eu competitiveness (2). where does the eu stand now? analysis of outcomes of lisbon objectives : the...
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EU Competitiveness(2)
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Where does the EU stand now?
• Analysis of outcomes of Lisbon objectives : the Sapir Report
• Mid-Term Review of Lisbon Agenda:Facing the Challenge (Report from the High Level Group chaired by Wim Kok)
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The Sapir report: findings
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GDP and Productivity in EU (US=100)
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Source: European Commission, New Cronos database.
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Copyright
• © Sapir, 2003
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2005
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The Lisbon Agenda ‘Revived’
• Focus on two main areas:– Productivity– Employment
Make objectives of social cohesion and environmental protection achievable
- The latter reinforce growth and employment
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The Renewed Lisbon Action Plan
• Aims:– EU as a more attractive place
to invest and work– Promoting knowledge and
innovation for growth– Creating more and better jobs
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EU as a more attractive place to invest and work
• Extend and deepen the internal market
• Improve European and national regulation
• Ensuring open and competitive markets inside and outside Europe
• Expand and improve European Infrastructure
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Knowledge and innovation for growth
• Increase and improve investment in Research and Development
• Facilitate innovation, the uptake of ICT and the sustainable use of resources
• Contribute to a strong European industrial base
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Creating more and better jobs
• Attract more people into employment and modernise social protection systems
• Improve the adaptability of workers and enterprises and the flexibility of labour markets
• Investing more in human capital through better education and skills
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The Competitiveness and Innovation Framework Programme (CIFP)
•Brings together support programmes towards:–Higher EU productivity– Innovation capacity–Sustainable growth–Environmental concerns
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The crucial areas
• ICT Policy support programme (eEurope)
• Entrepreneurship and Innovation
(especially SME geared)
• The Intelligent Energy – Europe Programme
(energy/environment and sustainable
development)
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eBusiness Watch (c)
Geographic Differences in e-Business
100
89
88
77
75
68
56
0 20 40 60 80 100
FI
DE
UK
IT
FR
CZ
HU
(for selected countries, based on 10 sectors)
Based on data in % of firms (thus emphasizing small companies).
The index aggregates 16 component indicators
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eBusiness Watch (c)
44
57
61
38
38
52
55
-10 0 10 20 30 40 50 60
Revenue growth
Process efficiency
Work organisation
Procurement costs
Product quality
Customer service
Productivity
Negative Positive
Perceived ICT impact on the business
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eBusiness Watch (c)
33
40
24
20
37
25
34
30
29
18
22
27
25
24
0 10 20 30 40 50 60 70
Management
Accounting
R&D
Production
Marketing
Logistics
Customer support
Expect high impact Expect medium impact
Read: "Firms representing …% of employment in the sectors surveyed expect that ICT will have a high / medium impact on management / accounting / … in the future."
Base: EU-10, 10 sectors. N = 7237.
Where ICT will have an impact in the future?
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EU R&TD Policy
(supporting the Lisbon Agenda)
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Contents
• Industrial Policy and Components• Science and Technology Policy
Rationale• Research and Technological
Development Policy in the EU• Innovation Policy• Enterprise Policy
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EU Industrial Policy
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Industrial Policy
• M. Bangemann (1994): – Industrial Policy ‘should promote adaptation to
industrial change in an open and competitive market’
• Instruments:– Subsidies– Tax breaks– Protection from foreign competition
• Specific versus ‘general’ industrial policy towards the competitive function of the market
• Industrial agglomeration and support for R&D
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Industrial PolicyThe analysis of world trends and of Europe’s position highlights the need to:
– adapt its industrial policy– spread the enterprise culture – encourage risk-taking– promote the emergence of innovative
companies able and willing to conquer the world market.
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New forms of competition
require:
• the mastery of technologies, • access to global markets, • speed of action, • innovation, and • intangible investment.
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EU firms implications
The ambition of European firms should be:
• to improve their competitiveness on all the World's markets, and
• to be present in the leading industrial and service sectors.
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Resulting priorities
• rapid adaptation, • active cooperation, and• a sharing of responsibility between
the EU's different economic, social and political players.
