INDUSTRIAL R&D - JRC Policy Insights - Europa
INDUSTRIAL R&D - JRC Policy InsightsIRITEC BRIEFS SERIES - ISSUE # 4 – December 2017INNOVATION AND INDUSTRY: POLICY FOR THE NEXT DECADEKey messages This document contributes to the discussion on the post-2020 policies that will start with the next EU multiannualfinancial perspectives and the subsequent preparation of the ninth Framework Programme (FP9). We identify seven major challenges posed by the industrial transformation. These challenges will shape the futureeconomic landscape and should be at the heart of the next generation policies. Four main ingredients are proposed for future EU policies: they should i) be based on (truly) new policy vision, aims andobjectives; ii) promote coordination, simplification and openness; iii) target EU specificities; and iv) embodyexperimentation.The contextThe worldwide industrial landscape is rapidlychanging and innovation continues to transformindustries and society. In order to discuss theresearch, business and policy challenges for thedecade to come and provide guidance to the EUindustrial research and innovation policy agenda, theEuropean Commission's JRC and the OECD coorganised the 6th European Conference on CorporateR&D and Innovation (CONCORDi 2017) on 26-29September 2017.This document outlines seven challenges (andopportunities) the industrial transformation alreadyposes and then proposes four main elements thatpolicy makers should take into account whenelaborating the next generation of policies. This isespecially relevant as the coming years present acrossroads where the EU needs to define the post2020 industrial and innovation strategies as part ofthe structural framework.EU is a global leader in a number of manufacturingindustries where the adoption and development ofdigital technologies is becoming the key for success,e.g. via the implementation of manufacturing 4.0. Thishas also been pointed out in the recently renewed EUIndustrial Policy Strategy (EC, 2017a), which alsostipulates that the EU should enhance its capacity tograsp new technological opportunities, create newsectors and make them grow. This makes it all themore crucial for the EU to support leading (mature)sectors in absorbing new technologies and updatingtheir business models (Moncada-Paternò-Castello,2017).This would in turn contribute to the development ofthe next generations of technologies. In this process,the key role of new technology-based firms should beoptimised and so the conditions for their scaling-upprioritised. Indeed, the potential for innovative firmsto scale up is crucial for the emergence of newknowledge-intensive sectors. This calls for a betterunderstanding of the role played by recent markettrends and structural changes in this process.7 challenges from industrial transformation1) Upgrading and updating the industrial baseThe EU is facing two simultaneous issues. On the onehand, more should be done to favour the emergenceof EU champions in the ICT industry, a key industrywhere the EU is still under-represented compared toits role among the top R&D investors worldwide(Guevara et al., 2015). On the other, it is vital toensure that more traditional (non-ICT) sectors alsobenefit from the digital transformation. Indeed, theJRC Policy Insights – Industrial R&D, December 2017JRC Directorate Growth & Innovation, European Commission2) Data revolution and non-R&D intangible assetsThe data revolution, brought about by the knowledgeeconomy, offers new opportunities related toinnovation and the potential to multiply its impact onsocio-economic development. The availability of anincreasing volume of data produced within shorttimeframes calls for clear data protection, handlingand storage strategies as well as more and better useof micro data. The use of new emerging data sourceshttp://iri.jrc.ec.europa.eu/
INDUSTRIAL R&D - JRC POLICY INSIGHTSwill allow for the measurement of key aspects of theinnovation and business dynamics.To fully exploit these new data, we need to developmeaningful and operational (possibly real-time)metrics for system assessments. For example, we areused to measuring entrepreneurial quantity to assessan economy's potential. However, economic growthhas a much stronger relationship with entrepreneurialquality (Stern, 2017). This suggests that it would bebeneficial to focus on measuring quality rather thanonly pursuing quantity. The data revolution can alsohelp to better grasp the growing role of non-R&Dintangible assets for firm competitiveness. Thenature, measurement, complementarity and impact ofnon-R&D intangible assets deserve much morescrutiny. In this context, the support to and theprotection of firms' intangible assets are pivotal forfull socio-economic exploitation of the knowledgegenerated.Most of the evidence on the industrial transformationand digitalisation comes from the US. To guaranteebetter targeted and efficient policies, the EU needsmore evidence from this side of the Atlantic and newtheoretical and empirical approaches to the directionand assessment of innovative activities. This wouldallow betteralignmentofthe industrialtransformation with the EU's wider socio-economicgoals.3) Innovation is dynamic and specificBecause of its changing nature, our understanding ofthe innovation process requires continuous dedicationto explore new possible aspects relevant for policymaking. While differences across sectors arenowadays taken for granted, awareness of theheterogeneity of innovation strategies among firms inthe same industrial sectors is still in its infancy.The high heterogeneity of R&D intensity among firmswithin the same sector (Coad, 2017) indicates thecoexistence of firms with different (R&D) investmentstrategies. These are probably linked to differentbusiness models and to specific product niches inwhich firms operate. Such heterogeneity