26 Apr 2018

Re-finding Industry-Defining Innovation

Executive Summary

Recent years have shown marked disparities between Member States, and the gap between the rich and the poor has not been narrowing. The trend of rising inequality has not been reversed. From 2007 to 2013 market income inequality increased by 6%. This general trend is driven by a combination of factors, notably the effects of the recent big recession and the loss of jobs in some Member States, as well as the potential effects of technological change. Adding to this the speed of technological transformation, it is no wonder that many people fear the loss of their job, a reduction of their salary and a lack of career opportunities. If we, the citizens of the European Union, want to secure our way of life, our human rights, our democracy and our future, we must do better than today.

Therefore, we recommend to the EU and its Member States to focus their policies on inclusive growth and sustainable protection of our planet. This will unite our societies and allow us to go beyond the fruitless dispute between austerity and increasing debt.

In order to finance the investments necessary for inclusive growth, we need to increase productivity growth. We are convinced that this can be achieved with higher investment in education, research and innovation, close to the market. This is also what is needed for Europe to stay on par with its main competitors in the USA and China.

We are convinced that a strong European economy needs strong industry. Economic growth needs manufacturing and services. An innovative economy needs inclusive growth.

Over the past 15 years, labour productivity growth was almost entirely driven by manufacturing and business sector services. High-tech firms were able to ramp up their productivity by 18%.

If we in Europe want to reach our targets, we need a new industry policy with more leading positions in key enabling technologies and a new innovation policy.

Therefore, and in view of the 9th EU Framework Programme for Research and Innovation, we have defined new key enabling technologies (KETs), proposed exemplary missions for Europe and suggested actions to improve the overall innovation system.

The new KETs we propose cover production technologies, digital technologies and cyber technologies. They encompass the technologies identified by the EU in 2009, open them up and add two new digital technologies. Our proposal is for the EU to prioritise advanced manufacturing technologies, advanced materials and nanotechnologies, life science, micro- and nano-electronics and photonics, artificial intelligence, security and connectivity. The technologies we propose are multi-KETs and crossover KETS and will serve as the basis of missions. An opinion poll of 2500 citizens across the EU revealed high awareness of technologies and high interest in technical developments, considered as relevant for daily life. Benefits and risks are perceived as rather balanced for society as a whole, while at individual level perceived benefits prevail.

The second task was to define missions for a European knowledge-based industry and research sector. It is no coincidence that the first mission we propose in part II of our report is a project that supports an inclusive democratic society, aiming to build a connected and secure Europe based on social quality. We then look at the conditions needed for an innovation system to function well, such as freedom of expression, openness to the world, theright framework for digitisation and cooperation across Europe’s regions. Thismeans that innovation policy should cover the full value creation chain, from fundamental research to applied research to product development and business creation.

In part III of this report, we discuss implementation. To help the KETs and innovation to succeed, we have formulated 16 recommendations around four headings:

  • More skills for Europe,
  • More courage for funding in Europe,
  • More ‘Single Market’ in Europe, and
  • More social dialogue and participation in Europe.

Our recommendations range from mutual recognition of secondary education levels to programme funding based on EU-wide competitions, from creating clusters based on a European value chain approach to consulting social partners during the KET transformation process.

If we get it right, Europe can start a new future, ending the disparities between the rich and the poor, overcoming the polarisation between austerity- and debt- driven policies, and providing the right answers for everyone, from democrats to populists. Our goal is simply: Europe will be the best place to live.

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