1. Building an Innovation Union
Budva,
11 November 2010
Tania Friederichs
DG Research
European Commission

2. European Innovation Scoreboard 2009
The European Innovation Scoreboard tries to capture the capacity of our economies to generate innovative products and services by looking at 29 innovation-related indicators categorised in three groups: enablers, firm activities and outputs
Only publicly available data is used, for the most recent year, in most cases This explains why the effect of the economic crisis is not captured yet.

3. Summary innovation performance for the EU27 Member States (2009 Summary Innovation Index)
Note: The Summary Innovation Index (SII) is a composite of 29 indicators normalised to a lowest possible performance of 0 to a maximum possible performance of 1. The 2009 SII reflects performance in 2007/2008 due to a lag in data availability and therefore does not capture the effects of the recent economic and financial crises.

4. Where has performance improved at EU27 level?
Public R&D expenditures
Broadband access
IT expenditures
Knowledge intensive services employment
Medium high and high-tech manufacturing products
Sales of new-to-market products
Where has performance worsened at EU27 level?
Non-R&D innovation expenditure
Firm renewal (SMEs entries plus exits)
SMEs innovating in-house
Resource efficiency innovators (labour cost, materials and energy)

5. Dynamic performance and convergence trends in innovation in the EU-27 and other countries
EU27 average growth rate in
Innovation leaders
Denmark, Finland, Germany, Sweden, UK
Innovation followers
Austria, Belgium, Cyprus, Estonia, France, Iceland, Ireland, Luxembourg, Netherlands, Slovenia
EU27 innovation performance in 2009
Moderate innovators
Czech Republic, Greece, Hungary, Italy, Lithuania, Malta, Norway, Poland, Portugal, Slovakia and Spain
Catching up
Bulgaria, Croatia, Latvia, Romania, Serbia and Turkey
Note : colour coding matches the groups of countries: green are the Innovation leaders, yellow are the Innovation followers, orange are the Moderate innovators, blue are the Catching-up countries. Average annual growth rates as calculated over a five-year period. The dotted lines show EU27 performance and growth.

6. EU27 Innovation gap with the USA and Japan
The EU27 is still lagging behind both the USA and Japan
The catching-up trend with the USA from previous years seems to have ceased. The remaining gap is primarily due to:
Business R&D expenditure
International patents
Public-private linkages
Number of researchers
Figure 5 shows that the innovation performance of the US and Japan is well above that of the EU27. The EU27-US gap has dropped significantly up until 2007, but in the last 3 years the relative progress of the EU27 has slowed down. The EU27-Japan gap has remained stable between 2005 and 2009 although the gap has decreased up until 2008 but has increased again in Due to the inclusion of the Private credit indicator the results reported here are not directly comparable to those reported in the EIS 2008 report.
EU-US-Japan comparison based on 19 indicators. Performance for each reference year is measured using, on average, data with a two-year lag0
There is no clear trend in the innovation gap with Japan

7. Some conclusions Innovation Union
Research and innovation to emerge stronger from the economic crisis
Innovation leaders are biggest investors in R&D, not a coincidence!
Knowledge and innovation are at the heart of the Europe strategy
Innovation Union

8. What is Innovation Union?
Highlights
European Innovation Partnerships
European Research Area framework
Streamlined EU programmes
New financial instruments
Reform of standardisation system
Public procurement of innovation
Social innovation pilot
Stronger monitoring
Innovation Convention
 A distinctive European approach to innovation

9. Societal challenges New needs  new ideas  new markets
Powerful drivers of change in economy and society
Major global market opportunities
Requiring EU-scale approaches
From research to market
Climate change
Health and ageing
Use of natural resources
Energy security
Clean transport
Land use ….
New needs  new ideas  new markets

10. Excellence in education and skills
Issues
Universities need reform to specialise/diversify and attract top talents
EU needs at least one million more researchers to reach its R&D targets
Education & training should better match business needs
Actions
1. National strategies to boost training and careers of researchers (2011)
2. Independent multidimensional university ranking system and launch of business-education « knowledge alliances » (2011)
3. Commission to promote e-skills for innovation (2011)

11. Delivering the European Research Area
Issues
Costly fragmentation and overlaps between national research and innovation systems
Need for a unified European Research Area where all actors move and operate as easily as within national borders
Complex funding landscape creating administrative burden for researchers and business
Urgent need for world-class research infrastructures
Actions
4. Commission to propose a European Research Area framework (2012) to remove obstacles to mobility and cross-border cooperation by 2014
5. EU and Member States to complete or launch 60% of priority European research infrastructures by 2015.

