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# 52014DC0339

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Research and innovation as sources of renewed growth /\* COM/2014/0339 final \*/**

  

1.           Research and innovation:
the sources of future growth

Europe is well
placed to capture the next growth opportunities. With the largest internal
market in the world it is home to many of the world's leading innovative
companies, and has a leading position in many fields of knowledge and key
technologies such as health, food, renewable energies, environmental
technologies and transport.[1]

It has untold wealth stemming from its highly
educated workforce and its leading talent in cultural and creative industries.
However, efforts are still required to ensure the smooth functioning of its
single market, to improve the framework conditions for businesses to innovate,
and to speed up investments in breakthrough technologies in fast-growing areas.[2]

New growth opportunities come from
providing new products and services derived from technological breakthroughs,
new processes and business models, non-technological innovation and innovation
in the services sector, combined with and driven by creativity, flair and talent,
or, in other words, from innovation in its broadest sense. They should benefit
from a strong economic policy focus and from policies tackling societal
challenges such as the ageing population, energy security, climate change, including
disaster risk management, and social inclusion, which need breakthrough
innovations.

To reap the benefits from these advantages
in terms of economic prosperity and quality of life, governments across Europe need to take an active stance in supporting growth enhancing policies, notably
research and innovation.

The gradually improving economic situation
allows Europe now to shift its focus towards enhancing growth while keeping up
the pace of reform to secure a lasting recovery. As Europe exits the crisis, it
is increasingly clear how supporting growth enhancing policies have ultimately
paid off. Evidence shows that much of recent productivity gains come from
innovation[3]
and that, on average, those countries that invested more in research and
innovation (R&I) before and during the crisis have been the most resilient
during the economic downturn.[4]

Research and innovation as a growth
enhancing investment

For this reason, the Europe 2020 strategy
and recent Annual Growth Surveys,[5]
emphasise the need to sustain and where possible promote growth enhancing
expenditures within overall fiscal consolidation efforts. This is also
reflected in the 2014 European Semester Country Specific Recommendations.

Public investment generates the knowledge base and
talent that innovative companies need and it also leverages business investment
in research and innovation, crucial elements to fulfil the ambitions of the
Europe 2020 strategy. Curbing public investment in R&I, even if due to
difficult budgetary conditions, may also have a considerable impact on a
country's long term growth potential by reducing the capacity to absorb
research and innovation performed elsewhere and through the loss of attractive
career opportunities for a country's most talented young people.

The Union budget for 2014-20 marks a
decisive shift towards R&I and other growth enhancing items, with a 30 %
real terms increase in the budget for Horizon 2020, the new EU programme for
research and innovation. A further EUR 83 billion is expected to be invested in
R&I as well as SMEs through the new European Structural and Investment
Funds.

However, this
additional investment from the Union budget must complement, and not substitute
for, investments by Member states both from public and private sources. To make
further progress towards the Europe 2020 R&D investment target of 3 % of
GDP,[6] governments across Europe need to continue investing in research and innovation, ensuring its efficiency and leverage
over private investment. Framework conditions to facilitate this should also be
improved,[7]
taking into consideration the current industrial policy orientations[8]. Such public
expenditure is not a cost, but an investment in the future, a reality that is
now recognised in the revised European System of National and Regional Accounts,
Eurostat's method for calculating public spending.[9]

However, several Member States have cut direct R&D spending
within their fiscal consolidation efforts, as shown in Figure 1, even if in some cases this is partly compensated through increased R&D
tax incentives. These cuts are particularly noticeable since 2012. During the
first period of the crisis, from 2008 to 2010, many Member States protected
their R&D budgets and some even increased their expenditure on R&D.

Moreover, most Member States remain far
from their national R&D targets under Europe 2020 as shown in Figure 2.[10] This mainly reflects a
deficit in business R&D expenditure.[11]

This Communication will explore how the
potential of research and innovation as drivers of renewed growth can be
maximised through raising the quality of investments within Member States' growth
friendly fiscal consolidation strategies.

