THE TERRITORIALISATION OF RESEARCH & DEVELOPMENT AND INNOVATION POLICIES : THE ISSUES INVOLVED AND PROSPECTS FOR ACTION

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1 CONFERENCE ON THE REGIONS AND RESEARCH & DEVELOPMENT AND INNOVATION POLICY : THE CHALLENGES AND PROSPECTS OF TERRITORIALISATION THE TERRITORIALISATION OF RESEARCH & DEVELOPMENT AND INNOVATION POLICIES : THE ISSUES INVOLVED AND PROSPECTS FOR ACTION Note from the General Secretariat January 2001

2 TABLE OF CONTENTS Introduction Part I The issues involved and prospects for the territorialisation of R&D and innovation policies 1.1. What are the essential structural and organisational requirements for preparing and implementing the territorialisation of R&D and innovation policies? 1.2. What do we mean by the "territorialisation" of R&D and innovation policies? 1.3. How should the territorialisation of R&D and innovation policies be implemented? 1.4. What common framework of reference can be used to encourage a polycentric development of the Community territory? Part II Priority areas of action to achieve a territorialisation of R&D and innovation policies 2.1. Priority actions in the area of strategy and organisation of an approach to territorialisation 2.2. Priority actions to increase the regions' potential for excellence and enhance their R&D and innovation resources 2.3. Priority actions to promote access to knowledge infrastructure 2.4. Priority actions to enhance human resource potential 2.5. Priority actions to strengthen the financing of R&D and innovation policies Part III The governance of territorialised R&D and innovation policies 3.1. The governance of R&D and innovation policies : some basic principles 3.2. Some proposals for improving the governance of the European Union to encourage the territorialisation of R&D and innovation policies - 2 -

3 INTRODUCTION The Lisbon European Council of March 2000 highlighted the importance of research and development and innovation for economic growth, employment and the social cohesion of the European Union. It recommended that Member States take the necessary steps towards the establishment of a real European Research Area with the objective, amongst others, of establishing the conditions for a «territorialisation» of R&D and innovation policies; the aim being to adapt these to the social and economic context of the territories in an enlarged European Union. The European Council's initiative therefore has a dual objective : GTo maximise the regions' scientific potentialities and technological resources in the new «European Research Area» and Gto improve the competitiveness of regional economies of the European Union as a whole, by means of a coherent approach to R&D and innovation policies at the Community, national, regional and local levels. This document aims to contribute a concrete response to the European Council's initiative, with a view ultimately to proposing the implementation of certain actions. It is structured in three parts : The issues involved and the prospects for the territorialisation of R&D and innovation policies; The actions required to achieve this territorialisation; The initiatives to be taken in the matter of governance of R&D and innovation policies

4 I - THE ISSUES INVOLVED AND PROSPECTS FOR THE TERRITORIALISATION OF R&D AND INNOVATION POLICIES Research and development and innovation policy constitutes without any doubt a fundamental policy for business development and therefore for the sustainable development of all the territories that make up the Community. The role already played in recent years by the European Union, Member States and regional and local authorities in actively supporting this policy should in this respect be underlined. However, if we look at the anticipated effects of R&D and innovation on the present competitiveness of the various territories of the European Union, neither the preparation nor the implementation of this policy can be considered satisfactory. This negative situation is worsened if we take the territorial impacts of enlargement into consideration. As indicated in the second Cohesion Report, published recently by the European Commission, the gaps between the regions of the European Union as it stands today in the field of R&D and innovation remain very wide. For the single indicator of expenditure on research and development, expressed as a percentage of gross domestic product, the gaps range from differences of 1 to 7 between countries and of 1 to 9 between the regions (estimated on the basis of Eurostat data). In terms of the numbers of people employed in research and development, the gaps between the regions are in the order of 1 to 10 (estimated on the basis of Eurostat data). The gaps between the current and future Member States in this field are even wider. It is therefore imperative, both for the support of economic growth and for the development of the economic, social and territorial cohesion of the enlarged Union, to promote a policy that is better adapted to the current situation of the territories of the Union and to its enlargement. Only such a policy will enable an increase in the expected positive impacts on business development, and consequently a reduction in the competitiveness and development disparities between the regions of the Community area as a whole. 1.1 What are the essential structural and organisational requirements for preparing and implementing the territorialisation of R&D and innovation policies? The search for greater efficiency and effectiveness of R&D and innovation policies goes hand in hand with a set of essential structural and organisational requirements relating to their preparation and implementation. The most important of these are without doubt : The need for greater synergy between R&D and innovation policy and regional development policy. The compartmentalization of R&D and innovation policies and regional policy over recent years has often led to inefficiency, ineffectiveness and a lack of coherence in the combined efforts of these policies, not only at Community and national level, but also at regional level. This has limited their impact, both in sectoral and territorial terms. Yet the sustainable economic and social development of the territories in an enlarged Union, notably those territories lagging farthest behind, will not be possible without proper coordination between the guidelines of these two fundamental policy areas and sound management of the resources involved. The need to give greater consideration to the potential for excellence of all the R&D and innovation resources of all the European territories under the Framework Programmes for Research & Development. The results of the Framework Programmes for Research and Development, and in particular the 4th Framework Programme, point to a low level of participation in this policy on the part of very many regions on account of their structural weaknesses and lagging behind. The gaps between countries and between regions are for instance particularly striking in terms of the participation of the least favoured regions of the European Union (regions eligible under Objective 1). Over the period , these regions accounted for only 15.6% of all contracts and 8.9% of the total budget. The - 4 -

