Heikki Salmi. Advisor to the Director General, Directorate General Enterprise & Industry

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1 Globalisation and knowledge-based economies: European perspectives Heikki Salmi Advisor to the Director General, Directorate General Enterprise & Industry EIS 2 - Innovation performance in Europe Source : European Commission / DG ENTR D1 1

2 Innovation performance in the EU compared with the US and Japan Summary Innovation Index Losing momentum UK IE EE SE FI JP DK US DE BE AT NL FR LU EU 2 IT ES CY PT CZ PL LT SK MT EL LV Moving ahead SI HU.1 Falling behind Catching up Average growth rate of the Summary Innovation Index over the last 3 years Source: European Innovation Scoreboard 2 Innovation Gap: main sources Compared to the US USPTO patents -31% Tertiary education ICT expenditures Broadband penetration Early- stage venture capital Triad patents High- tech exports Business R&D Public R&D EPO patents Med/high- tech R&D S&E graduates Univ. R&D financed by business Med/high- tech manuf. employ. Community designs Community trademarks "2" "23" -23% -17% -13% -13% -12% -12% -9% -6% -2% -1% 2% % 8% 11% 11% Compared to Japan USPTO patents -2% Triad patents -21% Tertiary education -19% ICT expenditures -1% Business R&D -1% Broadband penetration -14% Public R&D -6% High- tech exports -% EPO patents -2% Med/high-tech manuf. employ. -2% S&E graduates -2% Med/high-tech R&D 2% Community designs 9% Univ. R&D financed by business 9% Community trademarks 13 % "2" "23" Patenting in the US. Tertiary education. ICT expenditures. Patenting in the US. Triad Patents. Tertiary Education Source: DG ENTR/D 2

3 4 4 The share of high-skill production remains below that in the US EU-1 US share in total value added (%), Low Low-intermediate High-intermediate High skill Source: O'Mahony and van Ark (23). Revised Lisbon Strategy Refocus on growth and jobs: EU s attractiveness as a place to invest and work Knowledge and innovation for growth More and better jobs 3

4 Knowledge and innovation for growth Invest in research Innovation Use of information technology Sustainable use of resources Strong European industrial base Key challenges in the 2 National Reform Programmes 2 MACRO-ECONOMIC MICRO-ECONOMIC EMPLOYMENT 2 no. of countries 1 1 Sustainability of public finance Short term budgetary stability Nominal convergence, adoption of euro External openness R&D-innovation Business environment/entrepreneurship Sustainable development Competition Infrastructure ICT Efficiency of public administration/services Utilisation of labour Education and skills Social security and cohesion Regional employment disparities 4

5 R&D targets 4. Situation 24 (IT, LU, MT, PT 23) Target 21 (MT 27, PL 28, IE 213, UK 214) (*) BE CZ DK DE EE GR ES FR IE IT CY LV LT LU HU MT NL AT PL PT SI SK FI SE UK EU- 2 (*) IE as % of GNP - EU-2 weighed average (with GDP 27) Source: Eurostat, Structural Indicators, Innovation & Research - OECD / NRP's of the Member States 1 actions to support innovation as part of the Lisbon Strategy for Growth and Jobs Action 1 : Better education systems to promote an innovation friendly society Action 2 : A European Institute of Technology should be established to help improve Europe's innovation capacity and performance. The EIT should be operational by 29 Action 3 : Develop a strategy to create an open, single, and competitive European labour market for researchers Action 4 : The Commission will publish voluntary guidelines for Member States and stakeholders to promote knowledge transfer between universities and other public research organizations and industry Action : The EU s cohesion s policy for the period will be mobilized in support of regional innovation by 'earmarking' a large proportion of the 38 billion available for investing in knowledge and innovation Action 6 : A new framework for State aid to research, development and innovation and new guidance for the design and evaluation of tax incentives for research and development will be presented Action 7 : A new patent strategy before the end of 26 and a more comprehensive IPR strategy in 27 to facilitate the circulation of innovative ideas will be presented Action 8 : An initiative on "copyright levies, to be presented before the end of 26, will facilitate new digital products, services and business models Action 9 :The Commission will, after public consultation, test in 27 a strategy to facilitate the emergence of innovation-driven "lead-markets in Europe Action 1 :The Commission will publish and distribute, by end 26, a Handbook on how pre-commercial and commercial procurement can stimulate innovation

6 The implications of R&D offshoring on the innovation capacity of EU firms A study undertaken by LTT for the European Commission Does R&D off-shoring replace domestic R&D? How much R&D off-shoring replaces domestic R&D 6 % of responding companies In last years Over next years 1 1 Not replaced 3 Completely The replacement effect has been limited over last years. However, firms do anticipate a relative growth of off-shored R&D compared to domestic in next years. 6

7 Why offshore in a particular location? Why to choose particular location for off-shored R&D Public support (taxes, subsidies) % of responding companies Not important Very important Don't know Developed infrastructure, size of R&D sector, R&D concentrations Quality of academic institutions and education system, links between academia and firms General attitudes towards high-tech IPR protection Public support relatively unimportant in decisions about R&D locations. Good IPR protection and quality of academic institutions and links between firms and academia very important. R&D off-shoring and general innovation capacity of firms The effect of R&D offshoring to the general innovation capacity of all EU firms The magnitude of the effect % of responding 4 companies Positive Negative No impact Don't know % of 2 responding 2 companies very small very high Don't know Responding companies expect the general innovation capacity of all EU firms to increase significantly becase of R&D off-shoring. 7

8 Thank you 8

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