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Policy News01

INNO-Grips Newsletter October 2010

TablE of ContentS

Lead Article

Editorial – Smart Innovation Policy for Smart and Sustainable Growth // P 02

30 actions for promoting innovation in Europe

Transforming Europe into an “Innovation Union” // P 03 Policies for High-Growth SMEs: Interview with Dr Burton Lee // P 05 Social Innovation Deserves Attention Too // P 06 Fostering Innovation through Public Procurement // P 08 International Innovation Policy News // P 10 About INNO-Grips // P 11 Imprint // P 12

Transforming Europe into an “Innovation Union” On 6 October 2010, the European Commission adopted the Innovation Union Communication, one of the seven flagship initiatives of the Europe 2020 Strategy. The Innovation Union is key to achieving the goals of a smart, sustainable and inclusive economy at the heart of the Europe 2020 vision. The Communication presents more than 30 policies and actions to improve conditions and access to finance for research and innovation in Europe. Enhancing our innovation performance in the EU should contribute to the creation of new, lasting and well-paid jobs in a context of increasing global competition … read more on Page 03

European Commission Enterprise and Industry

INNO-Grips NEWSLET TER October 2010



Doing things in a new and better way

Smart Innovation Policy for Smart and Sustainable Growth Hannes Selhofer INNO-Grips Project Manager empirica GmbH, Bonn

Dear Readers, An openness to do things in a new and better way is necessary to address the huge economic, environmental and social challenges of our day, and to realise the vision of smart, sustainable and inclusive growth. In short, what is needed is the capability for innovation. Innovation policy is increasingly seen as key to promote and accelerate the required process of change. The challenge is to select, from among the wide variety of instruments and approaches, the most effective for specific contexts. This INNO-Grips newsletter aims to raise awareness about specific trends and issues in innovation policy. The lead article, “Transforming Europe into an Innovation Union”, introduces the new and ambitious innovation strategy of the European Commission. The recent Communication “Innovation Union” proposes more than 30 actions to keep Europe as a world-class science performer and to remove bottlenecks to innovation. The Commission is convinced that Europe’s innovation performance will be a critical success factor for creating lasting and well-paid jobs – and wants all actors to join forces in achieving this goal. Within this broader strategy, innovative SMEs are essential for the creation of new jobs. Which policy strategies are most promising to leverage this job potential by fostering high-growth innovative companies in Europe? For his research on this topic, my colleague Stefan Lilischkis talked to Burton Lee, Managing Director of a US investment advisory company in Palo Alto, California. Mr Lee has some recommendations as to what Europe could do to improve its record in this regard (see interview, Page 05).

A catch-word which is increasingly attracting attention in the innovation policy domain is “social innovation”. The underlying suggestion is that existing innovation know-how could and maybe should be applied to problems in society. In this newsletter, we introduce the concept and give some practical examples of how it is applied in Europe. Innovation has often been initiated by changing customer requirements, i.e. the demand side. Theoretically, therefore, public procurement should be an important driver to stimulate innovation processes. We asked researchers and policy makers what they think about the potential of public procurement. Finally, we present in this newsletter (and will continue doing so in forthcoming editions) an overview of international developments in innovation policy, as reported by our correspondents in over 30 countries. We hope that some of these topics are of interest to you, and we recommend a visit to the PRO INNO Europe and INNOGrips websites for further and more detailed information about innovation policy trends.


// Transforming Europe into an “Innovation Union”



EC adopts Communication

Transforming Europe into an “Innovation Union” On 6 October 2010, the European Commission adopted the Innovation Union Communication, one of the seven flagships of the Europe 2020 Strategy. The Innovation Union is key to achieving the goals of a smart, sustainable and inclusive economy set out in this vision.

