Opinion of the Committee of the Regions on the "Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Reinforcing cohesion and competitiveness through research, technological development and innovation"

(1999/C 198/09)

THE COMMITTEE OF THE REGIONS,

having regard to "Reinforcing cohesion and competitiveness through research, technological development and innovation" (COM(1998) 275 final);

having regard to the Commission decision of 8 June 1998 to consult the Committee of the Regions on the matter;

having regard to the COR Bureau decisions of 15 July 1998 and 18 November 1998, in accordance with Article 198c(3) of the Treaty establishing the European Community, to instruct Commission 5 - Social Policy, Public Health, Consumer Protection, Research and Tourism - to draw up the relevant opinion;

having regard to the 1998 Annual Report: Research and technological development activities of the European Union (COM(1998) 439 final);

having regard to the Proposal for a Council Decision concerning the specific programmes implementing the fifth framework programme of the European Community for research, technical development and demonstration activities (1998-2002) (COM(1998) 305 final);

having regard to the COR Opinion on the First action plan for innovation in Europe - Innovation for growth and employment (CdR 68/97 fin)(1);

having regard to the COR Opinion on the First Cohesion Report (CdR 76/97 fin);

having regard to the COR Opinion on the Proposal for a European Parliament and Council Decision concerning the Fifth framework programme of the European Community for research, technological development and demonstration activities (1998-2002) (CdR 158/97 fin)(2);

having regard to the draft opinion (CdR 278/98 rev. 2) adopted by Commission 5 on 9 November 1998 [rapporteurs: Ms Olander, Ms Morichaud (COM 6) and Mr Tindemans (COM 1)],

adopted the following opinion at its 28th plenary session on 10 and 11 March 1999 (meeting of 11 March).

1. Background

1.1. This Communication reflects the Commission's wish to boost competitiveness in the least-favoured regions by making it easier for business to apply R& D and innovation. If the goal of stimulating firms to make a greater commitment to R& D and innovation is to be realized, an in-depth appraisal must be made of the difficulties they encounter when they seek to do so.

1.2. Since most jobs are created in small and medium-sized firms, efforts must therefore focus on enabling them, at a local and regional level, to assimilate existing technology and incorporate innovations.

1.3. Measures to foster an innovation culture encompass, among other things, the creation of networks to facilitate contacts between SMEs and the relevant RTD environment. The COR endorses the Commission's starting point that "knowledge policies" should be adjusted to the economic development of the regions concerned and at the same time be integrated into a broader European perspective via national RTD systems (in line with Article 130h of the EU Treaty).

1.4. The COR Opinion on the first Cohesion Report(3) called for closer coordination between Structural Policy and other areas of policy embracing the entire Community so that integrated action can be taken to frame coordinated measures to assist the LFRs.

1.5. The purpose of cohesion policy is to alleviate discrepancies in development levels between regions and to promote development in the LFRs and rural areas. The most important financial instruments deployed for this purpose are the Structural Funds, the Cohesion Fund and, increasingly, the EIB.

1.6. Since RTD and innovation potential are heavily concentrated on the prosperous regions, these will benefit most from the EU's RTD and innovation policy. That can generate higher economic growth in regions which are already thriving while there is a risk that the LFRs' economic and technical development may fall even further behind. The Commission's Communication is a challenge which seeks to alter this pattern to the LFRs' advantage.

1.7. The COR therefore welcomes the Commission's proposal to bring together cohesion, competitiveness and RTD and innovation in a single, coherent framework to underpin the framing of guidelines for the EU Structural Funds and to provide a point of reference when evaluating how RTD and innovation activities can be integrated into the Structural Funds.

1.8. The COR appreciates the Commission's intention of encouraging a high level of participation in the work of putting forward proposals for Structural Fund guidelines for the period 2000-2006. RTD and innovation activities are to contribute towards solving existing social problems. The guidelines for the new Structural Fund programmes should be shaped so that the programmes give greater support than at present to both local and regional social needs and Community policy. Ongoing dialogue between the Commission and the COR is a vital factor in realizing the opportunities which will be offered by future Structural Fund programmes.

