One of the paths Europe will need to follow to get its finances in better shape is that of growth, as we suggested in our previous proposal. A key element to allow European countries to follow a sustainable growth path is investment in innovation. There are two steps required for the development of technology: increasing access to physical capital, i.e. the means to produce technologic innovation and developing human capital: the brains to innovate.
A driver of innovation in Europe will therefore be its ability to nurture and develop talent.
Europe is already host to some of the best research centres in the world, scattered across the various member states. In addition, the European commission has managed to develop a strong network of research institutions and given them the means to interact, exchange and share their resources. The European Association for Nuclear Research, the European Space Agency are examples of cooperation at the European level.
This area is in fact an interesting instance of how European member states can act together to pursue a common goal. However the necessary funding to compete internationally, attract talent and retain creative minds has been more difficult to get on the scale required.
A few institutions have already been set up with the stated aim of bringing together resources for research across Europe. One example of such cooperation can be found in the 7th Framework Programme for Research and Technological Development (FP7), setup by the European Union for the funding of carefully selected research projects. This initiative aims at strengthening research in the European Research Area (ERA), with a particular emphasis on cross-border cooperation. It also allows researchers to gain access to a larger pool of financing. The current programme is endowed with€50bn to be deployed over 7 years.
New research initiatives will however require substantial amounts of financial support in order to finance equipment and attract leading scholars. Universities in the U.S.have historically managed to secure finance for scholarships and fellowships through large endowments, invested in mutual and alternative investment funds, and supported by a strong alumni network. However, some of these endowments have been hit quite severely by the financial crisis, and this solution is therefore not appropriate for the long-term commitments that research requires.
A large proportion of research and development in Europe is publicly funded, (34% versus 27% for the US and 15% in Japan) which limits the extent to which they can expand their capabilities and attract talent. More higher education institutions are also publicly funded in Europe compared to other developed countries. Finally, research and development in Europe currently represent 2% of GDP.
The commission has announced the objective of reaching 3% of GDP by 2020 in order to be aligned with the US and Japan. MEPs have also pledged to simplify administrative requirements for funding applications. Both objectives are key and are summarised in the green paper “Horizon 2020”
One difficulty that European governments will face is to reconcile the need to invest in innovation to support growth with public deficits under increasing stress. As public funds become scarce, European states will need to look for alternative financing mechanisms.
Optimisation of funding could be done through sharing a common research budget at the European level to avoid duplication of research projects. Another way to increase financing is to open more opportunities for private funding of independent research. The Max Planck Society for example registers and sells patents to commercialise ideas developed in their labs. Taken to a European scale a similar commercialisation of research could be highly beneficial to innovation in Europe. We also need to encourage companies to support research that does not provide immediate financial returns but which has the potential to drive the European economy in the long run. Companies will ultimately benefit from a market that is more innovative and demonstrates more sustainable growth potential.
One constraint that will need to be imposed on funding, is the requirement of independence for research institutes, to ensure that less financially profitable but socially desirable fields are not left out. This will need to be a focus point in rethinking the funding of research at the European level.
We would like Europe to offer:
- An incentive scheme for private companies to support independent research, without focusing on short-term returns
- A Europe-wide mechanism to facilitate the commercialisation of innovative research projects in order to incentivise researchers to stay in Europe
What do you think? Do you know of other current cooperation initiatives? Feel free to share any programmes that you have heard of!