Opinion of the Economic and Social Committee on the "Communication from the Commission to the Council and the European Parliament — Innovation in a knowledge-driven economy"
Date: 2001-07-12
Institutions: European Economic and Social Committee
Subjects: EU programme, innovation, research and development, school-working life relations, teaching

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Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council and the European Parliament — Innovation in a knowledge-driven economy’

(2001/C 260/21)

On 3 October 2000, the European Commission decided to consult the Economic and Social Committee,
under Article 262 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 27 June 2001. The rapporteur was
Mr Dimitriadis.

At its 383rd plenary session (meeting of 12 July 2001), the Economic and Social Committee adopted the
following opinion by 41 votes to two with six abstentions.

1.

Introduction

In the ESC’s opinion,

1.1.
the Commission’s proposal
setting objectives for enhancing innovation in the Union is
extremely important.

and dynamic knowledge-based economy in the world, capable
of sustainable economic growth with more and better jobs and
greater social cohesion.

1.2.
The importance of innovation was already acknowl-
edged in 1995 in the Green Paper on innovation (1) and then
in 1996 in the First Action Plan for Innovation in Europe (2).

1.4.
Boosting innovation was one of the fundamental aims
of the fifth RTD framework programme (3). Building on the
results of the framework programme will also form a major
part of the action.

This action plan highlighted three prime objectives:

— to create an innovation culture;

— to establish a legal, regulatory and financial framework

conducive to innovation;

— to gear research to innovation.

1.3.
The March 2000 Lisbon European Council acknowl-
edged the importance of innovation for the economic and
social development of the Union, and focused its innovation
enhancement initiatives on the knowledge-based economy. It
recognised the Union’s persistent ‘innovation deficit’ despite
the progress made since 1996, and pointed out the need to
reap the maximum benefit for innovation from research and
to establish a friendly environment for developing innovative
businesses.

1.3.1.
This was the essence of the strategic objective set in
Lisbon for the next decade: to become the most competitive

(1) COM(95) 688 final (ESC opinion: OJ C 212, 22.7.1996, p. 52).
(2) First Action Plan for Innovation in Europe — Innovation for

1.5.
The ESC is of the opinion that the Commission’s
communication to the Council and the European Parliament,
‘Innovation in a knowledge-driven economy’, is a step in the
right direction. In the light of the Commission communication
‘Towards a European Research Area’ (4), aimed at enhancing
the efficiency and innovative impact of Europe’s research
effort, the ESC reaffirms the systemic view of innovation as
defined by the First Action Plan (2). According to the systemic
view, innovation is born out of complex interactions between
many individuals, organisations and environmental factors,
rather than a linear trajectory from new knowledge to new
product; in addition, this helps to reiterate the message that
the goal is to enhance cohesion in the Union, by coordinating
national efforts. The communication lists five individual
objectives, which the ESC believes to be appropriate, though
possibly rather ambitious. For this reason, the ESC calls on

(3) Commission working paper on the

the 5th RTD framework programme

specific programmes
of
(1998-2002),
COM(97) 553 final, 5.11.1997; Specific programmes, COM(98)
305 final and COM(98) 306 final, both OJ C 260, 18.8.1998;
ESC opinion: OJ C 407, 28.12.1998, pp. 123-159.

(4) COM(2000) 6 final of 18 January 2000; ESC opinion: OJ C 204,

Growth and Employment, COM(96) 589 final.

18.7.2000, p. 70.

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the Council to ensure that sufficient financial resources are
earmarked, and stresses the need to bolster innovation-
promotion activities within the framework of the sixth RTD
framework programme. The ESC also believes that the com-
munication should tie in with the conclusions of the communi-
cation on ‘Making a reality of The European Research Area:
Guidelines for EU research activities’ and the corresponding
ESC opinion (1).

to develop new products and services that can improve the
use of resources and contribute to environmental protection,
while paving the way to sustainable development.

2.1.3.
Lastly, the Commission notes that there is a perennial
lack of cohesion, in that performance in the Member States
and regions differs enormously. As long as the European
innovation system remains fragmented, it will be impossible
to maximise the benefits of the internal market.

