European innovation. January 2007.
Date: 2007-01-19
Institutions: Directorate-General for Enterprise and Industry
Subjects: industrial policy, information, innovation, research and development, serial publication

E u r o p e a n

Europe INNOVA conference
Valencia hosts Europe’s innovators

I
S
S
N
1
8
3
0
-
4
3
3
8

7
0
0
2

y
r
a
u
n
a
J

 Radio-frequency identiﬁ cation

 The European Cluster Alliance

 Innovating Regions in Europe Network News

European Commission
DIRECTORATE-GENERAL FOR ENTERPRISE AND INDUSTRY

ENT 5 0110 - EI 01-07 EN.indd   1
ENT 5 0110 - EI 01-07 EN.indd   1

12/20/06   9:34:12 AM
12/20/06   9:34:12 AM

 
 
Contents
Europe INNOVA conference report 
FEATURE: New ways to make money – 

innovation in financial services 

FEATURE: Radio-frequency identification – 
a technology seeking applications 

IRE NETWORK NEWS 
(cid:129) Measuring innovation performance, 

lessons from Lazio 

(cid:129) Innovation Cycles – raising 
awareness in Alentejo 

(cid:129) STRATINC – Strategic intelligence 

to help companies 

(cid:129) Different approaches to cluster support – 

south-east England and Jämtland 
(cid:129) Oxford’s approach to using university 

research results 

NEWS IN BRIEF 
Support for innovation from 
the European Parliament 

3

5

9

13

14

16

17

18

20

21

22

European Cluster Alliance – enabling clusters 

to learn from each other 

24
The proposed European Institute of Technology  26
BY INVITATION: Human capital, 

measuring innovation potential 
A high-tech strategy for Germany 
Where next for the single market? 
CONFERENCES 
PUBLICATIONS 
INNOVATION IN FIGURES 

27
28
29
30
31
32

Innovation for growth

“You  have  to  speculate  to  accumulate”,  is  an  oft  repeated  piece  of 
advice  for  would-be  investors.  Most  of  us  like  making  money,  but  for 
many people the range of financial services products on the market is 
bewildering  and  the  real  costs  and  benefits  of  each  to  a  great  extent 
hidden behind marketing promises and actuarial small print. For many 
investors, the fear that the person making the money is not them but 
the person who sold them the product is all too real. But what is driving 
the rash of new products – with new ones coming out every day – avail-
able to retail investors? Our first feature article suggests that competi-
tion amongst providers is one of the biggest drivers.

In our second feature, the relatively new technology of radio frequency 
identification has found a wide range of new applications as the price 
has  come  down.  A  recent  consultation  exercise  by  the  Commission 
found  many  worries  about  the  privacy  implications  of  this  tool  for 
transmitting  data  through  the  airwaves.  Many  of  these  worries  seem 
overblown given the costs of setting up the infrastructure required to 
demolish our privacy, but if regulators do not deal with the issues there 
is a risk that RFID applications will be hindered or blocked.

November’s Europe INNOVA conference was the first get-together for 
participants in the Commission’s flagship initiative to encourage innov-
ation in business. As the various component projects get off the ground, 
the  conference  was  the  opportunity  to  share  ideas  on  how  Europe’s 
traditional businesses can be encouraged to innovate and supported in 
doing so. The conference’s “Valencia Declaration” is intended to send a 
strong message to Member States’ leaders on the value business places 
in their support for innovation.

European Innovation

European  Innovation  (formerly  Innovation  and  Technology  Transfer)  is  published  six  times 
a  year,  simultaneously  in  English,  French,  German,  Italian,  Polish  and  Spanish,  by  the 
European Commission’s Enterprise and Industry DG as part of the European Community’s 
Sixth Research Framework Programme.
The next issue will be published in March 2007.

Published by: 

Legal notice:

Communication and information Unit
Enterprise and Industry DG
European Commission
B-1049 Brussels
Fax +32 2 292 1788 
entr-itt@ec.europa.eu
http://aoi.cordis.europa.eu/

Written and produced by: 

ESN, Brussels

Neither the European Commission nor any person 
acting  on  behalf  of  the  Commission  is  respon-
sible  for  the  use  which  might  be  made  of  the 
information  contained  in  this  publication.  While 
every effort is made to ensure the accuracy of the 
information, readers who wish to follow up any of 
the opportunities cited in this publication should 
confirm  the  validity  of  the  information  with  the 
contacts and/or references cited in the articles.

© European Commission, 2007

Luxembourg: Office for Official Publications of 
the European Communities, 2007

Reproduction is authorised, provided the source 
is acknowledged.

Printed in Belgium

European Innovation

2

Innovation in the Enterprise 
and Industry DG

The development of innovation policy and the imple-
mentation of a range of measures is the responsibility 
of the Innovation policy Directorate of the European 
Commission’s Enterprise and Industry DG. 

Contact

Innovation policy development (D/1)
Fax +32 2 296 0428 
entr-innovation-policy-development@ec.europa.eu

Support for innovation (D/2)
Fax +32 2 298 1018
entr-innovation-networks@ec.europa.eu

Financing SMEs, entrepreneurs 
and innovators (D/3)
Fax +32 2 299 8025
entr-finance-sme@ec.europa.eu

Technology for innovation; 
ICT industries and e-business (D/4)
Fax +32 2 296 7019
entr-ict-e-commerce@ec.europa.eu

http://ec.europa.eu/enterprise/
innovation/index_en.htm

http://cordis.europa.eu/innovation/

January 2007

ENT 5 0110 - EI 01-07 EN.indd   2
ENT 5 0110 - EI 01-07 EN.indd   2

12/20/06   9:35:23 AM
12/20/06   9:35:23 AM

Europe INNOVA: 
It’s innovation, stupid!

Bill  Clinton  –  in  name,  at  least  –  Ferrari  and  a  posse 
of  students  were  at  the  Europe  INNOVA  Conference 
in  Valencia  last  November.  They  were  joined  by  an 
800-strong contingent of Europe’s innovation profession-
als  and  policy-makers,  all  keen  to  share  their  views  on 
how to improve European competitiveness and growth.

y
c
i
l

o
p

n
o
i
t
a
v
o
n
n

I

Beat the bureaucracy

Pilar del Castillo, the European Parliament’s rapporteur on 
innovation  and  research,  concurred,  calling  Aho’s  report 
“a concise account of the state we are in today”. She high-
lighted  social  welfare  and  investment  in  energy  as  areas 
ripe for new innovation. ICT, e-skills and the promotion of 
entrepreneurial thinking – “flexibility and flair” – through-
out the education system should be top priorities. 

“Europe needs to be the leading innovator and to put its 
heart and soul into it,” the former Spanish minister assert-
ed;  not  just  using  trendy  words  and  waving  fancy  docu-
ments but taking up challenges in well-designed projects. 
“Europe needs to beat bureaucracy and lazy attitudes.”

The  EU  can  only  deliver  a  comprehensive  solution  if  all 
actors  are  fully  engaged  and  innovation  permeates  all 
aspects  of  social  and  economic  life,  suggested  White. 
“That’s why we are here at Europe INNOVA.” 

What  advice  could  Esko  Aho,  Finland’s  former  prime 
minister and chair of a major report on Europe’s state of 
innovation(1) offer professional innovators attending the 
November 2006 Europe INNOVA conference to stoke the 
continent’s innovation fires? 

It  needs  to  create  and  nurture  the  market  for  innova-
tive  products  and  services.  Europe  must  bring  in  more 
resources  for  R&D  and  for  innovation  (not  the  same 
thing!),  and  to  encourage  structural  mobility  –  people, 
financial instruments, organisations, etc. 

Sporting success

Ferrari’s general manager Amedeo Felisa is someone who 
understands how to deliver ‘the benefits of a team-driven 
‘innovation  culture’  across  its  road  and  Formula  1  divi-
sions.  Every  year,  the  firm  produces  new  and  modified 
models with up to 80% new parts. That requires a lot of 
innovation, which is why Ferrari ploughs back 17% of its 
€1.3 billion turnover into R&D. Input comes from univer-
sity partners (over 60), internal R&D, suppliers (some 800 
in Ferrari’s ‘community’), and from the F1 operations.

Importantly, according to the man at the helm during his 
country’s  lauded  economic  turnaround,  Europe  needs  to 
adopt a positive attitude towards risk-taking – entrepreneurs 
willing to accept failure and use the simple lessons learned. 

“We are a small company and this level of co-operation is dif-
ficult to manage, but we understand its value added,” Felisa 
noted. And the customers appreciate it, ranking the carmaker 
number one in ‘sportiness’ and also in ‘innovation’.

To illustrate, Aho borrowed from Bill Clinton’s 1992 presi-
dential campaign slogan, ‘[It’s] the economy, stupid!’ “But 
in  Europe  we  can  say  ‘It’s  innovation,  stupid!’  because  it 
plays such a key role in solving many of our problems.” 

David White, director of Innovation Policy at the European 
Commission’s Enterprise and Industry DG, put it another 
way:  “Innovation  determines  what  we  will  achieve  in 
material terms; the spiritual and cultural values which we 
bring to that material state will determine whether it has 
quality or not.” 

Delegates  were  interested  to  learn  more  about  the 
Commission’s  proposed  European  Institute  of  Technology 
(EIT).  Alain  Pompidou,  president  of  the  European  Patent 
Office  (EPO),  called  it  a  “major  breakthrough”  capable 
of  filling  the  gap  between  ideas  and  inventions,  offering 
networking without walls, clustering benefits and a pluridis-
ciplinary approach. White said it is an “open door” to new 
and exciting possibilities which, if successful, could remould 
education. Negotiations over funding it are difficult, he con-
ceded, but the EIT is a convincing proposition. 

▼

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   3
ENT 5 0110 - EI 01-07 EN.indd   3

3

12/20/06   9:35:24 AM
12/20/06   9:35:24 AM

 
y
c
i
l

o
p

n
o
i
t
a
v
o
n
n

I

French  student  Eric  Boniface  told  European  Innovation 
that involving the next generation like this gives a new-
comer’s  perspective.  “Maybe  a  bit  naive,”  he  mused, 
“but certainly fresh air!” 

Büscher  went  on  to  deliver  a  nine-point  agenda  for 
the  coming  two  years,  including  making  progress  on 
IPR,  standards  and  the  EIT;  tackling  neglected  areas, 
such as services; improving trans-national co-operation 
among  clusters(2);  knocking  down  barriers  to  early-
stage  finance;  concluding  a  public  procurement  hand-
book; and building on new, lead markets – as called for 
in the Aho report.

Star-spangled clustering

Top of the bill

As  drivers  of  innovation  and  economic  growth,  clusters 
and cluster policy dominated the event’s parallel sessions. 
Christian  Ketels  of  the  Harvard  Institute  of  Strategy  and 
Competitiveness,  presented  a  cluster-mapping  exercise 
for the ten new EU Member States, built on a Michelin-
styled star system for ranking regional performance. Early 
findings  point  to  a  strong  relationship  between  high 
clustering and high GDP per capita in various regions.

At one point, grey-haired innovation experts had to yield 
the floor to a posse of Europe’s students. “We asked them 
for their views on Europe INNOVA to see if our message 
is  getting  across,”  said  Reinard  Büscher,  head  of  the 
Commission’s Innovation policy development unit. 

In her closing remarks, Gema Amor, the Valencian region-
al  minister  for  co-operation  and  participation,  rounded 
up the three-day conference and delivered the 20-point 
Valencia  Declaration(3)  of  policy  priorities  for  European 
innovation.

In  his  closing  speech,  David  White  said  innovation  is 
“absolutely  top  of  the  bill  for  Europe”,  noting  positive 
and encouraging signals coming from the highest politi-
cal echelons. With the “fundamental building blocks” in 
place – legislation, programmes, networks and attitudes 
– Europe can move forward and develop into a “world-
beater” in innovation, he concluded.

Europe INNOVA Awards – 
skyrockets in flight...
After a delightful afternoon of networking and infor-
mation  sharing,  Europe  INNOVA  delegates  were 
treated to an al fresco cocktail and fireworks display 
in  the  hacienda-style  Masía  Xamandreu,  outside 
Valencia.  The  official  dinner  followed,  during  which 
the first Europe INNOVA Cluster Awards were given 
to Dusan Busen of the Slovenian Automotive Cluster 
and  Herbert  Ortner  of  the  Oekoenergie-Cluster, 
Upper Austria, in recognition of their professionalism 
and  commitment  to  excellence.  The  Commission 
also  recognised  outstanding  networking  and  results 
among  the  Europe  INNOVA  networks.  Four  teams 
were duly awarded Network of the Year: the space-
sector  networks  CASTLE  and  INVESaT,  and  BeLCAR 
and TCAS in the automotive sector.

(1)  ‘Creating an Innovative Europe’, Aho Report, January 2006; 

http://ec.europa.eu/invest-in-research/action/2006_ahogroup_en.htm

(2)  See also ‘European Cluster Alliance – all for one ... one for all’, 

European Innovation, this edition.

(3)  Valencia Declaration, download from 

http://www.europe-innova.org/servlet/Doc?cid=6499&lg=EN

More information on Europe INNOVA:
www.europe-innova.org

European Innovation

4

January 2007

ENT 5 0110 - EI 01-07 EN.indd   4
ENT 5 0110 - EI 01-07 EN.indd   4

12/20/06   12:17:58 PM
12/20/06   12:17:58 PM

 
Better earnings 
but bigger risks, too

As  Europe’s  populations  age,  straining  state  retirement 
funds, individuals need more and more to take charge of 
their own personal investment plans as a means to ensure 
a  prosperous  retirement.  But  with  interest  rates  on  sav-
ings accounts at an historic low, and the market growing 
ever-more  competitive,  banks  and  financial  institutions 
are  having  to  become  increasingly  creative  in  designing 
and marketing investment products to customers.

n
a
m
e
e
L

k
i
r
E
©

:
o
t
o
h
P

Today’s retail investor (i.e. private individuals, primarily, 
as  opposed  to  institutional  investors)  has  a  dizzying 
array  of  investment  possibilities  and  ways  to  buy.  He 
or she can go on-line to manage their savings account, 
buy  listed  and  unlisted  shares  and  bonds,  units  in  an 
investment  fund,  insurance  products,  and  many  other 
options,  often  with  just  a  few  clicks  of  the  mouse. 
Purchases  can  be  made  from  banks,  insurance  com-
panies, and other financial institutions, as well e-brokers, 
and fund supermarkets, depending on the 
country. Then there are so-called special-
ist  investment  products  offered  in  new 
ways  to  allow  retail  investors  access  to 
much  riskier  vehicles  with  higher  poten-
tial yields, including offshore hedge funds 
and derivatives.

