Analytics, Education and Science, EU – Baltic States, Innovations, Investments, Technology

Europe is relatively strong in adding or sustaining value for existing products, services and processes, known as incremental innovation. It is seen in numerous sectors: e.g. in space, aeronautics, pharmaceuticals, electronics, renewable energy, bio-based industries and advanced manufacturing. The EU states have been also supporting innovation through Key Enabling Technologies, such as robotics, photonics, and biotechnology. These technologies can be used and applied across many industries and are crucial for addressing key societal challenges

However, the EU states are still lagging behind in many areas: the EU companies spend less on innovation than their competitors (1.3% of GDP compared to 1.6% in China, 2% in the United States, 2.6% in Japan, or 3.3% in South Korea).

But, venture capital (VC) remains underdeveloped in Europe: in 2016, VCs invested about €6.5 billion in the EU compared to €39.4 billion in the US, and VC funds in Europe are too small – €56 million on average compared to €156 million in the US. As a result, these companies move to ecosystems where they have better chances to grow fast.

The EU is home to only 26 "Unicorn start-ups" (start-ups valued at over $1 billion) compared to 109 in the US and 59 in China. Public investment across the EU falls short of 3% GDP target, and R&D intensity is still uneven among EU regions, with investment and research heavily concentrated in Western Europe. Besides, about 40% of the workforce in Europe lacks the necessary digital skills.

Technology-driven innovation, digitisation and global megatrends such as artificial intelligence and the circular economy offer huge opportunities while creating new developmental directions. Global competition is intensifying and threatens Europe's leading competitive position in key industrial sectors. Europe needs to deepen its innovation capability to maintain and improve the European way of life.

Commission’s opinion

The Commission’s intention is to contribute to the member states through additional steps in research and innovation needed to ensure Europe’s global competitiveness; as investing in research and innovation (R&I) is to invest in the member states’ future. It helps compete globally; it improves the daily lives of millions of people and helps solving biggest social-economic challenges.

The EU “Renewed European Agenda for Research and Innovation” sets concrete actions to deepen Europe's innovation capability and provide lasting prosperity.

In presenting the Agenda, Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, underlined that “new megatrends”, such as artificial intelligence and the circular economy, would bring profound changes to socio-economic development in the states. Thus the Baltic States need acting fast to be able to take part in the new wave of innovation and catch up with the global/European competition.

Commissioner for Research, Science and Innovation, Carlos Moedas added that growing international competition has forced the EU states to act urgently on research and innovation. The proposed €100 billion for the next EU research and innovation programme would be a huge boost. But Europe also needs to reform the support for breakthrough innovation through a new European Innovation Council, and reconnect with citizens through a mission driven approach to research and innovation. The member states need “future-proof regulations” to attract more private investment, in particular in venture capital.

The EU’s supporting measures

Generally, the EU measures in R&I are of a triple nature: a) to ease science and financial regulation in R&I; b) concentrating on market-driven innovations, and c) launching a EU-wide research and innovation hubs.  

1. Ensuring innovation-friendly regulation and financing. The proposed measures include the following measures: - giving priority to the transposition of the Directive on preventing restructuring frameworks; - providing the second chances and measures to increase the efficiency of restructuring, insolvency and discharge procedures; - increasing the procurement of innovative products and services by public authorities by applying the guidelines published by the Commission today; - swiftly adopting the next EU 2021-2027 budget with the proposed allocation of €100 billion to Horizon Europe and the Euratom research and training programme, as well as other major funding programmes that will provide a significant stimulus to innovation; - rolling out the “Venture-EU” initiative to boost private investment and venture capital; - further simplifying EU State aid rules to facilitate public funding of innovative projects including blending of EU and national funds.

On the Directive, in: http://europa.eu/rapid/press-release_IP-16-3802_en.htm; on investment funds, see: https://ec.europa.eu/info/business-economy-euro/growth-and-investment/investment-funds_en  

2. Becoming a frontrunner in market-creating innovation. In this direction, the Commission proposes to establish a full-scale European Innovation Council to offer a one-stop shop for high potential and breakthrough technologies, as well as for innovative companies with potential for scaling up. The European Innovation Council will build on the €2.7 billion pilot phase for the period 2018-2020, with the objective to help identify and scale up fast-moving, high-risk innovations with strong potential to create entirely new markets.

3. Launching EU-wide research and innovation missions with bold, ambitious goals and strong European added value in areas to be defined with the member states, stakeholders and citizens. Progressive research is expected in such spheres as combating cancer, clean transport and/or plastic-free environment, to name a few. These directions will encourage cross-sectoral investment and participation of various scientific disciplines to jointly perform a desired result by creating synergies with research and innovation strategies at the EU states, as well as at regional and local level.

More in the following websites: - Communication: A renewed European agenda for Research and Innovation: Europe's chance to shape the future; - Factsheet: A renewed agenda for Research and Innovation: the Commission's contribution to the Leaders' Agenda; - Factsheet: EU research and innovation success stories; - Commission’s press release “Renewed agenda for Research and Innovation: Europe's chance to shape the future” in: http://europa.eu/rapid/press-release_IP-18-3736_en.htm?locale=en; - LV’s version: http://europa.eu/rapid/press-release_IP-18-3736_lv.htm.