12. Focusing EU funding instruments
Issues
Need to support the whole innovation chain, from research to market
Further simplify access for beneficiaries, including SMEs
Develop scientific evidence to support policy-making
Promote the European Institute of Innovation & Technology
Actions
6. Focus future EU R&I programmes on EU2020 and Innovation Union: societal challenges, with streamlining/ simplification (2014)
7. Ensure strong involvement of SMEs with high growth potential (2014)
8. Develop the Joint Research Centre’s role to support the science base for policy making through forward-looking activities
9. European Institute of Innovation & Technology to set out a strategic innovation agenda (2011)

13. Access to finance Issues
Lack of finance is main constraint on innovative companies
Few European SMEs grow into major companies
Specific market gaps for start ups, for high growth companies, and for financing major research and innovation projects
RSFF, CIP Financial Instruments cannot meet demand.
Actions
10. New generation of Financial instruments with EIB (by 2014)
11. Regime for cross border Venture Capital funds (2012)
12. Stronger brokerage between innovative SMEs and investors
13. Review State Aid framework, to enable support to all forms of innovation (2011)

14. A Single Innovation Market
Issues
Costly EU patent system
Lack of harmonised regulations for innovations
EU standard setting too slow
Public procurers lack incentives, knowledge or scale to benefit from innovation
Importance of eco-innovation
Actions
14. Rapid agreement on EU patent
15. Screen regulatory frameworks linked to Partnerships (2011)
16. Reform EU standard setting & link to R&D projects (2011)
17. Member States to set aside procurement budgets for innovation, with EC technical/ financial support (2011)
18. Commission to present an eco-innovation action plan (20110

15. Openness and creative potential
Issues
Many different forms of innovation (open, user driven, systemic etc.)
EU strengths in design and creativity not recognised in policy
Much IPR is dormant, as it is difficult to find a user.
Actions
19. Establish Design Leadership Board & Creative Industries Alliance (2011)
20. Open access to FP research publications
21. Model agreements for collaborative research and knowledge transfer
22. Develop EU knowledge markets to trade & invest in patents (2011)
23. Examine the role of Competition Policy

16. Social and territorial cohesion
Issues
Innovation needed everywhere
Need to avoid an “innovation divide”
Make best use of € 86 Bn Structural Funds earmarked for research and innovation until 2013
Actions
24. Improve use of Structural Funds by Member States with Commission supported « smart specialisation » platform
25. Preparations on future Structural Funds to support innovation
26. Launch social innovation pilot and mainstream in European Social Funds
27. Research programme on social and public sector innovation
28. Innovation all occupations, starting with caring sector

17. European Innovation Partnerships
Key issues
Major societal challenges require joint responses across policies and across EU
Numerous sub-critical, uncoordinated initiatives:
between EU / Member States / Regions
R&D / Market-side actions (public procurement, standards, regulation)
European Innovation Partnerships are:
Frameworks bringing together main actors and actions - At EU and national levels - From research to market - Around common objectives and targets

18. European Innovation Partnerships
2010
Pilot on active and healthy ageing
Aim: two additional healthy life years by 2020
Council, Parliament to discuss the concept
Member States and stakeholders invited to join
2011
Others to follow pending discussions and building on pilot experience
Topics considered: smart cities, water, raw materials, mobility, agriculture,

19. International cooperation
Key issues
Third countries see 27+1 small/medium parties, not one major partner
Europe’s openness is not always reciprocated
Global challenges require a global response
Actions
30. Attract high skilled third country nationals
31. Joint EU / national priorities for cooperation with third countries (2012)
32. Agree international infrastructures with world partners (2012)

20. Making it happen! A priority for EU Institutions
European Council dedicated discussion in December
Council invited to meet as “Innovation Council”
European Parliament discussions
Innovation Group of Commissioners
Accelerating national reforms
Self assessments of R&I systems under Europe 2020
Tracking progress
EU target of 3% of GDP on R&D and national targets
New indicator on fast-growing innovative firms
New Scoreboard of 25 indicators
Annual Innovation Convention

21. Next steps Nov. 26: Competitiveness Council conclusions
Dec. 16: European Council
European Parliament debate
Implementation
Launch of European Innovation Partnerships, …
Proposals for future EU programmes, European Research Area, ..
Implementation in Member States, regions…

22. Innovation Union website
Innovation Facebook page
Innovation unlimited blog