Innovation

Seven years after the launch of the Lisbon Agenda, Europe’s action plan for becoming the world’s most competitive and dynamic knowledge economy by 2010, it seems that the EU economy has at last shifted up a gear. Innovation, a core component of the strategy, has finally begun to flourish, thanks to a series of structural tweaks made in such areas as education and e-communications networks.

According to the European Commission’s 2006 Innovation Scorecard, the innovation gap between the EU and economies such as the US and Japan is now shrinking. After a long period of economic stagnation and engrained pessimism in Europe this is good news indeed. But, with the rapid integration of India and China into global markets, Europe cannot afford to relax.

The Centre for European Reform (CER), a London-based think-tank, in its annual scorecard on the Lisbon Agenda, asks whether globalisation will leave Europe stranded. This year’s report gave the EU a ‘D plus’ rating for research and development (R&D), even worse than last year’s dismal rating of ‘C minus’. Exemplary performance by countries such as Austria, the Czech Republic and Sweden were dragged down by laggards Greece, Italy and Poland.

Countries such as Sweden would appear to be converting knowledge into competitive advantage with some aplomb, according to a survey on innovation conducted by the Economist Intelligence Unit (see Page 22), thanks partly to decent investment in R&D activities. But overall figures on R&D spending for the EU are still significantly lower than in the US and Japan.

Initiatives are under way to help correct imbalances. Cluster alliances aim to harness the often disjointed potential of businesses, universities and public agencies so as more effectively to transform knowledge into marketable products.

Included in the Commission’s networking frenzy is the services sector, a hitherto neglected source of innovation with great economic potential. The Commission will fund projects to encourage interconnections between research, skills, entrepreneurship, finance and industry which might result in innovation in services (see Page 33).

The Commission is to invest billions of euros in a Competitiveness and Innovation Programme, an initiative with a substantial focus on small- and medium-sized enterprises that will broaden the scope of business-oriented innovation projects (see Page 31). The Commission’s research department is also making efforts to move beyond the scope of traditional EU funding mechanisms, such as the research framework programme, by working more closely with industry and governments (see Page 32).

If it is to be successful in its bid for leadership of the knowledge economy, the EU will need a clearer understanding of innovation, an often blurry concept. In seeking to define the constantly evolving nature and boundaries of innovation, universities can play an important role in Europe’s search for a common vision (see Page 32). But well-intentioned research projects will not be sufficient to move the EU into the fast lane. Esko Aho, the former prime minister of Finland, an innovation frontrunner, has frequently argued that demand-side initiatives are needed to boost EU innovation. Developing a coherent strategy on intellectual property (see Page 31), for example, would create the type of market-driven climate in which true innovation can thrive. Businesses, the key players in the innovation game, need to be convinced of potential rewards before pumping money and effort into risky research.

Seven years after the launch of the Lisbon Agenda, Europe’s action plan for becoming the world’s most competitive and dynamic knowledge economy by 2010, it seems that the EU economy has at last shifted up a gear. Innovation, a core component of the strategy, has finally begun to flourish, thanks to a series of structural tweaks made in such areas as education and e-communications networks.

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