In a nutshell, the Innovation Union aims to improve conditions and access to finance for research and innovation in Europe and to ensure that innovative ideas can be turned more easily into products and services that create growth and jobs. Europe needs “a sea change” in its innovation performance According to a statement from Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science, and Vice-President Antonio Tajani, responsible for industry and entrepreneurship: “As we emerge from crisis in the teeth of fierce global competition, we face an innovation emergency. If we do not transform Europe into an Innovation Union, our economies will wither on the vine while ideas and talent go to waste. Innovation is the key to

building sustainable growth and fairer and greener societies. A sea change in Europe’s innovation performance is the only way to create lasting and well-paid jobs that withstand the pressures of globalisation.” Europe is indeed at serious risk of lagging behind the US, Japan and the emerging economies in the race for sustainable growth and the creation of well-paid jobs. In the EU we are spending 0.8% of GDP less than the US every year and 1.5% less than Japan in Research & Development (R&D). We have not yet achieved our target of investing 3% of GDP in research and innovation – instead the current rate is under 2%.

innovators have moved to countries where conditions are more favourable. Although the EU market is the largest in the world, it remains fragmented and insufficiently innovation-friendly. Too few of our innovative SMEs grow into large, globally successful companies. Other countries, such as China and South Korea, are catching up fast. In a recent paper, Luc Soete and P. Zagamé calculated that achieving our target of investing 3% of EU GDP on R&D by 2020 could create 3.7 million jobs and increase annual GDP by €795 billion by 2025 (Ref. 1). To achieve the target, Europe would require at least one million more researchers in the next decade.

Private sector R&D is increasingly outsourced to emerging economies and thousands of our best researchers and

read more on Page 04

(1) See INNO-Grips NEWSLET NEWSLETTER TER October October 2010 2010 INNO-Grips


// Transforming Europe into an “Innovation Union”

More than 30 policies and action The policies and actions included in the Innovation Union –more than 30 of them– are aimed essentially at three objectives: maintaining Europe’s position as a world-class science performer;

removing bottlenecks – including expensive patenting, market fragmentation, slow standard setting and skill shortages - that currently prevent ideas getting quickly to market;

helping public and private sectors work together, through Innovation Partnerships, to address pressing societal challenges. Let us look at some of the proposed actions in some detail. The Innovation Union aims to release private sector investment and proposes among other things to increase European venture capital investments –which are only a quarter of the level in the US. Current EU schemes show that a contribution from the EU budget can leverage more than twenty times their value in investments from private capital. The Commission proposes scaling up these successful schemes and creating a regime to facilitate cross-border venture capital funds. The Commission will strengthen crossborder matching of innovative firms with suitable investors. For this a leading figure from the financial community will be appointed to steer the process. The Innovation Union proposes that from 2011, Member States and regions should set aside dedicated budgets for pre-commercial procurements and public procurements of innovative products and services. The result would be procurement markets across the EU starting from at least €10 billion a year


for innovations that improve the efficiency and quality of public services. This refers to procurements of R&D services (precommercial procurement) and of new technologies and innovations as identified by the European Innovation Partnerships (see below). The ambition will be to increase these levels over time towards the level in the US, which is around 50 billion dollars per year.

the average number of healthy life years by two by 2020. In 2011 the Commission will make additional proposals for more European Innovation Partnerships in areas such as energy, smart cities or water efficiency.

European innovation partnerships The most novel element in the Innovation Union is the launch of European Innovation Partnerships. These represent a new approach to EU research and innovation. They will each tackle a specific societal challenge that is shared across the EU, and where there is a large market potential for EU businesses. The Partnerships will have clear and measurable goals, bringing important benefits for citizens and society as a whole before 2020. These Partnerships will bring together all relevant actors at EU, national and regional levels –across policy areas and industrial sectors– in order to: step up research and development efforts;

coordinate investments in demonstration schemes and pilots;

anticipate and fast-track any necessary regulation and standards; and

mobilise demand, in particular through better coordinated public procurement, to ensure that new products and services are quickly brought to market.

