Brussels says too few of Europe's ideas make the journey from "research to retail" and global competition, particularly from Asia, means the EU must up its game or risk falling into unchecked decline.
The EU has now committed to steering structural funds and public procurement towards innovation, as well as removing bottlenecks that make it difficult for Europeans to turn knowledge into marketable products.
A new cross-border venture capital regime and an expansion of the European Investment Bank's Risk-Sharing Finance Facility will be part of a concerted effort to match innovative firms with investors, according to Máire Geoghegan-Quinn, EU commissioner for research, innovation and science, and Commission Vice- President Antonio Tajani, responsible for industry and entrepreneurship.
The long-awaited plan proposes that governments set aside dedicated budgets for buying innovative products and services, a move that could create a procurement market worth at least €10 billion a year.
The Commission will now review structural funding and state aid frameworks while helping member states to tap into the €86 billion of structural funds earmarked for research and innovation.
One million new researchers needed
The Commission has also published a new study showing that increasing R&D investment to 3% of GDP – as outlined in the 'Europe 2020' growth strategy – could create 3.7 million jobs and boost annual GDP in Europe by €795 billion by 2025.
However, experts say one million extra researchers will be needed and Europe's fragmented infrastructure must be streamlined. This, says Geoghegan-Quinn, means Europe must reverse the "brain drain" and strive to attract and keep the world's best researchers.
In line with the Lisbon Treaty and previous commitments made by the EU executive, the new plan pledges to make it easier for scientists to move within Europe by allowing them to bring their pensions with them when they move jobs.
Brussels also wants member states to pool resources to provide Europe with world-class infrastructure, pledging to have "completed or launched the construction of 60% of the priority European research infrastructures currently identified by the European Strategy Forum for Research Infrastructures (ESFRI).
New 'partnerships' to address grand challenges
The EU executive also unveiled what it calls the European Innovation Partnerships, the first of which will be a pilot project dedicated to healthy ageing. The project aims to expand healthy life years by two years by 2020.
Future initiatives in energy, smart cities, water efficiency, agriculture and raw materials are expected to follow.
The Partnerships will step up R&D, coordinate investment, speed up standards and mobilise demand, the Commission said. Brussels will provide "seed corn" funds to attract investment.
The Innovation Union flagship stresses the need to develop new curricula to address the skills gaps and to deepen business-academia collaborations. Brussels is also committing to support the development of an independent ranking system for universities.