The  so-called  private  wealth  manage-
ment sector has become a huge industry. 
By  their  sheer  numbers,  relatively  small-
sum,  retail  investors  represent  a  massive 
share  of  the  financial  services  industry’s  business, 
which earns commissions and fees for everything rang-
ing  from  advice  to  safe-keeping  of  certificates.  Retail 

e
c
n
a
n
i
f

n

i

n
o
i
t
a
v
o
n
n

I

investors  are  also  propping  up  European  financial 
growth, and could take some pressure off state retire-
ment funds in the not-too-distant future.

Leif Trogen, head of banking infrastructure for the Swedish 
Bankers’  Association,  says  he  sees  the  perceived  need  to 
save for retirement as by far the biggest motivator for retail 
investment. “People just leaving school are already prepar-
ing, or thinking about preparing, for their retirement. An 
important  issue  is  that  society  will  not  take  care  of  you 
forever. Retail financial products can address this.”

Bankrolling into the future

In  the  globalisation  and  deregulation  that  gathered 
steam during the 1990s, several factors spurred develop-
ment of retail financial products. Interest rates on low-risk 
investments,  such  as  savings  accounts  and  government 
bonds, plunged to the point that they barely kept pace 
with  inflation.  This  induced  small  investors  to  look  for 
more profitable ways to invest.

At  the  same  time,  large  firms  and  institutional  invest ors 
began investing directly in the market, bypassing banks 
and  other  financial  institutions  which  turned  to  retail 
investors  to  take  up  the  slack.  Before  the  IT  revolution, 
many  of  these  institutions  shunned  retail  investors, 
because  of  the  paperwork  involved  with  small-scale 
transactions.  But  now  computers  easily  process  massive 
amounts of data, allowing institutions to take on far more 
clients, and to use the resulting databases for probability-
based credit screening, so they do not have to vet every 
individual  application.  All  this  has  radically  sped  up  the 
investment process.

“Investment funds provide 
retail investors with access 
to professionally managed 
and diversified investments 
on affordable terms.”

▼

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   5
ENT 5 0110 - EI 01-07 EN.indd   5

5

12/20/06   9:35:32 AM
12/20/06   9:35:32 AM

 
 
 
 
 
 
e
c
n
a
n
i
f

n

i

n
o
i
t
a
v
o
n
n

I

g
n
h
c
X
k
c
o
t
S
©

:
o
t
o
h
P

of  investment  fund  and  unit  trust  that  could  be  traded 
anywhere in the European Union. The Directive aimed to 
harmonise laws, regulations and administrative provisions 
relating to these kinds of funds, so that they would face 
more or less the same competitive conditions throughout 
the EU. Investors can theoretically count on effective and 
uniform protection.

Investment Funds
Investment  funds  are  professionally  managed  col-
lective  investment  schemes  that  pool  investors’ 
funds  and  thus,  in  theory,  benefit  from  economies 
of  scale.  Also  known  as  managed  funds  or  mutual 
funds, they can be classed into four main categories 
according  to  their  investment  objective:  money 
market funds, equity funds, bond funds, and mixed 
(or balanced funds).

Investment funds account for a substantial portion 
of  all  trading  on  major  stock  exchanges.  They  can 
target a wide range of investment aims, for example 
specific geographic regions or specified themes like 
medicine or technology, or property holdings. They 
often focus on a domestic (or euro-zone) market to 
minimise  currency  risk.  Funds  can  be  open-ended 
or closed-ended depending on whether the number 
of units available is flexible or finite.

In Europe, UCITS are funds primarily aimed at retail 
investors.  Other  funds  (non-UCITS)  are  regulated 
at national level, with different rules regarding who 
can invest in them.

Investment trusts differ from funds in that there are 
a  fixed  number  of  shares  that  can  rise  and  fall  in 
value on the stock market, independent of the value 
of the trust’s holdings.

Structured  investment  products  are  specially  cre-
ated to meet specific needs that standard financial 
instruments cannot fill. They can be used either as 
an  alternative  to  a  direct  investment,  or  to  reduce 
risk exposure of a portfolio through asset allocation, 
or to exploit a current market trend.

Derivative  instruments,  or  derivatives,  are  complex 
vehicles whose prices are based on the performance 
of other underlying investments.

A hedge fund is an investment company that uses 
high-risk  techniques,  such  as  borrowing  money 
and  selling  short,  in  an  effort  to  make  very  large 
capital gains.

One-stop shopping

Deregulation  also  freed  banks  and  financial  institutions 
to  actively  seek  business  through  direct  mailing,  web-
site  offers,  and  other  routes.  And  it  allowed  institutions 
to  combine  their  offerings  –  selling  securities,  shares  in 
investment  funds,  and  insurance  alongside  each  other. 
Although UK and Irish investors tend to buy more from 
brokers and so-called on-line fund supermarkets, on the 
continent, banks are largely the outlet of choice.

“In Sweden, if you have money, you would probably go to 
your  bank  to  buy  an  investment  product  on-line  without 
thinking of anything/anyone else, because banks have the 
best selection,” says Trogen. He adds that, “In Sweden there 
are 6 million banking customers, of which 4.5 million use 
internet  banks.”  A  recent  survey  found  that  slightly  more 
than 50% of EU households have internet access. “Because 
of the internet, bank customers can get investment informa-
tion 24 hours a day/seven days a week,” explains Trogen.

Of course it is still possible to build a traditional portfolio 
of stocks and bonds, or other assets, by buying directly 
from  a  broker,  bank  or  other  outlet,  for  savvy  investors 
who prefer to control their own money. To manage risk, 
the experts say, diversification is the name of the game. 
According  to  the  European  Commission,  investment 
funds are the best way for a retail investor to play it safe. 
“Investment funds provide retail investors with access to 
professionally  managed  and  diversified  investments  on 
affordable terms,” the Commission said in its November 
2006 White Paper on reform of the UCITS Directive.

The  Commission’s  1985  UCITS  Directive  (85/611/EEC), 
concerning  Undertakings  for  Collective  Investment  in 
Transferable  Securities,  created  an  entirely  new  class 

European Innovation

6

January 2007

ENT 5 0110 - EI 01-07 EN.indd   6
ENT 5 0110 - EI 01-07 EN.indd   6

12/20/06   9:35:35 AM
12/20/06   9:35:35 AM

 
 
 
 
g
n
h
c
X
k
c
o
t
S
©

:
o
t
o
h
P

Ring out the old, cash in the new

For Helen Stephenson at the UK Investment Management 
Association, “Financial innovation responds to gaps in the 
market and to regulatory changes. When the EU recently 
relaxed rules on the holdings one could have in a UCITS 
fund  –  for  example,  managers  can  use  now  derivatives 
more freely – everyone jumped on the bandwagon with 
new products,” she says.

“It is not the products that are innovative, it is the styles,” 
continues  Stephenson.  “For  instance,  investment  funds 
are not new, but new funds appear to fill gaps in the mar-
ket. Recently there have been funds with so-called capital 
guarantees.” This, she says, is the market responding to 
customer  fears  of  losing  their  initial  investment,  which 
has happened with certain risky products. “You can also 
buy into funds that only hold shares of companies which 
adhere to certain ethical restrictions – no animal testing, 
no manufacturing in prisons,” she explains.

e
c
n
a
n
i
f

n

i

n
o
i
t
a
v
o
n
n

I

It  has  not  worked  out  quite  as  well  as  that,  but  UCITS 
products  have  turned  out  to  be  one  of  Europe’s 
most significant retail finance innovations. 
According to the Brussels-based European 
Fund  and  Asset  Management  Association 
(EFAMA), Europeans had nearly €7  trillion 
squirrelled  away  in  Europe’s  investment 
fund  market  at  30  June  2006,  up  5.4% 
from the end of 2005. This figure in cluded 
€5.5  trillion  invested  in  UCITS  funds, 
with  the  balance  in  nationally  regulated, 
so-called non-harmonised funds.

A single market?
The 42 measures of the EU’s Financial Services Action 
Plan (1999) were aimed at creating a single market 
for  financial  services,  harmonising  Member  States’ 
rules  on  securities,  banking,  insurance,  mortgages, 
pensions and all other forms of financial transactions. 
Although  most  of  the  measures  had  been  adopted 
by  2004,  a  truly  unified  market  is  still  years  away, 
experts say.

“One of our complaints about the Financial Services 
Action  Plan  is  that  financial  products  have  to  be 
adapted for every market,” says Florence Ranson, of 
the European Banking Federation. “There is a certain 
degree of harmonisation, but a truly EU market is not 
really operating for the moment. Any product has to 
be adapted to cross the border.”

“People just leaving 
school are already preparing, 
or thinking about preparing, 
for their retirement.”

According  to  Graziella  Marras,  senior  policy  advisor  at 
EFAMA,  product  innovation  by  financial  institutions, 
investment  funds  and  other  ‘packagers’,  has  put  some 
instruments  previously  unavailable  to  retail  investors 
within  their  reach.  She  mentions,  for  example,  hedge 
funds  and  private  equity  funds  (funds  that  hold  secur-
ities  of  non-listed  companies  and  start-ups),  which  are 
available  in  several  countries  to  investors  meeting  cer-
tain  criteria  (minimum  investment,  financial  wealth  or 
knowledge). “These instruments have a different liquidity 
level  and  tend  to  be  long-term  investments  with  a  very 
different  level  of  risk  from  a  basic  investment  fund.  It  is 
very possible to lose your invested capital, so they are not 
really for the small investor,” says Marras.

▼

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   7
ENT 5 0110 - EI 01-07 EN.indd   7

7

12/20/06   9:35:42 AM
12/20/06   9:35:42 AM

 
 
 
 
e
c
n
a
n
i
f

n

i

n
o
i
t
a
v
o
n
n

I

g
n
h
c
X
k
c
o
t
S
©

:
o
t
o
h
P

He  adds  that  “As  innovation  has  accelerated  in  the  last 
few  years,  there  are  additional  risks,  different  kinds  of 
risks that retail investors are probably not aware of. In the 
right hands they [specialist products] are actually benefi-
cial, but a risky type hedge fund, for example, is not the 
place for your nest egg.”

The EU Markets in Financial Instruments Directive (MIFID), 
which Member States must implement by 30 April 2007, 
will add, among other things, new rules to protect invest-
ors.  An  update  to  UCITS,  possibly  in  2008,  should  add 
more.  However,  Kovas  says  that  consumer  education  is 
key to protecting investors. “We do not have the budget 
to do it all. I think it is a major social piece of work that 
needs to done. The best way is to start in school.”

 Contacts

Ashley Kovas, UK Financial Services Authority (FSA)
Dp05_03@fsa.gov.uk
http://www.fsa.gov.uk/

Graziella Marras, European Fund 

and Asset Management Association (EFAMA)

Graziella.marras@efama.org
http://www.efama.org/

Helen Stephenson, 

UK Investment Management Association

ima@investmentuk.org
http://www.investmentuk.org/

Leif Trogen, Swedish Bankers’ Association
info@bankforeningen.se
http://www.bankforeningen.se/

Florence Ranson, European Banking Federation
http://www.ebf-fbe.eu/

“Hedge funds and private equity funds are not UCITS and 
investment  is  usually  limited  to  certain  so-called  quali-
fied  investors  –  either  people  who  can  invest  a  certain 
(high)  minimum  amount,  or  wealthy  people,  or  people 
with a certain level of financial knowledge. They are still 
sold  mostly  to  institutional  investors.  However,  they  are 
becoming  more  mainstream  due  to  regulatory  changes 
in some countries, and interest from institutional invest-
ors  such  as  pension  funds,”  she  says.  European  rules 
also changed recently to allow the creation of innovative 
products  that  make  use  of  derivatives  and  leverage  in 
retail UCITS investment funds, she says.

Getting  burned  is  a  real  possibility,  warns  Ashley  Kovas 
of  the  UK  Financial  Services  Authority,  especially  for 
inexperienced  investors.  “My  particular  concern  is  that 
the  industry  is  sometimes  moving  faster  than  consum-
ers can keep up with, a so-called paradigm shift in asset 
management.  There  are  a  bewildering  number  of  ways 
these  products  can  be  constructed  and  sometimes  the 
people  who  designed  them  are  the  only  ones  who  can 
really understand how they work.”

“Financial innovation 
responds to gaps in 
the market and to 
regulatory changes.”

European Innovation

8

January 2007

ENT 5 0110 - EI 01-07 EN.indd   8
ENT 5 0110 - EI 01-07 EN.indd   8

12/20/06   9:35:46 AM
12/20/06   9:35:46 AM

 
 
 
 
Radio tags make waves

Radio-frequency identification (RFID) is a fast- growing 
technology  that  promises  to  revolutionise  all  areas  of 
business  from  supply  chain  management  to  health-
care. But what does Europe need to do to maintain its 
strength in this area? How realistic are the claims that 
have  been  made  for  RFID?  And  what  are  the  implica-
tions for our personal privacy?

RFID tags are becoming increasingly common.

The next time you start your car it is very likely that you 
have  been  allowed  to  do  so  by  a  technology  known  as 
radio-frequency identification or RFID. A ‘tag’ embedded 
in your key signalled to the car’s control system that the 
key was genuine and so allowed the engine to be started.

RFID tags are becoming increasingly common. They stop 
clothing  being  stolen  from  shops  and  control  access  to 
buildings.  They  are  used  to  check  library  books  in  and 
out, to track the movement of farm animals and to pay 
toll charges on motorways.

An RFID tag consists of a microchip, a fraction of a milli-
metre  across,  connected  to  an  antenna.  Information 
stored in the chip is transmitted to a ‘reader’ in response 
to  a  radio  signal.  The  simplest,  ‘passive’  tags  have  no 
internal  power  but  run  off  the  energy  received  from  the 
radio wave. They have a short range of up to three metres. 
‘Active’ tags, on the other hand, contain a battery and can 
transmit more powerful signals up to 100 metres.

Information recorded in the tag can range from a sim-
ple  serial  number,  much  like  a  bar  code,  to  additional 
information about the nature of the object it is attached 
to.  Some  tags  are  ‘rewritable’  in  that  new  information 
can be stored in them as they pass a reader. An RFID tag 

n
o
i
t
a
c
i
f
i
t
n
e
d

i

y
c
n
e
u
q
e
r
f
-
o
d
a
R

i

does not have to be in the line of sight of the reader and 
could  be  inside  a  box  or  other  container.  This  means 
that  the  reading  process  can  be  entirely  automatic, 
opening up a whole range of applications beyond those 
possible with bar codes.

