Crossing the Innovation Divide

1. Crossing the Innovation Divide Taking stock and looking forward Dimitri CORPAKIS Head of Unit RTD.B.5 Spreading Excellence and Widening Participation DG Research and Innovation European Commission EC DG RTD B5

2. Setting the scene – why we came to have the Widening actions • The knowledge economy changes everything • Globalisation has pushed the boundaries and changed traditional growth strategies • Global value chains have redrawn the map for conceiving and producing products and services • Countries / regions that are not able to adapt (will) see their economies being marginalised • Global (re)positioning necessary - Need for a new growth proposition based on knowledge assets

3. Europe’s innovation divide undermines competitiveness • Large parts of the EU out of ‘sync’ • Modest and Moderate Innovators holding back the EU as a whole • Grand policy designs at risk without a sound and functioning base • Identification of priorities and strategies of crucial importance – yet still, among the major bottlenecks

4. Spreading Excellence and Widening Participation / Background • The Interim Evaluation of FP7 revealed considerable differences across countries in terms of participation and success rates. This sparkled a wide political debate during the Horizon 2020 negotiation process. • The Commission was given a mandate to investigate causes and propose solutions • A thorough analysis presented to the Council revealed disparities due to structural issues, such as: insufficient national RTDI investment, insufficient capacities and reduced access to international networks. • Problems need to be primarily addressed at national and regional level and through other instruments, such as Cohesion Policy funding. • However Horizon 2020 took relevant action under the separate specific objective "Spreading Excellence and Widening Participation" (WIDESPREAD)

5. The issues with catching-up economies • MorisAbramovitz has summarised some issues as follows: • Countries that are technologically backward have a potentiality for generating growth more rapid than that of more advanced countries, provided their social capabilities are sufficiently developed to permit successful exploitation of technologies already employed by the technological leaders. • The pace at which potential for catch-up is actually realized in a particular period depends on factors limiting the diffusion of knowledge, the rate of structural change, the accumulation of capital and the expansion of demand. • The process of catching up tends to be self-limiting, but the strength of the tendency may be weakened or overcome, at least for limited periods, by advantages connected with the convergence of production patterns as followers advance towards leaders or by endogenous enlargement of social capabilities” • Catching Up, Forging Ahead and Falling Behind, The Journal of Economic History, Vol. 46, No 2, The Tasks of Economic History (Jun.1986), pp. 385-406

6. The issues with catching-up economies (II) Jan Fagerberg and Manuel Mira Godinho point to a subsequent series of issues: • “…..a preliminary classification of catch- up strategies. The type described by Veblen assumes that technology is easily available/transferable, not very demanding in terms of skills or infrastructure and that market forces are able to take care of the necessary coordination without large-scale involvement of external “change agents”. • In contrast there is the Gerschenkronian case in which technology transfer is so demanding in terms of skills/infrastructure that market forces, if left alone, are considered unlikely to lead to success, and some degree of active intervention in markets by outsiders, being private organisations or parts of government, is consequently deemed necessary.”

7. The issues with catching-up economies (III) • “….Arguably, to avoid being stuck along an inferior path and never catch up, “institutional instruments” may be needed to compensate for some of these “latecomer disadvantages”……... In particular what the developing country firm may need are “institutional instruments” that improve: • links with the technology frontier, • links with markets (and sophisticated users), • supply of needed skills, services and other inputs, • the local innovation system/network…”. • Jan Fagerberg and Manuel Mira Godinho in Paper presented at the Workshop “The Many Guises of Innovation: What we have learnt and where we are heading”, Ottawa, October 23-24.2003, organized by Statistics Canada.

8. Turning the European Union into an Innovation Union Innovation Union flagship initiative aims at creating the best conditions for Europe's researchers and entrepreneurs to innovate A broader approach to innovation: meshing research and technological development with • Product innovation, service innovation, innovation in design etc., including process and organisational innovation • Social innovation, public sector innovation, eco-innovation etc. • Exploration of new business models >Both technological & non-technological > Both incremental & disruptive innovation • Improving framework conditions for innovation to flourish

9. A core part of Europe 2020, Innovation Union & European Research Area: • Responding to the economic crisis to invest in future jobs and growth > Addressing people’s concerns about their livelihoods, safety and environment > Strengthening the EU’s global position in research, innovation and technology • Novelties • A single programme bringing together three separate programmes/initiatives • Coupling research to innovation – from research to retail, all forms of innovation • Focus on societal challenges facing EU society, e.g. health, clean energy and transport • Continuation of investment in frontier research • Simplified access, for all companies, universities, institutes in all EU countries and beyond. The promise of Horizon 2020, the new Framework Programme for Research and Innovation

10. ESIF will focus on Europe 2020 objectives for smart, sustainable and inclusive growth / list of 11 thematic objectives for ESIF developed around the Europe 2020 priorities • New regulatory provisions for thematic concentration (R&I part of the minimum 60-80% concentration for ERDF funds in more developed regions - 50% in less developed regions) • Support to applied research and innovation for the purpose of regional socio-economic development • Capacity building for innovation and growth through the promotion of innovation friendly business environments • Smart Specialisation – strategic approach to economic development through strategic support for R&I / Ex-ante Conditionality for the use of the European Regional Development Fund (ERDF) for any kind of R&D&I investments A reformed Cohesion policy (ESIF – European Structural and Investment Funds)

11. Spreading excellence and widening participation through Horizon 2020 New Part IV in Horizon 2020 (budget circa EUR 800M) Main actions on Teaming (Centres of Excellence), Twinning (institutional networking), ERA Chairs (bringing excellence to institutions); also Policy Support Facility and a special action from COST on Widening actions

12. Crossing the Innovation Divide First Widening Calls were launched in 2013 and the first Teaming Call was closed on Sep.17, 2014 with 169 submissions – very promising start with an overall good turn-up We need now to think about refining and improving the actions – essentially focusing more on innovation

13. Extending the impact of Widening actions Integrated strategies of the national / regional authorities are expected to improve the impact of the Widening actions – notably through Cohesion policy actions However knowledge institutions could also engage in more active and positive ways to more diversified partnerships

14. Horizon 2020 has the right tools for small players and newcomers Simpler programme Less bureaucracy Single set of rules Streamlined procedures Simplified financial management Streamlined / more strategic work programmes / topics / Calls