Innovation and the Lisbon strategy

1) OBJECTIVE

To define the innovation process and innovation policy, and present an action programme for the Community and the Member States which aims to help achieve the objectives of the Lisbon strategy.

2) ACT

Commission Communication of 11 March 2003, "Innovation policy: updating the Union's approach in the context of the Lisbon strategy" [COM(2003) 112 final - Not published in the Official Journal].

3) SUMMARY

Background. The Communication takes stock of the innovation process and the Lisbon strategy launched in March 2000, which aims to make the European Union the world's most competitive and dynamic economy by 2010. Together with the Green Paper on entrepreneurship and the Communication on industrial policy in an enlarged Europe, it plays a part in the development of an enterprise policy to foster the competitiveness of companies and economic growth.

Definition. Innovation consists of the successful production, assimilation and exploitation of novelty in the economic and social spheres.

Importance of innovation for companies. Innovation helps companies conquer new markets or stave off competition. It comes in many different forms, ranging from an invention arising from R&D to efforts to adapt production procedures, tap new markets, use new organisational approaches or create new marketing concepts.

The race to innovate can be just as important as price competition. Companies do therefore need to play an active role in this field, particularly in embracing the results of research and helping to raise competitiveness in the European Union.

Innovation policy. At a policy level, the diversity of innovation causes difficulties in understanding the process as a whole. Initially, a research-based linear approach was adopted, although a systematic approach which includes all the factors involved in innovation is more appropriate. The systemic model needs to be developed in order to gain an understanding not just of technological innovation, but of other forms of innovation as well. The European Union must therefore deepen its knowledge of this process in order to develop an effective policy.

Incorporating innovation into the EU's different policies would help strengthen companies, which are at the core of the innovation process. Staff trained in entrepreneurship would be better equipped to grasp the opportunities offered by the market. Successful cooperation with other companies and the public authorities calls for the creation of "clusters", which are geographic concentrations of complementary, interdependent yet competing enterprises. Market conditions and consumer demand also play an important role. Some parameters, such as competition, capital injection, a light regulatory environment, and the existence of a skilled and mobile labour force are also necessary for the development of innovative processes. These multiple dimensions make the implementation of innovation policy a delicate matter. The Community, national and regional authorities therefore need to approach the matter with the utmost flexibility.

The challenges. The European Union will have to catch up on its main competitors, help the new Member States remedy their shortcomings, develop the necessary skills and profit from its economic and social setting.

Despite some promising results revealed by the 2001 and 2002 innovation scoreboards, the European Union still lags far behind the USA and Japan. Nonetheless, some Member States have made better progress than others, which enables other Member States to proceed at a faster rate thanks to the open coordination method. The European Union should also fight against any internal reluctance to adapt to innovative processes.

The enlargement of the European Union calls for specific action to be taken. People in the candidate countries have often had to display a capacity for entrepreneurship in adapting to the transformation of their economies. Although the problems encountered in these countries and in the EU Member States are often identical, particular attention will nonetheless need to be paid to building up, adapting and installing appropriate financial procedures.

As a general rule, the specialist or general qualifications of European workers need to be improved.

Also, given that demographic trends are resulting in an ageing population, there will need to be a review of work organisation in accentuating flexibility so as to upgrade vocational training.

In addition, at EU level, efforts should be made to capitalise on the specific features of the EU, such as the importance of the public sector or increasing urbanisation.

The framework for innovation policy.

At European level, coordination activity has been carried out mainly in the area of research framework programmes in order to improve the links between research and innovation. It will also be necessary to build up the "innovation" aspect in other areas. The five priorities identified by the Commission in its Communication on innovation in a knowledge-driven economy are still valid, but more effort should be put into promoting them. A framework will be set up for coordinated action:

• The Member States must develop and strengthen their national innovation strategies and coordinate action by the ministries concerned.
• At European level, the systemic approach should be strengthened by setting up a Competitiveness Council embracing activities relating to the internal market, research and industry. Within the Commission itself, the Commissioners have stepped up their cooperation to promote innovation. In addition, whilst still leaving room for Member State action, the European Union should look to derive the maximum possible benefit from the European dimension to innovation.
• Efforts should be made at national and Community level to upgrade knowledge on innovation, mainly through improving the statistical tools.

Measures will be implemented. The European Commission, for example, plans to enhance the learning process. A pilot project will aim to improve the innovation promotion support mechanism and the candidate countries will be the focus of special attention.

Other actions. New ideas on strengthening the innovation process should be investigated.

The first aim is to improve the business environment by stepping up interaction with other policies such as those in the fields of competition, the internal market, regional policy, taxation measures, education and vocational training, the environment, standardisation or the Community patent.

Innovation will only progress if the market is receptive to it. In this case, it is possible to study the reaction of consumers in lead markets who, by their very nature, may be particularly receptive in the EU. This procedure will also help European companies establish themselves in the world market.

The public sector in the EU is both a source and user of innovation even if obstacles do still remain. Efforts should therefore continue in this area, particularly through the use of e-government methods.

Innovative processes are often designed at regional level, and efforts should be made to avoid isolated approaches whilst stepping up the creation of clusters and centres of learning. The Commission will support the efforts of the regional authorities and European networks.

Action plan. Whilst the effects of Europe's innovation gap vis-à-vis the USA have not yet been felt, it is important for the EU to develop an innovation policy. The Member States and the Commission shall therefore develop a framework for action which contains priorities and objectives.

The Member States should strengthen their national innovation strategies, send the Commission information on innovation and participate more actively in the mutual learning process.

The Commission will endeavour to improve the coherence of the different data available, develop the mutual learning process, analyse the results of the process with the Member States and launch a pilot initiative on evaluating the results. It will establish a platform for the exchange of information in the candidate countries and extend the innovation scoreboard to include them. It will draw up a report on innovation policy at national and Community level and contribute to promoting innovation in the public sector. The Commission and the Member States will set up a coordination procedure, and will intensify mutual learning and cooperation to develop innovation in the EU.

Last updated: 13.05.2003