“RFID is revolutionising how business is done through-
out  the  market  place,”  says  Gérald  Santucci,  of  the 
European Commission’s Information Society and Media 
DG.  “We  see  more  and  more  RFID  in  the  consumer 
goods industry to ensure traceability of food products, 
in the pharmaceuticals industry to fight counterfeiting, 
in  the  medical  sector  to  promote  cost-effectiveness 
and  reduce  medical  errors,  and  in  the  security  sector 
to  improve  access  control  and  better  protect  citizens, 
companies and public buildings. Tremendous opportun-
ities  for  European  growth  and  competitiveness  can  be 
expected from this technology.”

Public consultation

Although  Europe  has  been  among  the  world  leaders  in 
the  development  and  commercialisation  of  RFID,  there 
are  signs  that  its  lead  is  slipping.  The  RFID  market  in 
the  EU  is  expected  to  grow  by  an  average  of  47%  a 
year between 2004 and 2010, but 57% a year globally. 
“If  Europe  fails  to  rapidly  make  the  necessary  efforts  to 
tackle  the  research  and  innovation  challenges,  its  RFID 
market will represent less than 30% of the global market 
in 2010,” Santucci warns.

In 2006, the Commission launched a public consultation 
exercise  to  find  out  about  the  state  of  play  in  Europe’s 
RFID  industry  and  possible  policy  actions(1).  Five  work-
shops were arranged, an on-line public consultation ran 
for six months and the exercise concluded with a confer-
ence in Brussels in October. The Commission is due to set 
out its proposals in the first quarter of 2007.

The  role  of  the  Commission,  says  Santucci,  is  to  fos-
ter  collaborative  research  and  large-scale  pilot  projects 
as  well  as  promoting  standards  and  interoperability. 
National regulators allocate the radio spectrum for RFID 
and  also  oversee  data  protection  and  privacy.  “We  very 
much need a common approach throughout Europe so 
as  to  ensure  that  individual  EU  Member  States  do  not 
opt for incompatible solutions which ultimately would be 
detrimental to everyone.

▼

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   9
ENT 5 0110 - EI 01-07 EN.indd   9

9

12/20/06   9:35:51 AM
12/20/06   9:35:51 AM

 
n
o
i
t
a
c
i
f
i
t
n
e
d

i

y
c
n
e
u
q
e
r
f
-
o
d
a
R

i

But not everyone is happy with the spread of RFID tech-
nology.  The  fact  that  tags  can  be  used  to  record  the 
location of objects automatically raises questions of per-
sonal privacy. RFID travel passes (see box), while primarily 
intended as season tickets, can be used to keep track of a 
person’s movements and have already been used to help 
police in criminal investigations.

Privacy issues

A customer carrying a tagged item bought from a shop 
may  not  know  when  or  whether  it  is  being  read.  At 
present,  retail  tags  are  large,  reusable  items  which  are 
removed at the point of sale, but in future they could be 
much smaller and incorporated into the item at the time 
of  manufacture.  If,  as  is  proposed,  each  item  is  given  a 
unique  serial  number  –  the  electronic  product  code  – 
there are concerns about these items being permanently 
linked to an individual on the retailer’s database.

“The  privacy  issue  was  raised  by  the  majority  of  the 
respondents to the consultation,” Santucci says. “It arises 
when  RFID  technology  enables  third  parties  to  obtain 
information  about  individuals  which  they  otherwise 
would  be  unable  or  unauthorised  to  access,  or  even  to 

“The  Commission  is  seeking  to  define  a  general  policy 
framework that allows RFID to reach its potential without 
unnecessary  constraints,  to  protect  our  security,  to  aid 
law enforcement, to close the digital inclusion gap, while 
at  the  same  time  guaranteeing  European 
citizens’  privacy.  We  are  still  analysing  the 
situation  to  see  whether  any  legislative  or 
regulatory action is needed. The discussions 
which  will  take  place  during  2007  among 
all stakeholders will certainly help clarify the 
requirements and policy options.” 

“RFID is revolutionising how 
business is done throughout 
the market place.”

Supply chain management
A  sought-after  goal  of  the  RFID  industry  is  to 
develop  common  standards  for  tags  so  that  a 
single tag can be used to route a product through 
the  supply  chain  from  manufacturer  to  retailer. 
US  retailing  giant  Wal-Mart  has  already  started 
introducing tags into its supply chains, forcing its 
major  suppliers  to  do  the  same.  Tesco  in  the  UK 
and Metro in Germany are also bringing them in. 
In principle, RFID could improve the responsiveness 
of the supply chain by automatically ensuring that 
supply  matches  demand,  reducing  the  need  to 
hold large stocks.

Transport
RFID  tags  can  be  used  as  public  transport  passes. 
London’s  Oyster  card  is  an  RFID  smart  card  that 
serves  as  a  season  ticket  for  buses  and  trains. 
Passengers  touch  their  card  on  to  a  reader  when 
they enter or leave a station or board a bus and the 
system  validates  that  they  are  able  to  travel.  Up  to 
three  different  season  tickets  can  be  stored  on  the 
card as well as an amount of cash for other journeys. 
The  card  contains  a  passive  read-write  chip  with  a 
range of a few centimetres. It is quicker to use than 
a magnetic-strip swipe card and the readers contain 
no moving parts and so require less maintenance.

European Innovation

10

January 2007

ENT 5 0110 - EI 01-07 EN.indd   10
ENT 5 0110 - EI 01-07 EN.indd   10

12/20/06   9:36:01 AM
12/20/06   9:36:01 AM

 
n
o
d
n
o
L

r
o
f

t
r
o
p
s
n
a
r
T
©

:
o
t
o
h
P

The Oyster card, used on the London Underground, is a good example 
of the everyday use of RFID technology.

track  or  target  individuals.  The  Commission  intends  to 
promote further consultations and negotiations between 
all stakeholders on this issue to reach a balanced approach 
that will also give industry the security to develop appro-
priate solutions.”

Most  proposed  solutions  require  the  tag  to  be  disabled 
once  the  customer  has  left  the  shop.  Santucci  points 
out  that  EU  Directives  on  data  protection  and  e-privacy 
already  provide  a  legal  framework  for  personal  privacy, 
and  representatives  from  the  Member  States  are  exam-
ining whether they need to be amended in the light of 
developments in RFID. The Commission is also proposing 
a code of conduct to protect privacy. “Such a code could 
deal  with  issues  such  as  user-friendliness,  interoperabil-
ity,  sustainability,  and  transparent  use  of  data  gathered 
through RFID applications,” he points out.

n
o
i
t
a
c
i
f
i
t
n
e
d

i

y
c
n
e
u
q
e
r
f
-
o
d
a
R

i

Passports
A controversial application of RFID is in identity docu-
ments  such  as  passports  and  identity  cards.  Many 
countries are introducing ‘e-passports’ in which data 
about the holder, including biometric details such as 
a  photograph  and  fingerprints,  are  held  on  a  chip. 
In  June  2006,  the  European  Commission  issued  a 
common  specification  for  the  data  to  be  stored  on 
an  e-passport,  based  on  standards  issued  by  the 
International Civil Aviation Organisation. The tag can 
be read by readers at immigration control points.

Questions about the security of the data were raised 
when  the  Guardian  newspaper  demonstrated  that 
the data on the RFID chip on a UK e-passport could 
be  extracted,  decrypted  and  copied  by  a  cheap 
microchip reader and publicly available information.

R&D  Framework  Programme  to  enshrine  its  fundamental 
social values in technology for achieving security and priv-
acy by design and giving control of tags to the end-user.”

Kevin Kelly, of the RFID Centre, an independent body set up 
to promote the use of RFID, doubts the technology poses 
much of a threat to privacy, at least in the retail sector. He 
points out that the passive tags used in shops operate over 
a very short range. To use them as tracking devices would 
need  investment  in  an  infrastructure  that  would  be  of  lit-
tle benefit to business. “The best tracking device we have 
is  a  mobile  phone.  Credit  cards  already  keep  track  of  our 
purchases,  as  do  loyalty  cards.  RFID  is  one  of  the  poorest 
of tracking technologies; there is very little ability or motiv-
ation to run a tracking system like that.”

In the longer term, Santucci believes that the issues of secur-
ity and privacy should be addressed through collaborative 
research. “I see a strong opportunity for Europe to use its 

Reality checks

Mobile life
A technology called near-field communication (NFC) 
can  be  used  to  allow  a  mobile  phone  to  retrieve 
data  from  an  RFID  tag  embedded  in  an  advertising 
poster.  The  tag  could  contain  information  associ-
ated with the product, such the address of a website 
where one can buy tickets for a film or theatre show. 
Field trials on applications of NFC are taking place in 
Germany and France.

In  fact,  many  of  the  proposed  applications  of  RFID  may 
appear  somewhat  fanciful  when  looked  at  with  a  hard 
business eye. The key question is whether they offer any 
advantage over existing or competing technologies. Even 
the  goals  of  automated  supply  chain  management  (see 
box)  may  not  be  as  useful  as  is  assumed.  “Introducing 
RFID  into  the  supply  chain  would  be  very  complicated,” 
Kelly says. “You have the cost of the infrastructure and of 
sharing and managing the data. RFID would need to show 
a very high cost saving per year of usage to pay that back. 

▼

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   11
ENT 5 0110 - EI 01-07 EN.indd   11

11

12/20/06   9:36:07 AM
12/20/06   9:36:07 AM

 
 
 
 
 
n
o
i
t
a
c
i
f
i
t
n
e
d

i

y
c
n
e
u
q
e
r
f
-
o
d
a
R

i

s
p

i
l
i

h
P
©

:
o
t
o
h
P

Major European companies, like Philips, use RFID to tag their products.

Retailers  were  thought  to  be  the  biggest  potential  users 
of  RFID,  but  they  already  have  fairly  good  stock  control 
systems. So the savings are not there with RFID.”

He sees many applications in ‘closed loop’ environments 
where  the  tag  remains  in  control  of  the  manufacturer, 
especially in safety-critical applications such as air trans-
port.  An  engineer  sent  to  inspect  a  faulty  aircraft  com-
ponent  would  be  able  to  check  from  its  tag  that  it  was 
genuine and read its maintenance history. “You can see 
the  value  in  that,  whereas  you  cannot  necessarily  see 
value in the supply chain.”

In the more distant future, many commentators envisage 
an ‘internet of things’ where every object on the planet 
has its own RFID code and is able to communicate with 
every  other  object.  Kelly  is  sceptical.  “Unless  someone 
establishes  a  value  on  that,  it  is  not  going  to  happen. 
People  thought  that  tags  would  talk  to  each  other,  but 
they do not – they are just bar codes.” He also points out 
that few manufacturers would want anybody to be able 
to  read  their  tags  because  of  the  risk  of  counterfeiting 
and other security problems.

The  main  technological  challenge,  Kelly  says,  is  to  cut 
the costs of the infrastructure required for RFID systems. 
There  is  a  lot  of  interest  in  using  existing  wireless  net-
works to transmit data collected from tag readers. It will 
also be possible for active tags to be directly connected 
to  a  wireless  network  allowing  them  to  be  read  over  a 
wide area such as within a campus, factory or hospital.

“RFID is working to prove its value and it is doing so to 
individual companies in very specific ways,” he stresses. 
“It is not a network or a blanket overlying everything. It is 
automation and if we can save time and money through 
automation  then  that  is  terrific,  otherwise  there  is  no 
point. The ‘internet of things’ would take more time and 
effort than it actually saves.”

“It is coming down to a couple of key technologies,” he 
says. “One is where active tags are working in a wireless 
network,  and  the  other  area  is  where  passive  tags  are 
being  used  simply  as  an  anti-counterfeiting  aid,  a  glori-
fied version of the bar code.”

(1) http://www.rfidconsultation.eu/

 Contact

Healthcare
It  has  been  estimated  that  three  times  as  many 
Europeans  die  from  mistakes  in  medication  than  in 
road  accidents.  Many  such  errors  could  be  avoided 
by  using  RFID  in  hospitals  to  tag  both  patient  and 
medicine as part of a system to ensure that they are 
correctly matched.

RFID tags combined with temperature sensors could be 
used in the blood supply chain not only to ensure trace-
ability but also to guarantee that the blood has been 
kept at the correct storage temperature at all times.

Gérald Santucci, European Commission 

Information Society and Media DG, Networked 
Enterprise, Radio Frequency Identification Unit

Tel. +32 2 295 9353
gerald.santucci@ec.europa.eu
http://ec.europa.eu/information_society/

policy/rfid/index_en.htm

Kevin Kelly, RFID Centre Ltd
Tel. +44 870 762 2200
kkelly@rfidc.com
http://www.rfidc.com/

European Innovation

12

January 2007

ENT 5 0110 - EI 01-07 EN.indd   12
ENT 5 0110 - EI 01-07 EN.indd   12

12/20/06   9:36:12 AM
12/20/06   9:36:12 AM

 
 
 
y
r
a
u
n
a
J

7
0
0
2

IRE Network News

Measuring innovation performance in Lazio

Raising awareness in Alentejo

Strategic intelligence as a tool for innovation in firms

Contrasting approaches to cluster support

Technology transfer benefits a university’s local region

ENT 5 0110 - EI 01-07 EN.indd   13
ENT 5 0110 - EI 01-07 EN.indd   13

12/20/06   9:36:20 AM
12/20/06   9:36:20 AM

 
Building on innovation 
results in Lazio

2006  saw  the  publication  of  the  fourth  edition  of 
Lazio’s  Regional  Innovation  Scoreboard.  While  it 
 borrows   methodologies  from  the  European  Innovation 
Scoreboard,  Lazio’s  version  has  developed  its  own 
 indicators  and  evolved  to  become  a  key  tool  for  local 
policy- makers. Lazio’s innovation specialists are  sharing 
their   experience  with  other  IRE  regions  through  the 
Mutual  Learning  Platform,  and  now  in  the  OMEN 
project, which aims to measure the impact of innovation 
policies and help guide decision-making.

n
o
i
t
a
v
o
n
n

i

g
n
i
r
u
s
a
e
M

i

i

n
a
g
g
u
C

a
l
r
a
C

a
i
r
a
M
©

:
o
t
o
h
P

The Lazio region of Italy was one of the first in Europe to produce 
its own innovation scoreboard.