5 application of the criterion of excellence to a limited number of structures and bodies with a high concentration of R&D resources also led in fact to a certain potential in this field remaining unexploited, to the detriment of the territories of the European Union as a whole. The 5 th Framework Programme for Research and Development, covering the period , adopts a more innovative approach to the extent that it takes account, in assessing the criterion of excellence, of the economic impact of Community interventions in the area of research and development and their impact on the development of society. It is important therefore that this approach be consolidated with a view to drawing greater benefit from the R&D potential that exists across the whole of the Community area in order to significantly increase the level of excellence of resources throughout the whole of the European Union. The requirement for a better integration of social and economic reality and the needs of the different territories of the Community. This imperative concerns the policy implemented by the European Union through the Framework Programme for Research and Development and, to a lesser extent, the policies pursued by each Member State. The emphasis on a top-down approach to the preparation and implementation of Community policy has led to relatively little account being taken of the different needs of the various territories. However, the R&D resources of these territories are more directly linked to the economic characteristics of their region and they often constitute a driving force for business innovation and increased competitiveness of the regional productive fabric and, ultimately, of that of the Community territory as a whole. A new approach, in which the top-down and bottom-up approaches to the preparation and implementation of R&D and innovation policies are better interlinked, can only reinforce the competitiveness of the Community territory and considerably increase the capacities of an enlarged European Union in this field. The obligation to improve targeting of interventions and reduce the dispersion of resources. Poor targeting of interventions and an excessive dispersion of resources in the field of R&D and innovation often lead to wasteful use of public funds. This is particularly true in the case of investment, where the needs of businesses and of the territories have been either over-estimated or incorrectly taken into account. Errors of this kind can be seen both in the implementation of the successive Framework Programmes and in the interventions in the field of business innovation. The origin of these errors is often to be found in either the absence or the malfunctioning of a partnership between the players involved. This therefore leads us to ask the question, how can cooperation and partnership help to improve the coordination between the different levels - Community, national, regional and local - involved in the institutional decision-making process? The acquisition of critical mass in R&D and innovation through the promotion of cooperation between the territories in an enlarged European Union. The acquisition of critical mass in terms of R&D and innovation is without doubt a necessary requirement for a certain number of territories wishing to take a more active part in this policy. It goes without saying that the weak capacities in this field sometimes prevent regions from conducting research programmes or projects themselves, or having an adequate presence in interregional or transnational programmes which are nonetheless indispensable to their development. This phenomenon affects the peripheral regions in particular, notably those characterised by a significant development gap or those that suffer permanent geographical handicaps such as for example islands or sparsely populated regions. This can lead, as in the previous example of the use of the criterion of excellence alone, to the non-exploitation of a real potential in R&D and innovation. This is without doubt to the detriment of the sustainable development of the European Union as a whole. The need to take advantage of the cumulative effects of these different imperatives leads us naturally to question whether the R&D and innovation policy pursued today by the European Union, the Member States and the regional and local authority is in fact well founded, not only in terms of its design but also in terms of its implementation and impacts