2. General comments

2.1. The COR endorses the thrust of the Commission proposal viz. that there should be a shift in cohesion policy so as to boost economic activity in LFRs.

2.2. The COR would highlight the interaction between RTD and innovation at local and regional level and point out already at this stage that the positions of greatest relevance to the municipalities and regions are those which relate to the details of new Structural Fund programmes and to the changes to be made in them.

2.3. All studies show that RTD and innovation are vital to meet international competition in an increasingly competitive world. Concurrently relations between research circles and small and medium-sized firms and industries are extremely complex; attempts must be made to simplify such contacts in order to achieve significant results through the introduction of help systems. In particular it is necessary to enhance the quality of both the product and the production process, and one way of doing this is to integrate Community programmes and national initiatives, giving priority to establishments in less-favoured areas.

2.4. Stepping up the regional dimension of research policy is consistent with EU policy efficiency criteria, whilst the increased emphasis on the competitiveness of LFRs respects EU policy fairness principles. Nevertheless, the Commission communication gives the impression that the aim of the proposed strategic frameworks to promote cohesion and competitiveness through RTD and innovation is to streamline Structural Funds regional programmes rather than to promote regional RTD and innovation as such. Moreover, it is still unclear whether opportunities exist to improve LFR access to fifth framework programme RTD funds.

Earlier framework programme participation procedures were so complicated and time-consuming that they scared LFR players away from RTD and innovation, rather than improving access. Whether their applications were granted or not was often a matter of luck. The same applies to partnership projects with CEEC regions. The new Community programmes must improve on this state of affairs.

2.5. The COR would stress that several of the analyses made and conclusions drawn also have implications for regions which are admittedly not "growth regions" but do not qualify for the LFR category in the strict sense of the term. Future development in Europe could well create a "two tier" Europe, with a handful of strong growth regions, spread throughout the continent and normally concentrated around large conurbations, and the rest of Europe. This split is already clearly noticeable in several highly developed Member States.

2.6. RTD and innovation provide the foundation on which industrial competitiveness can be built. Small and medium-sized firms and industry can lead the way in several ways:

- modernising production

- adapting to new demands, e.g. pressures for environmentally-friendly production

- technological improvements to protect market share, etc.

2.7. Despite the fact that firms are the main target group for intervention, RTD and innovation are just as important in such areas as environment, health, infrastructure, energy and spatial planning. European, national and regional/local programmes must therefore be coordinated in line with the EU's subsidiarity principles. Regional and local authorities are the decisionmaking authorities closest to economic players and the ordinary citizen. RTD and innovation also usually come within the scope of these authorities' decisionmaking powers. Innovation processes are multifunctional in emphasis and therefore interlinked with all areas of policy in which regional and local authorities are authorized to take decisions (education, vocational training, environment, spatial planning, local development activities and support for small businesses).

2.8. The COR observes that EU RTD programme intervention has been effective in promoting cooperation between, for instance, regions in the Nordic countries and regions in Ireland, Portugal, Spain and Greece. In 1997 Objective 1 regions participated in 47 % of the projects funded under the fourth framework programme. Again in 1997, 13463 partnerships (out of a total 56478) were established between regions in Ireland, Portugal, Spain and Greece and regions in other Member States.

2.9. The COR considers that RTD and innovation must be integrated into the regions' productive fabric and agrees with the Commission's conclusion (point 13) that regions which are less adept at attracting high added value activities can gain particularly by synchronizing their RTD and innovation strategies with their economic plans.

2.10. The COR would also stress that efforts to integrate RTD and innovation aid into the regions' productive fabric should not be seen purely in terms of "technical" implementation. It is a question of implementing rather than disseminating knowhow and technology. In particular, it is important at regional level to influence local and regional mentalities and attitudes which, in the regions concerned, can often be highly resistant to new ideas and change. When the climate is hostile to change, forceful intervention may not achieve the intended results.