Regional  policy-makers  promoting  innovation  need 
information  on  how  effective  different  policies  are  in 
achieving  their  aims,  and  so  several  regions  worked 
together  within  the  Mutual  Learning  Platform  (coordi-
nated by the Innovating Regions of Europe Secretariat) 
to  look  at  the  question  of  benchmarking  innovation 
policy.  Lazio,  one  of  those  regions,  has  developed  its 
own Innovation Scoreboard, and so their experience is 
of interest to many other IRE regions. Lazio’s scoreboard 
is  managed  by  Filas,  the  region’s  finan-
cial  investment  agency,  which  realised 
that  there  was  plenty  of  raw  data  about 
regional economic and business perform-
ance available. 

“The challenge was to find a way of inter-
preting  that  information  and   presenting 
it in a way that could be useful to  policy-
makers,”  explains  Luis  Iurcovich  who 
co ordinates work on the Lazio scoreboard. 

The 2006 version harnesses 23 indicators to assess inno-
va tive  performance,  covering  areas  such  as   education, 
employment,  levels  of  R&D  and  patenting,  and  the 
spread of new technologies.

The  Filas  team  is  working  constantly  to  improve  the 
usefulness  of  the  scoreboard,  adding  new  indicators 
when appropriate. The 2005 scoreboard introduced new 
indicators relating to creativity and how it contributes to 
business  in  terms  of  growth  and  innovation.  This  year, 
three  new  indicators  have  been  added  to  assess  com-
petitiveness  –  these  track  capital  growth,  the  ability  of 
the region to attract foreign investment and the develop-
ment of business-to-business services.

“We are now trying to develop cognitive indicators that 
will  shed  light  on  cultural,  historical  and  social  factors 
behind innovative activity,” adds Iurcovich. Data for the 
scoreboard is processed by Filas Observatory.

Widespread uses

The scoreboard has developed into a valuable tool for a 
range of policy-makers. The Lazio region uses it to help 
draft its annual budgets, and it proved to be a valuable 
source  for  local  politicians  when  they  drew  up  regional 
programmes to support innovation. The region also finds 
the  scoreboard  useful  when  developing  plans  to  attract 
European funding designed to boost innovation.

The scoreboard boasts a strategic value, too, as it allows 
Lazio’s  politicians  and  policy-makers  to  assess  their 
region’s  innovation  performance  against  other  parts  of 
Italy,  both  individual  regions  and  larger,   geographical 
areas.  This  information  gives  policy-makers  a  useful 
 summary  of  the  strengths  and  weaknesses  of  Lazio’s 
innov ation  performance,  allowing  them  to  see  where 
improvements need to be made. 

“Regional policy-makers 
promoting innovation 
need information on 
how effective policies are 
in achieving their aims.”

European Innovation

14

January 2007

ENT 5 0110 - EI 01-07 EN.indd   14
ENT 5 0110 - EI 01-07 EN.indd   14

12/20/06   9:36:25 AM
12/20/06   9:36:25 AM

 
 
 
 
 
Businesses  are  also  finding  the  scoreboard  increas-
ingly  useful.  “Bigger  companies  are  using  it  to  plan 
improvements  in  their  innovation  activity  –  in  fact, 
the  national  business  association  is  now  building  its 
own  observatory  using  the  scoreboard  principles,” 
explains Iurcovich.

The OMEN project

Filas’ success in developing benchmarking tools to meas-
ure innovation are now being put to use in a European 
setting  as  it  acts  as  coordinator  for  an  EU-funded 
project called OMEN(1), one of eight projects within the 
Innovating  Regions  of  Europe  looking  at  impact  assess-
ment and benchmarking of innovation policy.

The  project  brings  together  six  regions  –  the  others 
being  from  Poland,  Czech  Republic,  Spain,  Germany 
and  Cyprus  –  to  develop  benchmarking  tools  and 
methodologies  that  can  be  used  to  assess  the  impact 
of  regional  innovation  policy.  The  aim  is  to  provide 
decision-makers  with  enough  accurate  information  so 
they can go forward and improve their policy-making 
practices.

Beyond regional benchmarking

“There  are  very  few  tools  available  that  can  be  used  to 
evaluate  the  impact  of  innovation  policies  at  regional 
level,” explains Michela Michilli, OMEN project director. 
“This  project  will  provide  added  value  in  the  form  of 
indicators  that  can  be  used  to  measure  the  innovation 
policies  of  the  regions,  not  regional  innovation  per  se 
– an important distinction.” 

OMEN  began  work  in  2005  and  has  already  agreed  on 
a methodology and set of benchmarking indicators that 
can be used to measure the results of innovation policies 
and assess the policy implementation process.

Now  each  region  is  selecting  two  or  three  key  regional 
policies to be evaluated using the OMEN methodology. 
This implementation and analysis phase should be com-
pleted next summer.

A  key  challenge  for  the  OMEN  team  has  been  in 
de veloping  indicators  that  can  accurately  evaluate  the 
effectiveness of an innovation policy in terms of how it is 
perceived in the regional economy.

“We  have  established  regional  round  tables  as  a 
consult ation  mechanism,”  says  Michilli.  “These  involve 
key  inno vation  stakeholders,  including  universities, 
research   centres,  innovative  companies  and  industrial 
 associations.”

The results should help regions develop new innovation 
policies  based  on  the  experiences  of  colleagues  from 
other parts of Europe. For example, it may be possible 
for  OMEN  to  analyse  existing  policies  for  the  use  of 
mixed  public-private  funds  for  venture  capital.  Then, 
through  the  policy  impact  assessment  process,  new 
policies could be designed by regions that do not have 
their own experiences in this area – such as in some of 
the new Member States.

The project will produce a ‘white book’ of recommenda-
tions  for  regional  authorities,  setting  out  best  practice 
for the use of OMEN’s analysis and tools so they can use 
the project’s findings to inform and improve innovation 
policy-making. 

n
o
i
t
a
v
o
n
n

i

g
n
i
r
u
s
a
e
M

(1)  OMEN – funded through FP6-2004-INNOV4, regional innovation 

policy impact assessment.

 Contact

Luis Iurcovich
Filas – Finanziaria Laziale di Sviluppo
Tel. +39 06 360 06259
iurcovich@filas.it 
http://www.filas.it/ 
http://www.osservatoriofilas.it/

Michela Michilli
EU Programmes and Initiatives, Filas
Tel. +39 06 328 85725
michilli@filas.it
http://www.omen-project.org/

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   15
ENT 5 0110 - EI 01-07 EN.indd   15

15

12/20/06   9:36:34 AM
12/20/06   9:36:34 AM

 
A Cycle of Innovation 
in Alentejo 

The  Alentejo  region  of  Portugal  needs  to  foster  a 
culture  of  innovation  to  overcome  the  reluctance  of 
different  stakeholders  to  learn  about  each  other  and 
work  to gether.  The  Cycle  of  Innovation  project  allowed 
potential  innovators  to  learn  about  innovation  success 
stories from people who have already made it happen.

s
s
e
n
e
r
a
w
a

g
n
i
s
i

a
R

l

e
u
a
K

l

r
e
h
e
s
i
G
©

:
o
t
o
h
P

The  Portuguese  region  of  Alentejo  has  many  difficulties 
in  developing  its  economic  strength,  associated  with 
the  limited  range  of  industries  in  the  region  and  its 
considerable  reliance  on  agriculture(1).  For  many  local 
people, the significance of innovation as a means to help 
develop their economy is not immediately apparent. The 
region has developed and implemented a Programme of 
Regional Innovative Actions (PRAI) with EU funding, but 
to build on this it is essential to raise awareness of innov-
ation and its importance amongst the wider population.

The  Cycle  of  Innovation  project,  which  ran  throughout 
2006,  comprised  a  series  of  linked  events,  each  focus-
ing on a sector of importance to the regional economy. 
“Many people in our region work in the same fields but 
do not know each other, so this initiative showed them 
what we could all achieve if we work together,” says Rosa 
Onofre of the Commission of Coordination and Regional 
Development of Alentejo, which ran the project. 

Learning from experience

Each  event  in  the  Cycle  focused  on  real  examples  of 
innovation,  from  the  following  key  fields:  education, 
energy, environment and natural resources, traditional 
products,  health  and  quality  of  life,  entrepreneurship 
and  innovation,  tourism,  information  society,  and 
innovation itself.

Between  60  and  100  selected  participants  from  local 
businesses and institutions attended each event.

“For  the  first  part  of  each  day,  they  met  people  with 
successful examples of innovation, to learn at first hand 
that  it  is  possible  to  innovate  in  these  fields  and  how 
to  achieve  it,”  explains  Onofre.  Participants  could  then 
discuss  the  issues  raised.  Most  importantly,  each  event 
sought  to  bring  together  producers,  consumers,  educa-
tors, administrators and other people who could collabor-
ate to promote innovation.

Good feedback

The  structure  of  the  workshops  proved  much  more 
effective than traditional presentations, because the par-
ticipants  actually  met  successful  innovators  and  learned 
from them what is possible.

“The focus was on innovation in its widest sense – doing 
anything that is new,” Onofre says. Good feedback from 
participants  revealed  that  the  workshops  were  popular, 
with many participants enquiring about follow-up activ-
ities and making their own suggestions.

The  project  itself  brought  together  four  partners,  and 
Onofre  comments  that  “actually  bringing  these  four 
different  institutions  to  work  together  is  itself  a  good 
example  of  the  collaboration  required  to  promote 
innovation”.

With the final workshop held in December 2006, the region 
is  now  focused  on  building  on  the  momentum  achieved, 
and setting up future events to raise awareness further.

(1)  http://www.innovating-regions.org/network/whoswho/

regions_search.cfm?region_id=248

 Contact

Rosa Onofre, Commission of Coordination 
and Regional Development of Alentejo

Tel. +35 126 674 0300
Fax +35 126 670 6562
rosa.onofre@ccdr-a.gov.pt
http://www.ccdr-a.gov.pt/

European Innovation

16

January 2007

ENT 5 0110 - EI 01-07 EN.indd   16
ENT 5 0110 - EI 01-07 EN.indd   16

12/20/06   9:36:34 AM
12/20/06   9:36:34 AM

 
 
 
 
A blueprint to make use 
of strategic intelligence

The STRATINC project has produced a blueprint highlight-
ing the use of ‘strategic intelligence’ methods in support of 
cluster  policy.  Intended  to  serve  as  a  tool  kit  for  regional 
development  specialists,  it  focuses  on  the  foresight,  eco-
nomic  intelligence,  knowledge  management  and  bench-
marking required for successful strategic decision-making.

A blueprint for cluster success.

Support for clusters forms a major part of EU efforts to pro-
mote innovation(1). This reflects the fact that when com-
panies  come  together  to  co-operate,  and  compete,  the 
resulting clusters often become hot spots of innovation.

Cluster support

The  STRATINC  project,  funded  by  the  EU’s  INTERREG 
programme(2),  considered  how  regional  development 
experts  can  support  the  establishment  and  growth 
of  clusters.  The  project  partners  came  from  Lorraine, 
Central  Macedonia,  Murcia,  North  Rhine-Westphalia, 
North Tenerife and Oslo.

In  order  to  assess  and  develop  their  strategic  intelli-
gence tools, the partners examined a diverse variety of 
clusters in the wood, ICT, biotechnology, agro-food and 
materials industries.

“It was interesting to find that the results of the partners 
looking  at  very  different  industries  in  different  regions 
converged in validating the potential of our tools to sup-
port  cluster  building,”  comments  Pierre  Bourgogne  of 
the Regional Council of Lorraine, the lead partner.

e
c
n
e
g

i
l
l

e
t
n

i

i

e
g
e
t
a
r
t
S

Blueprint for success

Strategic intelligence includes foresight, economic intel-
ligence, knowledge management and benchmarking, all 
provided to support strategic decision-making.

The project has come up with a comprehensive ‘blueprint’ 
which highlights ways in which strategic intelligence can 
be used to support cluster policy(3). “This is a tool kit for 
managers of clusters and intermediaries involved in region-
al  and  economic  development,”  explains  Bourgogne.  “It 
can  also  help  policy-makers  when  proposing  economic 
development policies to politicians.”

The blueprint covers three main pillars of cluster support. 
An  initial  ‘Getting  started’  section  includes  guidance  on 
analysing  the  needs  of  stakeholders  and  how  to  intro-
duce the concept of strategic intelligence into a cluster.

The  central  ‘Moving  forward’  section  looks  at  the 
wide  range  of  strategic  intelligence  tools  which  the 
project  partners  recommend.  Moderation,  consensus-
building,  economic  intelligence  gathering,  knowledge-
 management  techniques  and  benchmarking  strategies 
are among the topics covered.

The third section on ‘Operations management’ considers 
the management skills and techniques that are needed to 
keep a cluster moving forward, growing and innovating.

‘We  are  being  told  it  is  very  useful,’  says  Bourgogne, 
describing  the  positive  feedback  from  recipients  of  the 
blueprint,  which  has  been  distributed  across  Europe’s 
regions in print and on-line versions.

(1)  See ‘Promoting co-operation between stakeholders’, 
European Innovation special edition, November 2006

(2)  http://www.interreg3c.net/

(3)  ‘A Regional Policy Blueprint Highlighting the uses of Strategic 

Intelligence in Cluster Policy’, http://www.e-innovation.org/stratinc/files/
A+Regional+Policy+Blueprint+(STRATINC).pdf

 Contact

Pierre Bourgogne, Regional Council of Lorraine
Tel. +33 3 87 33 60 65
Fax +33 3 87 33 60 40
cairnpb@gmail.com
http://www.cr-lorraine.fr/

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   17
ENT 5 0110 - EI 01-07 EN.indd   17

17

12/20/06   9:36:42 AM
12/20/06   9:36:42 AM

 
How can the public sector 
best support clusters?

Strong  clusters  can  really  drive  innovation  and  growth 
by helping industrial sectors share support services and 
to network more effectively on themes of common inter-
est. But should cluster development be left solely to the 
market  in  the  hope  that  mutual  self-interest  will  spur 
competing businesses to work together? Or is there a role 
for local public-sector actors and, if so, what type of sup-
port should they offer?

t
r
o
p
p
u
s

r
e
t
s
u
C

l

i

m
e
h
r
e
g
n
Ä

r
ä
P
©

:
o
t
o
h
P

Skiing facilities in Åre, Sweden.

Public  bodies,  such  as  development  agencies  and  local 
authorities, are naturally keen to help clusters grow and 
prosper  because  of  the  economic  benefit  that  they  can 
bring  to  a  region.  The  crucial  question  is  how  best  to 
organise that support. The Innovating Regions in Europe 
held  a  workshop  to  look  at  different  methods  of  sup-
porting  clusters,  and  south-east  England  and  Jämtland 
County in northern Sweden provided two of the success-
ful examples presented at the workshop.

