Rhein on Energy and Climate

Europe’s prosperity is at risk! European companies, small or big, are falling behind their American, Japanese, Korean, Chinese, Canadian and Australian competitors in terms of the innovation. They are less creative and slower to adapt to ever new international market conditions. The fates of once successful companies like Nokia, Vestas or major investment banks demonstrate that firms only have the choice between innovation and decline.

European political leaders have understood the message. More research and innovation is among the five headline goals of the “Europe 2020” strategy.

But at the beginning of 2012, the EU is far from an effective European innovation policy.

The Commission does not seem to understand what it can and should do to foster more innovation. All it has done so far is to produce a “score board” on where the 27 member countries stand among themselves and in comparison to their global competitors.

The findings of the 2011 scoreboard, based on 24 indicators, are anything but encouraging:

  • The EU is less innovative than USA, Japan or Korea.
  • Its advance over Canada, Australia and China is diminishing rapidly.
  • Switzerland is the most successful European performer!
  • Sweden, Denmark, Germany and Finland are the EU champions of innovation, while Romania, Lithuania and Latvia are lagging far behind.

The bulk of innovation takes place in private business and more specifically in small and medium companies. Public research and an excellent education are no more than complementary factors that may help to generate a social environment that is conducive to innovation.

The European Commission is not well equipped to promote European innovation. It is too far away from the business world. Its officials have no clue of how companies function. They have learnt to propose regulations, standards or rules for competition and public procurement. These areas are important, but contribute only marginally to innovation.

The Commissioners in charge either turn the buck to member states, calling for “national research and innovation systems that provide an innovation-friendly environment for business.” (Tajani) or “a European research area to inject competition, generate more excellence and attract and retain the best global talents” (Mair Geoghegan).

To be successful the Commission needs to follow a pragmatic approach focusing on intimate collaboration with member states and the private business sector. As a matter of priority it should

  • answer the question why the three Scandinavian countries, Switzerland and a few European regions are particularly successful in creating innovations and derive policy lessons for the rest of Europe.
  • launch a simple credit guarantee programme for innovators and company founders.
  • help resolving the issue of the European patent.
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  1. We do love innovation (funny how little invention is mentioned) – we love the idea of our guys out-innovating the other guys so that we (mostly meaning our elite) win and get rich – utilizing the tool of intellectual property racketeering – while the other guys have to clean the toilets. Yep, so long as it doesn’t challenge the current business model, innovation is a great thing.

    But where the EU really needs the vigorous use of innovation, indeed, also a good dose of invention, is in its own institutional structure. The EU needs to worry less about beating North America, BRIC, and the Eastern Pacific. It needs to worry less about innovating its way to a dominant market share in an environment of business as usual. Instead, it needs to worry about how to democratize its own institutions, and how to develop a model of supra-nationalization that can readily and smoothly absorb applicant countries. It needs to be the world leader in innovation and invention for public institution design and management. If it can achieve that, then economic well being will follow both naturally and effortlessly.

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