2. Summary of the communication — main aims

The communication is based on EUROSTAT (2), OECD
2.1.
and other third country statistics and includes the first outline
and evaluation of European innovation performance. As the
overall results give no cause for optimism, the communication
stresses the need for Member States to step up their efforts to
enable themselves to make the most of the opportunities
offered by the knowledge-driven economy and rise to its
challenges. To achieve that goal
it will be necessary to
devise methods for marketing new products and services and
responding immediately to changes in demand, in order to
sharpen Europe’s competitive edge at world level, by means of
innovation. Not only must the European Union remove the
obstacles to innovation, in order to motivate and hold on to
European scientists and investors, but it must also support
and strengthen Member States’ school and higher education
systems, with a view to nurturing the appropriate skills and an
appropriate spirit of innovation. Emphasis must also be placed
on developing technology dissemination and absorption
methods, especially for SMEs, and on encouraging traditional
industries to take new ideas on board and build up their
capacity for innovation, given that when it comes to the
knowledge society, any sector and any company can become
a vehicle for knowledge.

2.2.
The communication from the Commission to the
Council and the European Parliament refers to five general
objectives that cover individual goals and national policies in
the area of innovation and form the Europe-wide framework
for innovation development; they are:

— coherence of innovation policies;

— a regulatory framework conducive to innovation;

— encourage the creation and growth of innovative enter-

prises;

— improve key interfaces in the innovation system;

— a society open to innovation.

2.2.1.
These five objectives reflect current priorities for the
enhancement of innovation in Europe and tie in with the
consensus reached by the Lisbon European Council on general
policy directions.

2.1.1.
The Commission also stresses the importance of
disseminating information and communications technologies
throughout the service sector, in order to improve its innova-
tive capacity.

3. The importance of innovation

2.1.2. Meanwhile, the European Commission believes that
with worsening environmental problems, the climate is right
for encouraging more innovation, in order to meet the need

3.1.
The ESC agrees with the communication’s conclusion
that there is an innovation ‘deficit’ in the Union and that,
although the Member States’ experience is growing, the knock-
on effect of that experience has yet to be seen. The five
objectives listed in the communication are a step in the right
direction, which, in the ESC’s opinion, should be a recognition
of the importance of innovation policy on the part of both the
national governments and the European public. The ESC has
identified four crucial principles for encouraging innovation in
Europe:

(1) ESC opinion: OJ C 204, 18.7.2000, p. 70.
(2) EUROSTAT: Science, Technology and Innovation — Key Figures

2000.

— information on innovation;

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— a broad awareness of its value;

— a functional organisational and regulatory environment;

— coordination of activities at national (horizontal) and

cross-sectoral (vertical) level.

3.1.1.
The communication’s five objectives serve these
principles well, but in the ESC’s view, a few points require
further amplification; this is provided below in points 3.2 to
3.6.

3.1.2.
First and foremost, the ESC would emphasise the
need for reliable statistical data. The Commission has based its
communication on figures that date back to 1998 and in some
cases even earlier (e.g. Austria 1993). This is unacceptable. Up-
to-date, reliable and detailed data are essential. The Committee
feels that it is inadmissible that it should be obliged to give an
opinion without access to the latest figures as this could
compromise its judgement.

3.1.3.
The Commission communication ought to offer a
more practical definition of innovation. For instance, products
the cutting edge of
that
technology may not be tomorrow. The meaning of innovation
must be made quite clear in the communication.

today are considered to be at

3.1.4.
The significance of knowledge as a unique factor in
safeguarding the competitive edge of society is not given
sufficient attention in the Commission communication despite
its central place in the title. The ESC cannot stress the value of
knowledge strongly enough. Furthermore,
the distinction
between innovation and research as a product of knowledge
must be highlighted. The communication does not really tackle
this point.

3.1.5.
Human resources are an essential prerequisite for the
establishment of a science-based society. For this reason, the
first step must be to improve education systems and scientific
education in particular — for both teachers and pupils — as
well as job opportunities in science. Scientific careers must be
in
attractive to scientists and reward them satisfactorily,

accordance with their merits, in order to motivate talented
pupils and persuade them to go through the demanding,
difficult but interesting training period. The right job oppor-
tunities are essential as are social status and financial standing,
given the importance of scientists and engineers for the future
of Europe.

3.2. With regard to Objective I, ‘coherence of innovation
policies’, the ESC believes that the convergence of national
innovation policies is a central issue. It feels that the targets set
in the communication are positive but not as ambitious as
they should be. The benchmarking of innovation policies is
necessary, but it alone is not enough to achieve real cohesion.
The ESC urges the Commission to take additional action by
drawing up a plan to make Member States’ national innovation
programmes accessible to all EU operators and companies
regardless of the location of their headquarters or their area of
activity. This possibility, in combination with the first action
of the first objective — ‘implement a framework for dialogue,
coordination and benchmarking of Member State innovation
policies and performances’ — could speed up convergence in
the Union. The ESC believes that a plan of this kind could be
implemented over a period of four years (2001-2004).