Peter  Taylor,  cluster  manager  for  the  South-East 
England Development Agency (SEEDA), is in no doubt 
that  a  flexible  approach  is  required,  depending  on 
the industry in question, its needs and level of cluster 
development.

“I  think  we  have  to  recognise  that  clusters  are  natur-
ally occurring – our role is not to try and build clusters 
because  that  does  not  work,”  he  explains.  “What  we 
can  do  is  strengthen  clusters  in  a  variety  of  ways,  for 
example  by  encouraging  networking  or  addressing 
market failure.”

In  SEEDA’s  area  there  are  a  huge  variety  of  clusters 
covering  a  range  of  industrial  sectors,  including 
pharma-biotechnologies,  furniture,  engineering,  and 
different  facets  of  information  technology.  Some  of 
these clusters are mature, some are not, which means 
SEEDA  has  to  do  careful  research  when  it  comes  to 
offering support.

Targeted  help  can  pay  real  dividends.  For  example, 
SEEDA  provided  a  boat-building/marine  cluster  with 
a  grant  to  improve  their  networking  activities,  which 
spurred  businesses  to  come  together  and  win  three-
quarters  of  a  million  euros-worth  of  new  contracts  for 
local boat yards.

Creative involvement

Public sector involvement in clusters can turn out to be 
extremely creative, especially when addressing a particu-
lar weakness. Taylor’s team has developed plans for work-
force pooling to help the local defence-industries sector 
train and retain labour that would otherwise be lost when 
short- to medium-term contracts end.

Other  initiatives  also  show  that  the  public  sector 
has  a  great  capacity  to  offer  entrepreneurial  sup-
port  to  the  supposedly  more  businesses-minded 
private sector. SEEDA helped a local defence/security 
industry cluster called the Raven Alliance to focus on 
networking  and  find  ways  to  improve  its  long-term 
business prospects.

“As a result, the Raven Alliance has signed a number of 
technology  transfer  agreements  with  Australian  coun-
terparts,  which  we  hope  will  help  them  improve  their 
products  and  allow  them  to  penetrate  the  lucrative  US 
defence market,” explains Taylor.

SEEDA  has  also  helped  to  develop  and  fund  network 
consortia  –  these  act  like  semi-autonomous  companies 
and  now  provide  networking  support  across  a  variety 
of  sectors  such  as  aerospace,  the  marine  industry  and 
biotechnology. 

“A lot of the region’s cluster work is driven through net-
work consortia – strong industry networking allows us to 
help in a top-down way because those industries are now 
able  to  articulate  what  they  are  trying  to  achieve  and 
what their needs are,” says Taylor.

European Innovation

18

January 2007

ENT 5 0110 - EI 01-07 EN.indd   18
ENT 5 0110 - EI 01-07 EN.indd   18

12/20/06   9:36:49 AM
12/20/06   9:36:49 AM

 
 
 
 
t
r
o
p
p
u
s

r
e
t
s
u
C

l

Swedish model of success

The tourism cluster of Åre(1), a ski resort in the mountains 
close  to  northern  Sweden’s  border  with  Norway,  has 
helped  the  resort  become  one  of  the  country’s  premier 
holiday  destinations.  In  the  1970s  and  early  1980s,  the 
public  sector  had  a  leading  role  in  developing  tourism 
in  the  region,  not  least  because  resorts  like  Åre  needed 
heavy investment in infrastructure to become viable ski-
ing destinations.

However,  that  lead  role  has  changed  dramatically  in 
recent  years,  with  the  private  sector  taking  over  the 
drive  to  cement  the  area’s  status  as  a  major  tourist 
destination.

“Local government has transferred a lot of its traditional 
responsibilities  to  the  local  business  association  so  deci-
sions  can  be  made  closer  to  those  who  are  affected  by 
them,”  says  Sara  Nordin  from  the  European  Tourism 
Research Institute.

The public sector does have clearly defined roles when 
it  comes  to  development  matters  –  it  works  to  get 
money  and  grants  from  the  EU  and  national  bodies, 
and  the  local  municipality  recently  invested  in  the 
building  of  a  conference  centre/arena,  despite  some 
criticism that the money would have been better spent 
on traditional services.

“There  is  definitely  some  joint  risk-taking  between  the 
private and public sectors, as well as a deliberate pooling 
of resources, but it has proved a success as tax incomes in 
Åre have actually gone up recently,” explains Nordin.

The cluster has had great success in developing the sum-
mer  season,  which  has  allowed  people  to  settle  in  Åre 
all year round. This is a boon in terms of increasing eco-
nomic growth, and the resort boasts a growing popula-
tion in sharp contrast to most of northern Sweden where 
populations are generally falling.

2020 Vision

The  public  and  private  sectors  have  also  worked  closely 
together in the resort’s Vision 2011 strategy group which 
has  drawn  up  plans  to  expand  the  resort  and  the  local 
economy.  In  fact,  according  to  Nordin,  the  group  has 
vastly  improved  co-operation  between  the  two  sectors, 
as they worked together to fund projects and initiatives 
that will further foster the area’s economic prospects.

“Åre has developed a model of public-private co- operation 
that  has  brought  the  cluster  into  a  new  and  perhaps 
stronger growth phase than ever before,” she adds.

The  relationship  is  likely  to  grow  stronger  as  the 
2011 group evolves into a larger body, the 2020 Vision 
Group. This body has more members than its  predecessor 
and aims to lay down more long-term,  formal strategies 
to further develop tourism in Åre.

Innovating Regions 
in Europe in brief
As  part  of  the  Research  and  Innovation  activities  of 
the  EU’s  Sixth  Research  Framework  Programme,  the 
Innovating Regions in Europe (IRE) aim to facilitate the 
exchange  of  experience  between  regions  developing 
regional  innovation  policies,  strategies  and  schemes, 
and to improve their access to good practice. All such 
regions  are  welcome  to  participate.  Already,  over  230 
– from all EU Member States and beyond – are develop-
ing and implementing regional innovation strategies. 

IRE Secretariat
Fax +352 441012 2055
contact@innovating-regions.org
http://www.innovating-regions.org/

(1) http://www.areresort.se/

 Contact

Peter Taylor, South-East England 

Development Agency
Tel. +44 148 348 4286
petertaylor@seeda.co.uk
http://www.seeda.co.uk/ 

Sara Nordin, ETOUR 
European Tourism Research Institute
Tel. +46 631 95845
sara.nordin@etour.se
http://www.etour.se/

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   19
ENT 5 0110 - EI 01-07 EN.indd   19

19

12/20/06   9:36:55 AM
12/20/06   9:36:55 AM

 
Oxford innovation: 
local to global

Having  a  world-class  university  on  the  doorstep  is  of 
great benefit to innovation in Oxford and the surround-
ing region. The university’s technology transfer company 
–  Isis  Innovation  –  feeds  a  steady  stream  of  spin-out 
companies  into  the  local  economy.  It  can  also  work 
closely with local innovators who benefit from the inter-
national expertise on offer.

n
o
i
t
a
v
o
n
n

i

d
r
o
f
x
O

companies may eventually move further away, but hav-
ing  their  roots  near  the  university  has  a  very  significant 
effect near the point of origin.

Consultancy  to  companies  is  also  offered  locally,  but 
is  more  significant  nationally  and 
internationally. 
Nevertheless,  Hockaday  reports  that  Isis  does  work 
regularly with local businesses, for example in providing 
knowledge and experience of patenting and licensing.

A key priority for Isis is the licensing of innovative tech-
nologies to companies able to take them forward. ”Much 
of  our  licensing  tends  to  be  very  international,”  says 
Hockaday, ”as there is no automatic reason why the right 
licence  partner  is  going  to  be  in  our  region.  But  local 
companies will of course be considered, if they offer an 
appropriate match.”

A regular stream of spin-out companies flows from Oxford University.

Looking outward

Regions  have  to  make  the  best  use  of  their  resources, 
and when it comes to promoting innovation in a region’s 
SMEs, local universities can play a big role. The technol-
ogy  transfer  office  in  such  institutions  is  therefore  of 
ever-increasing  importance,  and  a  recent  workshop  of 
RIS  project  managers  from  across  Europe  learnt  how 
Oxford’s experiences could help them make more of their 
own universities’ results.

The  University  of  Oxford  in  south-east  England  is  a 
world-renowned  centre  for  research  and  innovation.  As 
such, its effect on innovation ranges from local to global. 
The university’s own technology transfer company – Isis 
Innovation – develops regional, national and internation-
al initiatives, and regards them as complementary.

Local impacts

In  the  past  two  years,  Isis  has  been  focusing  more 
attention  outside  the  university.  One  aspect  of  this  is 
local,  involving  closer  collaboration  with  the  South-
East  England  Development  Agency  and  its  work  with 
innov ators in the region(2). 

”In  addition  to  all  our  local  and  national  activities  we 
are actively developing as a European and international 
business,”  emphasises  Hockaday,  citing  recent  links 
with Scandinavian universities to help them set up their 
own spin-outs. Such international activity, however, is a 
crucial  part  of  nurturing  the  expertise  that  also  brings 
substantial benefits to the Oxford region and the south-
east of England.

”A  key  part  of  our  business  is  setting  up  new  spin-out 
companies  and  that  is  generally  a  very  local  activity,” 
says  Tom  Hockaday,  managing  director  of  Isis.  He  illus-
trates the huge impact the university has on the regional 
economy, noting that Isis has helped create 52 spin-out 
companies since 1998(1).

”The spin-outs are initially created in the Oxford area and 
draw  heavily  on  expertise  and  investment  sourced  rela-
tively locally,” adds Hockaday. As they grow in size, these 

(1) http://www.isis-innovation.com/spinout/index.html 

(2) http://www.seeda.co.uk/

 Contact

Tom Hockaday, Isis Innovation Ltd
Tel. +44 186 528 0839
Fax +44 186 528 0831
tom.hockaday@isis.ox.ac.uk

European Innovation

20

January 2007

ENT 5 0110 - EI 01-07 EN.indd   20
ENT 5 0110 - EI 01-07 EN.indd   20

12/20/06   9:36:56 AM
12/20/06   9:36:56 AM

 
News in brief

F
E
I
R
B
N

I

S
W
E
N

FP7 and CIP ready to come into force

Cutting red tape

Negotiations  between  Council  and  Parliament  have 
concluded  with  agreement  on  the  last  remaining  dif-
ferences  on  the  proposal  for  the  Seventh  Research 
Framework Programme (FP7). This agreement, approved 
by Parliament in November 2006, paves the way for for-
mal adoption of the Programme, and its entry into force 
on schedule for the start of 2007. Meanwhile, the legisla-
tion for the Competitiveness and Innovation Programme 
(CIP)  was  formally  adopted  in  October  2006,  and  has 
been published in the Official Journal.

http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=OJ:L:2006:310:0015:0040:EN:PDF

Scoreboard takes first look 
at innovation in services

For  the  first  time,  the  2006  European  Innovation 
Scoreboard  takes  a  look  at  innovation  in  the  services 
sector. In a technical paper published in advance of the 
main Scoreboard, the team aims to assess the suitability 
of  existing  indicators  for  measuring  innovation  in  the 
business-services  sector  (not  public  services).  Recalling 
that  the  indicators  within  the  Scoreboard  have  been 
developed  primarily  to  measure  technological  innov-
ation  –  products  and  processes  –  in  the  manufacturing 
sector,  the  first  challenge  is  to  identify  indicators  which 
can  measure  innovation  in  services  accurately.  The  key 
difference  is  that  innovation  in  manufacturing  requires 
mostly internal knowledge and time to develop products, 
whereas  in  the  service  sector,  knowledge  can  often  be 
sourced  outside  the  organisation  and  changes  can  be 
introduced  much  more  quickly.  Using  a  set  of  24  indi-
cators  (of  which  four  are  identical  to  those  used  in  the 
2005 Scoreboard, nine similar and 11 new) the team has 
developed  a  service  sector  innovation  index,  but  cau-
tion that it may best be used for comparing innovation 
in  different  service  sectors  within  a  country,  rather  than 
comparing performance between countries.

http://trendchart.cordis.lu/scoreboards/scoreboard2006/
pdf/eis_2006_innovation_in_services.pdf

The  next  phase  in  the  Commission’s  Better  Regulation 
drive to reduce bureaucracy was launched in November 
2006.  Going  beyond  the  previous  screening  of  existing 
and  proposed  EU  legislation  –  to  ensure  its  demands 
really  are  proportionate  to  its  aims  –  the  Commission 
now wants to set the ambitious target of reducing firms’ 
costs by 25% through scrapping or simplifying adminis-
trative procedures. It believes this target is achievable by 
2012, and is seeking commitments from Member States 
to work in partnership to reduce the administrative bur-
den of existing legislation. Furthermore, the Commission 
will  also  seek  to  strengthen  its  processes  for  assessing 
the impact of legislative proposals, and to step up a pro-
gramme of codification of existing EU laws to make them 
easier to follow.

http://ec.europa.eu/enterprise/regulation/
better_regulation/index_en.htm

Europeans still look at home first

The  single  market  should  enable  European  citizens  to 
purchase  goods  and  services  anywhere,  but  recent 
research  by  the  Bruegel  think-tank  shows  that  they  still 
–  more  than  20  years  after  the  creation  of  the  single 
market  –  overwhelmingly  shop  at  home.  Of  goods  and 
services purchased in the EU-15, some 96% are produced 
in  the  EU-15.  (In  comparison,  domestically  produced 
goods  account  for  a  similar  proportion  of  purchases 
in  the  USA.)  But  when  we  look  at  the  levels  of  trade 
between Member States, we find that, on average, 86% 
of  EU-15  consumption  is  on  national  products,  leaving 
just 10% spent on intra-EU trade. Of course, the figures 
for intra-EU trade tend to be higher for smaller Member 
States closer to the heart of the EU and lower for larger 
and/or more isolated Member States. The researchers call 
for policy-makers reviewing the functioning of the single 
market to adopt a new approach, focused on favouring 
new  entrants  in  the  market,  fostering  competition  and 
diffusion of innovation, and encouraging the integration 
of value chains across Europe.

http://www.bruegel.org/Files/media/PDF/
Publications/HomeBias_Final_to_Printer.pdf

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   21
ENT 5 0110 - EI 01-07 EN.indd   21

21

12/20/06   9:37:00 AM
12/20/06   9:37:00 AM

 
 
The European Parliament’s 
role in promoting innovation

Giles Chichester, MEP is the Chairman of the European 
Parliament’s Industry, Research and Energy Committee. 
He also has some 25 years experience running an SME. 
He  talks  to  European  Innovation  about  what  the 
European Parliament, and its members, are doing at EU 
and national level to promote innovation.

y
c
i
l

o
p

n
o
i
t
a
v
o
n
n

I

So how can the European Parliament 
help them concretely?

