ARCHIVES HISTORIQUES 
DE LA COMMISSION 
COLLECTION RELIEE DES 
DOCUMENTS "COM" 
COM (80)755 
Vol. 1980/9010 
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concernant l'ouverture au public des archives historiques de la Communaute economique 
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Economic 
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1 ), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
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file have been declassified in conformity with Article 5 of the aforementioned regulation. 
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Februar 1983 Ober die Freigabe der historischen Archive der Europaischen 
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COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(80) 755 final 
Brussels, 18th November 1980 
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INDUSTRIAL DEVELOPMENT AND INNOVATION 
(Communication from the Commission to the European Council 
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Luxembourg, 1 and 2 December 1980) 
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COM(80) 755 final 
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Communication to the European Council 
Industrial Development and Innovation 
The issue 
Inoustry in.the Community is in trouble. There are serious 
problems in many sectors. Unemployment is high and ~ising. 
By several measures, our industrial performance is de­
clining compared with competitors. In our traae in manu­
factured products, our deficit with Japan is growing 
alarmingly and we no longer hav~'a surplus with the 
Unitea States. 
In 1965 we exported 40 I more electronics-based products 
than we imported. In 1976 we only just broke even, ~here­
as by 1976 the Japanese exported nearly•9 times as much 
electronics products as they importea. In 1965 ~e ex~orted 
3.7 times as much machinery and transport equipment as we 
importea. By 1978 this was down to 2.4 times, whereas 
Japan was exporting nearly 10 times as much as she was 
importing. The long term implications of these trends 
for employment in industry ao not need to be emphasized • . 
Innovation has been a historical motor of industrial 
a~velopment in Europe. Ever since the industrial r~volu• 
tion, the application of new discoveries has resultea 
in economic growth, increased employment, domestic pros• 
perity and exports abroad. This process, initially based 
on relatively simple technologies, took on a second 
lease of life in the early part of this century in inaus­tries such as chemicals, automobiles and electrical 
appliances, and is now entering a new phase through 
the application of electronic technologies to many areas 
of economic activity. Future developments in areas such 
as biotechnology'and marine development can already 
be discerned on the horizon •. 
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Innovation in industry is essentially a market-oriented 
process. The principal responsibilities thus lie with 
enterprises and individuals as well as with those in 
both the public-and ·private sectors who are responsible 
for the organisation of work, investment decisions and 
public purchasing. Thus, the message has to be addressed 
to people who are living and working throughout the 
economy. It is their decisions and their actions which 
-will determi.ne the extent to which European society 
continues its economic and social progress, through innovation. 
II. Factors of chgnge(l) 
1. We are entering a historic tu~ning point where the basic 
technological cavacity to oevelop and manufacture, to sell and trade is rapidly diffusing throughout a large 
part of the world economy. Notwithstanding the poverty 
and unaerdevelopment which prevails in much of the third 
world, there are alreaay several newly industrialised 
countries which are effectively competing with European 
manufacturing industry in many sectors. In the future, 
there will be more of them. ., 
Furthermore, to differing degrees and in different ways, 
the United States and Japan -the ~wo other major inous­trialised poles in the free trading world economy -· 
are managing to mai~tain their economic pre-eminence. 
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Consequently, the international pressure for industrial 
renovation in Europe is getting stronger and the need 
for successful innovation is far more pressing: the 
pace is no longer o~ OU'r o~n choosing. 
2. But innovation encounters domestic obstacles. First, 
(1) new investment is a:necessary vehicle for it and the 
present low level of profitability in many firms, leading 
to too few investments, must be holding back mcany innova­
tions which otherwise would be within our grasp. 