6 The current situation, which can readily be described as unsatisfactory, cannot fail to lead the various political, administrative and scientific decision-makers to give greater thought to the need, ultimately, for a «territorialisation» of the R&D and innovation policies implemented in the European Union What do we mean by the «territorialisation» of R&D and innovation policies? We need first to define what is covered by the concept of «territorialisation» of R&D and innovation policies, and its implications in particular for Community, national and regional policies. The «territorialisation» of these policies aims to combine two different kinds of approach to development : an approach by sector and an approach by region, or territory. In this respect, territorialisation does not mean the regionalisation of R&D and innovation in the strict sense of the term. It does not mean dividing up Community and national policies, and the programmes and projects that are associated with them, into as many regional programmes for R&D and innovation as there are regions in the European Union. The territorialisation of this policy means first and foremost the calling into question of its uniformity, in order to take better account of the social and economic realities and needs of the different territories of the Community and, especially, those of enterprise. From this point of view, the territorialisation of R&D and innovation policies must allow each territory : - to take advantage of the policies implemented notably at Community and national level; - to make a useful contribution to the implementation of these policies notably in the context of the establishment of the European Research Area. The territorialisation approach must be understood as being a way of better combining top-down and bottom-up approaches, not only at the planning stage, but also at the level of the implementation and the evaluation of these policies. There are two essential reasons why, in the pursuit of R&D and innovation policies, these two approaches should be combined : The top-down approach must promote the policy conducted at the level of the European Union and the Member States, the aim of which is to support R&D and innovation activities necessary for the competitive positioning of the Union at world level. It should enable greater efficiency of research activities emanating directly from the international scientific community and strengthen cooperation between the various different levels of territorial intervention. The bottom-up approach must allow the policy conducted at the level of the European Union and Member States to take advantage of the R&D and innovation resources present throughout the whole of the Community territory. By linking policies directly to the needs of business and in particular SMEs, this approach will ensure the best possible adaptation of R&D and innovation policies. The combination of these two approaches should ensure a more balanced development of the Community area and therefore significantly reduce the development disparities that are damaging to the positioning of the Union in the context of world competition and globalisation of the economy How should the territorialisation of R&D and innovation policies be implemented? The territorialisation of R&D and innovation policies implies that each territory is not only able to benefit from these policies but also to make a useful contribution to them. Territorialisation therefore involves simultaneous «action» with a view to strengthening, at the planning, decision-taking, implementation and evaluation phases, two levels of territorial intervention that are to a great extent interdependent : - 6 -

7 The regional level, which constitutes without doubt the most appropriate level of reference for taking proper account of the characteristics and needs of the various territories of the European Union; The transnational level, which provides a more coherent framework for certain interventions and therefore produces better results in terms of effectiveness, efficiency and impact of the polices pursued. The transnational level groups together two complementary dimensions here : that of the large cooperation areas identified under Strand B of Interreg III, and that of interregional cooperation conducted under Strand C of Interreg III. A combination of simultaneous action at these two levels is indispensable for the following two reasons : A sustainable territorialisation of R&D and innovation policies will not be possible unless the regional level is reinforced. This in itself implies first and foremost the strengthening of capacities and means in this field of each region of the enlarged European Union. Similarly, a sustainable territorialisation of these policies will not be possible unless the transnational areas are reinforced. These alone are capable of ensuring greater coherence, effectiveness and efficiency in the coordination of interventions between the Community, national, regional and local levels. However, the long-term viability of these large areas is dependent on the simultaneous strengthening of the capacity of each region in the enlarged European Union to maintain its place and play its legitimate role in this field within its wider area of links and connections. It is important, then, to underline that the implementation of a real approach to territorialisation of R&D and innovation policy by means of these two levels of intervention (regional and transnational) implies improved coordination of Community, national and regional policies and, therefore, concerted action between the European Commission, the Member States and the regional authorities What common framework of reference can be used to encourage a polycentric development of the Community territory? While the aim of an evolution in R&D and innovation policies is to better respond to the needs of all the territories in terms of competitiveness, in order to encourage a more polycentric development of the Community territory, its implementation must also be coherent with and converge with the other policies pursued within the European Union. The development of the European Research Area must, then, be able to take advantage of all the community policies. This requires that it be part of a more global approach to Community intervention. From this point of view and given the diversity of regional and transnational territorial dynamics, a common reference framework is necessary in order to provide an approach to public policy-making that is coherent throughout the European Union. This common framework must interlink two fundamental dimensions : The combining of R&D and innovation policies with other sectoral policies such as education, training, employment, transport, and environment policies, etc.; The implementation of spatial development policies based on integrated regional development strategies of the kind already initiated under the Structural Funds : Community Support Framework, Operational Programme, Single Programming Document, etc. The interlinking of these two dimensions requires a common strategic framework, the aim of which is to achieve a more balanced and sustainable development of the Community territory and consequently to define common overall guidelines. The European Spatial Development Perspective (E.S.D.P.) should be used as the common Community framework for such a policy