One  way  would  be  to  help  avoid  allowing  SMEs  to  be 
buried in social and environmental legislation. All of this 
is brought in with the best of intentions, but it bears on 
SMEs  more  heavily  than  any  other  sector  and   certainly 
stifles  creativity  and  innovation.  Take  REACH(1),  for 
ex ample, which will be a big burden for business in terms 
of recording and record keeping. 

What about specific regulation 
to encourage SME innovation?

A  two-tier  regulatory  framework  which  is  more  favour-
able  for  SMEs  would  not  be  advisable,  in  my  opinion. 
And overall, second-guessing SME requirements is a very 
difficult thing to do. The best two things we can do for 
SMEs, and I think this then flows into innovation, are: 

1.  Containing  the  burden  of  regulation.  The  European 
Commission is working hard on this, and we must strike a 
balance between reasonable precautions and risk; and 

2.  Information and access to it. All small businesses need regu-
lar  access  to  information  about  finance,  business  advice, 
marketing and so on. All that is useful practical material. 

“The public institutions have 
a key role in setting 
the right framework.”

Giles Chichester

How supportive is the European 
Parliament of innovation? 

Very  much.  And,  as  you  might  expect,  we 
 support it more strongly on my committee. It 
is our job to be concerned with innovation.

How can the European 
Parliament get the message of 
innovation across?

It is a big question because it is allied to a particular view 
of SMEs and small businesses but again we are very much 
in favour of SMEs being able to innovate. We all believe 
in  them;  especially  people  like  me  who  have  worked  in 
SMEs,  but  when  it  comes  to  the  practicalities  of  sup-
porting innovation then views tend to diverge. And it is 
difficult because there are millions of SMEs and the only 
thing they have in common is being small! Often when 
there are calls for SME support it is a feeling rather than 
an expression of some concrete action.

As an MEP, how do you find 
out about how business innovates? 

I worked for 25 years in an SME, running my own map-
publishing company. There, I had to innovate because I 
knew I needed to develop new products. 

Later, as an MEP I did an Industry Parliament Trust (IPT)(2) 
fellowship.  The  IPT  is  a  UK  organisation  that  seconds 
parliamentarians  to  industry  to  learn  about  business.  I 
spent my fellowship working with Unilever in their food 
production  arm.  I  was  interested  in  how  new  products 

European Innovation

22

January 2007

ENT 5 0110 - EI 01-07 EN.indd   22
ENT 5 0110 - EI 01-07 EN.indd   22

12/20/06   9:37:01 AM
12/20/06   9:37:01 AM

 
y
c
i
l

o
p

n
o
i
t
a
v
o
n
n

I

are developed in a mature market. It became clear to me 
that it is possibly more difficult for big business to pursue 
innovation  than  it  is  for  SMEs,  providing  they  have  the 
courage to be willing to fail.

How might we promote the 
exploitation of research results 
for innovation? 

This is the strength of small business, the idea that some-
one has an innovative idea and pursues it. And let us not 
forget  that  mature  and  sophisticated  financial  organisa-
tions  are  looking  around  desperately  for  a  good  pros-
pect to back. The challenge is then to have an effective 
broking business to marry ideas and the means to make 
them successful. This does happen already but there is a 
difficulty  of  scale  –  the  disproportionate  cost  of  making 
relatively small loans.

How successful can the new 
Competitiveness and Innovation 
Framework Programme (CIP) be 
in promoting innovation? 

The CIP is a worthy initiative, but it is difficult to institu-
tionalise innovation. It is about creating the right condi-
tions. The public institutions have a key role in setting the 
right framework, and lower taxes and less regulation are 
crucial to this. There are many different people to satisfy 
in the innovation equation; some people get pleasure out 
of  inventing  things,  others  get  pleasure  out  of  making 
lots of money so the requirements are different. 

One  idea  I  have  had  is  for  an  ‘innovation  and  techno-
logical  development  zone’,  a  kind  of  enterprise  zone  to 
attract the best brains. Scientists, researchers and entre-
preneurial developers will always go where the action is, 
so  we  need  to  make  Europe  seem  like  an  exciting  and 
innovative place to be. And that is where we have to try 
and force the relationship between universities and their 
related  business  partners;  it  is  about  working  the  inter-
face between academic research and business. 

A final word on SMEs and innovation? 

important  thing 

is  the  human  factor. 
The  most 
Governments and parliaments must try and improve the 
environment they work in so as to give them the incen-
tives they need, but it is down to the SMEs themselves to 
pick up the innovation ball and run with it. 

Also  I  think  that  there  are  areas  of  innovative  activity 
that  are  not  necessarily  market  determined  (defence, 
for  example)  which  might  be  exploited  further  in 
Europe.  In  the  US,  for  example,  they  seem  to  have 
found the way to use spin-off technology to make new 
innovative products. 

How can MEPs help national 
governments to do more to 
foster innovation? 

Lower taxes and fewer regulations would 
be  one  answer,  but  there  is  no  magic 
solution.  There  is  a  contradiction  in  say-
ing  governments  can  create  or  force  innovation.  All 
they  can  do  is  support  and  encourage.  We  do  not 
want  to  go  down  the  route  of  oppressive  command 
economics policies, but neither do we want an unfet-
tered,  unregulated  market.  For  a  market  to  function 
efficiently you need an element of regulation otherwise 
monopolies can emerge.

I  am  a  strong  supporter  of  the  European  Technology 
Platform  initiative(3)  and  how  it  is  being  applied  across 
lots of sectors, because it draws together the main play-
ers  without  the  use  of  large  amounts  of  public  money 
and it is industry-led.

“It is down to the SMEs themselves 
to pick up the innovation ball 
and run with it.”

(1)  REACH is the EU regulatory framework for the Registration, 

Evaluation and Authorisation of Chemicals.

(2) http://www.ipt.org.uk/

(3)  http://cordis.europa.eu/technology-platforms/home_en.html

 Contact

Giles Chichester, MEP
Tel. +32 2 284 5296
giles.chichester@europarl.europa.eu
http://www.europarl.europa.eu/
committees/itre_home_en.htm

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   23
ENT 5 0110 - EI 01-07 EN.indd   23

23

12/20/06   9:37:12 AM
12/20/06   9:37:12 AM

 
e
p
o
r
u
E
O
N
N

I

O
R
P

European Cluster Alliance: 
all for one ... one for all

Four  trans-national  cluster  projects  –  not  musketeers 
–  have  put  their  swords  together,  using  the  INNO-Net 
policy  instrument  of  the  European  Commission’s  new 
PRO  INNO  Europe  initiative,  to  develop  common 
approaches  and  policies  for  boosting  innovation  and 
competitiveness across Europe.

But despite concerted national and regional efforts, clustering 
activity in Europe remains relatively small compared with the 
USA, suggests Nikos Pantalos of the European Commission’s 
Innovation  policy  development  unit.  Fragmentation  of  the 
market  and,  in  some  cases,  less  regional  specialisation  is 
 holding back cluster development in Europe.

“To ensure we have healthier, stronger and more sustain-
able  clustering  across  the  Union,  our  activities  must  be 
supported by the right policies,” says Pantalos. “If regions 
pull in different directions we get fragmented results, so 
the European Cluster Alliance is going to provide a plat-
form  for  much  greater  co-operation  among  the  cluster 
programmes  themselves,  breaking  down  the  barriers  in 
the European market.” 

Allied forces

The European Cluster Alliance, initially built upon the four 
PRO INNO Europe cluster projects, will be an open plat-
form to pass on clustering strategies and policies used by, 
for  instance,  the  more  advanced  regions  –  in  the  Nordic 
countries, the United Kingdom, Germany, France, Austria, 
Spain, northern Italy and some from the ten new Member 
States – to fledgling cluster regions and Member States. 

This  new  scheme  will  encourage  the  55  regional  or 
national  public  authorities  and  innovation  agencies 
– from 20 EU country partners – involved in the four clus-
ter projects, to work together in solving what can often 
be  common  problems  across  Member  States.  Problems 
that prevent or inhibit co-operation between clusters at 
European level, explains Pantalos. 

According  to  the  recent  Commission  Communication 
on  innovation(1),  a  critical  mass  and  strategic  orienta-
tion,  through  more  and  better  trans-national  European 
co-operation,  are  essential.  This  raises  the  prospect  of 
“generating world-class European clusters”. 

Ask the pros!

Alliances,  by  definition,  are  relationships  borne  out 
of  an  affinity  between  participants  whose  union  pro-
vides  mutual  benefits.  Fittingly,  the  European  Cluster 
Alliance,  to  be  officially  launched  in  November  2007, 
will  harness  the  added  value  of  multiple  PRO  INNO 
Europe cluster projects. 

Recognised  as  an  important  driver  of  regional  competi-
tiveness and growth, public authorities have been invest-
ing in the notion that shared effort usually means shared 
benefits.  Cluster  policy  is  also  a  high-ranking  priority 
within  Member  States’  National  Reform  Programmes 
aimed  squarely  at  meeting  the  renewed  Lisbon  goal  of 
more jobs and growth. 

PRO INNO Europe’s three main pillars are ‘policy analysis’, 
‘policy  learning’  and  ‘policy  development’(2).  The  latter 
is  the  biggest  part  of  the  initiative,  where  partners  from 
several Member States work together on  INNO-Nets and 
INNO-Actions,  which  are  projects  to  bring  national  or 
regional innovation programmes closer, and develop new 
support schemes.

European Innovation

24

January 2007

ENT 5 0110 - EI 01-07 EN.indd   24
ENT 5 0110 - EI 01-07 EN.indd   24

12/20/06   9:37:12 AM
12/20/06   9:37:12 AM

 
 
Promoting  clusters  at  national  level  lacks  the  wider 
view.  This,  Pantalos  confirms,  is  where  the  Alliance 
enters  the  picture.  It  will  integrate  regional  efforts, 
remove  the  barriers  preventing  closer  co-operation 
between clusters, and foster the development of com-
mon  actions,  technology  projects  and  ‘mutual  learn-
ing’ among EU regions. 

The  Memorandum  will  identify  the  areas  of  com-
mon  interest  for  future  co-operation  and  shape 
a  ‘cluster  agenda’  for  years  to  come.  It  will  be 
 formally signed at a Ministerial Conference in Sweden, 
on  26-27 November  2007,  to  be  organised  by  the 
Baltic Sea Network, one of the four PRO INNO Europe 
cluster projects in the Alliance. 

He  explains:  “Let  us  say  an  agency,  such  as  Vinnova 
in  Sweden,  TEKES  in  Finland,  VDI/VDE  in  Germany 
or  France’s  OSEO-ANVAR,  is  developing  its  future 
programme  in  support  of  clusters.  With  the  European 
Cluster  Alliance,  we  are  encouraging  them  to  do  this 
in  collaboration  with  other  agencies  across  Europe, 
while respecting their own priorities and regional spe-
cificities,  for  their  mutual  benefit  and  the  creation  of 
world-class clusters.”

Further,  the  Commission  will  present  a  policy  paper 
describing  cluster  policy  in  Europe  –  its  challenges  and 
actions,  including  cluster  mapping,  networking  and 
actions  supporting  European  policy  co-operation.  Due 
in April 2007, it will also outline the various instruments 
available  for  clustering  in  the  relevant  EU  programmes 
–  the  Competitiveness  and  Innovation  Framework 
Programme,  the  Structural  Funds,  and  Seventh  R&D 
Framework Programme. 

e
p
o
r
u
E
O
N
N

I

O
R
P

So, now the authorities and agencies will be asked to keep 
in mind not just regional and national considerations but 
also the European and international dimension. 

“We  have  promoted  the  concept  of  ‘mutual  learning’ 
quite a lot during the past few years, but it is definitely 
time  to  go  beyond  this,”  stresses  Pantalos.  “This  is 
our chance to pass from the concept of ‘mutual learn-
ing’  to  a  state  of  ‘mutual  doing’  or  even  ‘learning  by 
doing’,” he muses. 

But the devil is in the detail. Who will lead the Alliance? 
How  will  it  be  financed  in  the  long  term  and  for  how 
long?  Much  of  this  will  be  answered  in  the  Cluster 
Memorandum  being  drafted  by  a  high-level  group  of 
experts  in  close  association  with  the  four  PRO  INNO 
Europe cluster projects.

“To ensure we have more 
sustainable clustering across 
the Union, our activities 
must be supported by 
the right policies.”

(1)  ‘Putting knowledge into practice: A broad-based innovation strategy 

for the EU’, COM(2006) 502 final.

(2)  See ‘First phase of PRO INNO Europe launches’, 

European Innovation, July 2006.

 Contact

Nikos Pantalos, European Commission

Enterprise and Industry DG
Innovation policy development unit

Tel. +32 2 299 9734
nikos.pantalos@ec.europa.eu

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   25
ENT 5 0110 - EI 01-07 EN.indd   25

25

12/20/06   9:37:23 AM
12/20/06   9:37:23 AM

 
 
Technology Institute 
proposals agreed

Following  two  rounds  of  public  consultations,  the 
proposed  European  Institute  of  Technology  (EIT)  has 
received  widespread  support  from  Member  States.  But 
there  are  still  question  marks  from  some  stakeholders, 
notably  over  the  proposed  funding  methods,  following 
publication  of  the  Commission’s  formal  proposals  in 
October 2006. The EIT is a key part of the Commission’s 
strategy to create a thriving and dynamic environment 
for research, education and innovation. 

T
I
E

r
o
f

t
h
g

i
l

n
e
e
r
G

g
n
h
c
X
k
c
o
t
S
©

:
o
t
o
h
P

The  EIT  will  have  around  60  scientific  and  support  staff 
plus the 19-member Governing Board. Its legal structure 
should  be  set  up  by  2008,  and  it  could  be  operational 
in 2009. This would allow the first two KICs to be estab-
lished  and  to  start  their  activities  as  early  as  2010.  The 
aim is to create some six KICs by 2013. 

Funding issues

The success of the EIT is partially dependent upon fund-
ing from industry. Barroso has already received tentative 
offers of support from several major European companies 
including Siemens, Unilever, Nokia, BP and Eriksson. 

