Janez POTOCNIK, European Commissioner for Science and Research, How Europe can benefit from Increased Globalisation of R&D -- Royal Technology Forum

October 28, 2005

Stockholm, October 2005

Ministers, ladies and gentlemen,

First allow me to say how pleased I am to have been invited by the Academy to give this speech. I am equally pleased to be able to listen to some of the other speeches here today.

I also look forward very much to hearing Minister Pagrotsky, representing one of the most successful countries in Europe when it comes to R&D investments. I am convinced there is a strong correlation between Sweden’s strong national research and the high participation of Swedish teams in the Framework Programme.

How can Europe benefit from increased global R&D?

Let me be clear, globalisation is not an option today, but a reality. This means that Europe has to be a strong partner and player on the international scene. Many view globalisation as a threat but I’m sure that you, like me, prefer to see it as an opportunity.

I would like to give you some examples of how we, the EU, are trying to become a stronger global partner, as well as examples of some successful cooperation of mutual benefit. Secondly, I will turn to the policy impact of globalisation on EU R&D and thirdly I would like to touch upon our main instrument at EU level – the Research Framework Programme.

Europe as a global partner

Europe has contributed substantially in science over the centuries, and not just through the large-science facilities such as CERN or the European Space Agency. Europe produces a third of the world's scientific knowledge. It is at the forefront in areas such as medical research and chemistry. It has had notable technological successes in sectors such as aeronautics and telecommunications. The EU Framework Programmes have been instrumental in achieving some major successes, such as sequencing a genome, developing the GSM standard for mobile telephony and much more.

However, the overall picture is worrying and more must be done to maintain, strengthen and utilise our science and technology potential. In fact, the US and Japan are still far ahead of the EU average and the vast majority of Member States when it comes to investing in research. The increase in corporate R&D investment for 2004-2005 was 2% in Europe compared to 7% in US and Asia. The figures speak for themselves.

In the EU, we invest less in R&D as a percentage of our GNP so: we employ fewer researchers in proportion to the labour force; we file fewer patent applications; we raise less venture capital; we win fewer Nobel prizes.

To help counter this trend, the Commission adopted two weeks ago an Action Plan to boost research and innovation. This Action Plan launches 19 ambitious initiatives to promote innovation and research, such as redeployment of state aid, improved efficiency of intellectual property protection, mobilisation of additional funds for research, creation of innovation poles, and improving university-industry partnerships. For the first time, we integrate the EU’s research and innovation policies. In particular, we focus on improving the conditions for private sector investment in R&D and innovation.

We have presented this Action Plan as it is clear from almost any measure of current scientific or technological output that the European Union is lagging behind. There are some encouraging exceptions; Europe has the largest share of scientific publications; the EU produces more S&E graduates than the US and Japan and, at least this year, it is good news that two of the eight Nobel Prize winners in Medicine, Physics and Chemistry (Theodor W. Hänsch in Physics and Yves Chauvin in Chemistry ) come from Europe.

I should note here that the Nordic countries are not just an exception within the European Research Area, but often also globally, with Sweden and Finland in the lead when it comes to R&D investment. Sweden and Finland are also the only countries keeping up with Japan when it comes to the number of patents.

But even for a country like Sweden there is no room for complacency, and continued efforts must be made to remain at the forefront.

The rest of the EU can and must learn from the good examples in the Nordic Countries, even if it is not necessarily easy or even possible to copy a “complete” model because circumstances are so different and may depend on structural or cultural factors. In this respect the progress we are making through the Open Method of Coordination at EU level is a significant success. This open and voluntary coordination of research policies facilitate benchmarking and allow Member States to follow best practice.

Now, the most important question to be asked is why should Europe do more to increase investment in research and innovation?

Because most of the EU economies are no longer in a “catch-up phase”. They have to create growth, and economic studies show clearly that investing in research and innovation has a positive effect on economic growth. One recent study found that for each extra percent in public R&D, there is an extra 0.17% growth in productivity. An increase in EU R&D spending, accompanied by increases in spending at national level, could therefore have considerable impact on productivity.