The Commission is proposing to launch a pilot project on active and healthy ageing by the beginning of 2011. Its aims should be to enable citizens to live longer independently in good health by increasing

Máire Geoghegan-Quinn, Commissioner for Research, Innovation and Science, and VicePresident Antonio Tajani, responsible for industry and entrepreneurship, stress the importance of innovation for creating sustainable growth and jobs in Europe.

F u r t h e r I n f o r m at i o n For more information about the Innovation Union see: research/innovation-union/ index_en.cfm?pg=intro

INNO-Grips NEWSLET TER October 2010


// Policies for high-growth SMEs: interview with Dr Burton Lee


How to promote high-growth innovative companies in Europe

Boosting Scale-ups Requires Changes To Europes‘s Laws and Culture US investor and innovation policy advisor Burton Lee recommends promoting angel and venture capital and modifying labour law, corporate law and bankruptcy law. The European Commission could provide model legislation for Member States.

INNO-Grips is currently preparing a Policy Brief that explores how innovation policy could foster high-growth enterprises as a source of entrepreneurial dynamism. SMEs with a high growth potential are important drivers of employment growth. In this context, INNO-Grips talked to Dr. Burton Lee, Managing Director of Innovarium Ventures, an investment advisory company specialised in technology-based startups, angel investor networks and venture funds based in Palo Alto, USA. Dr. Lee also lectures on European entrepreneurship and innovation in the Stanford School of Engineering. INNO-Grips: The US is home to big global companies that were created only a few years ago - particularly in software, such as Google and Microsoft. Why has Europe not been able to do the same? Burton Lee: Europe has excellent technology, and good research infrastructure. But its economy, its legal system and its cultural attitudes create difficulties for rapid scale-up of companies to the global level. Initial funding of new companies is particularly difficult in Europe. So too are rapid exits for investors. Labour law is another obstacle. To grow a company quickly, you need to hire staff quickly - and you need to be able to dismiss them again if necessary. It is so costly to dismiss employees in Europe that entrepreneurs and company managers are extremely cautious about hiring. A further deficiency I observed on visits to business incubators in Europe is the lack of industry-specific mentoring and coaching to help young companies grow to international level. I have seen many companies focussing only on national markets, and not on leading global customers. Europe’s highly fragmented market is an additional complication. And companies’ products are often too technical in focus; what they need

are products designed from the beginning as platform technologies that are to be attractive for international markets. INNO-Grips: What should European countries and the European Commission do to foster high-growth innovative companies? Burton Lee: The key issue is to direct European culture and the European legal system towards developing ‘scaling ability’ – the capacity to allow companies to grow very quickly. On angel and venture capital, some attention has already been given to improving access, but funding in Europe is still difficult. While it should ultimately be private investors who make investment decisions, governments can help. They can, for example, match public and private funds, particularly when the private funding comes from angel investors. As regards employment law, European policy makers need to ensure that companies in early stages are treated differently from mature companies if the goal is to support high-growth enterprises. Corporate law could also be modernised. There are a number of European countries where provisions governing the issuance of equity shares and registration make it very expensive to launch a company and grow it quickly. Since the European Union’s influence on national labour law and corporate law is limited, the Commission could draft example model legislation that would reduce employment-related risks for early stage companies, and recommend that Member States adopt it. National and regional governments in Europe could also promote the establishment of “soft landing” networks, incubators and start-ups in Silicon Valley, where they find the right environment to grow quickly.

Dr. Burton Lee //

Ac k n o w l e d g e m e n t s & co n tac t i n f o r m at i o n Dr. Burton Lee (burton.lee@ is Managing Partner of Innovarium Ventures, an investment company specialised in technology-based start-ups based in Palo Alto, USA, and Director of the European Entrepreneurship and Innovation Programme at Stanford University’s School of Engineering. He was a Member of the National Innovation Taskforce of Ireland and co-author of the Taskforce’s final report. The interviewer was Dr. Stefan Lilischkis (, empirica GmbH, Bonn. The interview was conducted in the context of the forthcoming INNOGrips Policy Brief about “Policies in support of high-growth innovative SMEs”.