However,  some  European  industry  bodies  have  raised 
concerns.  In  particular,  UNICE  has  stated  that  it  is  not 
keen  to  see  resources  already  allocated  to  the  research 
Framework  Programmes  and  innovation  support  initia-
tives  used  to  finance  the  EIT,  and  that  it  should  not  be 
“politically motivated or directed”.

The Commission views the EIT as a form of public-private 
partnership with public funding coming from a number 
of budgets including FP7, CIP and the Structural Funds. 
Other external sources of funding could include Member 
States,  regional  or  local  authorities,  venture  capital, 
banks, and resources resulting from its own activity (for 
example, intellectual property rights).

The  EIT’s  total  budget  for  2008  to  2013  is  estimated  at 
€2.4  billion  with  an  initial  start-up  fund  of  €300  million 
coming from the Community budget.

Commission  President 
José  Manuel  Barroso  has 
described  the  EIT  as:  “...  a  future  flagship  for  innov-
ation  in  Europe,  based  on  that  important  idea  of 
public-private  partnerships  and  specifically  on  the 
linkage  between  university  and  research  excellence 
with a business interest and an economic 
potential”.  He  believes  that  the  EIT  will 
“help  to  break  down  the  walls  between 
research, education and business”.

EIT proposals

“The EIT will help to break 
down the walls between research, 
education and business.”

The proposed EIT structure(1) has two levels: an autono-
mous governing board that will set the overall strategic 
priorities  of  the  EIT  and  a  number  of  Knowledge  and 
Innovation Communities (KICs) that bring together uni-
versities,  research  organisations  and  businesses  within 
an  integrated  partnership.  The  board  will  identify  stra-
tegic  scientific  challenges  in  interdisciplinary  areas  and 
then  select  and  support  KICs  to  carry  out  tasks  related 
to  research,  education  and  innovation  (the  ‘knowledge 
triangle’) in these areas.

(1)  Proposal for a Regulation of the European Parliament 

and the Council establishing the European Institute of Technology, 
http://ec.europa.eu/education/policies/educ/eit/doc/com604_en.pdf 

 Contact

For further information, see http://ec.europa.eu/
education/policies/educ/eit/index_en.html

European Innovation

26

January 2007

ENT 5 0110 - EI 01-07 EN.indd   26
ENT 5 0110 - EI 01-07 EN.indd   26

12/20/06   9:37:23 AM
12/20/06   9:37:23 AM

 
 
 
 
 
How human capital 
creates innovativeness

Countries  need  to  make  greater  efforts  to  develop  and 
make use of their citizens’ skills and knowledge if we are 
to  see  increased  innovation  in  Europe,  argues  a  recent 
study(1)  by  Peer  Ederer,  Philipp  Schuller  and  Stephan 
Willms of the German think-tank Deutschland Denken!, 
published by the Brussels-based Lisbon Council. In our 
guest article, they explain their thinking.

Peer Ederer, Philipp Schuller and Stephan Willms.

The ability of a society to develop, master and make use 
of innovation for generating economic growth and pros-
perity  depends  largely  on  the  widespread  endowment 
and  utilisation  of  the  human  capital  of  its  citizens.  The 
case of eBay is a suitable illustration of this dependency: it 
requires not only scientists and engineers to develop the 
platform,  but  also  widespread  commercial  knowledge 
and  entrepreneurial  spirit  from  millions  of  small-scale 
traders using the platform. And finally, it needs hundreds 
of millions of customers able to use the site.

The  eBay  example  illustrates  that  human  capital  is  far 
more  than  just  the  education  and  vocational  skills  one 
acquires in schools and universities. Human capital also 
comprises  the  cultural  skills  and  societal  norms  that 
the child learns at home, the informal education which 
adults acquire voluntarily during their lifetime, as well as 
the  constant  learning  that  accompanies  change  in  the 
job environment.

N
O
I
T
A
T
I
V
N

I

Y
B

Thus, to understand the potential for general innovative-
ness in society – and the economic growth that can result 
from  this  innovativeness  –  it  is  necessary  to  assess  each 
of  these  five  components  of  human  capital:  parental, 
schooling,  vocational/university,  adult  and  job  educa-
tion.  The  assessment  needs  to  include  how  much  total 
human  capital  there  exists  per  country,  as  well  as  how 
much  of  it  is  employed  in  the  labour  market,  and  how 
productive it is. 

The  main  result  from  our  assessment  is  that  human 
capital  performance  is  widespread  across  the  European 
Union. Sweden is endowed with an average €175,000 of 
human capital per employed person, while Portugal pos-
sesses only €73,000. The Netherlands utilises 64% of all its 
human capital, while Italy employs only 52%. In Sweden, 
the UK and Finland, the human capital productivity trend 
is stable, whereas in all other countries it is declining – in 
the Mediterranean countries by up to 1.5% per year.

The key implication for policy-makers is to view the con-
nection between human capital and innovativeness in a 
much  broader  sense  than  merely  as  education  received 
in schools and universities, or the amount of R&D spent 
in  exclusive  high-tech  facilities.  A  human  capital  cam-
paign to enhance Europe’s competitiveness on the basis 
of knowledge requires broad mobilisation of private and 
public  resources  in  all  aspects  of  the  human  learning 
cycle:  from  parental  education  to  lifelong  learning.  The 
wide variation in performance among the various nations 
illustrates that there is large room for improvement even 
within the European context and its value systems.

(1)  The report can be downloaded from: http://www.lisboncouncil.net/

media/lisbon_council_european_human_capital_index.pdf

 Contact

Peer Ederer, The Innovation and Growth Academy
peer@innovationgrowth.com
http://www.innovationgrowth.com/
http://www.deutschland-denken.info/

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   27
ENT 5 0110 - EI 01-07 EN.indd   27

27

12/20/06   9:37:31 AM
12/20/06   9:37:31 AM

 
Investing for 
a high-tech future

Germany’s  new  high-technology  strategy  for  2006-09 
aims to stimulate innovation in a wide range of science 
and  technology  areas.  A  €15  billion  commitment  will 
focus especially on support for SMEs and on attracting 
researchers and investment to make Germany attractive 
for developers of emerging technologies, like biotechnol-
ogy, nanotechnology, security and energy.

n
a
p

l

h
c
e
t
-
h
g
H

i

g
n
h
c
X
k
c
o
t
S
©

:
o
t
o
h
P

Innovation  is  high  on  the  agenda  for  Germany,  which 
holds  the  EU  Presidency  until  June  2007.  Its  own  new 
high-technology strategy aims to invest a total of €15 bil-
lion  in  cutting-edge  technology  between  2006  and 
2009, plus an extra €6 billion to be added to the existing 
R&D  budget.  The  funds  will  support  a  very  wide  range 
of areas and contribute to raising research expenditure to 
the target of 3% of GDP by 2010.

While  its  research  has  been  fruitful,  German  ideas 
and patents have frequently had to be taken to other 
countries before new processes, products and services 
could  reach  the  market.  “One  example  of  this”,  says 
Christian  Herbst  of  the  Ministry  of  Education  and 
Research,  “is  the  MP3  player  which  was  developed 
at  the  Fraunhofer  Institute  but  eventually  produced 
outside  Germany.  We  need  to  develop  better  links 
between basic research and its application.” 

Helping SMEs

The new broad strategy is an attempt to stimulate devel-
opment  of  those  research  ideas  at  all  levels  –  from  uni-
versities to small businesses – and especially to encourage 

collaboration between them. Grants will go to universities 
carrying out research commissioned by small companies. 
New funding instruments will support market evaluation 
of research ideas and help speed up the process of setting 
norms and standards, to shorten the time to market. The 
high-tech strategy will also open the German public pro-
curement market, worth €260 billion a year, to innovative 
products and services.

SMEs  will  benefit  significantly,  both  through  specific 
measures  like  a  40%  increase,  to  €850  million,  in  fund-
ing for R&D carried out in-house, as well as through tax 
reform and a reduction in general red tape.

New markets

The strategy sets objectives for no less than 17 technol-
ogy  fields,  each  with  its  own  schedule  and  concrete 
objectives,  taking  into  account  both  research  funding 
and  market  conditions.  The  aim  is  to  open  new  lead 
markets  (or  develop  existing  markets)  in  Germany  for 
emerging  technologies,  attracting  both  researchers  and 
investors to develop products to be sold in Germany and 
around the world. Security research and energy are likely 
to attract particular national interest. Other key areas are 
biotechnology,  nanotechnology,  new  materials,  space, 
medical sciences, optics and production technologies.

Efforts are continuing to develop less technology-related 
production areas, but high-tech will be the focus. Herbst 
believes that the effort is not being spread too widely, and 
it  is  essential  to  stimulate  innovation  wherever  research 
findings can be translated into commercial success.

 Contact

Christian Herbst, German Ministry of Education 

and Research

Tel. +49 188 857 5175
Fax. +49 188 857 85 175
christian.herbst@bmbf.bund.de
http://www.bmbf.de/

European Innovation

28

January 2007

ENT 5 0110 - EI 01-07 EN.indd   28
ENT 5 0110 - EI 01-07 EN.indd   28

12/20/06   9:37:33 AM
12/20/06   9:37:33 AM

 
 
 
t
e
k
r
a
m
e
g
n
S

i

l

Relaunching 
the EU’s core policy

Europe’s  single  market  is  at  the  heart  of  EU  policies. 
Going back to the founding treaties, free movement has 
been  critical  to  the  development  of  the  Union,  and  to 
its  perception  amongst  citizens  and  firms.  In  the  wake 
of  the  single  market  programme  in  the  late  1980s,  the 
internal  market  was  widely  seen  as  a  great  benefit 
across Europe, but in recent years momentum has been 
lost. Today, the single market has somewhat lost its way, 
and the challenge for the Commission as it completes a 
year-long review in spring 2007 is to develop a strategy 
to reinvigorate the market.

Just a few years on, however, and the single market has 
lost  some  of  its  lustre.  There  are  still  too  many  gaps,  in 
areas  such  as  services,  retail  financial  services,  move-
ment  of  workers  and  energy  provision,  respondents  to 
a  Commission  consultation  in  2006  noted.  Moreover, 
those  representing  small  firms  and  consumer  organisa-
tions  were  particularly  concerned  that  the  benefits  had 
accrued more to large firms than to SMEs and individual 
consumers. And even once legislation has been adopted 
at EU level, many respondents complained, implementa-
tion  and  enforcement  of  common  rules  is  often  patchy 
across Member States. Finally, many groups pleaded for 
a greater ‘social dimension’ to the market, urging more 
common rules to protect workers.

New strategy

The results of the consultation will feed into a new strat-
egy,  due  to  be  endorsed  by  the  European  Council  in 
June 2007. In its preliminary work, the Commission has 
set out five priorities – generally welcomed by respond-
ents to the consultation – for the future development of 
internal  market  policy:  fostering  market  dynamism  and 
innovation;  better  regulation;  better  implementation 
and  enforcement;  taking  greater  account  of  the  global 
dimension;  and  informing  and  communicating  better 
with citizens on the opportunities of the market.

Speaking  about  the  results  of  the  consultation,  Internal 
Market  and  Services  Commissioner,  Charlie  McCreevy, 
underlined  that  “It  is  clear  that  there  is  strong  support 
for the internal market, but that there is also considerable 
room for improvement. In some areas there are gaps to 
be filled. But even where legislation is in place, we are not 
necessarily getting the most out of it.”

In  January  1993,  the  Union  completed  the  ambitious 
single market programme – meant to strip away barriers 
to  the  free  movement  of  goods,  services,  workers  and 
capital between Member States. Companies could take 
advantage of easier access to markets in other member 
states, no longer being blocked by rules and procedures 
which  discriminated  against  them  because  they  were 
from  abroad.  Widespread  positive  sentiment  meant 
that  this  was  recognised  as  one  of  the  EU’s  greatest 
 achievements, and there were few who argued that the 
single market had not brought benefits overall. Indeed, 
a  2002  study  showed  that  after  ten  years,  GDP  had 
grown  1.8%  and  2.5  million  jobs  had  been  created  in 
the then 15 Member States.

 Contact

For further information on the Single Market 

review, see: http://ec.europa.eu/
internal_market/strategy/index_en.htm

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   29
ENT 5 0110 - EI 01-07 EN.indd   29

29

12/20/06   9:37:40 AM
12/20/06   9:37:40 AM

 
S
E
C
N
E
R
E
F
N
O
C

EU Sustainable Energy Week 2007

29 January - 2 February, EU-wide

The first EU Sustainable Energy Week (EUSEW) is organ-
ised under the umbrella of the Sustainable Energy Europe 
Campaign.  The  programme  includes  a  range  of  events 
highlighting  the  multi-sectoral  nature  of   sustainable 
en ergy  development  and  stressing  the  need  for  all 
partners  to  work  together  with  a  common  aim.  Most 
events  will  take  place  in  Brussels,  but  there  will  also  be 
major  events  outside  Brussels,  for  example  Les  ’Assises 
de  l’Energie’  in  Grenoble,  France,  and  the  ‘Spanish 
Sustainable Energy Week’ in Murcia, Spain.

A

http://www.eusew.eu/ 

E-World of Energy and Water – 
brokerage event

ENEX New Energy – renewable 
energy sources brokerage event

14 February, Kielce (Poland)

IRC  South  Poland  is  organising  a  ‘Renewable  Energy 
Sources Brokerage Event’ at the 10th International Power 
Industry  Fair  (ENEX).  This  event  aims  to  help  European 
companies  and  organisations  in  the  renewable  energy 
sector  to  enter  into  trans-national  technology  partner-
ships  –  a  factor  which  will  be  central  to  increasing  the 
market  share  of  renewable  energy  sources  in  Poland. 
One-to-one meetings will be set up with potential part-
ners active in the renewables sector.

http://www.innovationrelay.net/
bemt/home.cfm?EventID=1493 

MEDTEC 2007 – IRC brokerage event

7 February, Essen (Germany)

28 February - 1 March, Stuttgart (Germany)

The Innovation Relay Centres (IRC) network will be organ-
ising  an  international  matchmaking  event  as  part  of  the 
E-World Energy and Water 2007 exhibition. This brokerage 
event will provide an excellent opportunity for participants 
in E-World Energy and Water to make contact with potential 
business  and  co-operation  partners  in  the  field  of  energy 
and water technologies. Target groups are companies, uni-
versities and research institutes with an interest in technol-
ogy co-operation in the areas of energy and water. 

