Commission working paper on benchmarking national R&D policies

February 21, 2002

Brussels, 20 February 2002

Commission Staff Working Paper entitled: "Benchmarking National RTD Policies: First Results". Cover note from Mr Bernhard ZEPTER, Deputy Secretary-General of the European Commission to Mr Javier SOLANA, Secretary-General/High Representative, date of receipt 1 February 2002. Brussels, 18 February 2002 (document 6390/02 RECH 38). Full text

Delegations will find attached Commission document SEC(2002) 129. Brussels, 31.1.2002

EXECUTIVE SUMMARY

At the Lisbon European Council in March 2000, the European Union set itself a strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world. Research and Technological Development (RTD) is an essential element for achieving this goal.

According to the first results of the benchmarking exercise of national RTD policies:

­ There is evidence that all Member States have made efforts to increase the level and effectiveness of their RTD investment. However, despite the progress made, both the level of investment and its current growth rate are too low to achieve the Lisbon goals.

­ The shortfall in RTD investment is principally due to the private sector.

­ In terms of human resources, current trends show that there is a risk that they will become inadequate for future needs. As they lie at the root of well-functioning and interacting RTD and innovation systems, through all the stages from basic science to knowledge absorption by enterprises, they deserve prompt attention in all Member States.

The Commission services are convinced of the usefulness of benchmarking national RTD policies in contributing to the implementation of the European Research Area and of the importance to continue this process with an improved methodology.

Many issues remain to be addressed at this stage of the benchmarking exercise, particularly concerning the methodological approach. Some concern the availability, choice and interpretation of indicators. Moreover, good practices still need to be identified and examined in the light of their capacity to be transferred to other countries. Such issues can only be tackled with a reinforced partnership between the Commission and the Member States. This will become even more crucial, when all the states associated to the EU RTD Framework Programme join the exercise....

.... 2.2. A first analysis of RTD investment policies

There is evidence that Member States are trying to face the challenge of an increased and more effective RTD investment, although actions taken recently may not yet have produced all desired effects, and there remains room for further action. In fact, while the level of RTD investments is an issue of main concern, more efficient spending has acquired almost equal importance. In every Member State, policy makers are putting into practice schemes, which will optimise the use of whatever resources are made available for RTD.

Whereas national objectives have been dictated by each country's specific situation, several common trends have been observed:

­ Direct public funding to large companies has been substantially cut, with the notable exception of Ireland and Greece, which are using structural funds to pay for such support. The rationale for this evolution is strongest in countries where the share of private funding of RTD is largest: the resources spent by the private sector on applied RTD dwarf the allocation that the public sector can make available for this purpose; therefore using public funds to subsidise research in the private sector can only have minor effects. This is why policymakers have moved away from straightforward subsidy mechanisms and contemplate ways of funding the private sector RTD only if additionality, leverage or catalytic effects are demonstrated.

­ Direct public support to SMEs continues in all Member States. Because of their limited size, these companies often cannot support all the necessary functions needed to innovate. Many SME-specific programmes aim at addressing these barriers, and favourable access conditions are designed for companies under a certain size in general support programmes.

­ In addition, several governments have developed programmes to create a venture capital market and provide seed capital and start-up funds. They can take very different forms. For example, on seed and venture capital (VC) fund, measures range from direct state funding to companies (France and Denmark), to providing funds to VC funds (United Kingdom and Ireland). The objective is to build a private venture capital market and to phase out public funds, but this has proved difficult in many EU countries.

­ Policies which support the creation of new-technology-based firms (NTBF) have flourished in recent years. Various types of subsidies, soft schemes, transfer programmes, seed capital funds, academic entrepreneurship promotion programmes, changes in IPR rules, etc. are set up with public intervention, in order to create a better environment for new firm creation, notably for those firms founded on the exploitation of research results.

­ Public funding is increasingly targeted at science-enterprise and enterprise- enterprise collaboration. It is made available through, inter alia, competitive programmes or indirect measures, such as loans or tax incentives. There are a number of positive national and European experiences. Successful examples include support to research consortia and creation of centres of excellence, creating critical mass of research activities in specific areas. The so-called "cluster programmes" promote networking within business for innovation purposes. Joint business RTD activities are also receiving support, not least from the European level. Finally, the promotion of enterprise-science relationships is a long standing focus of national policies, and many programmes are designed with such an objective in mind: creation of intermediaries, of bridging and collaborative programmes, etc. This is a fundamental part of an overall policy to improve the connection between Europe's relative strengths in research and the exploitation and commercialisation of discoveries.

­ At the same time, public research institutions are being encouraged (if not required) to direct their research efforts to areas of interest to private firms. All EU Member States have taken part in this characteristic trend of the 1990s. In some of them, it has been expressed through a focus on specific domains such as biotechnology or information and communication technologies.

­ A renewed commitment to fund long-term scientific research has been observed in several cases, including in areas of a basic nature or of high social value but no immediate returns. This is complemented by a reform of the science base structure to support such reorientation. The reform can, for example, incorporate more autonomy of research organisations along with more accountability, more competition in funds allocation and accommodation of the growing demand for linkages with users of research results.

­ Regional involvement becomes an important issue in several countries, allowing for the concentration of investments in dedicated areas as well as an overall increase of private sector involvement. A popular form is science parks. These developed in the 1980s in the northern EU countries. They then spread to southern Europe, with the help of European regional development funding.

These trends reflect a more general change of attitude, dictated by the need for more efficient spending. Public authorities now see their role in providing not just funds but also the "framework conditions", in which all stakeholders from the public and private sectors can fruitfully deploy their potential....

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