Figure 1. Changes in R&D as a share of total
government expenditure (2008-2012)

Figure 2. Public and private R&D intensity in 2012 in the Member States, EU, and third countries

2.           Increasing impact and
value for money

2.1         Raising the quality of
public spending on research and innovation

Under continuing difficult budgetary
conditions, it is critical to maximize impact from public spending by improving
its quality. Public investments therefore need to go hand in hand with far
reaching reforms of research and innovation systems, including by enhancing the
leverage effect of public spending on private investment. Governments need to
become smarter about how and where they invest,[12] and in doing so should
be inspired by the bold strategic approach developed in the Innovation Union
flagship initiative and the European Research Area agenda.[13]

Assessing the quality, efficiency and
impact of public spending on R&I is challenging and available indicators
face limitations. Focussing exclusively on the ability of the private and
public sectors to translate investment in R&D into patent applications,[14] the available metrics
show that some countries are capable of extracting more impact from their public
and private R&D expenditures than others, as illustrated in Figure 3. The
countries with higher efficiency of spending tend to be those with higher
levels of public spending in R&D and GDP per capita, and a stronger
knowledge base. In addition, business investments in R&D tend to be higher
in those countries with higher public R&D spending, given that efficient
public R&I systems are capable of better leveraging private investment in
R&D[15].

Improvements in the quality and efficiency
of spending can contribute to the creation of a virtuous cycle by leveraging
higher investment levels from the private sector and generating increasing
economic returns.[16]
Reforms to improve quality and efficiency of public spending are important for
all Member States. Overall, for those that are more fiscally constrained and
less efficient in spending, it is vital to get more impact with far reaching reforms
and to be in the condition to increase investment wisely as their economies
recover. On the other hand, for those with adequate fiscal space and high
efficiency, benefits will arise from getting smarter about their investments in
order to generate more value for money.

Figure 3. R&D intensity and efficiency scores[17]

Increasing the
efficiency of spending on R&I will also contribute to improving the general
quality of public finance. It will allow for a better use of scarce resources
and hence will also deliver longer term improvements, by supporting the
valorisation of R&I outcomes. Cross-cutting practices adopted to improve
efficiency of policies include regular public spending reviews or a
result-oriented performance-based budgeting. Case studies (France, Austria,
Sweden and the Netherlands)  highlight that Member States using these
approaches have succeeded in generating significant and quantified results in
terms of budget transparency, efficiency and savings without lowering (and even
improving) the quality level of public service.

2.2         Priority axes for reform

R&I reforms need to be tailored to the characteristics
of each Member State. Therefore, it is a major challenge for all Member States
to identify, design and implement those reforms needed to improve the quality
of their R&I investments. To date progress has been made as regards reforms
stemming from Innovation Union and the
European Research Area.

The 2014 State of the Innovation Union report accompanying this
Communication shows growing momentum around innovation[18], within the context of
the review of the Europe 2020 strategy[19].
Major results include more innovation friendly business environment through the
Unitary Patent and the Venture Capital passport. Union support for R&I has
been fundamentally reformed in a single, integrated and simplified programme,
Horizon 2020, with clear, measurable objectives focusing on scientific
excellence, industrial leadership and societal challenges.

Many Member States are also undertaking
reforms of their public support to R&I. Experience shows that implementing
reforms in a way that increases the quality of spending and ensures economic
and societal impacts is a continuous process and a long term challenge to all
countries. Improving value for money requires maximising the impact of R&I
policies, including by establishing closer links between quality and the resources
allocated to these areas. Consistent incentives to drive up the quality of
public spending and preserve growth-enhancing expenditures, notably R&I,
are thus essential.

Drawing
on this experience, three axes of reform emerge, which are relevant to all
Member States.

