Regional funds: Tracking the ‘sleeping innovators’?

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Many small businesses are innovating but lack the money and information to get their innovations to the market. Yet regional authorities could help to detect these "sleeping innovators," experts told a European Parliament hearing recently.

Micro-enterprises in the EU – those employing less than 10 people – struggle to get their innovative products to the market and regional authorities are often unaware of what they are doing, said Hubert Delorme of UEAPME, the European association of small and medium-sized enterprises.

EU cohesion policy and the regions themselves could play a big role in spotting these "sleeping innovators" through detection and assistance programmes, he said.

Such programmes would involve partnerships with regional chambers of commerce and allow direct contact with very small businesses, Delorme added.

Currently, about 25% of cohesion money is being invested in the EU's broad innovation agenda, while €27 billion is specifically earmarked for SMEs for the 2007-2013 period, said John Walsh, an official at the Commission's regional policy directorate-general (DG).

The development of innovation clusters, advice programmes and training in areas such as patent procedures would also help to realise the potential of these innovating companies, Delorme said.

There is a lack of cooperation between regional bodies and small companies and the Union's cohesion policy after 2013 must make it easier for them to benefit from EU money and programmes, he added.

The public hearing last Wednesday (27 October) gathered a panel of experts to discuss the role of EU cohesion policy in innovation and SMEs, hosted by Polish MEP Danuta Hübner, chair of the Parliament's regional development committee.

It comes as the European Commission readies its 5th Report on Economic and Social Cohesion, which will lay the ground for a public consultation and major political debate on the main priorities of EU regional policy spending after 2013.

The Commission has also unveiled plans for a 'Single Market Act' by listing 50 proposals to kickstart the EU's internal market – including simpler accounting rules and better access to public contracts for SMEs.

Paul Nijskens, director of the West Brabant regional development authority in the Netherlands, explained that the Dutch region's strategic approach towards innovation in SMEs is proving successful – but that it relied on strong government support in its initial years. He proposed a change in EU policy from supporting individual projects to backing wider regional strategies that focus their efforts on specific sectors.

Aida Catana, programme director of European Project Consulting in Romania, said it is difficult to change attitudes in the post-Soviet bloc towards EU cohesion funds and that most of the money in Romania goes to large-scale infrastructure projects. Romanian SMEs struggle to set up partnerships with public sector and education institutions and thus do not benefit from EU funding, she added.

Helmut Jäger, director of solar energy company Solvis, praised the role of EU funding in the development of his company's solar panel factory, but said that the system for accessing funds can be improved as they tend to favour large-scale projects. Clusters can be a very good way of supporting innovation in small businesses, he believes.

The regional policy of the European Union has the overall goal of promoting economic prosperity and social cohesion throughout the 27 member states and their 271 regions.

Within the current financial framework (2007-2013), spending on regional policy amounts to an average of €50 billion per year – approximately one third of the total EU budget.

Regional policy spending is channelled through three funds – often called 'Structural Funds'. These are the European Fund for Regional Development (EFRD), the European Social Fund (ESF) and the Cohesion Fund.

On 10 November 2010, the European Commission will publish its 5th Report on Economic and Social Cohesion. This will mark the start of a public consultation and a major political debate on what the budget and main priorities of EU regional policy should be in the future (2014-2020).

Of the more than 20 million enterprises in the EU non-financial business economy, about 99.8% are SMEs (i.e. they employ fewer than 250 people). Within the SME sector, the vast majority (92%) are micro-enterprises, employing less than 10 people.

  • 10 Nov. 2010: European Commission to publish 5th Report on Economic and Social Cohesion.
  • Mid-2011: Commission to propose Multiannual Financial Framework outlining details of EU budget allocations.
  • 2012-2013: EU to finalise budget for 2014-2020.

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