Esko Aho: Europe needs market that promotes innovation
Working group headed by SITRA seeks innovative European strategy
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By Jyrki Alkio
The problems of Europe cannot be solved simply by increasing public research and development funding, says an international group of experts working under the leadership of former Finnish Prime Minister Esko Aho, who is now the President of the Finnish National Fund for Research and Development (SITRA).
In connection with its Lisbon Strategy, the European Union set as one of its goals a sharp increase in research and product development funding; the aim was to raise it to three percent of the region's GDP by 2010.
"The goal is not even close to being implemented", Aho says. "However, it is not Europe's essential problem, but rather an indicator that things are not in shape."
"The biggest problem is that there is not a decent market in Europe for innovative new products and services", Aho says, crystallising the conclusions drawn by his group.
The team working under Aho's leadership submitted its report, Creating an Innovative Europe, on Friday, January 20th, to Janez Potoènik, the European Commissioner for Science and Research.
The group would like the EU to have a new agreement on research and innovation, which would lay the foundation for European success.
The European Commission is proposing its own recommendations for promoting competitiveness in the area at the EU summit which meets in late March.
In addition to Aho himself, the working group that was set up in early December includes Antoni Subirá, the former Minister of Industry of Catalonia, Jozef Cornu, chairman of the information technology group of the European Commission, and Professor Luke Georghiou of Manchester Business School.
According to the goal set in Lisbon in 2000, the EU should emerge as the most competitive economic zone in the world by 2010. This goal will not be realised, because the member states have not implemented the economic reforms approved in Lisbon.
Aho's group tried to find ways to get countries to jointly commit themselves to the goals that have been approved. "Is it possible to find mechanisms such as the ones that were used in creating the single market, or in the transfer to a common currency, that would help the member states and the Union to commit to practical action?"
In research activities, Aho is especially concerned about private financing. "How are we to get companies to invest considerably more than before in research and development activities?" Aho ponders.
The function of the market is a key factor. "We need to have an attractive operating environment that encourages companies to invest."
In Aho's view, EU member states can influence the development of markets by developing standards and regulation mechanisms. Nokia and other European companies have been successful in the mobile telephone business, because Europe used its strength effectively in producing the GSM standard.
Public acquisitions can also be used in the creation of markets, Aho points out.
Esko Aho's team proposes that the EU should choose a few areas of focus, where "special efforts would be made" to create a European market.
Aho and his group see the Lisbon Strategy and the follow-up work that has taken place in that connection as insufficient. In them, the basic assumption has been that the European social model is good, and worthy of preservation.
"It is our view that a more profound change is needed, in which this model is modified so as to favour and promote innovation, as well as research and development activities."
In Aho's view, the structures of European society and economy are remnants of the industrial age, and have hardly changed at all, or adapted to the needs of the production of innovative goods and services. "We are promoting this kind of mobility, the moving of resources from a resource-based economy to one based on information."
For instance, he says that the finance system should change, so that it could respond to the needs of an innovative society, which would mean, in practice, the improvement of the prerequisites of capital investment activities. "In a resource-based economy, the investments that were made were used to guarantee a loan. But what is to be given as collateral in an information-based economy, when medicines are developed from molecules?"
Aho would also want to accelerate the mobility of people between the academic world and business administration. A goal could be that one in ten people working in research institutes would apply for work somewhere other than in research.
Aho's team of experts concludes its report with the words before it is too late. "We believe that the final moments may be at hand to achieve a credible change", Aho says, explaining the choice of words.
Large European companies are increasingly investing in research and development activities outside Europe. "Although it may sound harsh, the fact is that these globalised European companies do not necessarily need Europe - but Europe needs them."
Like the companies, some EU member states might also find the Union to be superfluous. "If Europe does not quickly turn into a better operating environment, some member states will have to think of different kinds of solutions with which to secure their interests."
"These matters are much more important for Europe's independence and success than whether or not there is a constitution, and how binding it is. The constitution can be significant for the implementation of these goals, but it does not have any absolute value. On the other hand, these issues do have an absolute value. If they fail, nothing else matters."
Helsingin Sanomat / First published in print 20.1.2006
JYRKI ALKIO / Helsingin Sanomat
jyrki.alkio@hs.fi
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| 24.1.2006 - THIS WEEK |
 Esko Aho: Europe needs market that promotes innovation |
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