The innovation and research potential of regions and cities

Innovative Regions and Cities for Territorial Development

EPP/CoR Policy Paper: the innovation and research potential of regions and cities October 2012

Innovative Regions and Cities for Territorial Development INNOVATION UNION: A FLAGSHIP OF THE EUROPE 2020 STRATEGY The European Union needs more research and innovation so we can turn our ideas into new and better services and products. This will help the EU to remain competitive and improve the quality of life in Europe's regions and cities. Indeed the European Commission reports that we are facing an 'innovation emergency'.

Each year, Europe spends 0.8% less of its GDP than the US and 1.5% less than Japan on Research & Development (R&D). Although the EU market is the largest in the world, it remains fragmented and not friendly enough for true innovation. The Innovation Union is therefore a crucial investment for our future.

Innovation Union targets: investing 3% of EU GDP on R&D by 2020, creating 3.7 million jobs and increasing annual GDP by €795 billion by 2025.

Maria Luisa Coppola, EPP Group Political Coordinator "Research and innovation is essential for creating growth and jobs in our cities and regions. We will therefore substantially improve the framework conditions and ensure access to finance so that innovative ideas can be materialised.”

A DIGITAL AGENDA FOR EUROPE: A FLAGSHIP OF THE EUROPE 2020 STRATEGY Better use of information and communication technologies will help to speed up economic recovery and lay the foundations of a sustainable digital future. The new action plan proposes to remove current obstacles to maximising the potential of ICTs, with long-term investments to minimise future problems. The EU needs to invest in a digital single market to ensure that we can all reap the benefits of the digital era.

Europe is slow in the uptake of ICT-based innovations. While social changes are major drivers of innovation, here in the EU, we are making little use of procurement of innovation and R&D to improve quality and performance of its public services.

Digital Agenda targets related to ICT and R&D: double public investment to €11 billion.

Markku Markkula: EPP Group Political Coordinator "We want to support pioneering regions to create a flourishing digital economy by 2020. By promoting societal innovations and speeding up the roll-out of high-speed internet, we can reap the benefits of a digital single market at home and at work. Moreover, Horizon 2020 and the proposed European Research Area are closely linked. Funding is needed for the realisation of the ERA. This will ensure local and regional authorities can have a real impact."

THE EUROPEAN RESEARCH AREA The European Research Area is designed make Europe a place where scientific research, technological development and innovation thrive. Researchers, research institutions and businesses will be able to move, compete and co-operate across borders.

Deadline for ERA: EU leaders stressed the importance of completing the European Research Area, setting a deadline of 2014 in European Council conclusions.

Grigorios Zafeiropoulos, CoR rapporteur on the ERA "European national research programmes are amongst the first and best in the world, but they cannot tackle some of today's major societal challenges alone. We need sustainable and innovative synergies between Horizon 2020 and the Structural Funds. Smart specialisation will also be key to successful innovation strategies."

INNOVATION UNION: BECOMING MORE OPEN AND GOING DIGITAL What is 'open innovation'?

Previous innovation policies relied on large companies and universities to act as the engines of innovation in the EU. While they are still relevant, the mobility and availability of highly educated people has increased over the years. Large amounts of knowledge now exist beyond large companies and university laboratories. Innovation therefore relies more and more on SMEs and other contributors. It is increasingly possible for ideas and technologies to be developed outside of large firms.

Innovation policy must move beyond the walls of large companies and university labs to promote an environment of open innovation.

What is a 'digital entrepreneur'?

The digital entrepreneurship movement wants to bring the entrepreneurial spirit from Silicon Valley to Europe and to build a bridge between the European centers of innovation. Their aim is to further stimulate entrepreneurship, attract capital and minimize barriers. The new generation of innovation activities is socially motivated, open and exists thanks to online communities.

Digital entrepreneurs have been described as the missing link between Europe's Innovation Union and Digital Agenda flagship initiatives.

Available EU funds for boosting innovation in regions and cities COHESION POLICY EU regional policy is an investment policy. It supports job creation, competitiveness, economic growth, improved quality of life and sustainable development.

Johannes Hahn, European Commissioner for Regional Policy "We need to spend more intelligently, focus on the EU's top priorities and add visible value to what national and regional authorities are already doing‌ [this] will help us prepare a cohesion policy that is better adapted to the economic situation of today."

COMMON STRATEGIC FRAMEWORK The "Common Strategic Framework" (CSF) is intended to help set clear investment priorities for the next financial planning period from 2014 until 2020 in Member States and their regions. It will enable a far better combining of various funds to maximise the impact of EU investments.

National and regional authorities will use this framework as the basis for drafting their 'Partnership Contracts' with the Commission, committing themselves to meeting Europe's growth and jobs targets for 2020.

