Report on policies for promoting research and development: background to Ecofin Council - Brussels, 22 January 2002

January 21, 2002

Brussels, 18 January 2002

The Council will have an exchange of views on the Economic Policy Committee report on Research and Development and is expected to endorse it. The report, including the executive summary which contains key recommendations for action at EU and Member State level, will be forwarded to the Barcelona European Council as a background document (after being endorsed by the Council the report will be available on the Council's web-site).

The EPC report shows how R&D and innovation are crucial drivers of growth and productivity and concludes that the EU and its member states should ensure that the appropriate framework conditions are in place to foster innovation. This objective should be pursued through further implementation of structural reforms in product, capital and labour markets with a view to promoting a growth and stability oriented macro-economic environment, creating a competitive environment and fostering investment in human capital.

For the report, a fieldwork study of EU member states, the US and Canada was carried out in order to gain an overview of the challenges presented by different innovation environments. In addition, the report makes extensive use of indicators of innovation and R&D performance. This theoretical approach, as well as the empirical evidence, has drawn attention to a number of areas that may warrant further attention both at the Member State and the EU level.

A crucial finding from the fieldwork evidence and the indicators is that 'market pull conditions' and knowledge networks are key areas of weakness. The different ability to use knowledge in wealth creation could be a key factor behind the recent weaker productivity growth in the EU compared to the US.

The report notes that both Member states and the Commission are already doing a great deal. The study welcomes and encourages efforts to introduce an innovation-friendly Community patent and to implement the Risk Capital Action Plan. The report also suggests that countries and firms in the EU will increasingly have to pool their efforts, knowledge and resources in order to compete on a global scale.

It is recalled that research and development was identified by the Lisbon European Council as a key element to improve EU competitiveness and the dynamism of a knowledge-based economy in the framework of the Union's strategic goal "to become the most competitive and dynamic-based economy in the world" by the end of the decade.

Council document 002/02 (Presse). This note has been drawn up under the sole responsibility of the Press Office

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