should befurther investigated to assess which policy mix can bemost effective to support a specific industry ortechnology.The failure to identify and diffuse best practicesthroughout the economy and to recognise constraintsfaced by new innovative incumbents are importanthurdles for EU competitiveness.4) From static to dynamic efficiencyEfficiency has become a dynamic rather than a staticconcept. A firm is dynamically efficient when itreduces its cost curves and/or improves its productsover time by introducing new products and processes.Empirically, dynamic efficiency tends to beunderestimated by competition science and policy,perhaps because comparative static approaches areeasier to measure (Walker and Myers, 2017).Dynamic efficiency gains are often associated with asufficient number of larger businesses earning andreinvesting above-normal profits,1 combined with asufficient number of smaller firms able to innovate inindustry niches. Furthermore, competition plays animportant role. On the one hand, excessivecompetition in product markets, by reducing theinnovator’s payoff, can reduce incentives to invest inR&I. On the other hand, if there is excessiveconcentration (e.g. due to M&A), firms with a hugemarket power can pre-empt rivals; making itunprofitable for others to catch up and thus slowdown the pace of innovation.These dynamics should be studied in much moredepth. This also comprises ways to guarantee that thehigh productivity of firms active at the global frontier‘spills overs’ to other firms. Preventing an excessiveconcentration of resources and knowledge in just afew players (markets, territories) is essential in aperiod of slow growth and increasing inequality.5) Internationalisation and cooperation between firmsKnowledge, production and consumer markets areincreasingly fragmented and spread across borders.This brings opportunities, but also new challenges.Many new technologies find applications in multiplesectors, but also involve increasingly complexsystems where no single country or company is ableto dominate the full value chain.In this new ‘multipolar paradigm’, firms may profitfrom different R&I cooperation strategies to eration) strategies are not carved in stone. Thereare big differences in innovation and productionprocesses across sectors and (global) value chains. Inaddition, the large disparities in national (regional)R&I capabilities may prevent (small/local) firms fromHowever, large firms do not necessarily reinvest all profitsderiving from their superior R&D/innovation efficiency andprivileged market position.12
INDUSTRIAL R&D - JRC POLICY INSIGHTSfully grasping the opportunitiesparticipation in international markets.offeredbyallocate human capital to sustain a technology-richenvironment and if (and how) this can be donewithout putting a further burden on the labour force.Building successful university-business cooperation isnot always easy. An approach has been to try tomake universities more similar to business. However,it seems vital to both strengthening public basicresearch and fostering their cooperation in thetransfer and commercial exploitation of researchresults.4 ingredients of the next generation policies6) Improving university-business cooperationThe difference in performance among firmscollaborating with universities and those that do nothas increased steadily in the last 20 years in favourof the former. Businesses can learn from and takeadvantage of the interaction with academia andgrasp the opportunities offered by scientificknowledge, which is not always obviously applicable,but can have a huge potential.Recent cuts in public research funding may haveunforeseen negative effects as national and regionalresearch capacities shrink and longer-term objectivesare neglected together with more basic research. Themetrics to assess public research cannot be the sameas those for private or collaborative projects, but needto attach more value to future societal returns.Revitalising the collaborative funding and use ofsupra-national public research agendas andinfrastructures is an important policy instrument forinterregional (national) collaboration and technologydevelopment.7) Innovation and EmploymentRecent evidence suggests that the innovationemployment link is not straightforward and that thequality of new jobs remains an issue for the design oflabour-friendly innovation and industrial policyinterventions.This is particularly true when considering that this linkmay vary across sectors and firms of different sizes.Similarly, the so-called "jobless recovery" points to theimportance of understanding what other lessons canbe learned from the last financial crisis. The possiblenegative impacts of technology on jobs are nowadayswidely discussed, although history suggests new jobsthat are complementary to digital technologies willemerge too.Beyond determining possible negative aspects, thepoint is more about understanding which skills will berequired in the medium-long term, how to efficiently1) New policy vision, new aims and objectivesSocial values may be under pressure in many parts ofthe world, but they are and should remain at the coreof the EU project. The way forward is to rethink R&Ipolicy to give the EU a long-term vision based onlearning and experimentation.There is a dramatic need for a common definition ofan aim or “mission” and the relative design ofexisting, or the development of new, R&I instrumentsto realise that mission.The new R&I framework should be shaped accordingto three straightforward objectives: 1) supporting"science for science”; 2) supporting “science forsociety", R&I for (super)national priority missions; 3)supporting “science for industry”, R&I to help firmsdefining their innovation space (Soete, 2017).When crafting the policy design for (re)directinginnovation activities, we should clarify if the