Marek Wozniak, CoR rapporteur on the CSF "There needs to be improved coordination among the funds under the CSF. This will improve the effectiveness of their interventions and make it possible to ensure a higher level of synergy and complementarity in EU investment"

EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF) The ERDF aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. In short, the ERDF finances direct aid to investments in companies (in particular SMEs) to create sustainable jobs; infrastructures linked notably to research and innovation, telecommunications, environment, energy and transport; financial instruments (capital risk funds, local development funds, etc.) to support regional and local development and to foster cooperation between towns and regions; and technical assistance measures. The ERDF also gives particular attention to specific territorial characteristics.

Michael Schneider, CoR rapporteur on the ERDF "ERDF resources must be flexible and used without giving preference to certain types of area or discriminating against them‌. In my view, there is still significant scope for better links between Horizon 2020 and the structural funds. Moreover, in view of limited public budgets, private sector initiatives could assume greater importance in the future. ERDF support should be available to public and private research and innovation bodies to promote research."

FRAMEWORK PROGRAMME FOR RESEARCH AND INNOVATION: HORIZON 2020 Horizon 2020 is the financial instrument for implementing the Innovation Union flagship initiative aimed at securing Europe's global competitiveness. The new programme for research and innovation is part of the drive to create new growth and jobs in Europe. In comparison to previous framework policies for research and development, Horizon 2020 will concentrate more on stronger support for innovation, including non-technological innovation and market take up.

Raising scientific and technological excellence in all parts of the Union is a pre-requisite for the success of the Europe 2020 Strategy.

Time frame: 2014-2020 Proposed amount: EUR 80 billion; 46% increase compared to current period (2007-2013) Share of research and innovation in EU Budget (increases to 8.5% in 2020) Markku Markkula, CoR rapporteur on Horizon 2020

"Regions not only establish the strategies that drive forward research excellence and industrial activity. They are also key players in finding solutions to societal challenges.

We need pioneering regions to form European consortiums, which can integrate different capabilities and create ground-breaking societal innovations for Europe."

HORIZON 2020: TOWARDS GLOBAL INDUSTRIAL LEADERSHIP The European Commission underlines that Europe needs more innovative SMEs to create growth and jobs. Strategic investments in key technologies (e.g. advanced manufacturing, micro-electronics) are also essential to underpin innovation across existing and emerging sectors. Finally, Europe needs to attract more private investment in research and innovation.

FORGING SYNERGIES BETWEEN EU POLICIES AND FUNDS A strong emphasis has been placed on the link between the CSF funds and the Horizon 2020 programme. This is welcomed by the EPP Group in the Committee of the Regions, which considers that financial support for capacity building, exploitation and immediate dissemination of the results of research and innovation will benefit not only the region or regions concerned, but Europe as a whole. It will also allow for more cross-border and transnational cooperation.

FACT: Creative industries represent a growing part of Europe’s economy and provide significant employment. In fact, in 2003, the estimated turnover of these creative industries was ₏654 billion, often relying on many small firms and entrepreneurs. Every region has its speciality.

The link between regional policy and innovation STAIRWAY TO EXCELLENCE FOR LESS DEVELOPED REGIONS Significant regional disparities across Europe in research and innovation performance need to be addressed. The Horizon 2020 Programme therefore includes measures to unlock excellence and innovation in synergy with the Cohesion policy Funds. Measures include teaming of excellent research institutions and less developed regions, staff exchanges, expert advice and assistance and the development of joint strategies for the establishment of centres of excellence that may be supported by the Cohesion policy funds in less developed regions. The EU also proposes support for building links with innovative clusters and recognising excellence in less developed regions. Finally, 'European Research Area Chairs' could be created to attract outstanding academics to institutions with a clear potential for research excellence.

To support innovative regions and cities, national and regional authorities across Europe are encouraged to draw up research and innovation strategies for smart specialisation Smart specialisation is essential for truly effective research and innovation investments.

In the European Commission’s proposal for cohesion policy in 2014-2020, smart specialisation will be a precondition for using the European Regional Development Fund (ERDF) in 2014-2020.

Smart specialisation means identifying the unique characteristics and assets of each country and region, highlighting each region’s competitive advantages, and rallying regional stakeholders and resources around an excellence-driven vision of their future.

RESEARCH AND INNOVATION STRATEGIES FOR SMART SPECIALISATION These strategies aim to focus investments on each region’s relative strengths, exploiting the economic opportunities and emerging trends. They also aim to boost economic growth in the region by enhancing the added value, impact and visibility of EU funding. At a time of tighter budgets and scarce public resources, the research and innovation strategies ensure value for money by creating synergies between European policies. This complements funding from national and regional schemes and private investment.