8 II PRIORITY AREAS OF ACTION TO ACHIEVE A TERRITORIALISATION OF R&D AND INNOVATION POLICIES The proposed actions to achieve a territorialisation of R&D and innovation policies, outlined below, are structured around five main areas : Strategic and organisational guidelines for an approach to territorialisation; Access to excellence of regional resources in the field of R&D and innovation; Access to knowledge infrastructure; Enhancement of human resources; Financial instruments to support the policy of R&D and innovation. The actions described below are to be carried out at the two levels of territorial intervention considered to be the most appropriate, the regional level and the transnational level. In order that they can be as effective and efficient as possible, these actions must obviously be implemented in the closest possible coordination with the interventions of the Community, national, regional and local authorities Priority actions in the area of strategy and organisation of an approach to territorialisation. The territorialisation of R&D and innovation policies must be coherent at both transnational and regional levels with the more sector-related R&D policies and with the more horizontal innovation policies implemented at the level of businesses and the regions. In order to guarantee coherence and complementarity between these various policies, a strategic vision and an organisational framework are necessary at both regional and transnational level. The Commission has over the last decade launched initiatives in this direction at the regional level, through the RIS (Regional Innovation Strategy) pilot actions. The RIS, we can recall, have a threefold objective : To set up an integrated research and innovation policy coordinating the supply and demand of research and innovation with the needs of regional productive fabrics; To involve all the actors concerned, both private and public sector, in this approach, through partnerships; To achieve a better synergy between the regions' research and innovation policies and their integrated development strategies. The RIS are a preferred instrument used by the regional authorities to develop a policy in the field of R&D and innovation that is more coherent with and better adapted to the social and economic realities of the territory in a strategic perspective. They can constitute an operational tool for the implementation and management of programmes and projects in the field of R&D and innovation. The spirit of the RIS approach can be applied just as well to the large transnational areas. Such an approach can indeed only reinforce Community, national and regional interventions in the field of R&D and innovation, by providing not only a framework for intervention that better responds to the needs for critical mass of actions in this field, but also the possibility of taking greater advantage of local externalities resulting from transnational cooperation. In this context, the generalisation of RIS-type approaches at both regional and transnational level are to be desired and encouraged, since they constitute a mechanism that can ensure greater coherence between the more sectoral dimension of R&D and innovation policy and the more horizontal dimension of regional development policy. Various different actions need to be carried out to accompany the implementation of RIS-type approaches

9 Actions to be carried out at regional level : The development of cooperation programmes and projects in the field of R&D and innovation and the reinforcement of technical assistance at regional level with a view to promoting the participation of firms in these different activities; Exchanges of experiences and identification of good practice, aimed at politicians and decisionmakers in the field of R&D and innovation policy, notably through the creation of regional and transnational observatories together with ongoing benchmarking activities; The delegation of tasks to the regional authorities for the implementation and management of the dissemination of the results of Community and national programmes concerning R&D and innovation; The development of regional forums for R&D and innovation, bringing together representatives of the scientific community, private enterprise, consumer organisations and public authorities so as to put forward consensus-based strategies in this field. Actions to be carried at transnational level : RIS-type approaches can themselves be reinforced through cooperation actions at transnational level. In particular they can enable the creation of critical mass effects, which are likely to lead to the elaboration of a veritable joint strategy in the field of R&D and innovation. This can only strengthen the competitiveness of the territories concerned, notably if it is accompanied by the following actions : The reinforcement of long-term planning conditions in relation to public research policy, through the establishment of contracts between the European Commission, the Member States and groups of regions on major scientific and technological objectives. Within each transnational area, regions that are technologically more advanced should be encouraged to associate the weaker regions in the implementation of Community and national R&D and innovation programmes and projects so as to improve their competence and expertise in certain fields. The development and utilisation of databases and indicators on the results of R&D and innovation, allowing benchmarking actions to be carried out. This type of action should thus make it possible for the different regional and transnational partners to exchange good practice. It should also encourage the setting up of transnational cooperation networks between universities, public and private research laboratories, technology parks and SMEs that are particularly innovative in terms of technology. The setting up of a transnational RIS network with a view to reinforcing exchanges of experience and best practice. The actions proposed under RIS-type approaches aim to make the best use of R&D and innovation resources and to improve coordination between R&D and innovation policies and Structural Funds policy at the regional level and at the level of transnational and interregional cooperation Priority actions to increase the regions' potential for excellence and enhance their R&D and innovation resources. The priority in terms of action is to achieve a better territorial balance of scientific resources across Europe, notably by reinforcing regional and local centres of excellence. It is also a question of increasing knowledge and facilitating its dissemination towards research, the economy and society via a certain number of institutions such as universities, research centres and technology parks. It is important to highlight the fact that access to a level of excellence of scientific and technological structures and bodies in the regions - above all the most peripheral regions - will be better undertaken in the framework of transnational cooperation than at regional level, thanks to a better synergy between the structures offering R&D and innovation, and a better concentration of financial resources

