Innovation Europe > News > Innovation EU Vol1-1 > The birthplace of innovation

Europe is, in many ways, the birthplace of innovation. The industrial revolution, the first major technological developments – such as the railways, the university and the corporate laboratory – were all pioneered in Europe prior to the 20th century. During the 20th century, there was a clear shift of leadership to the US and the rapid development of Japan. This was particularly the case for the wave of innovation based on Information and Communication Technologies and new models of innovation based on the greater involvement of users and employees, stronger collaborations, and exploiting innovative and technological opportunities to create new multinational companies.

The last decade has marked another major change, with the emergence of China and India as both major economies and importance sources of entrepreneurship and innovation. The 2008/09 Science, Technology and Competitiveness Report showed that the EU’s world share of R&D fell by 2% between 2000 and 2006 while that of the Developed Asian Economies increased by 4%, and that the EU share of patent applications fell by over 5% while that of the developed Asian economies increased by nearly 7% Some 90% of new consumers are in emerging or developing markets, and they are projected to account for 80% of average consumers by 2020. At the same time, major societal challenges are coming to the fore, most notably those stemming from climate change and demographic changes in Europe.

We are, nevertheless, witnessing a renaissance in EU innovation performance in recent years. The 2008 European Innovation Scoreboard shows that the EU has been catching up or overtaking the US in most indicators of innovation performance in the last five years, and that European countries such as Sweden and Finland are firmly established as top global innovation performers.

In parallel, public policies to support innovation in European countries and at the level of the European Union have expanded dramatically. Since its inception in the 1980s, the Framework Programme for Research and Technological Development has developed into one of the largest international programmes in the world with a budget of over E50bn from 2007 to 2013. An even larger level of support is due to come from the Structural Fund programmes where support for research and innovation has been prioritised in the current set of programmes. This is particularly important in the newer EU member states that have seen their economies and innovation systems undergo radical transformations. Since 2007, there has also been a dedicated Competitiveness and Innovation Programme which is supporting finance for innovation, trans-national networks and eco-innovation.

Current European innovation policy is based on the Broad Based Innovation Strategy endorsed by European leaders at the end of 2006. This has seen major new initiatives launched, including the Joint Technology Initiatives as major public-private partnerships to invest in key technologies, and the European Institute of Innovation and Technology to bring together the triangle of research, education and innovation. Another new approach has been the Lead Market Initiative, launched at the end of 2007, with the aim of catalysing the demand for innovation through regulations, standards and public procurement in identified markets such as e-Health and sustainable construction.

These developments took place before the financial crisis and economic downturn and we not yet know the impact of the current situation on innovative capabilities in Europe. We do, however, know that innovation is vital for a sustained economic recovery and it is essential that governments maintain their investments in research and innovation during this period. The example of Finland, which increased public R&D expenditures during their economic crisis in the early 1990s, is instructive.

2009 is the European year of creativity and innovation, and will be an important year for European innovation policy. First, we must ensure that Europe is able to further develop its innovative capabilities and talents in difficult economic circumstances. Second, we must understand the policy responses needed to boost innovation within the economic recovery packages. Finally, we must look to the future and make sure that Europe realises its innovative potential and is well placed to benefit from tomorrow’s opportunities. Indeed, the European summit in December 2008 called for a new European Plan for Innovation and the European Commission will work intensively on this during 2009 and beyond.