read more on Page 06 INNO-Grips NEWSLET TER October 2010



// Social innovation – a new concept is gaining momentum

INNO-Grips: Why should European governments help locate start-ups in Silicon Valley? This would mean that Europe is losing the yields and employment opportunities of these companies. Burton Lee: Not quite. Many European start-ups retain their core operations teams in Europe - for example, the technology team. Often, headquarters, sales and marketing are established in Silicon Valley. Has anyone studied the employment benefits for Europe of companies that came from Europe

to Silicon Valley? What models of splitting company teams between Europe and the Valley are most and least successful? It would be worth finding out. INNO-Grips: Is there a trade-off between policies for high-growth SMEs and general SME policies? Should governments focus on one or the other? Burton Lee: No, governments have to do both – protect high-growth companies but also the low-growth ones. There is no

choice for European governments, and this is the same for all governments in the world. But for both types of policy, it is important to allow entrepreneurs to fail. Failing is very instructive, because next time you will do it better. In Silicon Valley we say “Fail early, fail often, fail fast”. Governments should promote serial entrepreneurship, not one-time entrepreneurship. This is where the need to modify bankruptcy law comes in. And there is a need for change in social attitudes towards entrepreneurs who failed, too.

“Social innovation” – applying innovation know-how to problems in society

Social Innovation Deserves Attention Too The discussion of innovation usually focuses on technological advances, new products and business processes. But if innovation is important in business, why should it not be relevant for addressing problems in society as well? The concept of “social innovation” is increasingly attracting attention.

Social innovation is increasingly recognised as a promising field to contribute to the prosperity of society. European Commission President José Manuel Barroso has remarked that the financial and economic crisis makes “(…) innovation in general and social innovation in particular even more important to foster sustainable growth, secure jobs and boost

competitiveness” (Ref.1). The recommendations of a Business Panel on future EU innovation policy (Ref. 2) and a new report by FORA and the OECD (Ref. 3) have similarly highlighted the importance of social innovation. They all agree that the success of European societies will rest on the ability to align innovation with societal challenges in a way that generates social value.

“New ideas that work in meeting social goals” Definitions of “social innovation” vary widely across business, social and political studies, and even within these areas. A short but compelling definition is offered by Geoff Mulgan and the Young Foundation: “new ideas that

read more on Page 07 INNO-Grips NEWSLET TER October 2010



// Social innovation – a new concept is gaining momentum

work in meeting social goals” (Ref. 4) . This means a focus on the improvement of living conditions - longevity, material well-being, healthy family and community life, functioning environment, freedom, security, stability, equality. This is in marked contrast to business innovations, with the focus on profitable new ideas in products, processes, and organisational changes. But their different focuses do not mean that social and business innovations are mutually exclusive (see Microinsurance Box as an example of the intersections). Social innovations can be structured according to the societal challenges addressed, or the lines of actors involved, or the type of innovation. Social innovations can involve actors from any sector, including business, the public sector, the third sector (including NGOs) and citizens. Often, they result from collaborations among different actors (crosssector or public-private partnerships), and this can lead to changes in the sector over time (Ref. 5). Social innovations take diverse forms, ranging from products, processes and technologies to principles, ideas, legislation, or social movements or

Ac k n o w l e d g e m e n t s & co n tac t i n f o r m at i o n This article was prepared by Dominik Rüede, Research Assistant at the European Business School (EBS), Strascheg Institute for Innovation and Entrepreneurship (SIIE), in Oestrich-Winkel, Germany. Mr Rüede’s research focuses on social innovation. Contact:

interventions (Ref. 6). Examples from the past include the English Bill of Rights in 1689 and the Red Cross in Geneva in 1864; contemporary examples include the 2010 Grantees of the US Social Innovation Fund (e.g. REDF and Jobs for the Future, which both target an improvement in job opportunities of disadvantaged job seekers). (Ref. 7) Examples of fostering social innovation through policy The US Social Fund is one example of policy actively promoting and supporting social innovation to address social challenges more effectively. Another example is the creation of the Community Interest Company in the UK, to provide a compatible legal structure for “people who want to conduct a business or other activity for community benefit, and not purely for private advantage” (Ref. 8) . In the Basque region, financial support was granted for establishing a “social silicon valley”, which can be seen as the first business park fully dedicated to third-sector innovation (Ref. 9).