3.2.1.
Coordinating, harmonising and fostering interaction
between the various national and European programmes and
their organisations and principles is especially important.
Given the contribution and interest of
the organisations
involved, this type of approach would have to be a radical and
ongoing process with satisfactory room for manoeuvre and
accompanied by reciprocal trust and cooperation, avoiding
unproductive centralisation.

3.3.
On Objective II, ‘a regulatory framework conducive to
innovation’, the ESC agrees that innovation initiatives must be
facilitated by creating a flexible regulatory framework, without
meanwhile ignoring the need for regulations. The ESC would
urge the Member States to implement the action rapidly, to
apply tax measures, in accordance with Articles 87 and 88 of
the Treaty, and to encourage private investment in research
and innovation and the employment of researchers by the
private sector, and it calls on the Commission to present
reports on the efficiency and progress of this measure. There
is an urgent need to cut through red tape of all kinds.

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3.3.1. More specifically,
the ESC stresses the need to
establish a high level of communication between SMEs and
universities and research centres in the Member States. The
barriers that prevent such communication must be removed.
The companies concerned should work with the universities,
and vice versa, to achieve synergy. Furthermore, the EU must
reduce the bureaucratic obstacles blocking access to scientific
programmes, and European programmes must encourage
cooperation between universities and companies.

broadest possible support to innovative activity and generat-
ing value added from the prospective cooperation. Partici-
pation in the forum would have to be completely voluntary
and in no event should there be barriers to or any kind of
restriction on the innovative activities or endeavours of
European companies or individuals.

is worth noting that

3.4.
Objective III, ‘encourage the creation and growth of
innovative enterprises’, is the most important for the Union.
Despite the good performance of the Union over the last three
years, it should be stressed that in 1999 the United States
invested more than three times as much venture capital in
technology as Europe, and it
the
corresponding growth rate in the US compared with the
previous year was 108 %. In the ESC’s view, there is no
appropriate funding framework to provide backing for innova-
tive new companies or start-ups. There is no European-level
mechanism organised whatsoever for the generation of venture
or seed capital. In addition, the regulatory framework poses
obstacles for new and small businesses taking part in RTD or
innovation programmes, which more often than not act as a
deterrent. The ESC believes that, as part of
its effort to
facilitate the access of start-ups to public tendering procedures,
Community programmes (and their results) and the ‘Inno-
vation 2000 Initiative’ of the European Investment Bank (EIB),
the Commission should:

— devise (in conjunction with the EIB) a plan for attracting

and channelling venture capital;

— promote research into ways of removing restrictions on

funding from RTD and innovation programmes.

3.4.1.
As part of the action to ‘encourage networking
activities’, such as the network of regions of excellence for
the creation of enterprise, the networks for training and
support
seed funds, etc.), and the
development of a European electronic directory of innovative
start-ups, the ESC would encourage the Commission to work
towards establishing a European forum for licences and
innovations. This forum would have the task of giving the

(incubators,

services

3.4.2.
The ESC would emphasise the value of centres of
excellence. The USA’s superior position is not the result of
a generally higher level of education compared with Europe.
On the contrary, Europe has a multitude of educational
establishments that are of a higher standard than their US
equivalents. The superiority of the US stems from its capacity
to concentrate its best
resources in specific centres of
excellence. The EU should do the same.

is

3.4.3.
an
The development of human resources
important step in promoting innovation and forming a
knowledge-based mind-set. In contrast to the US, European
research institutes are facing problems attracting scientists
because of low salaries and generally unattractive working
conditions in research. The brain-drain to the US is extremely
that knowledge begets
damaging. We must not
knowledge. The centres of excellence will play an important
role here. The ESC believes that drastic countermeasures are
needed to address the current situation and encourage an
influx of
from third countries. An attractive
working environment and preferential treatment should be
provided for researchers. The long-term goal should be to
attract scientists from non-EU countries to the EU, especially
from countries that are advanced in innovation such as the
US and Japan.

scientists

forget

The Commission has published statistics

3.4.4.
that
demonstrate that the European Union as a whole is lagging
behind the US and Japan in terms of
the number of
researchers per 1 000 workers. Various accounts from within
the Union paint the same picture and testify to a more
general shortage of trained research staff in both public and
private sectors of the economy. The ESC would welcome a
Commission measure to give special priority to actions to
support the training of new researchers in cooperation with
the Member States, with a view to establishing a European
research area made up of a number of distinct centres of
excellence. As this type of training is time-consuming, action
in this area is imperative.

