Draft opinion of the Committee of the Regions on the "Communication from the Commission to the European Parliament, the Council - Innovation in a Knowledge-Based Economy"

(2001/C 253/07)

THE COMMITTEE OF THE REGIONS,

having regard to the Communication from the Commission to the European Parliament, the Council - Innovation in a Knowledge-Based Economy (COM(2000) 567 final);

having regard to the Commission Staff Working Paper - Trends in European innovation policy and the climate for innovation in the Union (SEC (2000), 1564);

having regard to the decision of the Commission of 26 September 2000, under the first paragraph of Article 265 of the Treaty establishing the European Community, to consult it on this matter;

having regard to the decision of the Bureau of the Committee of the Regions on 13 June 2000 and the President's decision on 15 November 2000 to instruct Commission 6 (Employment, Economic Policy, Single Market, Industry and SMEs), in collaboration with Commission 5 (Social Policy, Public Health, Consumer Protection, Research and Tourism), to draw up an opinion on the subject;

having regard to its Opinion on the Green Paper on Innovation (COM(95) 688 final)(1);

having regard to its Opinion on the First Action Plan for Innovation in Europe (COM(96) 589 final)(2);

having regard to the supplementary Opinion (CdR 419/2000 rev.1 adopted by Commission 5 on 5 February 2001 [rapporteur: Mrs Piikivi (FIN/PES)];

having regard to the draft Opinion (CdR 468/2000 rev.) adopted unanimously by Commission 6 on 19 February 2001 [rapporteur: Mr Keymer (UK - PPE)],

at its plenary session of 4 and 5 April 2001 (meeting of 4 April) adopted the following opinion.

VIEWS AND RECOMMENDATIONS

General aspects of innovation policy

1. The Committee welcomes the opportunity to comment on this important communication. In its 1996 opinion on the European Commission's Green Paper on Innovation, the Committee stressed the important role of local government in innovation policies. The Committee has continued to stress the local government role in subsequent innovation opinions.

2. The Committee believes that this Communication is generally a well-argued and sound set of proposals designed to improve EU and individual Member States' performance in the field of innovation. Overall, it seems to reflect the current shared understanding among practitioners and organisations working in this area.

3. Nevertheless, the Committee feels strongly that there must be a concerted effort to increase the coherence between innovation and other related policies. Economic and social cohesion policies matter because they help shape the framework in which new clusters of economic activity can take place. EU Structural Funds for example have been crucial in creating the infrastructure that helps declining and lagging regions and areas to put new life into traditional industries, and to develop new and hi-tech sectors. Skills policies matter because the source of all innovation is the application of the human intellect.

4. The Committee considers the five proposed priority objectives to be appropriate and relevant as they form part of a coherent support system for innovation and reflect the key issues facing the EU as a whole. Individual Member States may of course have different emphases according to their own systems and circumstances. The systemic view of innovation which is based on continuous improvement of processes and which implies not only the need to increase the knowledge of individuals but also the development of collective knowledge, is seen as the most valuable methodology for developing innovation policies and strategies. The role of the EU and Member States is therefore to focus on creating the right framework conditions to allow innovation support to develop, and this clearly involves creating a level playing field.

5. A key role for regions and local administrations is to concentrate on local specific actions such as removing barriers to the effective operation of the local and regional innovation system. The Committee believes therefore that innovation promotion policies should always be designed with sufficient flexibility to allow localities and regions to design their own support systems as appropriate.

6. The Committee believes that innovation is the key process that links research with enterprise, and allows jobs, goods and services to be created as a result. Innovation promotion policy should therefore be strategic, and not sectoral, and as a consequence emphasis should be placed on ensuring an integrated and coherent approach at all levels.

7. In particular, the Committee considers that there should be more emphasis on the strategic role of local government in promoting and stimulating innovation. Local authorities are directly responsible for many of the functions which contribute to the innovation support system. These include economic development; education and training; development of science, technology and business parks; land-use planning to assist in attraction of investment and the formation of clusters, and so on. Local government systems and structures may vary between Member States, but they have a common responsibility to act strategically to bring together these various innovation-related functions (including those provided locally by national government agencies) in order to provide a coherent framework in which firms can operate and innovate.