I           Improving
the quality of strategy development and the policy making process

R&I affect many
policy areas and involve a large number of actors and should therefore be
driven by an overarching strategy and be steered at a sufficiently high
political level. Such a strategy should encompass both research and innovation
activities, including infrastructure investments. Policy design should take
account of the long term impact of R&I and operate on the basis of a stable
multi-annual strategic framework and forward planning of public investment. Embedding
growth-enhancing spending such as R&I within the multiannual planning
perspective of a medium-term budgetary framework[20] can combine the
benefits of sounder public finances with increased visibility of the medium-term
priorities of governments. This can build credibility and improve the attractiveness
of the R&I system.

Member States should at the same time take
care to not spread scarce resources too thinly, focusing on a limited number of
key strengths and opportunities, through the process of smart specialisation as
supported under the European Structural and Investment Funds. Given the dynamic
changes in R&I, policy making should also take account of emerging thinking
and paradigms.[21]
Objective information and evidence is an integral part of policy making,
including foresight and systematic ex-ante and ex-post evaluations, in particular
to assess the long term socio-economic impact of R&I funding. Member States
need to continuously monitor the impact and review their policies in a European
and international context.

Box 1. Many Member
States are redefining their national R&I strategies based on a broad
concept of innovation, encompassing education, research and
innovation. Germany has put forward a comprehensive innovation-oriented
strategy ('The High-Tech Strategy for Germany') drawing on forward looking
analysis, with a focus on new technologies linked to the societal challenges,
on intensifying cooperation between science and industry, and on improving
framework conditions for innovative businesses. Following its update in 2010, Germany plans now to strengthen the Strategy and its overarching and inter-departmental
innovation policy approach.

Several Member States are assessing value
for money from R&I expenditure as part of broader public spending reviews.
The Netherlands, for example, has set up an extensive policy monitoring system
for the review of selected policy areas, including research and innovation, to
identify options for future savings and achieving more value for money based on
ex ante and ex post evaluation. These reviews bring together the
public finance ministry, research ministry, ministry of economic affairs, and
independent organisations and benefit from public support to policy-relevant
research and insights on the basis of gathered evidence. Estonia has maintained a long term strategy of sustained increases in R&D investment,
multiplying its initial level of spending in 2000 by more than 10 times. The
country has a holistic strategy consolidating all available EU resources to
deliver development leaps.

II          Improving
the quality of programmes, focusing of resources and funding mechanisms

Significant amounts of public R&I
funding are managed through programmes, the objectives of which have
traditionally been set in terms of scientific disciplines, technology areas, or
industrial sectors. As in Horizon 2020, Member States should consider
increasing the focus of their programmes on key societal challenges, as there
is considerable growth potential in turning these into the business
opportunities of tomorrow, while at the same time providing solutions for
citizens' concerns. A better coordination of priorities between Member States
through joint programming of national research and innovation agendas increases
the impact of public investment in a given R&I area. [22]

As set out under the European Research Area,
quality of public spending through programmes can be increased by allocating
funding on a competitive basis, through open calls for proposals according to
excellence, for instance on the basis of international peer review, and by
allocating institutional funding on the basis of proven performance. Open
competition should equally apply to programmes targeted towards specific
economic and/or societal objectives, with clear expected impacts defined and a
robust evaluation system to assess proposals against those impacts using
independent expertise. In line with more focused and aligned strategies
("smart specialisation"), the monitoring of real outputs and impacts
of projects supported should provide accurate and comparable information about
the quality and efficiency of funding through R&I programmes.

R&I programmes need to be relevant and
accessible to businesses, including through reducing administrative burdens to
participation, accelerating time to grant, monitoring business involvement, and
taking seriously the feedback received from participants. The essential role of
frontier science in advancing the state of the art and in triggering
breakthrough technological innovations should be addressed, building on
successful initiatives at the EU level such as the European Research Council.

