'The Regions and Research and Development and Innovation Policy:
The Challenges and Prospects of Territorialisation'

  NB: only the spoken text is authentic

Ministers,
Mr President,
Mr Secretary General,
Ladies and Gentlemen,

First of all, let me thank you for inviting the Commission to this very interesting conference.

To begin with, I would like to convey to you the apologies of my Commissioner, Philippe Busquin, who very much wanted to be among us today, but was prevented from doing so, due to other commitments. However he asked me to deliver to you his personal greetings and to convey as well his specific interest in the Regional Dimension of our research and development and innovation policies.

Let me also express my warm thanks to the Community of Valencia and the Conference of the Maritime and Peripheral Regions, and especially to Mr Eduardo Zaplana and Mr Xavier Gisard, and their staff who have helped to make this event possible.

It is now widely acknowledged that science and technology are crucial to economic and social progress. Hardly a day can go through without identifying breaking news in the media about how our lives are affected by science and technology: sometimes for the best and, unfortunately, occasionally for the worst.

May I remind you of some of the exciting news that marked last year - and even last week - about the complete mapping of the Human Genome, that revived our hopes for more breakthroughs in medicine and life sciences in general and thus gave us more hope for relieving human pain and misery.

Science and technology are now at the heart of the knowledge society we entered, roughly a decade ago, marked by an acceleration of production, treatment, interpretation and re-processing of new knowledge, as we moved into the Information age. The major part of our economic activities lie now with the so-called knowledge industries that are primarily based on knowledge processes and products. Know how and 'know-who', have thus come to be the most value-added activities in today's markets.

In the world of today we could not, of course, talk about the knowledge-based economy without paying attention to its territorial aspects. In this general context the role of regions is recognised as key in economic development, as one of its the primary motors. And as every human activity has a spatial dimension, regions come to play an increasingly important role in the organisational aspects of science, technology and innovation.

'Towards a European Research Area'

When he took up his position as European Commissioner for research in September 1999, Philippe Busquin undertook to give a new momentum to Community research. He conducted a searching assessment of the rationale for Community action which culminated in an initiative, launched at the beginning of last year, under the title 'Towards a European Research Area'.

The ambition of this initiative is to reshape quite profoundly the relationships between the different institutional actors concerned with research in the Union - Community, member states, and regions - so as to promote a more coherent policy framework overall.

This project has the ambition of re-inventing the European research landscape, in re-defining the roles of each of the players (including public authorities and private operators) and re-configuring the processes and policies that underpin the research effort in Europe. In so doing, it includes a new approach for European, national and regional instruments, and aims at designing a new partnership among all those involved.

Europe is in a state of flux. Over the last two decades it has taken a number of remarkable steps towards the integration of its economies. The most recent manifestation of this is of course the single currency, the euro, which will become a fact of everyday life for most countries of the European Union in less than 10 months from now. This in itself represents a proof of what we can achieve at Union level when we are able to set clearly defined targets and share a common vision.

Where Europe stands in today's Knowledge-based Economy

Cutting across all these political debates, and having a major influence upon them, are economic and social changes affecting all countries - globalisation, rapid technological change and the transition to a knowledge-based economy.

At a special summit held under the Portuguese presidency in Lisbon in March last year, Europe's heads of state and government developed an overall strategy and set an ambitious objective: the vision is that over the next ten years, Europe should become the most competitive and dynamic knowledge society in the world, capable of sustainable economic development, accompanied by a quantitative and qualitative improvement in the level of employment, and greater social cohesion.

This puts research and technology development policy as a top political priority on the economic agenda. It is the first time for several years, that a European Council has stressed so strongly the importance of research and development as the cornerstone of economic and social development. This conviction - which will be repeated within a month in the spring European Council in Stockholm - calls for a serious examination of how research, technology and innovation policies articulate with other policies, such as those for regional development.

Research and development and innovation policies are now fully open to the globalisation process; it is not conceivable today to talk of science at a European or American or Japanese level. Science and technology are global activities and their development is constantly shaped by information and knowledge flows that race across the planet with the speed of modern information networks.

However, the concept of a knowledge society also brings to the fore issues of culture, tradition and values - matters which define the way a society sees and understands itself. Europe is not an entity which exists apart from its constituents: to the extent that it has distinct values and culture, these ultimately depend on those of the countries and regions that make it up.

Moreover, the instabilities inherent in any market-driven systems risk being amplified in a knowledge society, where progress comes from learning, and learning feeds on itself. Existing disparities within and between regions - in educational attainments, access to facilities, levels of industrial development, research investment - can potentially be 'locked in', creating an ever deeper gulf between the knowledge 'haves' and 'have nots'.

In its initiative on the European Research Area, the Commission has undertaken an analysis of the main challenges facing Europe with respect to research in the context of the knowledge society, and the responses which are needed.

