EU risks brain drain if it fails to adopt new approach on innovation, Finnish State Secretary for Trade and Industry Paasivirta tells CoR Bureau

July 11, 2006

Brussels, 10 July 2006

Europe risks a “brain drain” to Asia and America unless it makes innovation a priority and invests more in education, research and business knowledge, Finland’s State Secretary for Trade and Industry Anssi PAASIVIRTA has warned.

Addressing the Committee of the Regions’ (CoR) Extraordinary Bureau meeting in Turku, South West Finland, chaired by CoR President Michel DELEBARRE, Mr Paasivirta said his country planned to encourage new approaches to innovation during its six-month Presidency of the EU.

It was not just a question of more funding, he said, but fresh thinking. “Finland achieves the EU objective of 3% GDP spending on R&D and we know this is not enough. We need to think more about how we utilise innovation and how we can market innovation.”

He called for more emphasis on “synergetic cooperation between universities, companies and the public sector” and for the private sector to be “intensively integrated” into EU cohesion programmes.

Mr Paasivirta also reiterated the Presidency’s pledge to prioritise EU-Russia relations and the ‘Northern Dimension’: he recalled that it was the CoR which first gave prominence to the latter concept a decade ago.

He said Finland is considering opening a new innovation centre in the Russian city of St Petersburg following the success of a similar project in Shanghai, China. Another Finnish innovation centre is already under construction in California’s Silicon Valley.

The centre-piece of the 7 July Bureau meeting was a roundtable debate on ‘globalisation, decentralisation and competitiveness’, in which local speakers in particular explored potential new approaches to innovation.

Juha KASKINEN, Director of the Finland Futures Research Center, presented findings from the recent European Commission-funded ‘Regions of Knowledge Pilot Action Programme’, involving South West Finland, Wallonia (Belgium) and Düsseldorf (Germany). He said it had shown that innovation systems needed to be “self-renewing” with in-built “creative tension to make a buzz”.

“We don’t need more networks but different and better ones,” he commented.

Outi SLOTBOOM, responsible for competitiveness and economic reform at the European Commission’s Enterprise Directorate-General, stressed that local and regional authorities had a crucial coordinating role to play in ensuring that EU Structural Funds and national strategies work coherently to promote growth and jobs.

“The process of globalisation is not something we are going to stop or something we should be trying to stop. Globalisation holds large positives for Europe,” she remarked.

For CoR member Pauliina HAIJANEN, the experience of Turku and its surrounding region had shown that small cities and provinces could be competitive on the global market. Important factors included the availability of cheaper business premises, reasonable labour costs, high environmental and service standards, as well as trustworthy public administrations.

Mobile phone manufacturer Nokia is undoubtedly the region’s biggest success story. Director Mikko LEINO revealed that 800 million people across the globe are currently using Nokia devices and that the company is manufacturing nine mobile phones a second at its plants.

He said that the firm, which employs 60% of its 60,000 workforce in Europe (23,000 of them in Finland), considered labour flexibility and competence as key when deciding where to locate its assembly plants. Other cornerstones in location decisions included an area’s overall attractiveness, including willingness to invest, and, crucially, proximity to markets.

Another local success story in South West Finland is Valmet Automotive, which manufactures Boxster and Cayman sports cars for Porsche. Managing Director Tapio KUISMA said the firm, launched with the help of state funding, encouraged an innovative culture and flexibility among its staff.

In his view, the biggest competitive threat in future would not come from Asia or America but from inside the EU, from both new Member States and from “old industry” with defensive, patriotic attitudes and strong labour unions.

Paavo OKKO, Vice-Chancellor of the Turku School of Economics and Business Administration, who moderated the roundtable, predicted that the EU’s share of the world economy would continue to shrink and that improving productivity was the only way to protect its high income levels and welfare standards.

Donald STORRIE of the European Monitoring Centre on Change, part of the Dublin-based European Foundation of Living and Working Conditions, said what was new in the globalisation era was not the higher rate of job destruction but rather the lower rate of job creation. The solution was a “permanent state of innovation at the regional level”.

President DELEBARRE concluded that there could be “no going back to the good old days ... we have to face change and citizens have to be told to prepare for several different jobs over their lifetime”.

Citing the case of Valmet, he argued that public funding could be “indispensable or highly necessary” as a “pump-primer” for business. The countries which would be best prepared for the constant evolution of globalisation would be those with developed, decentralised regional organisations, he added.

Rome Plenary mooted

Among other issues discussed by the Bureau was a proposal by political group leaders to hold one of next year’s CoR plenary sessions in the Italian capital to mark the 50th anniversary of the Treaty of Rome. Eberhard SINNER, Minister of State and head of the Bavarian State Chancellery in Germany, also suggested that the Bavarian city of Würzburg host an extraordinary Bureau meeting during the German Presidency in the first half of 2007. Final decisions on both proposals are likely to be made in October.

Delebarre to meet Barroso

President DELEBARRE announced that he would hold his first official meeting with European Commission President Jose Manuel BARROSO on 18 July. Issues under discussion are likely to include the OPEN DAYS European Week of Regions and Cities (which M. Delebarre will be launching with Commissioner Danuta HÜBNER on the same day), implementation of the updated CoR cooperation agreement with the Commission, including a new section on communication policy, and the Committee’s Lisbon Network aimed at giving regions and cities more say over the jobs and growth strategy.

Tribute to 7/7 victims

The Bureau opened on a sombre note with a silent tribute to the victims of the terror attacks on London in July 2005, which left 52 dead and more than 700 injured. President Delebarre also announced he had sent a message of condolence to the mayor of Valencia, following the underground train crash in the Spanish city on 3 July, which claimed more than 40 lives.

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Item source: COR/06/95 Date: 10/07/2006

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