Box 2. Many Member States are introducing greater
competition in the allocation of public R&I funding. Following the R&I Bill in 2008, Sweden introduced the
competitive allocation of a
certain portion of the basic funding to universities -initially 10% and subsequently increased to 20%- on the basis of their performance in
scientific publications and in attracting external funding. Poland introduced in
2011 reforms to increase the share of public funding allocated to R&I on a
competitive basis through calls for proposals evaluated by independent and
international experts. As of 2013, Croatia has established a new model of public
funding for fundamental research, which uses three-year performance-based institutional
contracts. Greece has recently set up a competitive process to decide on a
limited number of national research infrastructure projects. Science
Foundation Ireland has introduced peer reviews of the economic and societal
impact of grant applications, complementing the scientific peer reviews.

A number of funding agencies are starting to rigorously monitor and
evaluate the impact of their programmes. The monitoring system of Tekes, the Finnish Funding
Agency for Innovation, demonstrates
that for every euro invested by Tekes companies increase their R&D
expenditure by 2 euros, and that the SMEs it supports have 20% greater increase in turnover and 17%
greater increase in employment than comparable SMEs.

III        Optimising
the quality of public institutions performing research and innovation

In all Member States, a large share of
public R&I funding is provided as institutional funding to universities,
technology institutes and other public research and technology organisations.
These institutions need to be encouraged to be entrepreneurial and seek out new
opportunities and partnerships, including outside Europe, to allow for an
improved transfer of knowledge to the private sector and to reallocate
resources to activities that have the greatest impact. These institutions
therefore need sufficient autonomy and flexibility, while ensuring
accountability, as part of which they should be subject to regular independent
evaluation and quality assessment.

Institutions also need to be able to
attract the best possible researchers to work for them. However, as identified
by the European Research Area, a lack of open, transparent and merit-based
recruitment in some countries which undermines the performance of institutions
and holds back career attractiveness and development for the most able researchers.

Box 3.
Several Member States, including Austria, Poland and Italy, have introduced
national regulations stipulating that vacancies in universities and other
public research organisations have to be published internationally, for
example via the European researchers' portal 'EURAXESS'.

New partnerships involving R&I
performing institutions are boosting economic development at the regional
level. A partnership of six universities between Germany, France, Belgium and Luxembourg is allowing greater specialisation, sharing of courses and improved
knowledge transfer to businesses. In April 2014, the UK Government announced a
£1 billion Greater Cambridge City Deal in partnership with the University of Cambridge to invest in growing the region's technology cluster, which already
employs 54,000 people in more than 1,500 technology-based firms, generating an
annual revenue of over £12 billion. The 'Vanguard' initiative gathers 18 EU
regions (Asturias, Baden-Wurttenberg, Euskadi, Cataluña, Lombardia, Małopolska, Nordrhein-Westfalen,
Norte, Oberösterreich, Pays de
la Loire, Rhône-Alpes, Scotland, Śląsk, Skåne, Tampere, Vlaanderen,
Wallonie and Zuid Nederland) to jointly implement smart specialisation
strategies, mobilising public and private resources in favour of R&I around cluster initiatives for
emerging and transforming technologies.

2.3         Commission support for Member State reforms

To assist Member States in the process of
implementing R&I reforms based on the priority axes identified in section
2.2 of this Communication, the Commission will review the currently available
tools to assess the quality and effectiveness of R&I reforms and launch
discussions with Member States on the implementation of the R&I priority
reforms and the possible need for an integrated, evidence-based approach to
assess the quality of R&I policies at Member States level. In doing so it
will draw on relevant experience gained from the self-assessment tool presented
in the Innovation Union and from the analysis of progress with respect to the
European Research Area, and make use of relevant indicators, including the
Commission’s Innovation Union Scoreboard and the indicator of innovation
output.[23]
The Commission will also provide world-class data, analysis and intelligence on
research and innovation (R&I) policy and performance at EU and national
level,[24]
and use the Policy Support Facility foreseen in Horizon 2020 including
technical assistance, peer reviews and mutual learning.

In this context, the Commission will also
promote further research to provide a better evidence base for R&I policy
making, for example by using big data approaches and by improving the way in
which the long term positive impact of R&I is taken into account in some of
the macro-economic models used to support policy making.[25]

The Commission will facilitate exchange of experiences
with the design and implementation of indirect measures such as expenditure-based
R&D tax incentives to ensure cost effectiveness, avoid unwanted cross
border effects, and review whether young and fast growing companies, who
account for a disproportionately large number of new jobs, are able to benefit.