Analysis suggests that the European Union is today broadly competitive at the international level. But we need to have our eyes on the future. Technological innovation creates the jobs of tomorrow, and research creates those of the day after tomorrow. Research and technology have been estimated to account for between 25% and 50% of economic growth.

But in Europe, we still have problems to face:

• There is a huge gap in employment between the EU and US in services, with a 14% difference in employment rate, amounting to 36 million jobs.
• And it is in the most fast-moving dynamic markets, such as those characterised by technological change and information technology in particular, that the EU's competitiveness appears most fragile.
• Although growth is now taking off throughout Europe, we have yet to see evidence of a 'new economy' in the form of the rapid economic expansion and productivity growth of the United States.

Obviously the situation differs dramatically within Europe from one country to another, and from one region to another.

There are striking disparities in economic performance between different parts of Europe, particularly between the central and peripheral regions. And, as the economic position of countries converges, the divergences tend to be located increasingly within individual countries rather then between them.

• GDP per head is typically half to two-thirds of the EU average in the southern periphery, stretching from Greece through southern Italy to southern and western Spain and Portugal, and around 60% of the EU average in most of the former East Germany. In all of the EU's outermost regions, except the Canary Islands, GDP per head is around half the average, or even less. There are also clusters of poorer regions in the Northern periphery, particularly in northern and eastern Finland and the north and west of the UK.
• By contrast, GDP per head is well above average in the more central area extending from the north of Italy through southern Germany to Austria as well as in the Benelux countries and northern Germany.

• RTD expenditure and employment are very much concentrated in a band stretching from the south and south-west of Germany, Flanders in Belgium, the Netherlands, south-east England and Ile de France. The south-east of France and the north-west of Italy show smaller but significant levels of expenditure.
• At the national level, Sweden's overall expenditure as a proportion of GDP (3.85%) is more than seven times that of Greece (0.5%).
• Germany has almost twice as many research and engineering personnel per thousand labour force as Spain, three times more than Greece and four times more than Portugal.
• Patent applications are similarly concentrated in comparatively few regions, each being specialised in different areas of technology. Twenty times as many patent applications arise from Germany as from Ireland, Greece, Portugal and Spain combined.

• In the northern regions, RTD is mainly undertaken by private business and is therefore largely demand driven.
• In the southern regions, mainly those where the capital city is located, there is much greater public sector involvement. (Business RTD expenditure in Portugal and Greece is around 10% of the Community average.) Moreover, there also tends to be less transfer of knowledge between the public and the private sectors, as well as between companies within the private sector, and poor linkages to international RTD networks.

Some principles of the regional dimension of European research policy

Addressing the regional dimension of the European Research policy is not an easy task. I will try to concentrate on this topic but it goes without saying that the regional dimension of national research policies is equally - if not more - important.

Let me offer you my view on some principles on which we could build:

• First, it is a matter of common sense that we need to strengthen the innovation capacity of the regions, especially of those with structural problems. Globalisation, accelerating technological change and the new sources of wealth creation inherent in the 'new' networked economy call for a higher level of technological competitiveness for most regions.
• Regional specialisation needs to develop as the next phase in raising technological capacity. In an increasingly interconnected, European economy, the competitiveness of regions and the competitiveness of Europe in its entirety are more than ever closely inter-dependent.
• We need to achieve greater European cohesion in research based on the best experiences of knowledge transfer at regional and local levels and on the role of the regions in European research efforts.
• The conditions must be studied and put in place for a real 'territorialisation' of research policies, that is their adaptation to the geographical socio-economic context. A better understanding and strengthening is needed of the role that the regions can play in establishing a real European Research Area, in addition to that of the Member States and the Union. But for this we will need to benchmark the measures and efforts already undertaken, identify enabling and blocking factors, and address good practice in transferability.
• We have to analyse the problems faced by regions, and develop strategies from a systemic point of view. Specific analyses are needed of industrial clusters, different types of infrastructure, education and training facilities, and various institutional factors including policies and resource strategies, if we are to tackle systematically the particular components of regional innovation systems.
• Equally important, however, is the idea that development comes from learning. Not only we do need to ensure networks for learning are in place at the regional level, but also that inter-regional networks operate to allow regions to learn from one another.
• Development of innovation capacities - like innovation itself - depends on local initiatives. Although policies and structural resources can be provided to support regional strategies, development cannot be imposed from outside. It has to be locally motivated and attuned to local conditions. We will need to analyse how best to use the regional 'prime movers' to develop a more dynamic scientific and technological landscape in Europe, in particular through training of researchers at a regional level, where the excellence often resides.
• We need to ensure that regions are able to internetwork and cooperate together even if they are remotely located: this is by far one of the most promising trends in terms of regional networking. I would remind you of the now-famous network of the four regional motors: Baden-Württemberg, Rhône-Alpes, Lombardy and Catalonia. Similar examples can also be found in neighbouring regions: the Brussels Region, for example, already co-operates in a Euroregion context with Flanders, Kent, Wallonia and Nord/Pas-de-Calais.