8. Moreover, local government should actively be encouraged to mesh their policies with policies operating at national and European levels to ensure a strong, united and transparent framework for the promotion of innovation.

9. The Committee believes that there continues to be excessive red tape affecting SMEs which, inter alia, stifles innovation. Moreover, SMEs have to contend with inadequate measures for the financing of innovation and R& D and innovation information systems, which reduce their innovative capacity.

10. Finally, the Committee considers that the Communication underplays the immense impact local government itself can have in stimulating innovation in the local economy. Local government is a procurer of goods and services on behalf of the community it serves. It is a direct provider of services in its own right; and is engaged in raising the level of local civic participation through, for example, the intelligent use of information and communications technologies. Local government has a significant role to play in exploiting new technologies; encouraging innovative behaviour in its suppliers; implementing new systems of service delivery; and applying new forms of management as a public sector employer.

Objective 1 - Coherence of innovation policies

11. The Committee welcomes the proposal to implement a framework for dialogue, coordination and cooperation which will make it possible to identify, evaluate comparatively and benchmark Member States' innovation policies and performance. This dialogue should include relevant actors at all levels within the Member States, as well as with the EU.

12. The Committee believes that the European Commission itself can do more to assist this process. This can be through the creation of a website; by disseminating good practice on training technologists to become entrepreneurs; and by issuing guidance on how to establish effective business incubators. Moreover, within its own initiatives such as the Framework Programme for Research and Development, the Commission could simplify the call procedures and the bidding process in order to make it less time-consuming and costly for potential participants.

13. The European Commission should encourage activities aimed at establishing contact, cooperation and coordination between (local and regional) authorities and/or institutions. This is necessary for example when international cooperation or coordination is planned. This means not only scaling down and simplifying rules and procedures but also accelerating them. It should also be sufficient for participants in initiatives to show that they have made the necessary efforts to find international cooperation partners.

14. The Committee notes that, in order to promote innovation, the fifth RTD Framework Programme (Decision 182/1999/EC, 22 December 1998) requires that research projects include a Technological Implementation Plan, and recommends that good examples and operational models of TIP implementation should be effectively disseminated by being widely publicised.

15. At the national level, while always being mindful to avoid misuse of state aids and distortion of the Single Market, all Member States could employ fiscal incentives including via regional and local government to encourage additional efforts to promote in-company R& D, particularly for SMEs, and new procedures for knowledge management. These measures, going with the grain of the market, would do much to raise the adaptability of enterprises within the EU, relative to their global counterparts.

16. The Committee warmly welcomes the European Innovation Scoreboard. This provides a suitably compact range of indicators that seek to reflect the various dimensions of innovation performance across the Union and Member States. The Commission should ensure that this relatively concise set of indicators be maintained so that there is a continued focusing of effort around key priorities.

17. The Committee recommends that consideration also be given to drawing up and publishing an innovation scoreboard at regional level, enabling local and regional authorities, the academic community (universities, colleges and research institutes) and businesses to evaluate and monitor the success of regional innovation activity.

18. The Committee believes that the main challenge facing the Innovation Scoreboard will be to ensure consistency of data across the EU and over time. Both the Commission and individual Member States should be urged to increase the quality and robustness of the European-wide data sets used. The Scoreboard should be updated frequently and should also attempt to analyse defined patterns and trends identified in the management of innovation.

19. The Committee believes that where suitable indicators or proxies do not currently exist, efforts should be made to fill these gaps and to give a more accurate picture of innovation rates.

20. The Commission should consider extending the Innovation Scoreboard to include the EU applicant countries, together with non-EU European countries. This would better reflect the realities of commercial interaction between organisations and the efficiency of networking in this area within the European space as a whole.

21. The Committee supports the efforts of DG Enterprise to increase the frequency of the Community Innovation Survey from every four years to every two years.

22. The Commission should undertake frequent and regular reviews of innovation progress by Member States.

23. The Committee would welcome ideas from the Commission relating to further strands of research to help strengthen our understanding of innovation systems and ways to support them.

Objective 2 - A regulatory framework conducive to innovation

24. The Committee supports the intention agreed at the Lisbon European Council to reduce administrative and regulatory burdens on firms. Indeed, the Committee wishes to see more positive action taken to deal with excessive bureaucracy. For example, the greater use of cost/benefit analysis of red tape should be adopted by Member States. Regulations should have a finite life, requiring renewed justification if they are to be re-imposed for a further finite period. The Committee would like to see indicators covering the extent of red tape, and the efforts made by Member States to remove it, included in the Innovation Scoreboard.