3.           Strengthening the
innovation ecosystem

Successful innovation depends not only on
the quality of public policies but also on innovation-friendly framework
conditions.

In recent years, the Commission has made a concerted effort to
reduce internal market fragmentation and restore economic confidence. It fostered
the functioning of the Single Market,[26]
took steps to complete the Banking Union,[27]
and took measures to facilitate and diversify access to finance,[28] and to streamline
legislation and reduce regulatory burdens,[29]
and is committed to fostering the long term financing of the European economy.[30]

The Commission has also promoted the effective
use of public procurement and demand-side instruments, addressed barriers to science-business
cooperation and mobility, and fostered a favourable and efficient intellectual
property rights system. The revised State Aid
guidelines support Member States to redirect State Aid towards R&I, for
example in the new General Block Exemption Regulation and by increasing the
thresholds for notification and by broadening the categories of aid, e.g. to support
the construction and upgrading of research infrastructures and to enable closer
to market support. Similarly, the revised State Aid guidelines for Risk Finance
allow greater flexibility to support venture capital and other financial
instruments for innovative businesses, helping them to overcome the most critical
stages of their life cycle. In parallel, revised State Aid rules introduce new
requirements on impact evaluation of large aid schemes that will contribute to
more effective measures with clear incentive effect.[31]

Yet the accompanying assessment of progress
under Innovation Union shows that there are a number of areas where further
efforts need to be made:

–
The Single Market is a major asset that
can attract innovative investments to Europe.  However, fragmentation and
inefficiencies in the Single Market undermine business investments in R&I
in particular in high tech areas such as ICT, including in digital networks,
content and services, and healthcare. By contrast, Europe is a global leader in
transport research and technology, bolstered by a well developed single market,
which will, however, need to keep pace with rapid innovation as the transport
sector increases energy efficiency, improves safety and tackles congestion.  Moreover,
major innovations need to be anticipated with the development of Single Market
frameworks that enable wide scale commercial uptake.[32] Full implementation of
the single market for services, which accounts for 60% of the EU economy, would
have a strong impact on innovation, in particular on non-technological
innovation, such as the development of new business models and services design.
In addition, regulatory frameworks need to foster the commercial use of new
knowledge and facilitate the entry of new firms.

–
The public sector is a major economic
actor and needs to become more entrepreneurial to benefit from innovation so as
to raise productivity, efficiency and the quality of public services, as well
as to create demand for innovation in the private sector.[33] Mutual learning is of
particular relevance in this context. Public procurement, which accounts for
around one fifth of GDP across the Union, can provide markets that demand
innovative solutions. This requires a coordinated effort across procurement
authorities to avoid a fragmentation of demand. The move towards open data has a
major potential to improve public services, create opportunities for new
products and services, and strengthen accountability and transparency in public
administration. Increasing the quality of public services and public financing
requires a robust evidence base for budgetary and policy decisions in line with
smart regulation principles. User-centred pilot actions, smart use of ICT and
the opening up of digital public services will enable the public sector to
efficiently develop and provide new services.

–
The transformation of the European economy
towards sustainable competitiveness requires a human resource base with the
necessary skills and with far more researchers with business and
entrepreneurial skills. It also requires frontier science to advance the state
of the art and play an active role in triggering breakthrough innovations. Education
and training systems need to provide broad innovation skills (idea generation,
problem solving, critical thinking, cross-cultural communication, etc.) that
allow employees and institutions,[34]
to adapt to new circumstances. Digital technologies bring major new
opportunities to access education,[35]
but require major innovations in national education systems, such as fostering
open and digital teaching and learning practices.

