1. The EU Innovation Policy
Ambitions and Realities
Frans van Vught
VentureLab Twente Venture Class
Enschede, 16 February 2012

2. Overview
 Globalisation
 Innovation and Innovation Policies
 The EU ‘Lisbon Agenda’ (2010)
 Ambitions and Realities
 The ‘Europe 2020 Strategy’ (2020)
 Issues and Actions

3. Globalisation
• Economic: process of increasing economic openness,
growing economic interdepence and
deepening economic integration in the
world economy
• Political: process of institutionalisation of
international consultation and decision-
making, and of relative reduction of the
power of national governments
• Socio-cultural: process of global cultural exchange and
integration and of potential weakening of
traditional social norms and institutions

4. Globalisation
Effect of:
 Decreasing costs of communication and transportation
 Leveling barriers for cross-border activities

5. Globalisation and ‘Geo-Regionalisation’
1990 1995 2000 2005 2008 2009 2010
Total % Total % Total % Total % Total % Total % Total %
internal internal internal internal internal internal internal
ECOWAS 23 7 22 9 36 8 72 8 107 9 72 10 85 11
SADC 35 3 46 11 52 9 102 8 191 10 137 9 170 11
MERCOSUR 46 9 70 20 85 21 164 13 278 15 217 15 281 16
NAFTA 562 40 854 46 1.224 55 1.479 56 2.046 50 1.601 48 1961 49
ASEAN 145 19 321 25 427 23 654 25 985 29 811 25 1051 25
ASEAN+3 560 13 1.048 13 1.333 13 2.294 14 3.640 14 2.955 14 3630 16
EU27 1.547 67 2.142 66 2.380 67 4.030 67 5.909 75 4.566 67 5134 66
Source: UNCTAD, Handbook of Statistics, 2011

6. Globalisation and innovation
 Globalisation triggers national innovation policies
 National innovation policies focus increasingly on
stimulating the creation, transfer and application of
knowledge
 National innovation policies are influenced by the “National
Innovation System” (NIS) perspective

7. The perspective of National Innovation Systems
(NIS)
 Emerged during 1980s as a new approach to the economics of
innovation
 Emphasizes interactions between scientific knowledge and new
products and services
 Takes an explicit policy orientation
 Identifies academic institutions as playing a critical role
 Distinguishes two crucial outputs of these institutions:
 research outputs (publications, patents)
 highly skilled human capital
 Focuses on linkages between actors in innovation processes:
 hard linkages (science parks, incubators)
 soft linkages (internships, conferences)
 Addresses institutional framework conditions of innovation processes
(regulations, incentives)

8.  International comparative study of national innovation
policies
 Australia, Canada, Europe (EU and several Member
States), Japan, US (Federal and several States)
 David D. Dill & Frans A. van Vught (eds). “National
Innovation and the Academic Research Enterprise:
Public Policy in Global Perspective” , Baltimore, Johns
Hopkins University Press, 2010

9. National Innovation Policy Strategies
 Clearly influenced by the NIS perspective
 Relate policy instruments to policy objectives regarding innovation
 Consist of some combination of the basic notions of market
coordination and central planning
 Two large categories:
 prioritisation strategies
 competition strategies

10. Prioritization strategies
 Reflects notions of central planning
 Characteristics like: foresight analyses, priority
allocation, concentration of resources, quality
assessment of outputs
 Examples:
 Australia’s research priority setting
 Canada’s centers of excellence
 Finland’s TEKES agency
 UK’s foresight assessments and RAEs
 Netherlands’ innovation priority areas

11. Competition Strategies
 Reflects notion of market coordination
 Characteristics like: competitive allocation of resources,
encouraging entrepreneurial academic behaviour,
deregulation, diversifying funding base
 Examples:
 US federal science policy
 Japan’s competitive grants scheme for doctoral
training
 Canada’s competitive research matching funding
 Germany’s excellence policy
 UK’s competitive ‘third sector’ funding

12. EU Innovation Strategy
 Example of prioritisation strategy
 But with elements of competition strategy
 20 Years of EU innovation policy:
 The ‘Lisbon Agenda’ (2000 – 2010): ‘to become the
most competitive knowledge economy in the world’
 The ‘Europe 2020 Strategy’ (2010 – 2020): ‘to build
the European Innovation Union’

13. The Lisbon Agenda on Innovation
Cohesion Policy Funds:
• European Regional Development Fund
• European Social Fund
Research • European Cohesion Fund
Policy
Structural
Funds
ERC
CPF
Higher Knowl.
Education Transfer
Policy policy
EIT

14. ‘Lisbon Agenda’: Research policy
 Fully developed since 1980’s
 Framework Programmes: medium term planning instrument
 But only 5% of the total EU research investments
 European Research Area (ERA):
 Launched in 2000
 Barcelona target: 3% GDP
 FP7: Technology Platforms; Joint Technology Initiatives;
European Research Council; joint programming.
 Six ERA Features:
 Adequate flow of mobile researchers
 World-class research infrastructures
 Excellent research institutions
 Effective knowledge-sharing
 Well-coordinated research programmes
 Opening up to the world

