Commissioner Danuta Hübner: “Research and Innovation – How to take advantage of the unique opportunities offered by the Structural Funds” -- Conference on Research and Innovation – an opportunity for

Warsaw, 13 February 2006

Ministers, Members of Parliament, fellow Commissioner, Ladies and Gentlemen,

I am delighted to be with you today to present how the Structural Funds support research and innovation, especially in the European Union’s convergence regions. Special thanks go to Jerzy Buzek for inviting me, and to him and his fellow members of the European Parliament’s Industry, Research and Energy Committee for taking such a keen interest in this issue.

Why are research and innovation of such importance to regions that are among the least prosperous today, but catching up fast?

The issues we are discussing today reflect the challenges facing the entire European Union – challenges for its internal cohesion as it enlarges to take in poorer but also more dynamic regions; and challenges to adapt to the continuous pressure for change and renewal that comes with the development of the knowledge society and globalisation.

Research and innovation are an important part of the response to both sets of challenges. They are key drivers of productivity and growth, all the more so in an era of rapid technological change and global competition. And their potential for wealth generation means that they must be given a significant weight in the portfolio of investments which are helping Europe’s disadvantaged regions to converge.

This is why we refer to regions whose GDP per head is less than 75% of the EU average as convergence regions – because the goal of EU regional policy is to reduce disparities in economic development on a permanent basis. Our aim is to promote growth-enhancing conditions that will result in long-term competitiveness and sustainable, high-quality employment. Investments through the Structural Funds enable Member States and regions to improve their attractiveness and to overcome obstacles to their economic development.

Now, there are those who say that our focus in convergence regions should be on concrete investments in physical infrastructure, with much less emphasis on less tangible factors such as know-how and skills. But a lack of innovation – and of research as a source of innovation – is actually a key deficit in the economies of less-developed regions. Innovation is a necessity, not a luxury, in the process of convergence. Without people actively engaged in innovation, you will not achieve rapid and effective transfer of technologies. And without an active research base, it is next to impossible to generate research excellence and home-grown innovation. It is important for the programming authorities in convergence regions to be aware of the importance of research and innovation as part of a balanced development strategy.

So how do the Structural Funds promote research and innovation?

We are approaching the end of one Structural Funds programming period and the start of another in 2007, so allow me to review what we are doing now before looking to the future. Support for research and innovation already accounts for a large share of Structural Fund investments, even when one defines innovation narrowly, excluding support for areas such as business investments, the information society or energy. Close to 10.5 billion euro is being invested in research, technological development and innovation by the Funds, chiefly through the European Regional Development Fund, between 2000 and 2006.

These investments are in three main areas:

• research projects, especially for applied and pre-competitive research, based in universities and public research institutes;
• research and innovation infrastructure, including research facilities and equipment at public institutes but also technology transfer centres and incubators; and
• support for innovation and technology transfer, including support for partnerships between businesses and research centres.

The Funds provide investments of some 2.7 billion euro for research projects, 2.8 billion for research and innovation infrastructures, and 3.6 billion euro for innovation and technology transfer. There is also some 350 million euro for training researchers.

Some 70% of total Structural Funds investment in research and innovation – about 7.8 billion euro – is made in the least-developed Objective 1 areas, which would not otherwise benefit from this type of investment. The pattern of investment is the same as in other regions: around 25% of the money is invested in public research projects, another 25% in research and innovation infrastructures and around 40% in technology transfer and innovation.

Let me give you an example of the kind of project which the Structural Funds make possible. Here in Poland, the authorities are using European Regional Development funding to set up a laboratory for aeronautics research near Rzeszów. The project will establish a modern facility furnished with the newest research infrastructure and specialist equipment for testing materials. The project brings together public and private partners in a consortium comprising Rzeszów University of Technology, other technical universities, the “Aviation Valley” group of aeronautical industry manufacturers and the Polish Institute of Aviation.

In the same way that some Member States devote a greater share of their GDP to research and innovation than others, there are also variations in the share of Structural Funds programme resources allocated to research and innovation. However, I must say that Objective 1 regions do not necessarily perform worse in this respect than others. Indeed, a few leaders – regions in Finland, Belgium and Sweden – already invest well over 20% of their European Regional Development Fund resources in research and innovation. Others are not far behind, including the eastern German regions, Hungary and Slovenia. These efforts have not yet enabled these regions to overcome all their deficits in economic development, but progress is evident, not least in the revival of historical scientific and technological strongholds such as Dresden, Leipzig and Chemnitz, which have seen a remarkable renaissance in recent years, due in part to the Objective 1 support they have received. Elsewhere, Structural Funds support over a number of years has contributed to such significant economic development that certain regions have caught up with average levels of prosperity and will no longer need Objective 1 support after 2006. I am thinking of Member States such as Ireland and regions such as Sardinia in Italy, Hainault in Belgium and Merseyside in the UK. In each one, we can point to projects supporting research and innovation which have benefited from Structural Funds aid. There are Ireland’s “Programmes in Advanced Technologies” which foster technology transfer between university research departments and private enterprise.

