
Enhancing IP Protection and SME Access to Procurement
Regarding changes in the legal framework encapsulating innovation, the paper gives two recommendations. First, it stresses the importance of adequate protection of intellectual property rights. The Bayh Dole Act and Stevenson-Wydler Act are used as examples of frameworks, which support the transfer of knowledge from academia to industry, while preventing exploitation of researchers. The paper argues that by boosting its IP policy, the EU can level the playing field versus its global competitors. Additionally, EARTO argues that the process of pre-commercial procurement (PCP) – considered to be a highly efficient tool for start-up development – should be made more accessible to SMEs. One of the core barriers startups face are the strict conditions they must meet for PCP not to entail state aid, or preferential treatment under the WTO government procurement agreement. Again, the paper proposes to follow the successful US model, in which R&I procurement from SMEs is no longer covered by the WTO GPA.
Strengthening Skills Development
All previous recommendations would be unsustainable without the development of a highly skilled and adaptable workforce; therefore, the paper assigns this crucial responsibility to RTOs. The current EU Skills Agenda[8] is highly focused on academia and industry and overlooks professional training on novel technologies. EARTO recommends that such professional training should be integrated as part of Horizon Europe’s collaborative projects and further consistency should be established in European labor market directives. They suggest that the EU should also further recognize the importance of RTOs as enablers of skills development.
Conclusion
EARTO’s recommendations underline the urgent need for the EU to adopt a complex approach to innovation that encompasses increased investment, strategic policy alignment, collaborative research efforts, infrastructure development, legal reform, and workforce training. By implementing these strategies, Europe can enhance its competitiveness on the global stage and secure its position as a leader in technological advancement. The path forward requires commitment from all stakeholders to adopt an innovation ecosystem that not only drives economic growth but also addresses societal challenges effectively.
[1] https://www.earto.eu/wp-content/uploads/EARTO-Recommendations-No-EU-Tech-No-EU-Competitiveness-Final.pdf
[2] https://research-and-innovation.ec.europa.eu/statistics/performance-indicators/european-innovation-scoreboard_en
[3] https://pitchbook.com/news/reports/2022-annual-european-venture-report
[4] https://www.oecd.org/en/data/datasets/research-and-development-statistics.html
[5] https://competition-policy.ec.europa.eu/foreign-subsidies-regulation_en
[6] https://commission.europa.eu/system/files/2021-11/ec_rtd_era-policy-agenda-2021.pdf
[7] https://www.europarl.europa.eu/factsheets/en/sheet/29/multiannual-financial-framework
[8] https://ec.europa.eu/social/main.jsp?catId=1223&langId=en