25. The Committee stresses the importance of innovation-related intellectual property in the knowledge-based economy and notes that application of research findings requires clear guidelines on ownership relations between the academic community and individual researchers.

26. The Committee recommends that rules governing the intellectual property of researchers be harmonised in the EU, which will encourage researchers to appraise the economic value of their findings and will also enhance application-oriented cooperation between researchers in different countries.

27. The Committee recommends clarifying whether intellectual property rights to the results of research projects conducted with public funding can be protected by using project funding to obtain patents.

Objective 3 - Encourage the creation and growth of innovative enterprises

28. The Committee believes that while the Communication is right to highlight the importance of innovative, technology-based start-ups in providing high quality skilled jobs in the future, it is important also to make the point that "innovative" does not always mean "hi-tech". There are many "traditional" sectors, ranging from steel production to food processing, that can benefit greatly from developing new products and processes. This is particularly important for localities and regions located outside the central European "core" and whose economies are still characterised by more traditional industries, such as footwear and textiles.

29. The Committee notes that technological innovation now concerns almost all sectors, and the trend to innovation is on-going, rapid, all-embracing and transferable between businesses. Innovation is therefore triggering fiercer competition, rewarding those able to earmark greater resources - human as well as financial - to introducing planning and management systems which act as instruments to help reshape companies' strategies and organisational structures, provided they are adequately planned and implemented.

30. The Committee believes that promoting innovation in the service sector should not be ignored. This ranges from those professional and financial services targeted towards industry and commerce; to broader consumer-oriented activities such as retail and leisure.

31. The Committee feels that efforts should be stepped up to ensure that scientific communities (universities, other higher educational institutions and research centres) increase their role in the creation of innovative firms by means of suitable vehicles (spin-offs etc).

32. Moreover, elements of the public sector should not be overlooked as potential beneficiaries of a supportive innovation framework. Examples include seeking to implement new methods of delivery of services ranging from health to transport; developing new forms of democratic and/or civic participation; and providing and commissioning public amenity such as planning and architecture. In rural zones and upland regions in particular, there is an urgent need to promote innovative ways of providing services to local populations, families and businesses, in order to ensure that populations remain in place and companies stay in business. Continuing to provide services in the traditional forms often means that they have to be cut, forcing residents to leave important and vulnerable areas. The Committee feels particularly strongly that local government should be recognised as having both a role and a responsibility in this context.

Objective 4 - Improving key interfaces in the innovation system

33. The Committee strongly supports the proposed measures for strengthening co-operation between researchers, companies and public bodies. Increased co-operation between all involved will make the innovation support system work more effectively. Local authorities, through their economic development function, can act as extremely effective facilitators for this.

34. The Committee points out that collaboration between business and science is becoming increasingly important; at the regional and local level, there is a particular need to find new forms of collaboration between science and SMEs. They must redefine their customer-producer relationship based on reciprocity and derive new forms of innovation management from this.

35. The Committee recommends that models be sought in higher education of best practice with regard to support measures and the knowledge needed to provide these, thereby helping researchers to understand the commercial value of their findings, and facilitating the protection and licensing of intellectual property, and advocates that good practice be widely publicised.

36. The Committee welcomes the reference to life-long learning in the Communication but considers that the Commission underplays the role of local government in promoting and delivering it. Moreover, the work-based dimension of lifelong learning and knowledge management deserve more attention since they do as much to improve skills and make innovative individuals and teams available to companies in all sectors as does scientific, technological or indeed graduate employment.

Objective 5 - A society open to innovation

37. The Committee considers that the final recommendation for Member States under Objective 5 - stimulating public demand for innovation by dynamic purchasing policies in public administrations - is a much more significant issue than the Communication would suggest. The US Small Business Investment Research programme, which legislates for a minimum quota for SMEs and start-ups in public sector research funding (and which has been operating for around 30 years), is an exemplar in this regard.

Brussels, 4 April 2001.

The President

of the Committee of the Regions

Jos Chabert

(1) OJ C 182, 24.6.1996, p. 1.

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