2.11. Further, local and regional authorities in LFRs, in tandem with practical business promotion measures, should take incisive action to modernize the region's infrastructure - not just in the narrow sense (i.e. road, IT and other communications) but also in terms of building up "cultural" infrastructure to provide the "lifestyle" that a well-educated and relatively young workforce expects of the region.

2.12. The COR would highlight the opportunities for active and purposeful involvement of Europe's research parks in Community RTD and Structural Fund programmes. Compared with the United States and Japan, Europe still does not seem to take sufficient interest in its research parks despite the fact that these have grown in number by over 30 % during the past three to four years.

2.13. International cooperation with US or Japanese research parks can be highly profitable. The setting-up of multinational consortia [or European economic interest groupings (EEIGs)] has been helpful in giving small- and medium-sized firms greater access to the EU's RTD and innovation programmes.

The Communication's objectives

3. Specific comments

3.1. Since coordination policy is of a structural nature, it is by definition a long-term policy. All regions now have access to a European database to disseminate knowhow about the best ways of coordinating RTD and innovation with regional industry.

3.2. The COR applauds the Commission's drive to boost the LFRs' competitive capacity, integrate RTD and innovation into the regions' productive fabric and show that the different Community instruments can contribute to cohesion and competitiveness, provided that they are mutually complementary. The COR also agrees with the Commission's emphasis on the many benefits that the new candidate countries can derive from local and regional experiences of EU support for RTD and innovation in LFRs.

3.3. The fact that the fifth framework programme covers 1998-2002 whilst the new structural policy covers 2000-2006 could be a disadvantage, despite the fact that, under the Structural Funds general regulations, plans can be revised during the programme period. Moreover, the regulations require a formal assessment at the half-way mark. However, this should not be seen as giving carte blanche to amend the guidelines needed for RTD and innovation, or the regulations for revising the plans.

3.4. The Commission claims that the opportunities under the current Objective 4 and Adapt are included under the new Objective 3. It should therefore be pointed out that, under the current proposals, Objective 3 will not apply in Objective 1 or Objective 2 regions. The Commission proposes that the new Objective 3 should only be applicable in the regions covered by the transitional regulations, outside the regions where Objective 1 and Objective 2 are applicable. The regional authorities in the latter two groups of regions will thus find it difficult to coordinate national Objective 3 plans and the regional needs for a regional RTD and innovation strategy.

4. Taking stock of past and present initiatives

4.1. The Structural Funds - past and present activities

4.1.1. The Commission shows that, in the least developed regions of the richest Member States, RTD systems are more demand-oriented than in the poorest Member States. If research is to bear fruit, there must be joint input from both the firm and the research worker, with measures targeting both parties; what is offered must be tailored to the needs of SMEs, and should include an awareness campaign. There is no point helping small and medium-sized firms if we ignore what is going on in laboratories or research parks etc. The reverse is also true.

4.1.2. There are many signs that the IT gap between north and south is widening. Small firms must participate more actively in RTD and innovation; the authorities can help, for instance, by encouraging electronic commerce. The COR would stress the importance of framing specific projects so as to give SMEs an opportunity to take part. The more expensive and ambitious the project, the more difficult it is for small businesses to participate because of practical obstacles and the necessary financial arrangements.

4.1.3. Any measures the Commission decides to take must, first and foremost, address the need for easier access to clear information, centralized at regional level, available in a catalogue which meets the requirements of users in SMEs and industries. The catalogue should also list the organizations which serve as a go-between for RTD and SMEs; funding options; existing networks which companies can sign up to; research training options and opportunities for researchers to find a placement with a company. Many areas and regions have experience of the growth opportunities generated by RIS and RITTS projects. The network of RIS and RITTS regions has a wealth of experience which can be harnessed in LFRs to encourage SME participation in EU programmes.