10 Generally speaking, transnational cooperation constitutes in this field a preferred instrument for limiting the dispersal of R&D and innovation potential and creating critical mass effects. These effects can only be beneficial in terms of promoting a more balanced development of the European territory in this field. The actions proposed will therefore only be really efficient if they are backed up by additional initiatives at the transnational level. Actions to be carried out at regional level : Support for the emergence of «virtual centres of excellence» by encouraging joint activities involving universities and research centres from peripheral and central regions; Promotion of the association of high level regional research centres with the centres of excellence on R&D programmes and projects of common interest by means of partnerships that are recognised and supported by the European Commission. Actions to be carried out at transnational level : Creation of a network of «virtual centres of excellence» in order to encourage the integration of the scientific communities of the various different transnational areas into Community and national R&D programmes; encouragement for the development of different models of «virtual centres of excellence» so as to make the best use of the knowledge existing across the different territories; Support for the creation of cooperation networks between research structures and bodies in the peripheral regions on topics of common interest in order to give them the critical mass necessary to enable them to take part in research programmes initiated and piloted by teams of researchers from the centres of excellence situated more in the central part of Europe; Professional improvement of researchers of a good level from research structures and bodies in the peripheral regions by means of cooperation with research teams from the centres of excellence; encouragement to the mobility of researchers between the peripheral regional and the centres of excellence, and the formation of research teams of the necessary critical size. These actions aim to take better advantage of the «niches of expertise and excellence» and to improve the R&D and innovation potentialities of all the territories of the European Union in the dual perspective of a growth in technological competitiveness and cohesion in an enlarged Union Priority actions to promote access to knowledge infrastructure. R&D and innovation infrastructure constitute one of the essential requirements for ensuring the competitiveness of the European Union and reinforcing a knowledge-based economy. While important decisions have been taken in this field by the Member States, notably at the Lisbon European Council, knowledge infrastructure is also of direct concern to the transnational, regional and local level. The objective that should be pursued is one of access for all the territories of the European Union to equipment and to «global» communication systems and networks in the field of R&D and innovation, rather than that of developing equipment and systems dispersed locally or too highly concentrated in a few large central geographic areas. The development of transnational partnerships can help to improve the peripheral regions' access to technologically more advanced equipment and networks, making it possible for example to remove the barriers to the mobility of researchers. The European Spatial Development Perspective (E.S.D.P.) thus considers equality of access to knowledge infrastructure as one of the essential factors in the promotion of a polycentric development of the European Union. The establishment of a European scheme for access to knowledge infrastructure in liaison with the E.S.D.P. would reinforce the coherence and the pertinence of important choices in the matter

11 As far as measures aiming to promote access to knowledge infrastructure are concerned, a distinction can be made between two major categories : Measures allowing access to infrastructure with a direct impact on the development of capacities for acquiring knowledge; Measures to implement, on the one hand, infrastructure to encourage networking between R&D and innovation structures and bodies and, on the other hand, the standardization of procedures. The development of knowledge-related infrastructure is certainly important at regional level, but it is above all at the transnational level that it will find an appropriate framework, through cooperation, thanks to a local area that is larger and more propitious to the creation of economies of scale. It is for this reason that the proposed actions are amalgamated at these two levels. Actions to be carried out at regional and transnational level. Concerning access to infrastructure with a direct impact on the development of the capacities for acquiring knowledge : Ensure equality of access to knowledge infrastructure by means of GEANT (Gigabit European Academic Network) a network linking universities, research centres, industrial laboratories and research teams throughout the European Union. This action is particularly important for the establishment of a European Research Area and will offer the peripheral regions access to «virtual» institutes in the more centrally located regions. This action will have to be implemented at both the levels defined above in order, in particular, to overcome the problems of standardization. Concerning infrastructure that encourages networking between structures and bodies and standardization of procedures : Ensure that all research teams have access to GEANT, thus enabling the peripheral regions to work with the more centrally located regions. This action will have to be implemented at both regional and transnational level in order to adapt to the conditions of global standardization in this field. Coordinate the dissemination of the results of the EUROPE standardization programmes towards specialised regional centres within the 12 transnational INTERREG IIIB areas, in order to avoid the dispersal of efforts and to contribute to the establishment of a high-speed inter-university communications network Priority actions to enhance human resource potential. The priority actions proposed concern the enhancement of the human resource potential in the field of R&D and innovation, and in particular target students in higher education and young scientists (postgraduate and PhD students). Overall, the territorialisation of R&D and innovation policies should result not only in an increase in the level of education but also in lifelong knowledge acquisition, in particular via the «virtual institutes» in the regions. From this point of view, a «virtual institute» should be seen as a new instrument arising from the liaison between industrial and research elements that are complementary but that are located in different territories. These virtual institutes should enable rapid transfer and utilisation of the results of research in economic and social applications. In this respect, the COST and EUREKA initiatives aimed at SMEs and SMIs, as well as large firms, suppliers, consultants, engineers and researchers in specific technological fields can be considered as a way of using virtual institutes by offering regions the possibility of cooperating at transnational level. Thanks to these possibilities, they will be able to access the latest European or global technology, satisfying the needs of each partner while organising potential for future collaboration. Furthermore, one of the challenges facing our society is the need to bring the world of science and research closer to the general public. As research advances, notably in the field of human health,