commitment, the European Commission plans a social innovation network for Europe. In a pilot phase, this will connect people involved in social innovation policies at EU, Member State, regional and municipal levels. In the longer run, the network will promote exchanges of best practices across Europe. A call for a service contract to set up this network has recently been issued (“social innovation initiative for Europe”, 40/PP/ENT/ CIP/10/E/N02C011). Expectations are also high of the forthcoming BEPA report on social innovation. This will highlight the advantages of incorporating social innovation in the “Europe 2020” framework for achieving sustainable growth in Europe.

Examples of policy measures in support of social innovation reflect Barroso’s injunction quoted above. To underline its

Microinsurance Microinsurance is the idea of providing insurance coverage for low-income customers in developing countries. When the Allianz Group started work on this topic in 2005 they faced challenges including lack of local knowledge, high distribution costs and distrust amongst the population. To address these obstacles to market entry, Allianz concluded cross-sector partnerships with international NGOs such as CARE. Bringing two types of core competence together - Allianz’ in product knowledge and CARE’s in local expertise - allows the partnership to provide a valuable product for the base of the pyramid, so that a minimum of protection against natural catastrophes or fatal working accidents is guaranteed. ObjectId=MzQ4NTI

References (1) Statement during a meeting on the “Renewed Social Agenda and Social Innovation”, 20 January 2009 in Brussels (2) Business panel on future EU innovation policy (2009): Final report. (3) FORA (2009): The new nature of innovation. (4) Geoff Mulgan (2007): Social Innovation – What it is, why it matters and how it can be accelerated, p. 8. (5) SIX & Young Foundation (2010): Study on Social Innovation, p.18. (6) James A. Phills, Kriss Deiglmeier & Dale T. Miller (2008): Rediscovering Social Innovation, Stanford Social Innovation Review, Fall 2008. (7) See for examples in the past: D. Stuart Conger (1970): Social Inventions, reprint 2002 in The Innovation Journal; see for contemporary examples: (8) See http://www. (9) See for a brief project description:

INNO-Grips NEWSLET TER October 2010



// Fostering Innovation Through Public Procurement

Recognising the importance of the demand side

Fostering Innovation Through Public Procurement Innovation has often been initiated by changing customer requirements – i.e. the demand side. Theoretically, public procurement could therefore play an important role as a driver of innovation. However, there is still not enough clarity about the practical mechanisms to make effective use of this instrument.

The concept: why public procurement matters for innovation Public procurement can have an impact on innovation in two ways: through how public procurers buy, and through the choice of what they are buying. Because of its potential, procurement was identified as a priority for EU innovation policy under the 2006 Broad Based Innovation Strategy. However, the Commission is not yet satisfied with the impact of the initiatives in this field. It would like to see public procurers in the EU give greater emphasis to purchasing innovative products. “Public procurement still holds a large untapped potential to stimulate the production of

innovative products and services in our economies”, says Cesar Santos from the Innovation Policy Development of DG Enterprise and Industry. “To realise the potential, we need to adopt a culture of managing risk rather than avoiding it, when it comes to allocating grants and contracts. In this respect, there are successful examples in the US and in the EU from which we can all learn.” Economists confirm that public procurement could be a useful instrument for innovation policy by steering R&D and innovation in the right direction. HansPeter Kloes, Head of the Department of Education and Labour Market Policy and