15. ‘Lisbon Agenda’: Higher Education policy
 Taboo until 2000
 First programmes: Erasmus (mobility), Socrates I&II (cooperation)
 Alignment with Bologna Process (1999)
 Lifelong Learning programme (2007-2013)
 Hampton court target: 2% GDP
 Major Bottlenecks:
 Tendency to uniformity and egalitarianism
 Too much emphasis on traditional monodisciplinarity
 Too little world-class excellence
 Too much emphasis on traditional learning and learners
 Too little transparency
 Too much fragmentation
 Too insulated from industry
 Over-regulated; state dependent; underfunded
 Modernisation agenda (since 2005)
 Mobility
 Governance
 (Regional) innovation
 Internationalisation (Erasmus Mundus)
 Higher education – Business fora
 European Institute of Technology (EIT) and Knowledge & Innovation
Communities (KICS)

16. ‘Lisbon Agenda’: Knowledge Exchange policy
 Only addressed since late 1990’s
 Focus on decreasing barriers:
 cultural differences between academic and business communities
 legal barriers
 fragmented markets
 lack of incentives
 Facilitate creation and marketing of new products and services (the
‘lead markets’)
 Competitiveness and Innovation Programme (CIP, 2007-2013)
 Several measures:
 Workforce of skilled knowledge transfer staff
 Entrepreneurial mindset in universities
 Staff exchanges between research organisations and industry
 Voluntary guidelines to improve intellectual property
management
 Innovation Relay Centers, Network of Innovating Regions. IPR
helpdesk, on –line information SMEs

17. The Lisbon Agenda: ambitions and realities
R&D expenditure as % GDP (2008)
R&D Business Public
intensity expenditure expenditure
EU 2.01 1.27 0.74
US 2.77 2.12 0.65
Japan 3.44 2.75 0.69
S.Korea 3.21 2.59 0.78
China 1.54 1.12 0.41
Source: Innovation Union Competitiveness report, 2011, European Commission

18. The Lisbon Agenda: ambitions and realities
Expenditure on higher education as % GDP (2007)
Total Public Private
expenditure expenditure expenditure
EU 1.2 1.12 0.08
US 2.6 1.25 1.35
Japan 1.3 0.63 0.67
Source: Innovation Union Competitiveness report, 2011, European Commission

19. The Lisbon Agenda: ambitions and realities
% researchers in business & industry (2008)
EU 54
US 80
Japan 73
S. Korea 69
Source: Innovation Union Competitiveness report, 2011, European Commission

20. The Lisbon Agenda: ambitions and realities
World shares of scientific peer-reviewed publications
2000 2009
EU 37.7 33.4
US 31.8 25.9
China 6.4 18.5
Japan 9.4 6.3
S. Korea 1.7 2.8
Brasil 1.4 2.3
Russia 3.1 2.0
Israel 1.1 0.9
Source: Innovation Union Competitivess report, 2011, European Commission

21. The Lisbon Agenda: ambitions and realities
% of scientific publications within 10% most cited
scientific publications worldwide as % of total
number of scientific publications of the country
(2001-2007)
US 15.3
EU 11.6
S. Korea 8.5
Japan 8.3
China 7.0
Source: Innovation Union Competitivess report, 2011, European Commission

22. Shanghai ARWU university ranking, 2011
Top 100 Top 500
US 53 EU 190
EU 28 US 151
Germany 39
United Kingdom 10
United Kingdom 37
Germany 6
China 35
Japan 5
Japan 23
Australia 4 Canada 22
Switzerland 4 Italy 22
France 3 France 21
Sweden 3 Australia 19
Netherlands 13
Denmark 2
S. Korea 11
Netherlands 2
Spain 11
Belgium 1
Sweden 11
Finland 1 Austria 7
Israel 1 Belgium 7
Norway 1 Brasil 7
Russia 1 Israel 7
Switzerland 7
Finland 5
New Zealand 5

23. The Lisbon Agenda: ambitions and realities
Number of public-private scientific co-publications per
million population (2008)
US 70.2
Japan 56.3
EU 36.2
China 1.2
Source: Innovation Union Competitiveness report, 2011, European Commission

24. The Lisbon Agenda: ambitions and realities
Number of patent applications per billion GDP (2007)
(as defined under Patent Cooperation Treaty)
Japan 8.3
S. Korea 7.0
US 4.3
EU 4.0
China 1.1
Source: Innovation Union Competitiveness report, 2011, European Commission

25. The Lisbon Agenda: ambitions and realities
Number of patent applications with at least one foreign co-
inventor as % of total number of patent applications (2001-2008)
China 11.7
US 11.2
EU 10.7
S. Korea 4.2
Japan 2.7
Source: Innovation Union Competitiveness report, 2011, European Commission