12 doubt and suspicion is spreading among large sections of the European population. At the same time, children are showing less interest in science subjects. The dissemination of a scientific culture, explanation and debate about scientific and technological issues in society are therefore necessary in order to stimulate interest in scientific careers and to bring researchers and citizens closer together. Actions relating to the enhancement of human potential should be initiated as a priority at the level of the regions, on account of their proximity to the demand existing in the higher education structures and to the needs of local firms. These regional actions will nonetheless be reinforced by transnational cooperation, thanks to the leverage effect constituted by the «training banks» initiated by the cooperation networks between the higher education structures and bodies of the different regions. Actions to be carried out at regional level : Promotion of cooperation between SMEs in the peripheral regions and the centres of excellence located more in the central part of Europe, notably through the use of the European Investment Fund's interventions for the funding of «virtual institutes» ; Assistance for SMEs that have limited resources, enabling them to participate in the training of young researchers and enabling European firms to develop links with interregional, regional and local educational and research structures and bodies notably by opening up access to their management bodies and to alumni associations; Setting-up of exchange programmes for researchers between research centres and SMEs; Development of forums and organisation of public conferences to encourage debate between the scientific community and civil society on science and technology issues, and support for the production of multimedia educational tools for the dissemination of science and technology. Actions to be carried out at transnational level : Creation of a network of cooperation between the virtual institutes of the different transnational areas and development of cooperation and partnership with the network of centres of excellence; Promotion of cooperation between the Framework Programme, COST and EUREKA on the one hand and the Structural Funds on the other in order to help the «pockets of innovation» to acquire a real competence in one or more sub-areas of activity. This strategy should enable the peripheral regions to face competition from regions that are technologically more advanced, given that they tend sometimes not to be specialised in certain areas or sub-areas. Development of European communication campaigns about scientific advances, notably those that raise ethical questions, and support for research in the fields of human and social sciences on the social and territorial impact of technological changes Priority actions to strengthen the financing of R&D and innovation policies. The priority actions relating to the financing of R&D and innovation policies concern the funding of R&D and innovation projects undertaken jointly by research structures and bodies and businesses, principally SMEs, as well as innovative actions implemented by individual firms. Numerous financial instruments for the encouragement of R&D and innovation have been created, either by the European institutions (European Investment Bank, European Investment Fund, etc.) or by national and/or regional financial institutions. A more recent example is the launching by the European Investment Bank of the INNOVATION 2000 programme as a follow-up to the Lisbon European Council in support of actions in the following areas : The information society; Research and development; Innovation and competitiveness, as well as human capital

13 The following initiatives of the DG Enterprise of the European Commission should also be mentioned. They aim to encourage access by individual firms to a variety of funding sources directly related to R&D and innovation initiatives : Transnational Joint Venture (JEV); Seed Capital (CREA); Mutual Guarantee Schemes; Venture Capital (ETF Start-Up and I-TEC); The Round table of Bankers and SMEs; Business Angels. Most of these instruments are accessible to individual firms through national or regional, private or public sector (or mixed) intermediate financial structures, whose services combine financial engineering and selective state aids for firms. It is important however to underline that there is a lack of coordination between these funding instruments at both Community and at national and regional levels. This often handicaps the participation of SMEs in these programmes and limits their interest in the existing instruments above all in the area of venture capital. Furthermore, the content and rules of the various provisions for R&D funding are strongly geared towards very high technology production activities (technology push) and are not particularly targeted at support for enterprise innovation policies (demand pull) although this constitutes the European Union's greatest part of growth in added value. The proposals put forward here fall within this framework and give priority to actions that constitute an improvement on and better coordination between the current funding provisions. Three types of instrument corresponding to current needs at the level of both the supply in R&D and innovation and the demand on the part of firms, would merit being developed : Capital risk instruments for innovative SMEs that are geared not only towards high technology products but also towards production processes that use existing technologies; Funding that targets the launch phase of innovative products and not only the phases prior to the innovation process. The latter should in fact be considered as a total process stretching from the identification of a market need through to the commercialisation of a product integrating the appropriate technologies; Funding of expertise of innovative projects taking account in an integrated manner of all the aspects of the innovation process (market strategy - acquisition of appropriate technologies modernisation of production management of innovation commercialisation and exportation), principally for SMEs. The Community financial institutions have set up systems of financial intermediaries both private and public at national and regional level, which play a role of intermediary in the application of the financial instruments. In this respect, the Community financial instruments, notably, should support and strengthen the actions arising out of the strategic guidelines of RIS approaches. Furthermore, the venture capital needs of R&D and innovation actions at transnational level argue in favour of the creation of financial institutions acting as such not only at transnational but also at interregional and cross-border level