• They reinforce the regional tissue around Europe;
• They reinforce a mix of specialisations and complementarities between the regions of the Union. For example, the four 'motor-regions' are about to launch the concept of Bio-Valleys under an initiative by Baden-Württemberg;
• There is a faster diffusion of knowledge at the regional level, thus facilitating the innovation process

But beyond this policy, all our other policies contribute to this convergence effort, including research policy. This is why we have always endeavoured to co-ordinate our research actions with those of the Union's regional policy and progressively to improve the technological development and innovation capabilities of the regions. The second report on economic and social cohesion adopted by the Commission on January 31^st this year, still identified convergence issues at the Union level for the cohesion countries. Despite a general converging trend, significant differences remain at the national level in terms of technological development and innovation, as well as in terms of human resources. Thus the technology gap for example between the cohesion countries and the four Member States where expenditure is highest (that is Germany, France, Sweden and Finland) has widened rather than narrowed (with the notable exception of Ireland).

The contribution of Structural funds in research efforts

Initially, Structural Funds activities in the regions whose development was lagging behind, were concentrated mainly on physical infrastructure. Today, the advent of the knowledge economy, and the growing importance of intangible investments - in education, training, research and innovation - have changed this approach. Structural policies in their innovative actions also deal a lot with innovation capacity building, beyond infrastructure. The policy focus has therefore shifted. Before 1988, less than 200 million euros were devoted to research, technology and innovation-related actions in the structural funds. However, in the last ten years, a full 12 billion euros have been allocated to these areas. This amounts to the same order of magnitude as the Framework Programme, but it is important to understand the difference in focus between these instruments. Put simply, the structural funds support research capacity building in the regions, while the Framework Programme supports trans-national research projects built on excellence, likely to have a specific socio-economic impact.

• As regards the future, the guidelines set for the 213 billion euros allocated to the structural funds for the period 2000-2006 explicitly place the promotion of innovation as a priority. These guidelines, based on the broad principles of identification of integrated strategies for development as well as of the establishment of a decentralised and broad partnership, encourage regions to undertake actions on innovation promotion, on building partnerships between universities and industry and on developing human resources.

The next Framework Programme and the regional dimension of the European Research Area

Ladies and Gentlemen, the project for building a European Research Area is both a diagnosis of the problems facing Europe in research and the outline of a set of strategic actions for resolving them.

The central observation, on which the European Research Area initiative is founded, is that research in Europe is not only diverse but also highly fragmented. It operates, for the most part, within national structures, of funding, regulation and administration. These operate in parallel with one another, and with the actions of the Union and other European co-operation frameworks, with very little co-ordination. The result is a highly sub-optimal overall environment for research, with numerous rigidities, overlaps and duplications.

The European Research Area initiative has identified several action lines, covering areas as diverse as material research infrastructures and scientific ethics, where better organisation of European research is needed. These are now being put into effect progressively, and they will have a significant influence on the Commission's proposals for the next round of Community research funding, the next Framework Programme.

The European Research Area approach calls for a more integrated policy across the regional, national and European levels, as well as between different instruments. It calls, therefore, for a new type of interaction between the Union's research and regional policies.

For more than twenty years, the Framework Programme has been the central expression of the Community's research policy; now it will become the principal tool for building the European Research Area. Approved by the Council of the European Union and the European Parliament through a complex co-decision procedure every five years, it mobilises a significant number of resources to enhance the development of European research networks and advance a number of key research priorities.

We are now in the final stages of the Fifth Framework Programme (1998-2002).

It has been endowed with a budget of nearly 15 billion euros. It is good to keep in mind that on average, we spend over 3 billion euros a year on transnational research projects, which represents close to 5% of all the publicly funded civilian research undertaken in Europe, but with a huge impact essentially on building transnational co-operation networks. Its fundamental principle is that it supports research excellence, guaranteed through open competition with equal access for research teams whatever their provenance in the participating countries. Proposals are subject to expert peer review.

Although the Framework Programme in its recent editions does not seek to reduce regional disparities directly, it does play a positive role in this respect. For example, research teams from Greece, Spain, Ireland and Portugal, with only 7.8% of the research personnel of the European Union, nevertheless accounted for 14.5% of the total number of participations in Framework Programme project contracts signed last year. They also accounted for 13% of project co-ordinators. Moreover, as recipients of 10.7% of the Framework Programme disbursements, the so-called cohesion countries received more than 2.5 times their notional outlay on Community research.

