European Semester: 2013 ERAC Mutual Learning Seminar

1. European Semester: 2013 ERAC Mutual Learning Seminar ERAC meeting, 19.04.2013 DG RTD, Unit C6

2. Outline • Objectives & settings • Highlights of Session I • Highlights of Session II • Highlights of Session III • Next steps

3. Objectives • stimulate discussion amongst MS about some specific subjects closely linked to the implementation of the CSRs on R&I adopted by the Council in July 2012 and about main policy orientations in the field of R&I in the context of Europe 2020 • be a source of inspiration to MS when finalising their NRP due for submission in April

4. Settings • Three themes, broadly covering the scope of the CSRs: • Effectiveness of national research systems • Innovation strategies (with focus on demand side) • Policies for High Growth Innovative Enterprises (HGIE) • Introduced by background papers and lead questions • Moderated by high-level external experts • Short presentations of MS on specific policy aspects • Final report circulated to ERAC delegates (see also http://www.consilium.europa.eu/policies/era/erac/erac-mutual-learning-seminars-2013)

5. Session I: effectiveness of research systems What is the optimum balance between competitive and block funding in a research system? • Competitive funding = grants + some institutional funding • Main instruments are grants (40% of GBOARD on average) • Share of performance-based institutional funding is low but increasing (e.g. SE, NL) • Overall trend is towards more competitive funding, with some marked exceptions (e.g. NZ, Koreareinstating core funding) • Balance is a matter of national context • Clear advantages associated with more competition, but also some drawbacks (e.g. transaction costs) • Policy design matters

6. Session I: effectiveness of research systems What measures can be taken to improve national approaches to peer review [and more broadly 'research evaluation']? • Evaluation = mix of (international) peer review and indicators • Multiple use: • allocation of institutional funding • selection of projects • recruitment/careers of researchers • selection of joint/collective research institutes (e.g. centres of Excellence) • Criteria increasingly take into account socio-economic benefits • Both peer review and indicators involve issues which can (partly) be addressed by funding agencies

7. Session I: effectiveness of research systems What is the most effective way to incentivise institutions to improve their research performance? • Overall trend towards assessing institutions as a whole, in relation with their increased autonomy • Increase of performance-based institutional funding drives better quality, accountability, stronger profiling and more collaboration (through e.g. strategic alliances) • Concentration of funding in some MS on top performers likely to spread throughout the EU • However, ERA is not only about the top end of the distribution but also the average

8. Session II: innovation strategies When designing innovation strategies are demand and supply side aspects equally taken into consideration? • In the past, national strategies heavily leaned on supply-side • Risk averseness, lack of awareness and long lead times deterred launching demand-side policies • Relevance of demand-side policies (leverage effect, new markets) is now better acknowledged • Now part of national strategies in some MS and of strategic discussions in most MS • Higher awareness and higher willingness to experiment but still risk/fear of substituting market failure by gov. failure

9. Session II: innovation strategies How are demand side aspects implemented in connection with strategic priorities? • Where in place, demand-side policies remain often disconnected from national research strategies • Further efforts needed to articulate demand-side and supply-side policies in integrated R&I strategies • Combining supply- and demand-side policies requires strong governance and policy coordination • More data collection and policy evaluation is needed, in particular from a systemic perspective

10. Session II: innovation strategies What are the experiences with demand side instruments? • Rapidly increasing number of demand-side policies, many MS have gained some experience with demand-side policies • Variety of instruments: • Public procurement of innovation (e.g. in DE) • Pre-commercial procurement (e.g. UK SBRI, new IT initiative) • Support to Lead markets (e.g. EE electro-mobility programme) • Inducement prizes related to societal challenges (e.g. in the UK) • Regarding procurement, the main demand-side instrument: • the successful US SBIR programme is a source of inspiration in Europe • Need for more data, evaluation and comparison of impact at different levels (firm, industry, society) • Need to ensure high level of competence/skills in procurement bodies

11. Session III: policies for HGIE Policies to support the fast growth of innovative enterprises: • Policy importance? • ERAC survey • Why? • US • impact on jobs • How? • access to private debt/equity finance • targeted public support schemes • Framework conditions

12. Session III: policies for HGIE What measures are particularly helpful or unhelpful to facilitate access to finance for high-growth innovative enterprises? • VC is important source of finance for HGIEs, but not the only one • Other sources : national funds for seed funding, corporate VC, business angels and crowd-funding • Business angels networks and VC need to be further developed in Europe in order to unleash its full potential to foster HGIE • In particular, collaborative approaches and syndication is needed for further developing VC in Europe • National governments are recommended to base policies for developing VC in their country on a careful analysis of the situation in their country

13. Session III: policies for HGIE What characteristics should targeted schemes for supporting high-growth innovative enterprises have? • There are indications that policies for HGIEs need to be different from policies for SMEs in order to succeed • These policies need to be selective, proactive, sustainable, professional and they need to be implemented in collaboration with the private sector • Examples: Coaching networks supporting the development of HGIEs (e.g. CH), support to internationalisation activities, public incubators, clusters, targeted tax incentives (e.g. FR) • However, there are no solid research results yet that would allow identifying particularly effective and efficient policies for HGIEs

14. Session III: policies for HGIE What framework conditions would most urgently need to be modified in order to support high growth of enterprises? • Framework conditions differ by country • However, an effective policy requires addressing a broad range of framework conditions • Stability of tax regimes/incentives • Reduction of administrative burden • Valuation of IP assets as collaterals • Earmarking of public procurement • Legislation preventing hostile take-overs could be important

15. Next steps • Future mutual learning activities • Additional ad hoc workshops on specific policy issues: • Strategies to train enough researchers to meet national R&D targets and to promote attractive employment conditions in public research institutions • Use of PCP and procurement of innovative products • Link with the work of the new ad hoc WG on the European Semester and the monitoring of ERA

16. Thank you! http://www.consilium.europa.eu/policies/era/erac/erac-mutual-learning-seminars-2013