Commissioner Janez POTOCNIK: EU Research - building a knowledge-based economy Fourth European Business Summit

March 17, 2006

Brussels, 16 March 2006

Ladies and Gentlemen,

I am happy to speak at this summit of business leaders, one week before the summit of our political leaders.

I am confident that the business world will send a strong and constructive message to the political world.

That is what we, at the European Commission, have done with our progress report on the European partnership for growth and jobs. The key message from that report has been summed up nicely by President Barroso: it is time to move up a gear.

I am also very pleased to be here with Esko Aho, who has inspired us to a great extent in defining our messages and our proposals to next week’s Spring Council. I was personally very encouraged by the genuine support that Esko Aho has had during his participation at the Competitiveness Council last Monday.

As you know, the first priority in the renewed partnership for growth and jobs is to build the knowledge economy - an economy that turns knowledge into growth. This is exactly the theme of this year’s business summit.

In our progress report to the Spring Council we have called for a renewed commitment to the 3% target for research and development.

Why? Why do we attach such great importance to that target, knowing that R&D investments in Europe are stagnating since the commitment was taken by leaders in Barcelona in 2002?

I would like to give you three reasons.

The first reason is that people and politicians have grown even more aware recently of how important the realisation of the knowledge economy is for sustaining our prosperity. The reason for that awareness has in great part to do with globalisation.

The times are gone that we could think of China and India as our low cost/low value competitors. Under a business as usual scenario, China would invest by 2010 as much of its wealth in research as Europe. It is up to us if these economies develop as an opportunity or a threat for us. And that depends to a large extent on how we derive our competitive advantage from research, education and innovation.

The second reason is that Member States have now really incorporated the 3% commitment in their national reform plans.

Our analysis indicates that if all Member States realise all measures they propose, the EU will be investing 2,7% of its GDP in research in 2010. That would be substantially better than the 1,9% in 2004. It would be very wrong to break the momentum that now exists.

The third reason, and not the least important, is that we can and should have a clear and useful understanding of what the 3% really means.

As Mr. Aho’s report says, the rate of investment in R&D, in any case the business R&D investment that we need to boost, is an indicator of the progress we make in reforming our economy.

If we do well what we know and say we should do, we will achieve the 3% R&D investment target. It will be a natural result of our policy actions.

We have a pretty good idea of what these policy actions should be: a coherent set of actions that should make Europe a more attractive place to research and develop, to innovate and to work.

It is obvious that this goes beyond the remit of the research commissioner. As a matter of fact, research and innovation are too important to leave them only in the hands of a research commissioner!

And that is exactly what we are doing: we are mainstreaming knowledge policies in everything we do at EU level.

In doing so, the goal is to improve the framework conditions for research and innovation, gearing up the internal market towards the knowledge economy.

This implies, for example, making the state aid regime more innovation-friendly; enhancing tax incentives for research and innovation; improving cooperation between academia and industry; promoting innovation through public procurement.

More directly in the remit of research policy is the need to reinforce our knowledge base in Europe. This goes to the heart of the European Research Area that we are building.

We need more Europe in research and development so that we can achieve much more productive mixes of competition and cooperation. We pay an unacceptably high price because of the fragmentation and duplication of our efforts – and because of the lack of a strategic capacity to programme research and technology development, for example in comparison with the US.

In that regard, R&D is not unlike the Olympics. If we continue to play in national leagues, we will soon be a collection of provincial players at world level.

The 6th Research Framework Programme is designed to help build the European Research Area.

The 7th Framework Programme should be launched at the end of this year. It has been designed to help create a knowledge economy, building on a European Research Area.

It will keep a good balance between continuity (for example in the choice of thematic priorities) and innovation.

A very novel and exciting programme to boost scientific and technological excellence will be the European Research Council, on which Jens Rostrup-Nielsen as member of the Scientific Council can say a bit more.

Ladies and Gentlemen,

There is one topic that Mr. Aho has singled out in his report on creating an innovative Europe and that I would like to underline today: the need and the potential we have to create lead markets for technology-intensive goods and services.

Getting the framework conditions for research and innovation right and bringing more coherence in research policy in Europe is necessary, but not sufficient.

If we could also propel market demand for new technologies that meet economic opportunities and societal needs, we would go a long way towards reaching the 3% objective.

Only the blind would not see the enormous potential for doing just that by working properly together at a European level and being smart about standardisation and regulations.

Mr. Aho cites the example of eHealth. A proper use of ICT can lead to a new health care delivery model based on preventive and person-centred health systems. It is a clear example of how economic opportunity through technology and service innovation could go hand in hand with sustaining prosperity and quality of life.

We could think of many other examples such as environmental technologies, intelligent systems for road pricing, transport and logistics, biotechnology – to name but a few.

I expect a lot from the technology platforms that we have now operating in these areas and in others as diverse, from nano-electronics and aeronautics to textiles and construction.

These technology platforms, led by industry, develop strategic technology agendas in consultation with academia, consumers, regulators and other relevant stakeholders.

They are meant to coordinate research investments, both public and private, at national and European levels. But it would be very natural for them to also take a proactive approach to standardisation and regulation. Technology platforms are focused on research and technology-driven innovation. That is why I believe that they could identify and drive new approaches to standardisation and regulation that create economic and societal value, thereby creating new markets.

This is not fantasy. It has been done for the GSM. And it lies at the heart of the single market.

My hope is that the European leaders will endorse this approach at their summit next week and ask the Commission, together with business and national governments to work in this direction.

We know that our future lies in the knowledge economy. We know more or less what we can do to help build that knowledge economy.

As Mr. Aho says, we now have to act before it is too late.

I believe I should now leave the floor to Mr. Aho, before it is too late.

Thank you for your attention.

Item source: SPEECH/06/173 Date: 16/03/2006

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