They have benefited from ERDF support to improve the quality of their services. In Belgium’s Hainault province, formerly known for its heavy industry, ERDF support has enabled the creation of the Charleroi Biopole, focused on the creation of commercially applicable knowledge in the area of biotechnology. In the deprived urban area of Merseyside in the UK, we can point to a highly successful incubator for digital technologies, fostering start-ups and with close links to Liverpool’s John Moores University. In Sicily, the ERDF has supported the work of a group of dynamic young researchers and engineers from local universities. The scientific and commercial success of their work has contributed to making the area of Catania a centre of excellence in the field of digital image processing. Of course, no one project brings about by itself the economic regeneration of a region. But such projects illustrate an important principle of our approach – the stress on commercially-valuable research and the fostering of links between the public and private sectors. For this reasons, such projects can serve as inspiration to regions which will continue to benefit from Structural Funds “convergence” aid after 2006.

Of course, the potential for research and innovation varies considerably across different regions, and so there would be little sense in setting uniform targets for the share of funds to be invested in research and innovation, or indeed any particular sector. However, when it comes to negotiating the programmes for 2007 to 2013, we will be examining carefully whether the proposed resource allocations for research and innovation are sufficiently ambitious. The same goes for other investments of direct relevance to the Lisbon strategy for growth and jobs.

Turning to the future, I can say without equivocation that research and innovation is one of the top priorities for the Structural Funds. This much was clear back in July 2004 when we adopted the draft regulations for post-2007. The Community Strategic Guidelines we proposed last summer put more flesh on these proposals.

One of the three over-arching Strategic Guidelines is “improving knowledge and innovation for growth”, which sets out investment priorities in the areas of research, innovation and enterprise, information and communication technologies and financial engineering. This reflects the practice of the best-performing Member States in this area – such as Finland – which have pursued an integrated approach to research, innovation and enterprise. The Structural Funds have a crucial role to play in strengthening the links between innovation and the development of innovative enterprises which create growth and jobs.

The Strategic Guidelines highlight the need to strengthen co-operation among businesses and between businesses and academic institutions by supporting the creation of regional and trans-regional clusters of excellence. We know that public policy cannot create research or innovation clusters, but it can nurture their development. We also know that geographical proximity between partners still plays an important part in research and innovation activity and in achieving critical mass. Future investment strategies therefore need to concentrate investment on locations with particular growth potential, such as existing or emerging poles of excellence. We will be working together with programme authorities at regional level to develop the capacity to identify such locations and provide appropriate support through the Structural Funds.

Let me turn finally to the synergy between Regional Policy and other Community policies that support research and innovation.

It is a particular pleasure to share this platform with my colleague Janez Potočnik. As he too can testify, we have devoted a great deal of attention to reinforcing the complementarities between the different Community instruments.

[As Janez has explained,] the Seventh Research Framework Programme will, for the first time, contain elements aimed at supporting research activity in convergence regions. These include the “Research potential” action and the extended “Regions of Knowledge” initiative for developing research-driven clusters.

Similarly, the Structural Funds will complement Framework Programme priorities to a greater extent than in the past. The Strategic Guidelines have already provided a strong signal that the Structural Funds should enable all regions to participate effectively in the European Research Area. Managing authorities should use Structural Funding to implement their strategies for innovation, including those developed through the Regions of Knowledge initiative. The European Regional Development Fund and Social Fund will also complement the Research Potential action under the Seventh Framework Programme. When a Research Potential project is developed, the Funds can provide complementary investments for aspects of the project which are not financed through the Framework Programme, such as infrastructure facilities and training.

I therefore see two essential synergy between the Structural Funds and FP7. First, Structural Funds support for research facilities and staff – including in this current programming period – can build up the capacity which will enable a wider range of research centres to compete for Framework Programme funding on the basis of excellence. Secondly, there are the specific complementarities I have outlined. By capitalising on these synergy, we will see more and more projects that have benefited in a coherent way from different sources of funding – projects like the Aviation Valley association involved in the aeronautics project in Rseszów I mentioned earlier, which has also benefited from Framework Programme support.

My services are now beginning detailed discussions with Member States on their Strategic Reference Frameworks for using the Structural Funds, and they are doing so in close association with other services, including the Directorates General for Enterprise and Research. Let me finish by briefly sharing with you our framework for advising convergence regions on how to make best use of the Structural Funds in fostering research and innovation. I am convinced that there are five key elements.

&ndash first, the need to develop more sophisticated and ambitious strategies using the tools which the EU has supported, such as Regional Foresight or Innovative Actions;

&ndash secondly, the need to intensify collaboration between the private sector, public research organizations and public authorities;

&ndash thirdly, the need to be results-oriented in our investments and ensure that the mechanisms and know-how are in place to translate research results into commercially viable products and services;

&ndash fourthly, the need to derive maximum benefit from the foreign direct investment which many convergence regions have attracted over the last few years by ensuring that local small and medium-sized businesses can integrate themselves into multi-national supply chains; and

&ndash fifthly, the need to support innovative clusters – and by innovative I do not mean only high-technology – as a basis for lasting public-private co-operation.

Ladies and gentlemen, I firmly believe that the Structural Funds are essential to strengthening the research and innovation capacity of convergence regions. In doing so, the Funds not only reduce economic disparities, but also help address Europe’s underperformance in research and innovation. I exhort national and regional authorities to take full advantage of the unique opportunities which the Structural Funds offer, both for supporting structural reform and for creating a knowledge-based economy. Thank you for your attention.

Item source: SPEECH/06/79 Date: 13/02/2006