26. EU’s innovation performance in a
globalizing world, 2006-2010
Composite score on 12 innovation indicators, EU=100
2006 2007 2008 2009 2010
US 146 145 146 148 149
Japan 132 136 140 139 140
EU 100 100 100 100 100
Russia 69 65 63 63 63
India 48 49 48 48 47
China 39 40 41 43 45
Brasil 39 40 40 42 42
Source: Innovation Union Scoreboard, 2010, European Commission

27. EU’s innovation performance compared to six other
countries, 2006-2010, EU=0
Russi
Innovation performance indicator US Japan India China Brasil
a
New doctorate graduates per 1000 population aged 25-37 + - + n.a. n.a. --
% population aged 24-64 having completed tertiary education ++ ++ ++ -- -- --
International scientific co-publications per million people + - n.a. n.a. -- n.a.
Scientific publications among the top 10% most cited publications
+ - -- - - --
as % of total publications of the country
Public R&D expenditures as % GDP - - - -- - -
Business R&D expenditures as % GDP ++ ++ - -- - --
Public-private co-publications per million population ++ ++ -- -- -- --
PCT patent applications per billion GDP (in PPS €) + ++ -- -- -- --
PCT patent applications in societal challenges per billion GDP (in
+ + -- -- -- --
PPS €)
Medium and high-tech products exports as % total product
+ + + + + +
exports
Knowledge-intensive services exports as % total service exports - - - ++ - +
License and patent revenues from abroad as % GDP ++ ++ -- -- -- --
Source: Innovation Union Scoreboard, 2010, European Commission

28. EU’s innovation performance compared to six countries

29. EU’s weaknesses in innovation
 Severe (private) underinvestment in research and
education
 Relatively low higher education attainment and
participation levels
 Limited scientific and technological excellence
 Weak knowledge exchange between academia and
industry
 Poor framework conditions in terms of access to
financing costs of patenting, and enhancement of
entrepreneurship

30. Diversity of innovation performance among
EU-member states
Innovation leaders Sweden, Denmark, Finland, Germany
UK, Belgium, Austria, Netherlands, Ireland,
Innovation followers Luxemburg, France, Cyprus, Slovenia,
Estonia
Portugal, Italy, Czech Rep., Spain, Greece,
Moderate innovators
Malta, Hungary, Poland, Slovakia
Modest innovators Romania, Lithuania, Bulgaria, Latvia
• 11 countries above EU average
• Switzerland would be overall innovation leader

31. The Europe 2020 Strategy on innovation
 Close EU’s innovation gap
 Integrate research and innovation, and
focus on societal challenges
 Create more knowledge-intensive products
and services

32. The Europe 2020 Strategy on innovation
Issues and Actions in Research:
 Costly fragmentation and overlap between national research
systems
 Need for a unified European Research Area where actors move
and operate easily
 Simplification of complex funding landscape
 Urgent need for world-class infrastructures
 EC proposal for to remove obstacles to mobility and cross-
border cooperation in research by 2014
 EU and Member States to complete 60% of priority European
research infrastructures by 2015
 International agreements on world-level infrastructures
 Streamlining and simplification of research programmes.

33. The Europe 2020 Strategy on innovation
Issues and Actions in Higher Education:
• Universities to diversify and specialise
• Need to create limited number of world-class European universities
• Attract international top talent
• EU needs at least one million more researchers
• More people to enroll in higher education
• Educational training should better match business needs
• Percentage 30 – 34 year old with tertiary education to 40% in
2020
• National strategies to boost training and career of researchers
• Mobility to be diversified
• New multidimensional ranking instrument
• Modernisation of governance and management in universities
• More entrepreneurial universities
• University-Business alliances

34. The Europe 2020 Strategy on innovation
Issues and Actions in Knowledge Transfer:
• Need to support whole innovation chain, from research to
market
• Address lack of finance as major constraint
• Few European SMEs grow into global companies
• Much IPR remains dormant
• EU patent system is costly
• Public procurement hardly used for innovation
• Rapid agreement on EU patent needed
• New generation of financial instruments with EIB
• Regime of cross border venture capital funds
• Strategic innovation agenda of EIT
• Member States to use procurement budgets for innovation

35. The Europe 2020 Strategy on innovation
Research and Innovation Policy Framework Cohesion Framework
CPF
Research Structural
policy Funds
ERC
Knowledge
Transfer
policy
EIT
Higher
Education
policy

36. EU 2020 Strategy on Innovation
 Two complimentary general policy frameworks
 Synergies between Innovation policies and
Cohesion policies
 Further integration of research and innovation
policies
 Combining global and regional innovation ambitions
(global-local connectedness)
 Multi-excellence approach
 Combining and integrating policies of EU and
Member States

37. The Europe of Knowledge
• Context of global competition: addressing the gap
• Prioritization strategy: societal challenges
• Policy integration: synergies & better framework conditions
• Multi-level cooperation: EU, member states, regions
• Multi-actor investments: governments, industry, households,
individuals
• Performance assessment: multiple excellences
• And a major political challenge!