Research and Innovation Research and Innovation European Semester: 2013 ERAC Mutual Learning Seminar ERAC meeting, DG RTD, Unit C6 1

Research and Innovation Research and Innovation Outline Objectives & settings Highlights of Session I Highlights of Session II Highlights of Session III Next steps 2

Research and Innovation Research and Innovation Objectives stimulate discussion amongst MS about some specific subjects closely linked to the implementation of the CSRs on R&I adopted by the Council in July 2012 and about main policy orientations in the field of R&I in the context of Europe 2020 be a source of inspiration to MS when finalising their NRP due for submission in April 3

Research and Innovation Research and Innovation Settings Three themes, broadly covering the scope of the CSRs: Effectiveness of national research systems Innovation strategies (with focus on demand side) Policies for High Growth Innovative Enterprises (HGIE) Introduced by background papers and lead questions Moderated by high-level external experts Short presentations of MS on specific policy aspects Final report circulated to ERAC delegates (see also ) 4

Research and Innovation Research and Innovation Session I: effectiveness of research systems What is the optimum balance between competitive and block funding in a research system? Competitive funding = grants + some institutional funding Main instruments are grants (40% of GBOARD on average) Share of performance-based institutional funding is low but increasing (e.g. SE, NL) Overall trend is towards more competitive funding, with some marked exceptions (e.g. NZ, Korea reinstating core funding) Balance is a matter of national context Clear advantages associated with more competition, but also some drawbacks (e.g. transaction costs) Policy design matters 5

Research and Innovation Research and Innovation Session I: effectiveness of research systems What measures can be taken to improve national approaches to peer review [and more broadly 'research evaluation']? Evaluation = mix of (international) peer review and indicators Multiple use: allocation of institutional funding selection of projects recruitment/careers of researchers selection of joint/collective research institutes (e.g. centres of Excellence) Criteria increasingly take into account socio-economic benefits Both peer review and indicators involve issues which can (partly) be addressed by funding agencies 6

Research and Innovation Research and Innovation Session I: effectiveness of research systems What is the most effective way to incentivise institutions to improve their research performance? Overall trend towards assessing institutions as a whole, in relation with their increased autonomy Increase of performance-based institutional funding drives better quality, accountability, stronger profiling and more collaboration (through e.g. strategic alliances) Concentration of funding in some MS on top performers likely to spread throughout the EU However, ERA is not only about the top end of the distribution but also the average 7

Research and Innovation Research and Innovation Session II: innovation strategies When designing innovation strategies are demand and supply side aspects equally taken into consideration? In the past, national strategies heavily leaned on supply-side Risk averseness, lack of awareness and long lead times deterred launching demand-side policies Relevance of demand-side policies (leverage effect, new markets) is now better acknowledged Now part of national strategies in some MS and of strategic discussions in most MS Higher awareness and higher willingness to experiment but still risk/fear of substituting market failure by gov. failure 8

Research and Innovation Research and Innovation Session II: innovation strategies How are demand side aspects implemented in connection with strategic priorities? Where in place, demand-side policies remain often disconnected from national research strategies Further efforts needed to articulate demand-side and supply- side policies in integrated R&I strategies Combining supply- and demand-side policies requires strong governance and policy coordination More data collection and policy evaluation is needed, in particular from a systemic perspective 9

Research and Innovation Research and Innovation Session II: innovation strategies What are the experiences with demand side instruments? Rapidly increasing number of demand-side policies, many MS have gained some experience with demand-side policies Variety of instruments: Public procurement of innovation (e.g. in DE) Pre-commercial procurement (e.g. UK SBRI, new IT initiative) Support to Lead markets (e.g. EE electro-mobility programme) Inducement prizes related to societal challenges (e.g. in the UK) Regarding procurement, the main demand-side instrument: the successful US SBIR programme is a source of inspiration in Europe Need for more data, evaluation and comparison of impact at different levels (firm, industry, society) Need to ensure high level of competence/skills in procurement bodies 10

Research and Innovation Research and Innovation Session III: policies for HGIE Policies to support the fast growth of innovative enterprises: Policy importance? ERAC survey Why? US impact on jobs How? access to private debt/equity finance targeted public support schemes Framework conditions 11

Research and Innovation Research and Innovation Session III: policies for HGIE What measures are particularly helpful or unhelpful to facilitate access to finance for high-growth innovative enterprises? VC is important source of finance for HGIEs, but not the only one Other sources : national funds for seed funding, corporate VC, business angels and crowd-funding Business angels networks and VC need to be further developed in Europe in order to unleash its full potential to foster HGIE In particular, collaborative approaches and syndication is needed for further developing VC in Europe National governments are recommended to base policies for developing VC in their country on a careful analysis of the situation in their country 12

Research and Innovation Research and Innovation Session III: policies for HGIE What characteristics should targeted schemes for supporting high-growth innovative enterprises have? There are indications that policies for HGIEs need to be different from policies for SMEs in order to succeed These policies need to be selective, proactive, sustainable, professional and they need to be implemented in collaboration with the private sector Examples: Coaching networks supporting the development of HGIEs (e.g. CH), support to internationalisation activities, public incubators, clusters, targeted tax incentives (e.g. FR) However, there are no solid research results yet that would allow identifying particularly effective and efficient policies for HGIEs 13

Research and Innovation Research and Innovation Session III: policies for HGIE What framework conditions would most urgently need to be modified in order to support high growth of enterprises? Framework conditions differ by country However, an effective policy requires addressing a broad range of framework conditions Stability of tax regimes/incentives Reduction of administrative burden Valuation of IP assets as collaterals Earmarking of public procurement Legislation preventing hostile take-overs could be important 14

Research and Innovation Research and Innovation Next steps Future mutual learning activities Additional ad hoc workshops on specific policy issues: Strategies to train enough researchers to meet national R&D targets and to promote attractive employment conditions in public research institutions Use of PCP and procurement of innovative products Link with the work of the new ad hoc WG on the European Semester and the monitoring of ERA 15

Research and Innovation Research and Innovation Thank you! mutual-learning-seminars