14 III. THE GOVERNANCE OF TERRITORIALISED R&D AND INNOVATION POLICIES The implementation of R&D and innovation policies to enhance all the resources of the various territories within the new European Research Area requires the establishment of a system of governance that responds to two major imperatives : one relating to its content, the other to the way in which it operates : Synergy between research and development policies and innovation policies, together with their coordination with regional policies notably those initiated under the Structural Funds; Coordination at both transnational and regional level between the Community, national and regional interventions in these fields. The approach to the governance of R&D and innovation policies cannot therefore be separated from the current reflections within the European Commission under the direction of President Romano Prodi in the framework of the White Paper on governance, all the more so since enlargement has to be taken into even greater account in these fields. The proposals contained in this document relating to governance will need to be modulated in a more operational manner depending on the proposals that will be contained in the White Paper on governance as well as the conclusions of the Second Cohesion Report which looks at the issues of economic, social and territorial cohesion in the context of enlargement The governance of R&D and innovation policies : some basic principles. The establishment of a system of governance that is functional and adapted to the implementation of R&D and innovation policies in coordination with regional policy must respect certain basic principles. 1. A common territorial reference framework In order to better respond to the needs of the territories in terms of competitiveness, a new R&D and innovation policy in the European Research Area must be implemented in coordination with the other policies pursued in an enlarged European Union. The development of the European Research Area must, then, be able to take advantage of all the Community policies. This requires that it fall within a reference framework that is common to all the Member States and regional and local authorities. The European Spatial Development Perspective (E.S.D.P.) should be used as a common Community framework, since its objectives and content link together two fundamental dimensions of the spatial development of the EU : The territorialisation of sectoral policies such as R&D and innovation, training, employment, transport, environment policies etc., the implementation of spatial development policies based on integrated regional development strategies such as those already advocated under the Structural Funds policy : Community Support Framework, Single Programming Document, etc. The linking together of these two dimensions implies the adoption of a common strategic framework, aiming to achieve a balanced and sustainable development of the European area and consequently to define common general guidelines. The imperative for this is even greater in view of enlargement, which could - in the absence of a common reference framework - result in dysfunction in the implementation of Community policies as a result of the increased diversity and disparities between the different territories of the EU