–
Europe's
citizens need to see that R&I is improving the
quality of their lives and is responsive to their concerns, for example through
allowing individuals to have their say in setting priorities.[36] R&I policy needs
to incentivise and enable individuals to engage in innovation as co-creators
and lead customers, promote social innovation and social entrepreneurship, and allows
innovative firms to test and roll-out solutions in real world environments.

4.           Conclusions

To fully capture the potential of research
and innovation as sources of renewed growth, the following are crucial
elements:

–
In line with the concept of growth friendly
fiscal consolidation, Member States need to prioritise growth enhancing
expenditure, notably on R&I.

–
Those investments need to go hand in hand with
reforms to increase the quality, efficiency and impacts of public R&I
spending, including by leveraging business investment in R&I.

–
In doing so, Member States should focus on three
main axes of reform, relating to the quality of strategy development and the
policy making process; the quality of programmes, focusing of resources and
funding mechanisms; and the quality of R&I performing institutions.

–
To assist Member States in the successful
implementation of R&I reforms, the Commission will draw on the experience
gained under the Innovation Union flagship initiative and European Research
Area, and fully exploit the Research and Innovation Observatory and the Policy
Support Facility foreseen in Horizon 2020 in order to support an integrated and
evidence-based approach to policy making and budgetary decisions.

–
Strengthening the broader innovation eco-system
and putting in place the right framework conditions to stimulate Europe's companies to innovate is crucial. Important progress has been made since the
launch of the Innovation Union, but further efforts need to be made in
deepening the Single Market, facilitating and diversifying access to finance,
strengthening the innovation capacity of the public sector, creating resilient
jobs in knowledge intensive activities, developing a human resource base
equipped with innovation skills, fostering frontier research, addressing the
external dimension of R&I policy, and embedding science and innovation more
strongly in society. The review of the Europe 2020 strategy will examine the
progress made with the Innovation Union.

The Commission invites the Council to
launch discussions on raising the quality of investments in R&I in line
with this Communication, as part of its broader discussions on improving the
quality of public finances and implementation of structural reforms.

In addition, the Commission invites the
Council to discuss the challenges for future R&I policy.

[1]               Innovation Union Competitiveness Report 2013, SWD(2013)
505.

[2]               COM(2014)014.

[3]               GDP growth in OECD countries from 1985 to 2009 was to
a large extent resulting from growth in capital and multi-factor productivity,
the later driven by the output of research and innovation systems. See OECD
(2011) 'Productivity and growth accounting'.

[4]               Conte (2014), 'Efficiency of R&D Spending at
national and regional level', Joint Research Centre, European Commission, forthcoming.
Ciriaci, D., Moncada Paternò Castello, P., and Voigt, P. (2013) “Innovation and
job creation: a sustainable relation?”, IPTS Working Papers on Corporate
R&D and Innovation series No. 01/2013, European Commission.

[5]               COM(2013) 800 final.

[6]               Research and Development (R&D) spending is used
for statistical purposes in this Communication. It does not cover broader
innovation, falling outside the definition of R&D.

[7]               Such as access to finance, adequate strategies for
human resources, the full implementation of the single market for services, and
supporting the development of the enabling technologies of the future, including
to foster a digital economy.

[8]               COM(2014)014

[9]               European System of National and Regional Accounts
(SEC 2010) will be updated in September 2014.

[10]             COM(201) 130final/2.

[11]             In this respect, an important evolution over the past
years has been to complement direct public investment in R&I with indirect
measures such as R&D tax incentives.

[12]             European Commission, 2012, "The quality of public
expenditures in the EU", Occasional Paper (DG ECFIN) n. 125

[13]          COM(2010)
546; COM(2012) 392

[14]             Conte (2014), 'Efficiency of R&D Spending at
national and regional level', Technical Report, Joint Research Centre, European
Commission, presents a comprehensive analysis of the options and methodological
approaches to compute scores to measure the efficiency of R&D systems. The
efficiency scores in Figure 3 are calculated using a statistical technique
(Stochastic Frontier Analysis), which computes an efficiency frontier using
total R&D intensity as input measure and patents per capita as output
measure, over the period 2005-2011. It should be noted that the variability of
relative measures of R&D and patenting performance is larger across sectors
than across countries (Meliciani, 2000), and that the ratio of patents to
R&D spending also differs largely across manufacturing sectors (Danguy et
al,, 2013). Efficiency scores using patents are thus influenced to a large
extent by the R&D specialisation profiles of each country. Other output
indicators can also be used to approximate efficiency, including notably
scientific publications and citations. Composite indicators can also be used
for that purpose.