So, one side of the coin is that we need to boost our own, national and European research capacity to stand up against the global competition. The other side of the coin is called cooperation. In a globalised world we face the same threats and challenges, be it scarce energy resources, health risks, consequences or climate change. It is only by working together that we stand a chance of meeting these challenges.

To demonstrate, let me give you a few examples of important international cooperation where the EU plays a leading role.

A highly significant example of successful international cooperation is the recent agreement of the six ITER Parties on the site to construct the ITER fusion energy reactor. In June this year we made history in Moscow, after long and difficult negotiations. The joint implementation of ITER is a clear manifestation of strength and an outstanding example for future international cooperation in Science and Technology. It demonstrates the recognition that working together is the best way to find responses to the global challenges that are faced by us all.

Another indeed very topical area of concern where the EU has and will continue to contribute is in research into pandemic influenza. Important projects involving research teams from across Europe and also from third countries have been funded by the Framework Programme to find ways of diagnosing, controlling, monitoring and preventing avian influenza.

My final example is the European and Developing countries Clinical Trials Partnership (EDCTP). It is a unique pilot initiative in the fight against the three main diseases challenging, in particular, the African continent: HIV/AIDS, tuberculosis and malaria. With a total budget of up to 600 million euros it is the largest programme on clinical trials ever targeted on Africa. It creates an unprecedented and a genuine North/South partnership on a long-term basis and it concentrates on the real needs of developing countries, which are themselves setting the priorities and establishing a strategy in close partnership with the European countries. Finally, it brings about a closer coordination between the national research programmes in Europe as well as between the national and Community programmes, thus allowing for a better allocation of the resources made available for clinical research in Europe and ultimately in the targeted sub-Saharan African countries.

Through these examples it is clear that working together makes sense and makes a difference.

The impact of globalisation on EU R&D

Now, it is equally clear that the globalisation of R&D has an impact on the EU research policy.

The globalisation of R&D is a multi-faceted process. It can be measured in terms of:

  • trans-national scientific collaboration or joint ventures,
  • flows of private R&D investment,
  • co-authorship of publications and Intellectual Property Rights,
  • flows of human capital,
  • trade in R&D-intensive goods and services
The measures of these and other related indicators, show that the globalisation of R&D is steadily increasing.

Moreover, most studies show that globalisation of R&D has to date been largely confined to the Triad - Europe, US and Japan. This seems to be clearly changing now. The extent to which large multinational enterprises spread their R&D activities outside their countries of origin has been increasing since the early 1980s. A study from 2002 of over 1.000 R&D locations of 81 multinationals from Europe, USA, Japan, China and South East Asia found that 80 % of the foreign research locations of these firms operate in the Triad.

However, the trends seem to be changing. A recent survey identified, indeed, China, India and Brazil as respectively the first, third and sixth choice destinations for increased overseas R&D investment.

Globalisation is of course not confined to R&D – it is also a way for companies to grow and stay competitive, which in the end will benefit Europe. For many companies today their market is neither the home market nor Europe but the whole world.

So, in this reality, what should we be doing to enhance further the international dimension of the EU’s R&D policy?

In terms of EU research policy, allow me to give you three main messages which are relevant to this debate:

First of all, we must continue to make every effort possible to create in Europe an attractive single market for researchers and an attractive location for private R&D investment. Both issues are addressed in the Action Plan on Research and Innovation that I mentioned earlier.

Just like we have the free movement of persons, of capital, goods and services as cornerstones of the European single market to guarantee an open and competitive common market, we need a European labour market for researchers. Researchers are a mobile workforce by nature, but they are faced by legal, administrative and practical problems when moving between countries, or even sectors. Often these obstacles are related to tax and social security systems.

An important step has been taken with the recent adoption of fast-track procedures and short-term visas for the admission of non-EU researchers. The Commission calls upon the Member States to rapidly set up the legal changes and administrative procedures necessary to put these new procedures into practice. The Commission has also just the other week adopted a proposal for facilitating the portability of complementary pension rights. This is another area where researchers often lose out due to the nature of their work.