Member of the Managing Board of IW Köln e.V., explains the line of argument: “Innovation is often initiated by changing customer requirements. Public procurement could play a vital role in fostering innovation, since it accounts for a substantial share of EU GDP.” Philipp Koellinger, assistant professor in economics and entrepreneurship at the Erasmus University Rotterdam, offers a practical example: “Demand from the US Department for Defence has frequently played a critical role in the development of new technologies for military purposes which then found commercial applications. Some of those became extremely important – an obvious example is the internet.”

read more on Page 09 INNO-Grips NEWSLET TER October 2010



// Fostering Innovation Through Public Procurement

Economists underline that public procurement strategies in favour of innovation must not violate certain general principles: “It has to be ensured that public procurement is strictly competitive and technology-open and that private procurement is not crowded out. Moreover, it should be ensured that the innovative character of the procured products or services does not cause delays in the procurement process, and that procurers and suppliers are matched efficiently,” says Kloes. The main challenge: translating the concept into practice While policy makers are mostly open to the concept, they are concerned by its continuing imprecision in many areas. “We have been discussing this idea for years, but I see little progress in translating the theoretical concept into a more practical perspective”, says Rupert Pichler, Head of Department Research and Technology Funding at the Austrian Federal Ministry for Transport, Innovation and Technology. “I would appreciate it if somebody came up finally with concrete suggestions about how to implement innovation as a criterion for procurement decisions in practical terms. Public procurement is mainly concerned with reliability, efficiency and good value for money. Innovation has to add to these goals and is not a goal in itself.” The Commission is aware of this challenge, and held a conference on “Promoting Innovation through Public Procurement” in March 2010 [1]. More than 200 experts attended the event, exchanged experiences and best practices, and developed some practical proposals. The conference addressed issues such as:

how to bridge the gap between public procurers and inovative SMEs,

how to progress towards a Life Cycle-Costing approach in public procurement, how to organise effective dialogue between the private and public sector, and risk management in procurement of innovation. A practical example of applying strategic public procurement for innovation is LCB Healthcare, an international partnership of the UK, the Netherlands, Norway and Poland. The goal of this European leadmarket procurement network is to stimulate innovation for low-carbon building solutions in the health sector, through coordinated pilot projects. Driving sustainable production methods through “green public procurement” is certainly a key objective in this context. A simple example that has already been adopted in many places is procuring organic products for canteens in schools and public administration, to promote sustainable production. The UK is often cited as a leader in using public procurement to drive innovation. One of the approaches used in the UK is “Forward Commitment Procurement” (FCP), a demand-side tool which aims to avoid either procurer or supplier incurring unmanageable risks. In the FCP process, public procurers discuss their longer term objectives (and future needs) with the entire supply chain early on, so that producers can better assess future demand and direct their innovation efforts towards it. The state as a lead user These examples also show that the procurement of innovation can be linked to a normative policy goal, such as sustainability or energy efficiency. “The justification

for buying a costly innovation - i.e. to pay the innovation premium – and to invest in innovations at an early phase within the innovation cycle, stems from this policy mission”, say Jakob Edler and Luke Georghiou from PREST in a paper on public procurement and innovation [2]. The state often acts as a “lead user” in emerging markets. The researchers support the view that the demand side should be given more attention in innovation policy, and describe critical success factors. They argue that it requires a systemic approach – a “complex implementation framework” – and regard innovation procurement policy as a horizontal approach which cuts across different administrative levels and ministries. Sharing a commitment for common innovation goals is therefore crucial to leverage public procurement for innovation. Notwithstanding the many challenges, the role of the demand side and public procurement in innovation could get a further boost from a recent European Parliament resolution on new developments in public procurement [3]. The resolution calls on the Commission and Member States to emphasize green and socially responsible procurement, and to evaluate the impact of procurement schemes on SMEs.

Further Readings [1] Proceedings of the Conference “Promoting Innovation through Public Procurement: Best Practice & Networking”, 23-24 March 2010: [2] Jakob Edler, Luke Georghiou: “Public Procurement and innovation – Resurrecting the demand side”, in: Research Policy 36 (2007), 949-963 [3] European Parliament resolution of 18 May 2010 on new developments in public procurement (2009/2175(INI)).

