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THE DIGITAL AGENDA
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Investment in R&D+i: necessary but not
sufficient
It is generally accepted that European policy on
science and innovation, both at the level of the
EU and of member states and regions, has an
essential role to play in making European indus-
try a global leader. In particular, innovation pol-
icy provides an interface between technological
research and development and industrial policy,
creating a framework through which ideas can
be brought to the marketplace. As such, it will
necessarily occupy an ever more important
place in European legislation.
EU innovation policy is closely linked to poli-
cy in other areas, such as employment, com-
petitiveness, the environment, industry and en-
ergy. The purpose of innovation policy is to
convert the results of research into new or im-
proved products and services, so that Europe
can remain competitive in the global market.
However, such innovation requires consistent
investment. Before the 2009 financial crisis,
spending on research and development was
growing at an annual rate of approximately 7
per cent. According to the Global Innovation
Index 2016, global R&D growth had slowed to
just 4 per cent by 2014, as a result of lower
growth in emerging economies and of pressure
on R&D budgets in developed economies.
Although the most recent data points to-
wards a slight recovery in some of Europe’s
more innovative countries, Europe as a whole
allocates 0.8 per cent less to research and devel-
opment than the USA and 1.5 per cent less than
Japan as a proportion of GDP. If this trend is
sustained over a significant period of time, a dif-
ference of 1 per cent of GDP can have a very
significant impact on the capacity to generate
and sustain scientific and technological leader-
ship.
There are other differential effects that are
linked only indirectly to financial input, such as
the scientific prestige of the top American uni-
versities or the existence of a well-developed
capital market to support investment in techno-
logical entrepreneurship. Whatever the specific
factors, the effect is to attract talent as the best
researchers and entrepreneurs go wherever the
best conditions and opportunities are to be
found. Although the Single Market is the largest
in the world, it remains fragmented and is less
attractive than some of its competitors.
The European digital single market
In response to this concern, and in addition to
programmes to support innovation as part of
the Horizon 2020 Strategy, the European
Commission has made the development of a
digital single market one of its ten priorities. In
the Commission’s own words, Europe has the
capacity to lead the global digital economy but
is failing to exploit this capacity to the full. The
EU is hampered by fragmentation and barriers
within the single market. Reducing these barri-
ers could add 415 billion euros to the area’s
GDP, and bring out the true value of a market
with 500 million inhabitants. A digital economy
supported by a digital single market could ex-
pand markets and promote better services at
more competitive prices, offering more choice
and creating new sources of employment.
The rules of the game have changed
The technological and digital revolution is creat-
ing a new landscape for competition and em-
ployment for European societies and compa-
nies, with technological and scientific progress