The internationalisation of private R&D weakens the local link between public and private research. It has also led to a decline in basic research by firms. On the other hand, it has raised the extent to which firms increasingly take decisions on where to locate their R&D laboratories. These decisions are taken not only in order to optimise the efficiency and effectiveness of their in-house research, but also with respect to the quality of the local research capacities in universities and research centres.

To make Europe an attractive location for private R&D investment, a broad policy mix approach, addressing a wide range of factors need to be addressed:

  • we need direct and indirect financial incentives such as grants, tax credits and loan guarantees;
  • we must ensure favourable framework conditions;
  • a sustainable supply of high quality human capital;
  • predictable conditions for the protection and exploitation of results; and, finally
  • excellent public and basic research infrastructures.
These incentives need to be put in place in good cooperation with the private sector.

My second point is that mutually beneficial international research co-operation with partner countries needs to be stepped up.

International S&T co-operation is already a high priority for the EU. You heard me mention some significant examples just before. Under the Framework Programme we pursue objectives such as:

  • strategic partnerships with Third Countries in selected sectors;
  • attracting the best third country scientists to Europe; and
  • reinforcing relations with third countries on an array of common scientific policy issues.
To maintain the relevance and effectiveness of the EU’s S&T co-operation activities the Commission will present a new European Strategy on International Scientific Cooperation at the beginning of next year.

Lastly, we need to enhance S&T cooperation with the Developing Countries. It is now largely recognized that the development of S&T and innovation is one of the essential engines of socio-economic growth and sustainable development in the Developing Countries.

Let me finally touch upon our main instrument for building a knowledge Europe - the Framework Programme for research and technological development. The Commission presented its proposal for the 7th Framework Programme (FP7) in April this year. Further, on the 21 September we adopted the seven Specific Programmes containing details on the implementation of the Framework Programme.

FP7 is a combination of continuity and novelty. Continuity, for example, in terms of supporting trans-national cooperation between universities, industry, research centres and public authorities, with scientific excellence as the main selection criterion, through collaborative projects and Networks of Excellence. Supporting mobility through the Marie Curie fellowships and training networks.

Novelty in proposing to set up a European Research Council to reinforce the excellence of Europe’s knowledge base by funding frontier research and development of new research infrastructures. In this context I would like to underline how important the Swedish contribution has been in establishing the principles of the ERC. The Swedish awareness of these issues has been very helpful to the Commission.

A major new approach in FP7 is the proposed Joint Technology Initiatives, which have the clear aim of stimulating private investment in order to move towards the 3% goal. We propose a scheme, ERA NET+, where funding agencies on a national or regional level can cooperate which will contribute to integration and more efficient use of research resources in Europe. We also foresee coordination and joint implementation of national research programmes.

Thus, FP7 will continue to be mainly project based but also stimulating integration of research in Europe and cooperation between funding agencies. This will indeed give a clear complementary role to different national funding agencies and actors in the sense that actions are necessary on both EU, regional and national levels.

Further, we propose for the first time a risk sharing facility to leverage European Investment Bank funding for R&D which could be used for large projects and new research infrastructures as well as for example Eureka projects. The cooperation programme also introduces international cooperation as an integral part of the cooperation effort, the overarching aim being to contribute to sustainable development.

Finally, we will continue and reinforce research support for Small and Medium-sized companies, regional clustering through the “regions of knowledge” action and actions to help convergence regions including the new member states. A strong emphasis has been put on the activities for science in society, because it is a strategic interest for the EU to mobilise society for science and to attract young people and women to scientific careers.

To conclude

As I mentioned at the beginning of my intervention, globalisation is a reality which is here to stay, whether we like it or not. Globalisation creates problems, certainly, but also opportunities. By harnessing globalisation, we can use this force to produce growth and jobs, better regulation and ensure sustainable development.  Globalisation can bring spectacular success and global R&D is paving the way.

Of course, every nation, every region, has a choice whether it wants to go alone or to join forces with the others. But I do not need to think twice about which way I think is the right way to move ahead to meet the challenges of tomorrow.

Thank you for your attention.

Item source: SPEECH/05/645 Date: /10/2005 Previous Item Back to Titles Print Item

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