4.1.4. During the first phase of Structural Fund action, the EU confined aid to investment in RTD centres and projects. During the second phase the EU stepped up its support for dissemination of technology and other innovation measures, and for centres which could potentially serve as a network for contacts between universities/institutes of technology and industry, with a view to putting industrial firms in touch with the latter's RTD resources. In the third phase of the EU's RTD and innovation policy for Structural Fund intervention (2000-2006), the aim is to extend the RTD-innovation link to areas such as funding mechanisms, human resource training and high tech firms.

4.1.5. The Committee of the Regions would therefore stress that small businesses cannot be treated as structurally distinct from the large firms which often contract out to them. There is thus every reason to involve large firms in projects to facilitate and support the implementation of new technology in SMEs.

4.2. The Community framework programme for RTD

4.2.1. In its review of the fourth EU RTD framework programme, the Commission shows that Spain and Greece have made substantial advances in IT, biomedicine and health but that progress remains to be made in industrial and material technologies and biotechnology. The components of the fourth framework programme which have proved most helpful to LFRs have been demand-oriented CRAFT technology stimulation measures for SMEs. Other effective measures include the training and mobility of researchers, promotion of innovation, dissemination of research results and networking of researchers.

4.2.2. The COR is also pleased to note that the Commission has opted to develop the fifth framework programme in consultation with the COR, among others. This dialogue has shown that the challenges and opportunities which underpin the framework programme are the same at local and regional level. The interaction between large and small towns and rural areas and the prerequisites for SMEs to be able to exploit research results are two major aspects which should be explored. The COR welcomes the setting up of the Seville IPTS, whose main task will be to develop prospective technological studies and carry out research into the interaction between technology, employment and competitiveness.

4.2.3. In 1997 Community research policy underwent far-reaching changes since the Amsterdam Treaty altered the legal base for research and Agenda 2000 reinforced the key role now played by research, innovation, education and vocational training in the EU. Progress in implementing the EU Innovation Action Plan has mobilized local and regional players in a drive to boost the climate for entrepreneurship and innovation in Europe. The December 1997 report on RTD indicators also provided data and comparative analyses of EU and Member States' research in an overall perspective, as a basis for ranking local and regional RTD and innovation priorities.

5. Developing competitiveness and cohesion at national and regional levels

5.1. The COR welcomes the Commission's finding that Objective 2 regions have been able to exploit the economic advantages of large cities and that rural and coastal areas have profited from other assets in which environmental technology and tourism have played a major part. In LFRs, research parks focusing on the strong expansion of a number of IT and biotechnology firms have boosted local and regional development by making commercial use of research carried out by universities and RTD-based firms. The COR considers that such examples bear out the importance of encouraging local and regional groups which develop complementary activities within major RTD and innovation clusters with a view to stimulating local and regional players and exploring ways of integrating RTD and innovation support into their region's productive fabric.

6. Integrating RTD and innovation into regional economic development

6.1. RTD and innovation - a shared responsibility

6.1.1. The COR agrees with the Commission's analysis that local and regional bodies must integrate RTD and innovation into their region's development strategy so as to alleviate the increasing gaps between the EU regions. The Green Paper on innovation and accompanying action plan and the European Spatial Development Perspective (ESDP) are of considerable relevance for the guidelines on RTD and innovation structural aid. The integration of various policy areas forms part of Structural Fund strategy. Different policy areas also need to be coordinated at local and regional level.

6.1.2. The ESDP document (June 1997) proposes that structural aid be allocated (a) to improve access to IT experts and increase awareness of the challenges and potential benefits that the information society can bring to regions which still lag behind in this respect, (b) to build up technology centres, strengthen contacts between higher education, applied RTD, innovation centres and business in less developed regions, (c) to achieve a minimum level of access to higher education and research and innovation centres in remote or sparsely populated areas, and lastly (d) to raise schooling and vocational training standards as part of an integrated development strategy in regions where such standards are low.

6.1.3. Negotiations on the new Structural Funds are now proceeding at a fast pace. Hence the COR would stress the need to involve areas and regions closely in integrating RTD and innovation activities into the Structural Funds' intervention for the period 2000-2006.