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3.5.
The Commission and others have been studying for
some time now the transfer of technical knowledge from the
point where it is generated to the point where it is utilised in
production. The ESC agrees fully with the actions listed in the
communication under Objective IV — ‘improve key interfaces
in the innovation system’, in particular:

somewhat ambitious. The communication recognises the
important role of the media, but gives no practical suggestions
for how that role should be played out. The ESC suggests that
the Commission should add a further action and look into
drawing up a plan for the use of the media to this end.

— bolstering regional initiatives, with the involvement of
professional organisations and the European Innovation
Relay Centres (IRC);

— invigorating life-long learning;

— directing research bodies in procedures for promoting

knowledge;

— coordinating knowledge production centres in a variety
of ways (knowledge networks, international links);

— disseminating good practice.

3.5.1.
By far the most effective form of technology transfer
is that between people who have been involved in acquiring
particular knowledge and then using it to develop products,
and/or who have worked on product development and have
then been involved in locating resources, new processes and
technologies. This type of exchange is rare, however, owing to
differences in work, even nationally, differences in the number
of costs restricting mobility, and differences in career-related
criteria and choices. In the case of cross-border mobility,
obstacles are also created by still insufficient co-ordination of
national social welfare systems and the frequent lack of mutual
recognition of academic qualifications and periods of study
and training abroad. In the absence of incentives to facilitate
mobility, scientists are often discouraged.

3.5.2.
The ESC would strongly encourage the promotion
of benchmarking in order to improve the effectiveness of
knowledge transfer activities.

the emphasis must shift

3.6.1.
Broad social awareness on a practical level of the
meaning of innovation is essential but will be impossible
to achieve without modernising basic school curricula and
providing training. Furthermore, as universities, owing to their
position and vocation, are showing a degree of success in this
respect,
to the lower levels of
education, namely primary and secondary schooling. Training
must focus to begin with on teachers, who in the ESC’s opinion
show a significant lack of awareness and appreciation of the
value of
innovation. This is owing in part to a lack of
vocational training for teachers, with the result that they are
unable to be the vectors of the new knowledge that
is
clearly the only possible means of promoting innovation.
Subsequently, an organised plan for promoting the idea of
producing new knowledge should further the objective of
providing the EU’s young people with a real understanding of
the need for innovative creativity. This process will be
demanding, will take a long time and will require considerable
patience before it bears fruit. Nevertheless, the ESC believes
that this is the only way to reverse the EU’s current innovation
deficit.

3.6.2.
The role of the mass media, the Internet included, in
spreading the value of innovation is highly important. The
ESC is convinced that the approach taken by the media is
biased owing as much to the complex nature of the issue at
stake as to the media’s own specific interests. The Committee
believes that this state of affairs must change, while also
recognising the difficulty of the task. It therefore urges the
Commission to conduct a study into methods of promoting
the importance of innovation by using means of influencing
public opinion and tailor-made programmes.

4. The ‘European innovation area’

In November 2000,

4.1.
the French
ministry for the economy, finance and industry, along with
the ministry for research, hosted a meeting (1) for scientists,
entrepreneurs and innovators representing the Member States

in Lyon, France,

3.6.
The ESC agrees that promoting widespread awareness
of the importance of innovation, as outlined in the communi-
cation under Objective V — ‘a society open to innovation’ —
is important. However, this task is extremely difficult and

(1) Annual European Forum for Innovative Enterprises, followed by
the Colloquium ‘Towards a European innovation area’, Lyon,
France, 21 November 2000.

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of the European Union. The meeting was followed by a second
European Commission forum on innovation and enterprise.
The seminar pinpointed the 15 most important ideas for the
future success of European innovation. These ideas, with which
the ESC is in full agreement, are the following:

4.2.
The ESC would draw special attention to the need to
establish a European patent that is flexible and accessible to
the pioneers of innovative applications, and would refer to its
detailed opinion on the subject (1).

— train up on innovation and foster entrepreneurship;

— identify the new skills needed and adapt the education

systems accordingly;

— develop the tools and services of the information society,
Internet included, for the purposes of social inclusion;

4.2.1.
The ESC realises that the academic and business
worlds differ in the methods they use to address the production
of knowledge. The former prefers immediate publicity as
this process brings prestige and is a criterion for career
advancement. The latter does not want to publish at least until
the discovery has been protected by intellectual property
rights. There is in essence a clear conflict of interests, which is
liable to keep the two communities at a distance. The ESC
suggests that use should be made of an appropriate ‘novelty
grace period’ between publication by the inventor and the
patent application. This is one possible way of bridging the
existing gap.