INNO-Grips NEWSLET TER October 2010



// International innovation policy news

Renewed strategies, new programmes and evaluations

International Innovation Policy News INNO-Grips monitors international developments in innovation policy. A network of correspondents from more than 30 countries worldwide reports regularly about the launch of new initiatives and other relevant events in their country. Their news reports are published on the INNO-Grips website. This article features a selection of news from some of the countries covered.

Canada. In a recent evaluation by KPMG, the Canadian Foundation for Innovation (CFI) was assessed as “outstanding” and as having made a significant contribution to Canada. The CFI is an independent corporation created by the Government of Canada in 1997 to fund research infrastructure. It normally funds up to 40% of a project’s infrastructure costs. An independent international review panel of seven experts reached similar conclusions, including the view that this programme is the best of its kind worldwide and worthy of emulation. Croatia. The financial crisis brought about a revocation of most tax incentives to companies. The incentives for research and development, however, have been preserved through their inclusion in the Law on Science and Higher Education. In a meeting in late July 2010, the representatives of the Ministry of Science, Education and Sports, all six Croatian universities and all 25 Croatian science institutes agreed that the system of financing and evaluating research projects needs to be changed. Under the current system, 2,298 projects are financially supported – mostly through small grants. Proposed changes include the consolidation of research projects in related areas, better formulation of strategic research priorities, and stronger linkages with the private sector. Czech Republic. The Technology Agency of the Czech Republic, established in 2009, has launched

the ALFA programme. In 2011-2016, this will provide project-based funding to industrial R&D and promote scienceindustry links. Projects will focus on three themes: (i) advanced technologies, materials and systems, (ii) energy sources and environment protection, and (iii) sustainable development of transport. The budget is about CZK 7.5 billion (approximately EUR 300 million), and it is expected that about 750 projects will receive grants. Germany. In July 2010 the German federal government renewed its high technology strategy, continuing the overall approach that was defined in 2006, but setting new targets. Key objectives are to foster scientific and technical solutions in lead markets, to deepen the cooperation between science and business, and to further improve framework conditions for innovation. Lead markets identified are climate/energy, health/nutrition, mobility, security and communication. Hungary. The new government launched a consultation in July on its planned economic programme, , the “New Széchenyi Plan”. The plan aims to create one million new jobs by 2020. It focuses on seven priorities and is expected to start in January 2011. The principal target is to increase R&D expenditures to 1.5% of GDP by the middle of the next decade, and to bring the Hungarian innovation performance into line with the EU average. This, it is presumed, would contribute 1.5-2 percentage points to real GDP growth. Further objectives include improved R&D and knowledge-intensity

of the economy by supporting innovative high-growth SMEs, and the promotion of innovation clusters. Italy. The Italian Financial Law 2010 has increased tax credits for R&D measures in 2010 and 2011, at an estimated cost of EUR 200 million per year. A risk capital fund for SMEs is also being launched. Already in late 2009, the FIT scheme (Fund for Technological Innovation) had introduced a new measure to support product- and process-innovation projects in the ICT, biotech, new materials, robotics and energy sectors. The ‘Brain-return’ measure, introduced in May 2010, offers fiscal incentives to attract back Italian researchers currently living and working abroad. Netherlands. Several innovation policy programmes in the Netherlands will not be extended beyond 2010, because of the end of the government’s term. One is the “Innovation Platform”, established in 2003 and renewed in 2007 (both times linked to a government’s term). But some 30 organisations, including VNO-NCW (the Confederation of Netherlands Industry and Employers), and federations of trade unions, have jointly launched a new national “Knowledge Investment Agenda”. The specifies visions and actions for modern industry policy, entrepreneurial culture and innovative service industries.