7. Three priorities

7.1. Promoting innovation

7.1.1. The COR agrees that cohesion policy should shift towards narrowing the technology and IT gap between the EU regions, that EU intervention should focus on demand for new technologies and IT solutions through various information programmes, and that development of total quality management at local and regional level should be prioritized. Cooperation between research institutes and SMEs should be encouraged and efforts made to achieve more effective coordination of aid channelled to firms for purposes of starting up new businesses, consolidating and developing businesses and expanding key firms in RTD clusters which the region prioritizes. The use of IT methods for the benefit of local community groups (e.g. information of the general public, educational purposes, electronic commerce) should be promoted. The COR would point out that almost 8000 SMEs will have participated in the fourth framework programme for research, technical development and demonstration activities by the end of its lifespan, in 1998. Over 60 % of these firms have never previously taken part in either Community or their own Member State's RTD programmes at national, regional or local level.

7.2. Improving networking and industrial cooperation

7.2.1. The COR would point to the Swedish legislation governing universities, which indicates cooperation with business as a university's "third task". Such partnership between universities and regional groups of firms in research parks plays a highly important role in a region's productive fabric. These research parks bring researchers, entrepreneurs, financiers and consultants into close quarters on a day to day basis, which is a major prerequisite for creating new jobs in technology- and research-based firms. One of the main functions of RTD and innovation activities during the lifespan of the new Structural Funds should be to disseminate best practice in such research park cooperation.

7.2.2. As a result of the Amsterdam and Luxembourg European Councils' strong support for funding of innovation activities, EIB, EIF and Community resources have been made available for high tech innovation enterprises in 1998-1999. The COR would stress that this is an essential complement to the intervention provided for in the fourth RTD framework programme. In the COR's view, regional and local authorities promote socio-economic cohesion by supporting the dissemination of knowhow or RTD and innovation results in the policy spheres for which they have decisionmaking powers (education, vocational training, environment, spatial planning, local development work and SME aid). The Structural Funds should encourage the establishment of inter-regional and cross-border channels of communication between RTD and business so as to exchange information and disseminate knowhow in these fields (cf. the "key measures" in the fifth RTD framework programme). The "Innovation Relay Centres" network also needs to cover a sufficiently wide geographical area to ensure that these centres' activities have a more effective impact on SMEs. Community networks such as technology agencies, Euro-info centres, and Business and Innovation Centres (BIC) can also provide support for small business in LFRs.

7.3. Strengthening human resources potential

7.3.1. The COR would draw attention to the need to provide opportunities for students, research students and established researchers to carry out coursework and traineeships in SMEs. Here Community initiative structural support to promote exchanges between RTD and universities in developed regions and LFRs could contribute. The EC Joint Research Centre (JRC) should be able to help in providing resources for such activities with the help of direct measures to assist SMEs in LFRs. Multinational consortia (EEIGs) provide a framework within which SMEs can carry out research and invest in refresher training and skills development.

7.3.2. During the lifespan of the fourth framework programme, some 6500 researchers have received financial assistance to pursue their research and a further 5600 or so, through the Marie Curie fellowship scheme, have had access to Community RTD facilities with funding from the framework programme. In the COR's view, it is most important for the new Structural Fund programmes to make such facilities available to firms, research students and researchers in LFRs, thereby helping to promote IT development and more effective integration of vocational colleges and research parks into the innovation process in the RTD clusters of greatest priority for each region.

8. The Commission's conclusions

8.1. The COR endorses the four aims stated in Point 25 of the Commission's Communication; in particular, it would stress the subsidiarity principle, viz. that it is important, since the majority of the proposed activities are to be implemented in the municipalities and regions, to provide these authorities with the time and opportunities they need in order to participate in framing new Structural Fund programmes for their respective regions before the start of the next programming period, on 1 January 2000.

