This is why innovation has become a key policy issue in the past few years, and this is why the EU has dedicated a number of initiatives to innovation, including most notably the Innovation Union strategy within the Europe 2020 agenda.
Over the past year, the EU has devoted significan’t efforts to advance the Innovation Union agenda, and also in the development of a more top-down industrial policy, one fit for the age of globalization. At the same time, key initiatives such as the Knowledge and Innovation Communities (KICs), coordinated by the European Institute of Innovation and Technology (EIT), have demonstrated a significant potential to mobilize innovation in Europe. However, recent weeks have been dominated by the debate on the EU budget for the 2014–2020 multiannual financial framework. The tension between calls for austerity and the need for growth has produced an undesirable cut in the budget allocated to infrastructure (the Connecting Europe Facility (CEF)) and also a reduction (admittedly, from a very ambitious initial proposal) in the budget allocated to the Horizon 2020 program for research and innovation.
What is beyond doubt is that public funding of research and development has remained the dominant way of funding innovation in the EU, and this — based on available data — seems to be part of Europe’s innovation problem. This report will look at ways to improve the value for money of public R&D funding, and at the same time creating a more favorable environment for private funding of innovation
Voices from the frontline
Mixed perceptions
We asked 680 business leaders whether their perception of innovation policy in the EU had improved or deteriorated. Their responses were mixed: 38% thought it had improved against 18% who thought it had deteriorated. Southern European companies suffering from a lack of private spending are much more enthusiastic about the role of the EU (96% in Greece, 89% in Italy). In northern and western parts of the continent, the national level is deemed more effective to conduct innovation policy (50% and 41%).
US approval
This year’s survey found that 68% of business leaders agreed that innovation policy in the US is more effective than in the EU, with only 18% disagreeing. The US also topped the charts as the country that most European business leaders (42%) believe the EU should partner with in order to become more competitive. Next was China at 24% and then Brazil and India tied on 6%.
Private sector importance
According to the respondents to the survey, private spending makes a significant contribution to technological and scientific innovation in their own country, with 74% agreeing compared with 66% last year. Interestingly, the most positive responses came from R&D directors and strategic directors (82% and 90% respectively). Data confirms that countries where private R&D funding is significant compared to public funding are the best performers in innovation (e.g., Scandinavian countries).
Investment targets
According to our respondents, EU policy has so far focused too much on ensuring competition between businesses within the internal market, if not within national borders, and not enough on investment incentives for innovation, with 76% agreeing with the proposition. There was also broad agreement among the survey participants that the EU should make more funds available for innovation. All the CEOs who responded agreed, and overall so did 94% of respondents.