Ladies and Gentlemen, two days ago a proposal for the next Framework Programme based on completely new thinking was adopted by the Commission for the period of 2002-2006. It will introduce major innovations in the way we operate and, more importantly for this audience, how we take the Regional Dimension into account.

For the first time, the Framework Programme has the objective of building in a new dimension, that of the regions. It will not be a straightforward task, because our instruments are not based on regional planning; moreover they cannot be a simple imitation of the mechanisms deployed successfully by the structural policies, because our aims and our target groups are different. However we have a lot of new tools to use and I will share with you our first ideas on this subject.

I would divide our activities in two areas: those concerned with our own initiatives and those in which we play the role of a partner with other policies, mainly with the structural policies.

I can deal quickly with the second: in the structural assistance planned for the years 2000-2006, we will find ways to combine projects. We have a good starting point here in the Regional Innovation Strategy networks, which have been jointly supported by the structural funds and the Framework Programme's specific programme on Innovation.

We look here specifically to synergies with the new generation of activities, referred to as 'innovative actions'. These are intended to provide regions with tools for experimenting with new policy approaches and innovative solutions that can help them to cope with the challenges of the new economy. The specific focus will be on areas such as the knowledge economy, the information society, and sustainable development.

I will be a bit more explicit as regards our actions: in principle we will operate in the future through 3 main instruments: networks of excellence, integrated projects and support of programmes jointly executed by Member States, within a spirit of further mobilising the large 'hidden potential' of the Union. In all three instruments, the regional factor will now play an important role.

• Networks of excellence will strive to reinforce European excellence through a sustainable integration of our research capacity, spread all over the European regions in fields of primary scientific importance. They will operate through common programming arrangements and hopefully will set up a backbone of a network of 'virtual centres of excellence' across Europe.
• The concept of the integrated project embodies a large partnership with specific scientific and technological objectives. Regions have an important role to play, in structuring the participation of their operators in these schemes. This concept gives the opportunity to sectoral networks to reinvent their regional dimension and reinforce their innovation capacity.
• Common programmes to be executed by different Member States, are more prone to the national than the regional dimension. However, nothing prevents Member States from organising their regional entities and sorting out their priorities better. The Commission will play a catalytic role in the whole process and provide all the necessary technical and financial assistance for the success of these measures.

• innovation and SME oriented actions
• You are well aware of the European paradox, our weakness to transform our research results into innovative products and processes. We intend to undertake stimulation actions to reinforce innovation especially in the regions, by comparing regional experience and exchanging best practice through benchmarking.
• We intend to encourage transregional co-operation on innovation issues and to provide support for the creation of technology enterprises and the elaboration of regional strategies in this field.
• activities related to research infrastructure

The development of a European approach in the field of research infrastructure can contribute significantly to the research potential of the Union as well as to the development of powerful external economies. We will ensure better access to existing infrastructure in Europe's regions and we will stimulate the development of new infrastructure where this appears to be necessary for science or for relevant regional technological development.

• reinforcing human capital and mobility across Europe
• Mechanisms will be introduced to facilitate the return of scientists to their countries or regions of origin (either on an individual or a global scale).
• In addition to that we will provide support for national and regional mobility programmes
• all areas in which we will undertake structural activities to reinforce the base of the European Research Area (mapping of excellence, benchmarking of national policies, indicator studies).
• anticipating new research and development priorities
• We will favour analyses and studies for future regional development in direct relation to our task of supporting other Community policies: in this case, regional policy.
• Provisions are also underway to introduce a special support scheme for successful applicants to the Framework Programme originating from Objective 1 regions. This will involve financial resources originating from the Framework Programme and the Structural Funds (Council Regulation N° 1260/1999), while fully observing the existing legislation for state aids.
• I should also mention another aspect of the European Research Area initiative which is of particular interest to regional innovation aspects, and also to the aims of this conference: it is the progressive integration of the scientific communities of the applicant countries. Research is one of the areas that has been identified as contributing to their accession strategy. Joint resources could be pulled together to achieve synergies. The aim should be to strengthen not only research capabilities but also research administration capacities of the applicant countries. This could be done by mobilising expertise in the national, regional and European research administrations.

The European research area will necessarily be the product of dialogue, between different political levels and between different operators, all of whom need to contribute to the project. The regions have a lot to offer in this process, in the overall context of good governance.

Ladies and gentlemen, allow me to conclude with this point: we have, in our policies, powerful instruments which have been proven and refined over a considerable period of time. We now have to tailor them to the task of bringing Europe and its regions fully into the knowledge society.

The project of the European Research Area provides a vision for the future of research and innovation in Europe, and the broad lines of strategy through which this task could be accomplished. There is a long way to go, however, and I am sure that this conference will help us in identifying the available options better and making some of the difficult choices that lie ahead.

Thank you very much for your attention.