8.2. In the COR's view, international cooperation between research parks should be eligible for Structural Fund support. Facilities in the context of CORDIS for setting up regional web sites on RTD clusters of research parks, universities and firms should also be reinforced and expanded. CORDIS should also indicate established networks for distance learning at university and researcher training level. However, it must be realized that distance learning will in future mainly take place on-line; computers will ensure direct contact between the course organizer and the "end-user" at times convenient to the user. Course organizers can be anywhere in the world without diminishing interactivity.

9. Conclusions of the Committee of the Regions

9.1. The Committee of the Regions is happy to note that the Commission intends to consult it when drawing up guidelines for reinforcing cohesion and competitiveness through RTD and innovation in the new Structural Fund programmes for 2000-2006. This dialogue shows that the challenges and opportunities behind the creation of a common coordinated framework for cohesion, competitiveness, RTD and innovation are the same as those found at local and regional level.

9.2. The COR has studied carefully the widening technology and IT gap between the EU regions and agrees with the Commission's conclusion on the need to boost the capacity of the authorities and economic players to develop strategic frameworks for integrating RTD and innovation into economic activity. Research has shown consistently that in an ever-more competitive world, RTD and innovation are essential to keep abreast of international competition. The COR therefore welcomes the thrust of the Commission's proposal, namely that a shift in cohesion policy is required.

9.3. The Committee of the Regions endorses a real strengthening of the regional dimension of RTD and innovation policy as such. To optimize the RTD and innovation learning process for regional players, the COR considers that advantage should be taken of the opportunities for involving Europe's research parks in the Community's RTD and Structural Fund programmes. These research parks should also receive encouragement to cooperate with the United States and Japan. In many countries too little contact between state-financed research institutes and university education, combined with a lack of cooperation with entrepreneurs, produces a bottleneck which closer liaison between research parks can help to remove. Relations between research circles and SMEs are extremely complex, and must be simplified if significant results are to be achieved via the introduction of aid systems.

9.4. In the light of its keen commitment to IT development and lifelong learning, e.g. in the context of the EU's Green Paper on organization of work and the Member States' national employment plans, the COR wishes to highlight the need for structural intervention to help firms and institutions to overcome the difficulties that arise when adjusting to new types of working structures.

9.5. The COR would stress the need to frame guidelines for the promotion of innovative vocational training programmes for SMEs and institutions; the task of assessing innovation processes and bringing them to the attention of the public must, in its view, be linked with regional education and vocational training programmes.

9.6. To narrow the technology and IT gap between developed regions and LFRs, RTD and innovation policy must be integrated into the regions' most important RTD clusters and production structures. The COR therefore feels that the guidelines for integration of RTD and innovation in future structural programmes should be framed so as to achieve a consolidated "bottom-up method" which pays particular attention to SME requirements in the production structures of a number of sectors. The scope for interaction between Structural Fund instruments and the fifth RTD framework programme's key measures should be clarified in the guidelines and the scope for including local/regional representatives on the groups which are to manage the key measures should be explored.

Some EU regions are making considerable efforts to develop extremely useful, effective systems easing access to RTD and innovation information for the various players concerned (researchers, businesses, local authorities, etc.). The COR believes that these efforts should be rewarded by the Community institutions, and that support measures should be introduced in those regions taking such action and producing tangible and effective results.

9.7. The Committee of the Regions would like to be involved in framing the guidelines for the inclusion of RTD and innovation in cohesion policy and the new Structural Funds' programmes. The COR feels that arrangements must be made at local and regional level to give researchers and firms the opportunity to gain a better understanding of their common interests and common ground. Instruments must also be introduced to enable firms to harness the fruits of research to their needs. This is the key to a form of development which will make it possible to step up cohesion across the EU's regions and boost the EU's competitiveness worldwide.

Brussels, 11 March 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER

(1) OJ C 244, 11.8.1997, p. 9.

(2) OJ C 379, 15.12.1997, p. 26.

(3) CdR 76/97 fin - OJ C 379, 15.12.1997, p. 34.