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Economic rationale for R&D Policy
•Arrow (1962):–Problems inducing market failure for invention processes
•Uncertainty•Indivisibility•Inappropriability
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Science and Technology Policy• The USA, Japan and the EU have realised that
an effective research and technological development (R&TD) policy is crucial in order to build up firms’ competitive potential.
• Compared with its leading rivals Europe is at a disadvantage on three fronts:– Lower resources and resource growth– A fragmented, uncoordinated policy– Less efficient take-up of research results
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An EU R&TD Policy
• 1974– EU Council decides on a common policy in
the field of science and technology
• Policy scope: – Coordinate the relevant policies of member
states– Implement research programmes and
projects of common interest
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Policy Objectives
• 1977:– Securing long term supply of
resources– Promoting internationally competitive
economic development– Improving living and working
conditions– Promotion of environment and nature
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Focus and instruments
• EC support criteria:– Cost too high for single nation– EC program good chance to compete
internationally– Cases with real potential (e.g. new energy
sources)– Need for standardization of information systems
• Since 1984– Main policy instrument: The Framework Programme
(since January 2007: FP7)
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The European Research Area
• 2000 – priorities:
– Networks and centres of excellence– Strengthening SME technologies– Improving research infrastructure
(electronic networking)– Human resource development– Science and citizens
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Research and Innovation
• Research policy focus:– Developing new knowledge– Application of new knowledge– Framework conditions for research
• Innovation policy focus:– Transforming knowledge into
economic value and commercial success
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European Innovation Policy
• Lisbon and knowledge and innovation for growth
• 2002 Barcelona European Council goal:– to increase EU research investment
from 1.9% of GDP to 3% of GDP by 2010
– Increased share of private funding for R&D, from 55% to 2/3
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Requirements for Member States
• Reform and strengthen public research and innovation systems
• Help develop supportive financial markets
• Create attractive education, training and career conditions
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Commission Action focus
• 2005– Step up dialogue with stakeholders to
identify regulatory barriers to research and innovation
– Adopt a more research and innovation-friendly State aid regime
– Support actions on improving the IPR system, and its effective use
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Commission Action focus...
– Support, monitor and further develop actions under the research human resources strategy
– Promote the use of public procurement to stimulate research and innovation
– Provide guidance to promote an optimal use of R&D tax incentives
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EU Patent System
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Patents in Europe
For an enterprise operating on an open market, intellectual property like:
• patents, European Patent Office• trade marks and • licences
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Patents in Europe
are tools for:
• protecting and capitalising on the results of its research and creativity
• negotiating favourable terms for technological cooperation and,
• possibly, even dominating the market.
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Inefficiencies• The imbalance between the US and
Europe in terms of the number of patents and volume of royalties is growing
• particularly in research-intensive sectors, notably– information technology, – pharmaceuticals, – biotechnology.
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Inefficiencies
• American SMEs and universities benefit from cheap and swift patent facilities.
• In Europe, the high cost and complexity of the procedures for obtaining effective protection throughout the single market scare many SMEs and universities away from taking this course.
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View of EU’s progress• ‘Science, Technology and Innovation” shows that
R&D intensity (R&D expenditure as % of GDP) in Europe has stagnated since the mid-nineties, while major competitors such as Japan, China or South Korea have been able to increase substantially their R&D effort, shaping a world where knowledge is more evenly distributed than ever before. Moreover, the R&D investment deficit against the US has remained constant over recent years. In particular, the low level of business R&D in the EU remains worrying.’
Source: The European Commission (Key Figures), 2007
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Reasons of EU lower business intensity of R&TD
• EU manufacturing and most services more research-intensive
• Business R&D intensity (business R&D expenditure as % of GDP): 1.13 % in 1995 vs. 1.19 % in 2003.
Issues:– Evolution towards service economy growing
weight for low R&D intensity services sectors.– R&D intensity predominantly determined by high-
tech and medium-high-tech industries;– US benchmark about 20 % higher (in EU it would
imply a business research intensity of 1.27 % of GDP instead of current 1.17 %)
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R&D intensity in comparative terms
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Bibliography
• Sapir et al, 2003. An Agenda for a Growing Europe
• Guellec, D. and B. van Pottelsberghe de la Potterie, 2007. The Economics of the European Patent System. Oxford: OUP.
• Competitiveness and Innovation Framework Programme
• Key figures on Science, Technology and Innovation