To target or not to target? That is the EU’s research and innovation question

A team of computer engineers choose printed circuit boards to work with. [Shutterstock/Gorodenkoff]

While Europe is a leading force in the world for research, historically it has lagged behind competitors when it comes to turning that research into innovative businesses. The new European Commission of Ursula von der Leyen hopes to change that.

The Commission wants to increase the EU’s research and investment spending with a new vehicle called Horizon Europe, taking over from the old Horizon 2020 programme.

It would have an allocated budget of approximately €94 billion for the 2021-2027 period, paired with an initiative to form a European Innovation Council aiming to create more world-scale tech companies in Europe.

But this proposal is receiving pushback from EU member states, which have to approve this funding line as part of the long-term budget in the coming months. The Commission and the Parliament are pushing member states not to cut the proposed research funding.

“It is obvious that when you look at the result and the evolution of the investments that are made in research and innovation in comparison with the objectives of the Lisbon Treaty, 3% of GDP, we are not there,” Jean-David Malo, director of the Commission’s European Innovation Council Task Force, told an event in Brussels this week.

“In terms of trend, the situation is not going in the right direction,” he said .

But he added that “in the research area, we have some very good results” and noted that many of the recent Nobel Prizes were awarded to projects supported by the EU.

“But in terms of innovation, this is the area where we have the most important challenge. The main problems we are facing are the capacity to sale up, the fragmented innovation ecosystem in Europe and the remaining barriers in the single market”.

Kristin Schreiber, director for SME policy at the Commission, said the executive has made a number of strides but the challenges remain.

“The problem we have is for the scale-up phase – we see many European start-ups disappear after some time,” she said. “And it’s always very frustrating for us when we see a very interesting idea developed in Europe, and then they move to the US.”

The discussion, part of a multi-day EURACTIV event on a Smart and Open Europe, supported by the Confederation of Finnish Industries and the Technology Industries of Finland, turned to whether having more targeted funding available to EU innovators would improve things. The reaction was mixed.

Schreiber noted that there is a risk that if funding is allocated too generally, it isn’t being invested smartly. But a too narrow targeting for funding could mean that innovators don’t apply, either because they think they are ineligible or because the application process is too cumbersome.

What’s most important, she said, is that there is dedicated funding for SMEs so they are not competing with large companies that have more resources.

Malo noted that the Commission is trying to focus funds smartly so they end up in the right hands in a way that is constructive to future growth – and this is often geographic.

This can be done through National and Regional Research and Innovation Strategies for Smart Specialisation (RI, which are integrated, place-based economic transformation agendas that focus policy support and investments on key national and regional priorities, building on each country’s strengths in an evidence-based way.

Leo Kärkkäinen, chief AI officer at Nokia, said a lack of focused funding for AI isn’t necessarily the problem. A bigger problem, he said, is the sharing of data across borders in the EU for this research and innovation.

“It’s still very hard even for good research and innovation to cross European borders, and it’s much easier in the US,” he said. “This is a multifaceted problem, it doesn’t only come from legislation. There’s also a question of using the public side and private side so they can leverage the money they put in.”

Henna Virkkunen, a centre-right MEP who sits on the European Parliament’s Industry, Research and Energy committee, said that leverage that investment from business in research requires legislators to give certainty and maintain technology neutrality.

“We as legislators should take care that we give legal certainty for business investments in Europe, because you always have risks when you are in business but there shouldn’t be political risks,” she said.

“This is mostly in the environmental sector now. We are all talking about the new climate actions we want to take, and tightening targets, but for industry they have to see a long-term vision for where we’re going in Europe.”

For now, stakeholders will have to wait and see the result of ongoing budget negotiations, which continue at today’s European Council summit in Brussels, to know how much money the EU is willing to invest in catching up in the research and innovation area.

The Commission and Parliament are urging citizens and businesses to put pressure on their national governments not to water down the proposed funding.

[Edited by Zoran Radosavljevic]

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