— develop public scientific awareness;

— promote organisational innovation;

— support the early stages of innovative businesses;

— mobilise private financing for innovation;

— coordinate the national and European support mechan-

isms for innovative companies;

— promote the development of European venture capital;

— decentralise European support for innovation towards

SMEs;

4.2.2.
Furthermore, the organisational structures of pub-
licly-funded bodies and universities and privately-run centres
are still out of synch, even within individual Member States.
The organisations responsible for protecting intellectual rights
and the technology transfer institutes can ensure on one level
that know-how developed through applications in publicly
funded organisations is used for product development in
industry.

4.3.
Lastly, the ESC would encourage the Commission to
step up its efforts to ensure that Commissioner Liikanen’s
statement at the Lyon meeting, that the Commission had an
important role to play in promoting innovation and restoring
confidence, will be proved right.

— boost the R&D effort in Europe;

5. Conclusions

— develop SME innovation on the basis of research results;

— introduce a European patent suited to applicants’ needs;

The importance of encouraging initiatives to promote

5.1.
innovation has already been demonstrated.

— foster European researcher mobility;

— enhance Europe’s appeal to the world’s best researchers.

(1) ESC opinion on the Proposal for a Council Regulation on the
Community patent COM(2000) 412 final — 2000/0177 (CNS),
OJ C 155, 29.5.2001, p. 80.

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5.2.
The Commission’s communication makes a positive
contribution to this end, but certain points must be developed
further.

5.6.4.
A methodology and model programmes must be
devised to promote the idea of innovation via the mass media.

In the ESC’s opinion, the promotion of initiatives to
5.3.
support innovative endeavour in the Union is of fundamental
importance, and it places special emphasis on the need to
facilitate financing procedures, harmonise the policies of the
Member States and work towards a more flexible regulatory
framework.

5.4.
The ESC warmly welcomes the programme’s broad
lines of action. These seem to be well planned and targeted,
and are of monumental importance to the European family of
inevitably be
nations. However, additional resources will
required.

The strategic objectives mentioned above may be
5.5.
overly ambitious. Nevertheless,
the
communication will make an important contribution to
fostering innovation in the broader e-Europe initiative, and
therefore urges the Council to ensure that sufficient financing
is made available.

the ESC believes that

5.6.
The ESC’s suggestions relating to structural changes
listed and set out in this opinion can be summed up in the
following points:

5.6.1.
The national R&D programmes of all EU countries
should be opened up immediately to all interested research
centres in the EU, irrespective of the country they operate in.

5.6.2.
In the long term, the importance of the knowledge
factor must be taught in EU Member State schools. University
and school lessons must be harmonised and adjusted accord-
ingly as a precondition for scientific integration in Europe and
improved mobility for scientists.

and lower

5.6.5. Middle
staff,
especially in local government, should be given training in
environmental awareness with a view to exploiting new
technologies.

ranking government

5.6.6.
The procedures for obtaining a European patent
must be made easier, simpler, less time-consuming and less
expensive.

5.6.7.
An appropriate legal and regulatory framework
should be set up to enable research results to be published by
the inventor within an appropriate period (‘novelty grace
period’) before patents are applied for, without jeopardising
originality. This would remove major obstacles to communi-
cation and the sharing of experiences in the public and private
research sector.

5.6.8.
SMEs must be supported and defended in their
research activities with a view to switching from a defensive to
a risk-taking business culture.

The ESC’s proposals on the establishment of centres of

5.7.
excellence can be summed up as follows:

5.7.1.
A mechanism is needed for the independent gener-
ation of European start-up and venture capital, modelled on
the US example, without unjustifiable restrictive regulations of
the type governing the EU’s current innovation programmes.

5.7.2.
There should be European centres of excellence for
innovative activity, using open and transparent procedures to
bring together researchers from universities, non-university
institutes and industry. The favoured use of English as a
common language could be an important factor here.

5.7.3.
University-industry researcher mobility programmes
must be stepped up, doing away with the current atmosphere
of introversion and exclusivity.

5.6.3.
There is a need for long-term technical/vocational
training based on uniform European models and lifelong
learning programmes, arising from the importance of knowl-
edge production.

There should be more programmes designed to
5.7.4.
attract non-EU scientists to research positions in European
industry and in the European academic community.

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The communication cannot achieve the strategic objec-
5.8.
tives set
in this respect as it stands, or even with the
improvements proposed by the ESC in this opinion. It can,

however, contribute to the development of these strategies as
part of an overall drive in this direction.

Brussels, 12 July 2001.

The President

of the Economic and Social Committee

Göke FRERICHS