Second, and more fundamentally, resistance to change is reinforced by· the current economic, social and cultural 
climate. Moreover, the recession and the contraction · 
of inoustrial employment which are taking place throughout 
the European economy are generating social attitudes 
See also Report on certain structural aspects of growth, 
COM(78) 255 f~nal, 22 June 197~ 
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't which are often inimical to change. These arise from 
the fact that after thirty years of rapid economic growth, 
high standards of living and full employment are taken ': ';,· '. ~-, , · for granted and from rigidities, even inadequacies, 
in educ,ation and training.j . ' · · '" L '•,. I 
. 3. At the same time, the technological characteristics 
of new discoveries are increasingly advanced. In the 
future,' much innovation will demand an unprecedented 
degree of managerial and technological sophistication 
both from the innovator and his working people. There is, however, little doubt that the education and training 
.systems within our economies have, with few exceptions, 
failed during the past generation t~ engenaer the flexi­bility and attitudes which would allow the European 
economy' to develop in the way which present international 
and technological factors require. Rigidity and time­
lags in the educational system and individual and social 
obstacles to retraining in middle life act as a serious 
brake on the scope for innovation in our economies. 
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Furthermore, innovating firms in the United States and 
Japan benefit from a .large domestic market as well as 
from additional support from .,a new well-targeted range 
of government measures.· In Europe only the Community-wiae 
market offers a comparable potential, but it remains 
fragmented for many purposes.. · 
III. The obj~ctives and scope of innovation 
.. Innovation policies must address themselves to the. 
obstacles which we encounter today because the Europ~an 
economy's dependence on external natural resources ana 
energy imposes a development strategy based on maximum 
use of our abundant human and technological resources. 
we cannot afford, for the remainder of this century, to 
allow this comparative aavantage we have to deteriorate 
further, for we have no other. · 
Innovation policies can favour social and economic pro­
gress throughout·European society, facilitate adjustment 
of industrial structures to changes in energy price 
and availability, technology and international traae 
patterns, and can support recovery in competitiveness 
of critical economic activities. 
The option for change has been altered by the compre­
hensive nature of innovation in modern society and the 
way in which new processes potentially affect many acti­
vities. Granted, the initiative to apply new possibilities 
rests with the firm and the individual, both in the 
public and private sectors. However, the option to ao 
so is increasingly predetermined by the social and eco-
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nomic environment and by the results of the research, 
financial, education and training systems. These, by 
contrast, are ovewhelmingly influenced by the public 
authorities. This is why it is imperative to aaoress 
the problem of innovation in Europe at the level of 
public authorities and at the level of the European 
Community. 
Many innovations in the form of new products further 
permit changes in the processes whereby existing products 
and services ~re ,upplied. As a result, innovation in 
telecommunicq~ions, micro-electronics and materials 
science, in p•rticutar, affects~wide ranges of industry 
and services to the1point where it represents a common 
factor of·cha~ge throughout our society and economy. ,, 
Although the need to apply advanced technologies is 
relativel~2yell understood and the international stakes 
are clear , the scope ·and need for innovation through­
out the whole economy is not always ·fully appreciated. 
For example, promotion of innovation in both supply 
and use of energy is vital. It would provide new opportun­ities for industry and have a positive effect on employ­
ment. Furthermore, many of the new technologies and 
new skills in the energy field will be exportable. It 
is important, for all these reasons, that policies to 
encourage innovation should give particular attention 
to energy. i 
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Many everyday applications can make use of the most 
advanced technologies and materi~ls. Our shortage of 
resources should also be tackled by employing alternative 
local resources of substitutable and more plentiful 
materials, by developing a recycling economy and by 
aifferent ways of aesigning and producing 9000s so as 
to lengthen ttieir life and allow for easy replacement 
and repair. ~ 
Comprehensive innovation strategies thus imply the appli­
cation of many appropriate technologies, builuing up 
a complex and articulated system of production. This 
woula improve further opportunities tor entre~reneurship 
throughout the economy and develop the basis for exports 
of technologies suitable for a wiaer range of requirements 
throughout the world economy. 
(2) See also European Society faced with the challenge of new 
information technologies: a Community response (COM(79) 650 
final), 26 November 1979 
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Innovatio., does not need to run counter to social values 
in Europe; it can help us reach our goals if it is ad­
dressed not only to the application of technology in 
proouction, but also to problems of social and economic organization. 