15 2. The coordination of sectoral and horizontal policies in the regions and transnational areas. The coordination of sectoral policies with the horizontal policies for integrated development at territorial level is a central element in a system of governance capable of managing a territorialised R&D and innovation policy in the new European Research Area. Indeed this requires a better coordination not only of policies pursued at Community level, but also at national level, all the more so since we are talking not only about regions, but transregional areas - and this from the point of view of a polycentric development of the Community area. In this respect, polycentrism, which offers a framework better adapted to the creation of leverage, critical mass and local externalities, will without doubt require concerted action between the different decision-making levels concerned. Once again, the linking together of the two dimensions, sectoral and horizontal, of such a policy will require a common strategic framework with the aim of achieving a more balanced and sustainable development of the Community area. The European Spatial Development Perspective (E.S.D.P.) should be used as the common Community framework for the implementation of such a policy. 3. A structured institutional partnership. The effectiveness of a system of governance adapted to the territorialisation of R&D and innovation policies depends however on the existence of a real partnership between the European Commission, the Member States and the regional and local authorities. Such a partnership should be based on at least the two following principles : Contract-based links between Community, national and transnational policies through cooperation between the regions, the Member States and the European Commission; The acquisition by the regions of a driving role not only in policies conducted at regional level but also in those conducted at transnational level. The implementation of these institutional partnerships must, it is true, respect the constitutional realities of each of the Member Sates, but it implies the implementation of both vertical and horizontal coordination methods covering the preparation, decision-taking, implementtion and evaluation of policies, methods of coordination that do not exist today. The new European governance will need to establish such mechanisms in order to reduce the wastage that results from too wide a dispersion of public intervention and to boost a more coherent approach to development. 4. Application of the subsidiarity principle as the linchpin of governance. The principle of subsidiarity is the linchpin of the functioning of the European Union's system of governance. The central element of the subsidiarity principle enshrined in the Treaty on European Union is to encourage, wherever possible and necessary, a real decentralisation in the carrying-out of Community and national policies. It must guide the nature and distribution of interventions between the various levels of power in line with the constitutional particularities of each Member State. The Maastricht Treaty raised subsidiarity to the rank of a constitutional principle in the Community legal order but it confined its application to the procedures for implementing Community competence only in relations with Member States. The efficient functioning of the system of governance in the implementation of an R&D and innovation policy is particularly pertinent in this context. Given its dual dimension - sectoral and horizontal - the application of the subsidiarity principle must be extended to all levels of decision-making, that is to say not only the Community and national levels, but also the sub-national levels, and in particular the regional level. 5. A sound public/private partnership. The implementation of R&D and innovation policies must be based fundamentally on cooperation between the structures and bodies directly concerned by the exploitation of the resources of the European Research Area. The linchpin of the functioning of this policy is the networking between the actors involved. This is based on a sound public/private partnership in which the supply and demand actors of R&D and innovation are brought together

16 With regard to the territorial aspects, R&D and innovation policies would gain from being able to rely on an organised system of public/private partnership directly linked to the needs of all of the European Union's territories. The proposals to develop RIS (Regional Innovation Strategy) -type approaches on both regional and transnational level fall within this context Some proposals for improving the governance of the European Union to encourage the territorialisation of R&D and innovation policies. Governance directly concerns the issue of cohesion and coordination of the different interventions between the Community level, principally the European Commission, the Member States, and the regional and local authorities. Moreover, this coordination concerns the four aspects of the decisionmaking process of every policy, i.e. preparation, decision-taking, implementation and evaluation. This therefore inevitably raises the question of the regions' participation in the preparation and implementation of R&D and innovation policies, both at the Community level and at the national and transnational levels. The proposals outlined below are general proposals concerning the Community, national, transnational and regional levels. The detailed provisions will only be able to be defined once the Commission's guidelines, contained in the White Paper on governance, are known. At Community level Annual round table between the European Commission, the Member States and the regions to discuss the policies, programmes and projects implemented at Community, national, transnational and regional level in the field of research and development, innovation and regional development. Organisation of joint Council of Ministers meetings between the ministers responsible for research and innovation and those responsible for regional and spatial planning to debate political guidelines and R&D and innovation programmes particularly regarding their spatial impacts; Participation of representatives of the large transnational areas at the meetings of the Council of Ministers for research and innovation, and at the meetings of the Scientific & Technical Research Committee (CREST); Creation of a permanent Taskforce between the European Commission's DGs for research, enterprise and regional policy so as to ensure coordination between the R&D and innovation programmes and those of the Structural Funds; Organisation of joint meetings of the European Parliament's committees on research and development, innovation, and regional policy. Setting up of contract-based links on a multiyear basis between the European Commission, the Member States and the regions concerning interventions in the fields of research and development, innovation, and regional development. At national level Annual round table between central government authorities and the regions to discuss the national, regional and transnational aspects of research and development, innovation and regional planning policies; Setting-up of contract-based links on a multiyear basis between the Member States and the regions concerning interventions in the fields of research and development, innovation and regional planning. At transnational level Annual round table between the European Commission, Member States and representatives of the transnational areas to discuss the policies, programmes and projects implemented at Community, national, transnational and regional level in the fields of research and development, innovation and regional development

17 Creation, for each transnational area, of a veritable and permanent structure grouping together the representatives of the regions and of the national and Community administrations responsible for preparing, deciding on and coordinating the implementation of transnational programmes in the areas of research and development, innovation and regional development. This structure should be provided with the appropriate organisational means and transparent operating rules clearly establishing the position and role of each partner throughout the whole decision-making process; Setting up of contract-based links on a multiyear basis between the regions, the Member States and the European Commission concerning interventions in the fields of research and development, innovation and regional development. At regional level Setting-up of a structure to concert and coordinate the RIS approach with the regional spatial development strategy in order notably to establish links with other sectoral policies (employment, training, transport, etc.)

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