For  the  third  year  running,  IRC  Stuttgart-Erfurt-Zürich, 
the  Innovation  Relay  Centre  for  Southern  Germany  and 
the  German-speaking  part  of  Switzerland,  is  organising 
an IRC brokerage event at the MEDTEC 2007 Exhibition 
and  Conference.  MEDTEC  (Medical  Equipment  Design 
&  Technology  Exhibition  and  Conference)  is  mainland 
Europe’s  only  dedicated  medical  device  manufacturers 
suppliers’  exhibition,  attracting  buyers  and  suppliers  of 
medical devices from across the world. 

http://www.innovationrelay.net/bemt/
home.cfm?EventID=1488 

http://www.innovationrelay.net/bemt/
home.cfm?EventID=1490

LED Partnering Event

8-9 February, Brussels (Belgium)

Within the wider framework of the LED4EUROPE Congress 
& Exhibition 2007, a first partnering event ever dedicated 
to  LED  technologies  will  be  organised.  European  LED 
experts will offer invaluable insights into the state of the art 
in the design and cost-effective manufacturing of reliable 
LED lighting and signage products. The partnering event 
will provide participants with the opportunity for bilateral 
meetings with potential research or business co-operation 
partners based on a pre-arranged schedule. It is targeted 
at  companies,  universities  or  research  institutes  active  in 
the LED sector, or interested in LED technologies.

EnergyMed 2007 – technology 
transfer days

9-10 March, Naples (Italy)

The Italian IRCs, IRIDE (southern Italy) and IRENE (north-
east  Italy),  are  organising  trans-national  technology 
transfer days event on renewable sources of energy and 
energy  efficiency,  within  the  wider  context  of  the 
EnergyMed  2007  conference  and  exhibition.  SMEs, 
universities,  research  centres  and  public  administrations 
involved in energy efficiency activities and/or the use of 
renewable sources of energy will have the opportunity to 
exchange information and present technology profiles in 
a series of one-to-one meetings. 

http://www.innovationrelay.net/calendar/
viewdetails.cfm?EventID=1498&type=future 

http://www.innovationrelay.net/bemt/
home.cfm?EventID=1485 

3GSM World Congress – 
technology transfer days

12-15 February, Barcelona (Spain)

IRC  Catalonia  is  organising  a  brokerage  event  alongside 
the 3GSM World Congress 2007, the leading international 
event  for  the  mobile  telecommunications  industry.  The 
3GSM  technology  transfer  days  will  facilitate  the  conclu-
sion  of  agreements  between  technology  providers,  com-
panies, researchers, technical associations and institutions. 
Bilateral  meetings  will  be  set  up  with  potential  partners, 
with the objective of generating real business collaboration 
opportunities in the mobile telecommunications sector. 

http://www.innovationrelay.net/bemt/
home.cfm?EventID=1502 

FutureMatch 2007

15-18 March, Hanover (Germany)

Since  1999,  a  partnering  event  has  taken  place  every 
year  at  CeBIT,  the  world’s  largest  Information  and 
Communication  Technologies  (ICT)  fair.  Organised  by  a 
 Contact
core group of Innovation Relay Centres (IRCs), the event 
– FutureMatch – aims to help European start-ups, SMEs 
and  laboratories  in  the  ICT  sector  initiate  trans-national 
technological partnerships. 

U

http://www.cebit.de/41688?usertyp=
1&highlight=FutureMatch&x=1

European Innovation

30

January 2007

ENT 5 0110 - EI 01-07 EN.indd   30
ENT 5 0110 - EI 01-07 EN.indd   30

12/20/06   9:37:51 AM
12/20/06   9:37:51 AM

S
N
O
I
T
A
C
I
L
B
U
P

The future of the Information Society 
in Europe – contributions to the debate

EUR 22353 EN

Recent  analyses  suggest  that  the  Lisbon  Strategy  is  in 
need of fresh impetus and that the pace of development 
of the Information Society in Europe needs to be acceler-
ated. In search of new ideas, the European Commission’s 
Institute  for  Prospective  Technological  Studies  (IPTS) 
hosted  a  thematic  workshop  on  the  ‘Socio-Economic 
Aspects  of  the  Knowledge-based  Europe:  The  role  of 
Information Society Technologies (ISTs)’, which set out 
to  diagnose  major  problems  for  Europe  in  achieving 
the  Lisbon  2010  objectives.  It  also  aimed  to  elaborate 
on  possible  new  initiatives  which  would  go  beyond 
conventional  wisdom  and  which  would  contribute  to 
defining Europe’s future role in a globalised society, tak-
ing into account the socio-economic drivers for a better 
quality of life. This report summarises and analyses the 
workshop findings, as well as the views of a number of 
well-known  economists  commissioned  to  suggest  pos-
sible new lines of analysis.

ftp://ftp.jrc.es/pub/EURdoc/eur22353en.pdf

Global Competitiveness Report 2006

ISBN 1-4039-9636-9, £65

The  Global  Competitiveness  Report  is  the  flagship 
publication  of  the  World  Economic  Forum’s  Global 
Competitiveness  Network.  It  provides  one  of  the  most 
comprehensive  and  authoritative  assessments  available 
of the comparative strengths and weaknesses of nation-
al  economies,  and  is  used  by  governments,  academ-
ics  and  business  leaders  worldwide.  First  published  in 
1979,  the  report  now  covers  125  major  and  emerging 
economies. The document, which is prepared with the 
help of leading academics worldwide, serves to identify 
impediments  to  growth,  thereby  helping  to  stimulate 
the  development  of  relevant  strategies  to  achieve  sus-
tained economic progress.

http://www.weforum.org/en/initiatives/
gcp/index.htm 

A

EUR 22348 EN

The 2006 EU Industrial R&D Scoreboard

A

‘Monitoring  industrial  research  –  the  2006  EU  Industrial 
R&D  Scoreboard’  provides  company-specific  data 
on  industrial  R&D  both  within  and  outside  the  EU. 
Information  is  given  on  the  top  1,000  EU  companies, 
as  well  as  on  the  leading  1,000  firms  from  outside  the 
EU  (non-EU),  which  invest  the  most  in  industrial  R&D. 
With  a  range  of  data,  including  R&D  expenditure,  eco-
nomic and financial data for the last four financial years, 
the  Scoreboard  provides  an  initial  insight  into  the  main 
trends  relating  to  industrial  R&D.  The  Commission  is 
releasing this company data immediately to allow anyone 
interested to analyse the data without delay. In the mean-
time,  Commission  services  are  conducting  their  own 
analysis which they intend to publish separately. The EU 
Industrial R&D Investment Scoreboard is published annu-
ally by the European Commission (as part of its Industrial 
A
Research Investment Monitoring (IRIM) initiative.

ftp://ftp.jrc.es/pub/EURdoc/eur22348en.pdf

Innovation and knowledge-intensive 
service activities
ISBN 92-64-02273-2, €28 (pdf), €40 (print)

This  OECD  publication  examines  the  contribution  of 
knowledge-intensive  service  activities  (KISAs)  to  the 
acquisition  and  growth  of  innovation  capabilities  in 
firms  and  public  sector  organisations.  It  focuses  on 
KISAs  in  four  industrial  sectors:  software,  healthcare, 
tourism and leisure, and resource-based industries such 
as mining technology services, aquaculture and forestry. 
The  analysis  derives  from  a  series  of  surveys  and  case 
studies  undertaken  in  nine  OECD  countries:  Australia, 
Denmark, Finland, Ireland, Japan, Korea, New Zealand, 
Norway and Spain.

http://www.oecd.org/document/56/0,2340,en_
2649_37417_36274360_1_1_1_37417,00.html 

Note

Publications  are  free  unless  otherwise  stated.  If 
specific  contact  information  for  obtaining  a  publi-
cation  is  not  supplied,  and  there  is  a  price  listed  in 
euros,  then  the  publication  can  be  purchased  from 
the  sales  and  subscription  office  in  your  country  of 
the  Office  for  Official  Publications  of  the  European 
Communities. Addresses can be found in most EU pub-
lications,  on  the  web  (http://bookshop.europa.eu) 
or  by  contacting  the  Publications  Office  (fax  +352 
2929 42759).

January 2007

European Innovation

ENT 5 0110 - EI 01-07 EN.indd   31
ENT 5 0110 - EI 01-07 EN.indd   31

31

12/20/06   9:38:14 AM
12/20/06   9:38:14 AM

Corporate tax rates: 
an incentive to innovate?

N
B
-
A
J
-
0
7
-
0
1
1
-
E
N
C

-

Corporation taxes – which companies pay on their profits 
–  vary  widely  from  country  to  country,  but  the  general 
trend  in  Europe,  as  elsewhere  in  the  world,  has  been  for 
rates  to  come  down.  In  recent  years,  there  have  been 
complaints  about  harmful  tax  competition  between  EU 
Member States, with some worried that countries with low 
corporate  tax  rates  are  ‘unfairly’  enticing  companies  to 
move to lower-tax regimes. The most recent in an annual 
series  of  surveys  on  corporate  tax  rates  from  KPMG  sets 
out to compare rates both within the EU and worldwide.

(cid:36)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:84)(cid:1)(cid:74)(cid:79)(cid:1)(cid:68)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:70)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:83)(cid:66)(cid:85)(cid:70)(cid:84)(cid:13)(cid:1)(cid:18)(cid:26)(cid:26)(cid:20)(cid:14)(cid:19)(cid:17)(cid:17)(cid:23)

6
0
0
2

,
l
a
n
o
i
t
a
n
r
e
t
n

I

G
M
P
K

:
e
c
r
u
o
S

(cid:38)(cid:54)(cid:1)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)

(cid:39)(cid:83)(cid:66)(cid:79)(cid:68)(cid:70)

(cid:40)(cid:70)(cid:83)(cid:78)(cid:66)(cid:79)(cid:90)

(cid:42)(cid:85)(cid:66)(cid:77)(cid:90)

(cid:54)(cid:79)(cid:74)(cid:85)(cid:70)(cid:69)(cid:1)(cid:44)(cid:74)(cid:79)(cid:72)(cid:69)(cid:80)(cid:78)

(cid:34)(cid:84)(cid:74)(cid:66)(cid:14)(cid:49)(cid:66)(cid:68)(cid:74)(cid:109)(cid:68)(cid:1)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)

(cid:45)(cid:66)(cid:85)(cid:74)(cid:79)(cid:1)(cid:34)(cid:78)(cid:70)(cid:83)(cid:74)(cid:68)(cid:66)(cid:1)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)

(cid:54)(cid:52)(cid:34)

(cid:43)(cid:66)(cid:81)(cid:66)(cid:79)

(cid:48)(cid:38)(cid:36)(cid:37)(cid:1)(cid:66)(cid:87)(cid:70)(cid:83)(cid:66)(cid:72)(cid:70)

(cid:18)(cid:26)(cid:26)(cid:20)
(cid:19)(cid:17)(cid:17)(cid:23)

(cid:17)(cid:6)

(cid:18)(cid:17)(cid:6)

(cid:19)(cid:17)(cid:6)

(cid:20)(cid:17)(cid:6)

(cid:21)(cid:17)(cid:6)

(cid:22)(cid:17)(cid:6)

(cid:23)(cid:17)(cid:6)

The prevailing corporate tax rate is just one of many factors 
that a company will consider when taking decisions on its 
location. But it is self-evident that where it finds  comparable 
background  conditions  such  as  human  resources,  infra-
structure, legal stability and similar costs, if tax rates in one 
country  are  significantly  lower  than  in  a  second,  it  would 
favour  the  first.  And  the  high-growth  firms  in  sectors, 
such  as   information  and  communications  technologies, 

and  particularly in the high-tech services sector, on which 
a  knowledge-based  economy  relies  heavily  to  generate 
growth, do have more flexibility in where they set up.

EU  enlargement  has  seen  a  major  drop  in  average  cor-
porate tax rates across EU Member States, with the eight 
central and eastern European countries which joined the 
EU in 2004 having rates amongst the lowest in Europe. 
Average  rates  in  the  EU  countries  have  dropped  from 
38%  in  1993  to  25.8%  in  2006,  a  reduction  of  about 
one-third. And as the table shows, the EU has gone from 
having  the  highest  corporate  tax  rates  to  the  lowest  in 
that  period.  And  significantly,  EU  average  rates  are  well 
below those of the US and Japan.

But are corporate tax rates a policy tool relevant to encour-
aging  innovation?  Corporate  tax  represents  a  very  low 
percentage  of  tax  take  across  the  world  (the  average  for 
OECD countries is 3.4% of GDP), and it generally represents 
a lower proportion in those countries with higher rates. The 
fact is that large companies invest significant efforts to avoid 
paying tax, and can divert profits into low tax economies. 
Therefore, corporate tax rates will have most influence on 
small firms, the very firms that Europe’s economy needs to 
grow, and to become more innovative.

KPMG’s corporate tax rate survey – an international 
analysis of corporate tax rates from 1993 to 2006, 
available to download from:
http://www.kpmg.com/NR/rdonlyres/
D8CBA9FF-C953-45FA-940A-FAAC86729554/0/
KPMGCorporateTaxRateSurvey.pdf

European Innovation is available on-line at http://aoi.cordis.europa.eu/ – and the printed edition is free

Keep up to date on EU innovation policy, programmes and projects, and on experience and good practice from business and 
industry, by subscribing on-line at http://aoi.cordis.europa.eu/ or by using the form below.

Subscription Form

Please write clearly

Name: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 

Address: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _  

Email address: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 

Subscribe on-line at the address above, or fill in and return 
this form to: 

Communication and information Unit, Enterprise 
and Industry DG, BREY 05/216, B-1049 Brussels
Fax +32 2 292 1788  (cid:129)  entr-itt@ec.europa.eu

For bulk quantities, state the number of copies you want to receive 
(if you require more than ten copies, please justify your request): 
Language required:  ®  English  ®  French  ®  German
®  Italian  ®  Polish  ®  Spanish

 Contact

U

To change an existing subscription, please supply subscription 
number: 0/ ®®®®®®®® (see routing slip)

Legal notice
Personal data are collected for the express purpose of fulfilling your order. This 
information  may  be  used  to  present  forthcoming  activities  of  the  European 
Commission  (events,  publications,  etc.).  You  are  entitled  to  access,  modify, 
rectify or delete any personal information. To exercise this right, please contact 
entr-itt@cec.eu 
If you would prefer your personal data to be used only to fulfil your order, please 
tick here  ®

S
E
R
U
G
I
F
N

I

N
O
I
T
A
V
O
N
N

I

32

ENT 5 0110 - EI 01-07 EN.indd   32
ENT 5 0110 - EI 01-07 EN.indd   32

12/20/06   9:38:16 AM
12/20/06   9:38:16 AM