Europe Must Use Its Head On Academic Research

http://www.ft.com/cms/s/0/85f21278-eb97-11dc-9493-0000779fd2ac.html


Europe must use its head on academic research


By Bruno van Pottelsberghe


Financial Times - Leaders & Letters


Published: March 7 2008


The European Union summit next week is set to decide that the main policies of the much-maligned Lisbon strategy, which aims to make Europe the world's most innovative region, should be carried through until 2010.


And why not? Though average growth is sluggish, the EU has created almost 6.5m jobs in the past two years and 5m more are expected by 2009. Average unemployment is expected to fall to below 7 per cent this year, the lowest since the mid-1980s. The Lisbon benchmark of getting 70 per cent of the adult population into work by 2010, which escaped the EU's recent purge of targets, no longer looks impossible.


[ONE MUST SERIOUSLY QUESTION WHETHER THE JOB GROWTH HAS BEEN IN THE GOVERNMENTAL SECTOR]


So far, so good. But one vital Lisbon policy area is going backwards: research and development.


As the European Commission itself concedes, the proportion of the EU's gross domestic product spent on R&D has actually dropped since the Lisbon strategy was launched. After flatlining for two decades, research spend fell from nearly 2 per cent in 2000 to 1.85 per cent in 2006, thus moving the EU further away from its target of 3 per cent (recently trimmed to 2.6 per cent) by 2010. But what is a target for overall R&D spending worth? Missing the target is bad enough. But publicly missing the wrong target is perverse.


Europe's spend is well below the US's 2.5 per cent and Japan's score of more than 3 per cent. China has engineered a dramatic increase, from nearly nil 10 years ago to 1.5 per cent in 2006. Of course, there are big differences between EU member states. Finland and Sweden leapfrogged the 3 per cent target several years ago. But the vast majority of EU countries spend well below 2 per cent of their GDP on R&D. Does this matter? Yes and no.


No EU member state fulfils the original commitment that governments should finance one third of investment in R&D, or the equivalent of 1 per cent of GDP. Many have reduced their support over the past 10 years, including the UK, Germany, France and the Netherlands. This matters. EU governments should increase their spend and honour their promise. Failure to do so ultimately means lower growth.


As for business, spending varies widely between countries, but these variations are to a great extent attributable to differences in technological specialisation. If a country specialises in information and communication technologies (such as Finland) one would expect a higher R&D intensity than for a country specialising in finance (eg Luxembourg) or tourism. Thus measuring EU countries' private R&D spend against a common benchmark makes little sense. Also, governments cannot decree business spending from on high: it does not respond to policymakers' targets.


What, then, should the EU and governments do to get business to invest more in research? When industrial specialisation is taken into account, only Sweden and the US outperform other countries. According to a Bruegel policy brief ( Europe's R&D: Missing the Wrong Targets ), two factors may explain this and point to what the EU's policy focus should be.


For the US, its large, homogeneous market radically improves the expected return on research activities and hence fosters business R&D spending. Europe does not benefit from such a scale effect despite its larger size because its market is still highly fragmented.


Market size may explain the US R&D spend, but it does not explain the Swedish case. One clue: Sweden has a very high level of spending on academic research, the highest as a percentage of GDP in the whole Organisation for Economic Co-operation and Development area. This strong emphasis on academic research is a stimulus for business R&D: universities generate new ideas, then business is attracted in to develop them, individually or in clusters, foreign or local. The European countries with the highest academic R&D intensities are also those with the highest business R&D intensities.


True, the EU has recognised the need for free movement of knowledge, the "fifth freedom", and has pushed for a new European Institute of Innovation and Technology. Both initiatives may bear fruit in time. But the bottom line is that the EU needs now to adopt a common European patent - under discussion for 30 frustrating years - and spend more, and more wisely, on academic research. These two steps would do more for the success of the Lisbon strategy - and for the EU's credibility - than maintaining top-down targets for business spend on R&D.


The writer is a senior fellow at Bruegel, the Brussels-based think-tank and professor at Université Libre de Bruxelles


Copyright The Financial Times Limited 2008

China Amends S&T Law to Boost Research

Jia Hepeng


January 3, 2008


Source: SciDev.Net


http://www.scidev.net/News/index.cfm?fuseaction=readNews&itemid=4166&language=1


[BEIJING] China has revised its science and technology constitution to give greater incentives to researchers, in an effort to boost innovation.


China's legislature — the standing committee of the National People's Congress (NPC) — passed the revision of the 1993 Science and Technology (S&T) Progress Law last month (29 December).
The law states that the nation's overall research and development (R&D) budget, from both the government and private sectors, should continue to increase steadily each year.


R&D investment in China grew by 22 per cent in 2006, totalling 300 billion yuan (US$41.1 billion) and accounting for 1.4 per cent of the country's gross domestic product (GDP). Existing plans state that R&D spending will account for 2.5 per cent of China's GDP by 2020.


Under the amended law, industry will be more involved in innovative research activities and the government will set up funds to support innovation in small and medium enterprises. Research activities and required equipment will enjoy favourable tax rates.


Amendments to the S&T law will also allow scientists, or their institutions, carrying out public-funded research projects to own the resulting patents.


Additionally, the government will not retract patents unless their holders do not use them in "a reasonable period". Previously, there was no universal regulation on intellectual property rights.
[THIS A FORM OF THE EUROPEAN 'FAILURE TO WORK' DOCTRINE]**


Li Yuan, director of the NPC's administrative law office, explained at a news conference for the new S&T law that the looser stipulation on the patent period is intended as an incentive for researchers.


Scientists who do not complete scientifically high-risk projects will not be punished under the new law, provided their research records can prove the risk was too great. But researchers committing malpractice will be punished with measures including public exposure and the deprivation of the rights to apply for public funding.


Duan Weiwen of the Chinese Academy of Social Sciences and a research ethics consultant to the Ministry of Science and Technology, welcomes the amendments, saying they have summarised many ongoing S&T policies in a legal way. But he warns that the coordination of different departments is essential to implement the amendments.


In related news, China's cabinet, the State Council, approved 'The Key New Drug Creation and Manufacturing Programme' last month (28 December), which will support the development of more than a dozen innovative drugs over the next five years.