Green Paper on innovation. Document drawn up on the basis of COM(95) 688 final, Bulletin of the European Union Supplement 5/95

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Supplement 5/95
European
Commission
Green Paper
on innovation
\á
■W Supplements 1995
1/95 Address by Jacques Santer, President of the Commission, to the
European Parliament on the occasion of the investiture debate of the
new Commission
Commission's programme for 1995
Presentation to the European Parliament by Jacques Santer
Resolution of thent on the programme for 1995
2/95 Strengthening the Mediterranean policy of the European Union:
Establishing a Euro-Mediterranean partnership
3/95 The European Union and human rights in the world
4/95 The citizen's network — Fulfilling the potential of public passenger
transport in Europe
5/95 Green Paper on innovation Bulletin
of the European Union
Supplement 5/95
Green Paper
on innovation
Document drawn up on the basis of COM(95) 688 final
European Commission Manuscript completed in December 1995.
Cataloguing data can be found at the end of this publication
Luxembourg: Office for Official Publications of the European Communities, 1996
ISBN 92-827-6084-7
© ECSC-EC-EAEC, Brussels · Luxembourg, 1996
Reproduction is authorized, except for commercial purposes, provided the source
is acknowledged
Printed in Belgium Contents
Summary 5
I — Introduction 9
/. Innovation, the firm and society
2. innovation and public action 10
II — The challenges of innovation4
/. The new innovation context
2. The 'European paradox'
3. European industry: improved but fragile competitiveness 16
4. The macroeconomic conditions conducive to innovation7
5. Innovation, growth and employment8
6. Innovation and enterprise 19
7. and society 21
8. Innovation and cohesion2
9. Effective rules of play
(a) Maintaining effective competition
(b) Promoting and suitable legal protection 24
III — The situation in Europe: diversity and convergence6
/. Great diversity
2. Genuine convergence
3. The increasingly important role of SMEs and the regional level 27
4. Economic intelligence 29
5. Europe is not standing still 30
IV — Innovation in a strait-jacket4
/. Orienting research towards innovation
2. Human resources5
(a) Poorly adapted education and training systems 3
(b) Too little mobility8
3. Problems with financing9
(a) Financial systems which avoid innovation
(b) Uncertainties and limits of public financing 41
(c) An unfavourable tax environment
4. The legal and regulatory2
(a) Too little use of protection rules 4
(b) Standards, certification and quality systems3
(c) Cumbersome administrative formalities6
(d) Legal formulas ill-suited to European cooperation 48
5. Conclusion 4
S. 5/95 V — Routes of actions 49
Route of action I: To develop technology monitoring and foresight 4
Route of action 2: To better direct research efforts towards
innovation 50
Route of action 3: To develop initial and further training 51
Route of action 4: To further the mobility of students and
researchers
Route of action 5: To promote recognition of the benefits of
innovation2
Route of action 6: To improve the financing of innovation 5
Route of 7: To set up a fiscal regime beneficial to innovation 53
Route of action 8: To promote intellectual and industrial property 54
Route of action 9: To simplify administrative procedures 5
Route of action 10: A favourable legal and regulatory framework5
Route of action II: To develop 'economic intelligence' actions6
Route of action 12: To encourage innovation in enterprises, especially
SMEs, and strengthen the regional dimension of innovation 57
Route of action 13: To update public action for8
Annexes
Annex I — Descriptions of the task forces 60
Annex 2 — List of innovation relay centres 71
Annex 3 — Simplified research contract for the fourth framework
programme 76
Annex 4 — Tables and statistical data 11
S. 5/95 Summary
Innovation is vital. It allows individual and Foremost among these obstacles is administra­
collective needs (health, leisure, working con­ tive red tape, but there is also inadequate
ditions, transport, etc.) to be better satisfied. It coordination of research efforts, which are in
is also central to the spirit of enterprise: every any case less well developed in Europe than
new enterprise is created through a process among its rivals, and a degree of short­sighted­
which is to some extent innovative. In addition, ness as to what is at stake in terms of tech­
enterprises need to innovate constantly if they nologies and markets.
are to remain competitive. The same is true of
The following points illustrate this situation. countries, which need to transform new ideas
rapidly into technical and commercial D R&D effort is insufficient (2% of gross
successes if they are to maintain growth, national product in 1993, against 2.7% in the
competitiveness and jobs. United States of America and in Japan) and the
share of companies actually involved (indus­In this regard, Europe seems less well placed
trial research) is too low.
than its main rivals. The paradox is that it has
an excellent scientific base but it is less suc­ □ There are not enough researchers, engineers,
cessful than others in converting its compe­ and scientists (4 per 1 000 in the EU active
tence into new products and market shares; this population against 7 per 1 000 in the USA and
is especially true in high­technology sectors. in Japan).
The situation in Europe is of course highly □ Up to 300 days are needed in Europe
diversified. Innovation is rooted in industrial (depending on the Member State) in order to
sectors and regions. Countries, regions, indus­ create a new company.
tries and enterprises look for their own solu­
D The venture­capital industry in Europe tions. There is a great wealth of experience.
invests much less in high technology and in
At Community level also, actions are currently young companies than in the USA. Europe still
undertaken which favour innovation, includ­ does not have stock exchanges for young and
ing: dynamic companies such as the American
Nasdaq. D the establishment and development of eco­
nomic and monetary union; D The convention on the European patent is
still not ratified by all the Member States. The D the consolidation of the internal market;
cost of filing and maintaining a patent is six
D an effective competition policy; times more expensive in Europe than in the
USA. D the promotion of the information society;
D Separations between research, university D the policies on research, education and
and industry, education and the business world training and the dissemination of results which
are still too strong. are moving forwards and include significant
efforts to streamline procedures and involve
D The status of the 'European company' has
small and medium­sized enterprises (SMEs).
still not been adopted. Companies which want
to enter the European market are subject to 15 However, much remains to be done. There is a
different legal systems. need to intensify and take a more consistent
approach to efforts which hitherto have been
Europe needs to react resolutely. It has to rely
too fragmented, in order to overcome the ob­
on intelligence and invest in the intangible.
stacles and handicaps which still hinder
Education and lifelong training, creativity, the
innovation in the European Union.
exploitation of research results and the antici­
pation of technical and commercial trends need The fact is that Europe and its Member States
to be developed. There is also a need to have built up a set of rules and habits which,
improve the management of enterprises, their taken together, sometimes fetter initiative and
openness to external influences and the the essential mobility of ideas and people and
involvement of employees in the innovation curb enterprise formation and development.
S. 5/95 the-job', closer links between education institu­process, so that all the essential skills can be
tions and businesses (route of action 3); mobilized. Lastly, a climate conducive to
innovation needs to be generated with regard to
D encouraging the mobility of students and
financing (venture capital, stock markets),
researchers, not only within the Community,
effective use of industrial property rights,
but also within each country, between univer­
regulations or standards.
sities or research centres and companies (route
With a view to subsidiarity, there is a need to of action 4).
draw on the successful experience of various
3. Improve the conditions for the financing
regions and countries. This means exploiting
of innovation. To that effect, it is important
accumulated knowledge, improving the dis­
to: semination of good practice and thereby
strengthening the cohesion of the European D mobilize private capital for innovation, and
Union. At each level of responsibility, there is
in particular, for new technology-based firms
also a need to ensure consistency in the range
(route of action 6); and
of actions geared to innovation. This is all the
more essential an