IV. Role of public authorities 
Public authorities have a major role to play in the 
c area of innovation, in order to create the conditions 
for successful de~eiopment in the future: 
-first, in leading public opinion to an understanding 
of our situation and prospects as well as by their 
determining influence over the educational and training 
systems, 
-second, as significant economic agents themselves 
responsible for the organization of many manutacturing 
and service activities, substantial public procurement, 
a large part of research and development ex1,>enditure, 
and the ability to decide whether or not to maximize 
the advantages of coorainated action at different 
levels of administration, local, national and European, ., 
' -third, and most important, through their influence 
over economic policies whi~h aff~ct the response of 
of indivioual peofle and firms. 
Innovation in industrial and service activities is deter­
mined largely by the market. However, if this takes 
place in the context of defensive and static attitudes 
and social structures, it may well turn out to be too 
late to take advantage of market opportunities. Thus, 
public policy tor innovation should address itself to 
several different levels of the problem: . . 
i (a) creating an environment of attituaes and opinion 
which is receptive to change. This involves explaining 
the real economic options which confront us at home 
and abroad so as to forestall purely irrational 
factors in the political process. 
It means encouraging social, vocational and geogra­
phical mobility neeaed for innovative change, ~hen 
necessary reinforcing social security. It will also 
ruean intluencing the characteri£tics and pace of 
innovation so as to reassure working people that 
the change will be progressive and not brutal and 
that help towards alternative opportunities will 
be provided. 1 ·, 
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:i j i It is also essential to build into education and 
training systems the necessary level and flexibility both·in terms of numbers and qualit~. 
(b) Then there is scope for a broader reappraisal of the 
the links between a wide range of public policies 
and public sector activities and the innovation 
process. In this respect, assessing and even emulating 
the more ~uccessful aspects of policy in other coun­tries may well prove to be a fruitful approach. 
Among the many opportunities for innovation are 
those ~hich arise from public policy in areas such 
as environment, pollu~ion control, health and work­
ing conditions. The relationship between public-spon­
sored research and development also neeas to be 
considered in order, at one extreme, to provitie 
the basic, long-range, technological research that 
companies have difficulty in carrying out for them­
selves but that our competitors' public authorities 
are supplyin91 at the other, to bring research and 
oevelopment closer to practical economic applications. 
To do so would no doubt iQvolve promoting smaller 
firms' possibilities to apply research and development 
results or to engage in collective research and 
development themselves. · 
(c) Finally, there is a crucial area of public policy 
which influences the incentive to invest and innovate. 
There is much more that the public authorities.could 
co to improve the environment for innovation by 
reducing the tax burdens on innovation, on energy 
saving and on employment. 'l'he incentive effect of 
tax relief compared with aid systems should be care­
fully examined, and the authorities should be alert 
to the importance that: their policies, regulations 
and practices for risk:capital and public procurement 
have for incentives to1 innovate and. invest, parti­
cularly in the smaller I firm. We should profit from 
the 1'.'"erica: experiencr X X 
'.L'he Community and the Member States can reinforce public 
consciousness of the obstacles to innovation and the over­
whelming need to overturn the existing unsatisfactory trend. 
Member Governments would do well to speak clearly in unison 
since the message will often be un~elcome. The message is 
not only addressed to the individual·, to the manager and 
to public opini~n at large, but also to many agencies of 
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the Governments themselves which determine the scope and 
pace of change, and which influence the environment for change 
in the long run. The Community must see that both established 
Community policies and new proposals'- where they can be 
relevant -promote and co not hinder innovation, and the 
Commission will act accordingly. 
A sound innovation strategy should act as a bridge between industrial strategies, on the one hand, and scientific and 
technological policies on the other. We must ensure that 
further integration of.the domestic market within the Com­
munity continues to proviae the incentive to firms to inno­
vate and invest. Here, public authorities have a crucial 
role to play. ~e should more actively exchange intormation 
within the Community, and between .the Community and the rest 
of the world, about successful innovation policies. For its 
part, the Commission will examine the reasons forth~ present 
inaoequate results of innovation in the Community, particularly 
in comparison with those achieved in the United States and 
Japan. 1 
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The European Council is inyi~ed to endorse this analysis 
and general approach·towards one of the most important prob-
lems facing European industry •. , ! 
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