read more on Page 11

INNO-Grips NEWSLET TER October 2010


// International innovation policy news

Poland. In July 2010, the National R&D Centre of Poland launched the KadTech programme, to encourage cooperation between SMEs and universities. The programme supports employment in SMEs of senior R&D specialists from universities, co-financing up to 50% of their salary for up to 24 months. SMEs can also apply for grants when purchasing innovation-related services, such as services of scientific laboratories, data bases, market research or certification procedures. Grants will cover up to 75% of the costs with a maximum of PLN 100,000 (about EUR 25,000). Portugal. The Portuguese government introduced measures in July to simplify applications for grants and the administrative procedures for projects funded under QREN, the national framework for the application of the EU’s economic and social cohesion


policy. By reducing the administrative burden, the government hopes to create a new incentive for companies to propose projects. QREN runs from 2007 to 2013. USA. President Barack Obama announced on 5 September a call to expand and make permanent a tax credit for research and development to boost economic recovery. The change would cost about USD 100 billion over 10 years. However, it is uncertain whether the bill will pass in the short legislative session before mid-term election campaigning begins. The costs are to be offset by increased revenues from other sources, such as closing corporate tax loopholes. In the past, Congress has repeatedly passed temporary extensions of this tax credit. ***** Based on the “America Competes” bill of 2010, the USA plans to establish new regional innovation clusters. In addition to providing grants to help support the creation of clusters, the


Department of Commerce will conduct research on best practices and metrics to measure the success of the programme. Under the Department of Energy, the bill also authorizes the creation of Energy Innovation Hubs.

Further I n f o r m at i o n More news and updated innovation policy country reports are available at the INNO-Grips website at: http://www.proinno-europe. eu/innogrips/latest-news


Renewed strategies, new programmes and evaluations

About INNO-Grips This newsletter is an INNO-Grips publication. INNO-Grips ( stands for “Global Review of Innovation Policy Studies”. It supports policy-makers in adopting appropriate responses to emerging innovation needs, trends and phenomena. It analyses framework conditions and barriers and drivers to innovation and innovation policy, and offers intelligence on international developments in these fields. INNO-Grips is part of the European Commission’s PRO INNO Europe portal (http://www., a focal point for innovation policy analysis and cooperation. INNO-Grips has two strands of activity. One concentrates on innovation policy (this newsletter is part of this strand), the other conducts economic studies of framework conditions, barriers and drivers to innovation. INNO-Grips policy briefs in 2010 / 2011: Innovation policy in an anti-cyclical conjuncture (November 2010, summary in the forthcoming newsletter) Innovation policy in support of high-growth innovative SMEs (preview in this newsletter, expected: February 2011) Policies in support of service innovation (expected: June 2011) The impact of regulation on disruptive innovation (expected: November 2011)

INNO-Grips workshops (recent / forthcoming): 29 September 2010, Brussels: Barriers to internationalisation and growth of innovative EU companies 30 September 2010, Cologne: Innovation policy in an anti-cyclical conjuncture February 2011: Innovation policies for high-growth SMEs

The INNO-Grips policy analysis and monitoring is carried out by empirica GmbH, Bonn ( and ICEG European Center, Budapest (, with support from Institut der deutschen Wirtschaft Köln Consult GmbH, Cologne (, based on a service contract with the European Commission, DG Enterprise and Industry, running until the end of 2012.

INNO-Grips NEWSLET TER October 2010



Policy News01 The INNO-Grips Newsletter

Imprint This INNO-Grips newsletter has been prepared by empirica Gesellschaft für Kommunikations- und Technologieforschung mbH, Oxfordstraße 2, 53111 Bonn, Germany on behalf of the European Commission, Enterprise and Industry Directorate General. Editors: Hannes Selhofer, Stefan Lilischkis (empirica); Peter O’Donnell Design and Layout: KITZ.KOMMUNIKATION GmbH Werbeagentur, Bonn, © European Communities, 2010. Reproduction is authorised provided the source is acknowledged.



Transforming Europe into an “Innovation Union

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