[15]             Evidence shows that the level of cooperation between
the public sector and businesses is positively influenced by the intensity of
public R&D spending. Using 2011 data, the correlation between the level of
private funding of public R&D and public R&D intensity is statistically
significant.

[16]             There are also persistent differences in: overall
innovation performance across Member States, as shown by the Innovation Union
scoreboard; in innovation outputs as confirmed by the Commission's innovation
output indicator; and in overall quality of government, as shown by the
Commission's 6th Cohesion Report.

[17]         Efficiency
levels across Member States are illustrated in this Figure on the basis on the
relationship between patents per capita and total R&D intensity. See
Conte (2014).

[18]             Staff Working Document 'State of the Innovation Union, Taking Stock 2010 – 2014'.

[19]             COM(2014 130).

[20]             As encouraged by Council Directive 2011/85/EU on
requirements for budgetary frameworks of the Member States, which lays out
among others the features and benefits of credible medium-term budget
frameworks.

[21]             Such as big data,
open innovation, and Science 2.0. New insights as regards the effects of
globalisation and innovation on job creation and inequality or on the role of
innovation in promoting inclusive growth should also be considered. Science 2.0
describes the ongoing changes in the way of doing research and organising
science. Enabled by digital technologies and driven by the globalisation of the
scientific community, it promises better value for money thanks to more
transparency, openness, networking and collaboration but entails risks, too, in
terms of fraud and scientific integrity.

[22]             The Strategic Energy Technology 'SET' Plan, COM(2013)253,
provides an example of how a single integrated roadmap of priorities at the EU
level supports a better coordination of industrial investments, Member State
and EU programmes.

[23]             COM(2013) 624 final.

[24]             As part of activities of the Commission’s Research and
Innovation Observatory.

[25]             The Royal Netherlands Academy of Arts and Sciences
published recently its report 'Public knowledge investments and the value of
science', which argues that, while the Netherlands has a long tradition of
using macro-economic models to examine the impact of public policies and
budgets, these do not sufficiently reflect the long term benefits of public
investments in research and innovation.

[26]             COM (2011) 206; COM(2012) 573.

[27]             On 20 March 2014, the European Parliament and the
Council reached an agreement on the proposed Single Resolution Mechanism (SRM)
for the Banking Union. The mechanism complements the Single Supervisory
Mechanism (SSM) which, once fully operational in late 2014, will see the
European Central Bank (ECB) directly supervise banks in the euro area and in
other Member States which decide to join the Banking Union.

[28]             The European Commission supports companies throughout the
innovation lifecycle. Besides venture capital, it supports funding via business
angels, technology transfer vehicles or more traditional bank lending.

[29]             COM(2012) 746; COM(2013) 685.

[30]             COM(2014) 168.

[31]             See OJ C 19, 11.1.2014, page 4.

[32]             For example, the new markets in advanced biofuels,
waste and recycling, renewable energy and environmental technologies where the
EU has innovation strengths.

[33]             Evidence also supports the role of government in
promoting investments in R&I due to market failures, including technological
uncertainty, indivisibilities and economies of scale, and knowledge spillovers.

[34]             The cooperation with the OECD the 'HEInnovate'
initiative, a Commission has developed in self-assessment tool to support
higher education institutions in becoming more entrepreneurial.

[35]             COM(2012) 173 final. 'Towards a
job rich recovery'

[36]             For example the "Voices" project (www.voicesforinnovation.eu/)
allowed citizens to provide views on research topics to be funded by Horizon
2020 on waste as a resource.

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