Stateshould only have a “repair-shop function” or whetherwe need a "new role of the State for innovation"(Mazzuccato, 2015). Indeed, (re)directing innovationactivities means amending market/system failures,but also filling missing markets (State as producer)and avoiding unacceptable market outcomes. In thelatter case, the justification for policy action comesfrom outside the economic sphere and implies theeventual shutdown of detrimental markets and thecreation of conditions for beneficial market solutions.Also, EU industrial and innovation policy shouldcontribute in reversing the rising tide of inequality. Adifferent type of inclusive innovation-led growth ispossible in the EU and is in line with economic theory(e.g. Acemoglu & Robinson, 2012). This could be anopportunity for Europe to overtake competingeconomies on specific issues by favouring theprioritisation of urgent social challenges such assustainable 'green' growth.The policy-relevant questions should not be justabout the intensity of innovation but also about itsdirection (Cantner, 2017). Analyses in this arearequire a great degree of interdisciplinary and strongconnections in different areas of research. The JRC,with its cross-disciplinary nature, can play aprominent role in putting together differentapproaches to best support future policy design.3
INDUSTRIAL R&D - JRC POLICY INSIGHTS2) Coordination, simplification and opennessIn Europe, R&I policy is a “shared” responsibilitybetween actors at different governance levels. Thiscreates coordination problems, legal challenges andaccountability issues.National and regional policy making agendas shouldbe brought closer together. Regionalised support ismore sensitive to the local context than nationallydefined interventions, which in turn may have abroader impact on the economy. How can we alignnational and regional capacities, advantages andpriorities? Stakeholders and policymakers at differentlevels need a shared understanding.There are always good reasons to come up with newpolicy instruments, while it is much more difficult toclose or replace existing ones. The result is a growinglist of instruments, nowadays extremely long in theEU, which is already too long. We need asimplification of policy instruments, in other words “aminimum objective should be to eliminate one thirdof R&I funding schemes, instruments and acronymsacross the landscape” (EC, 2017b).The simplification of policy instruments should bedone while embracing a more open approach. Inparticular, "openness" could represent the tool toaddress the grand societal challenges of our time.The EU should play a central role in those challengeswith application at the local and global level. Sincecommons depend essentially on trust, the creation ofnetworks and communities focusing on people asactors of change (both as innovators and consumers)seems a precondition to reach higher levels ofthinking and properly address these challenges.3) Targeting EU specificitiesWell-intentioned approaches may end in the"Boulevard of Broken Dreams". The innovation policyboulevard is paved with numerous failed attempts toreplicate the success of Silicon Valley, also in the US.We should turn European "weaknesses" into ourstrengths by better targeting and tailoring R&Ipolicies to EU-specific conditions. This can guaranteethat efforts to accelerate growth and competitivenesswill not fail to turn “ideas” into action.Tailoring also means that different instrumentsshould be foreseen to address different challenges.Sometimes large firms would be crucial in realisingthe innovation mission, while in other cases SMEs oreven new technology-based firms would be theessential targets/partners.The challenge for policy becomes how to integratesector innovation specificities into tailored policiesbased on a shared European vision.4) Policy experimentationCausality is fascinating, but it is extremely difficult todraw causal links outside an experimental frameworkand to draw sound policy implications.We should embrace experimentation on a largerscale. This requires design thinking in policyformulation, experimental policies and a proper datacollection. However, at the same time, we can also tryto fully exploit the potential offered by big data andalgorithm developments.Sometimes is not all about causality and predictiveanalytics may prove to be extremely useful. Somerelevant topics (e.g. where new innovationopportunities will arise) do not necessarily require acausal setting to be investigated.Moreover, to monitor and evaluate policy actions,data should be collected before, during and after thepolicy implementation. A clear understanding of whatshould be actually measured should provide guidancefor designing data collection.Concluding remarksThe speed and complexity of recent technological,industrial and social changes pose fundamentalchallenges to industry and to our capacity ofsustaining proper levels of job creation and economicgrowth. Understanding the direction of technological,industrial and societal change is not trivial. In thiscontext, the EU should aim at designing policiestailored to its specificities and needs and building onits historic strengths.This is especially important in the framework of thediscussions on the negotiations on the next EUmultiannual financial perspectives (post-2020), thesubsequent preparation of the next FrameworkProgramme for Research and Innovation (FP9) andthe implementation of the measures deriving fromthe proposal for "A Renewed EU Industrial PolicyStrategy" to foster industrial competitiveness,innovation and technological leadership.4
INDUSTRIAL R&D - JRC POLICY INSIGHTSDisclaimerThe views expressed are purely those of the authorsand may not in any circumstances be regarded asstating an official position of the EuropeanCommission. Stern,S.(2017). Innovation-DrivenEntrepreneurialEcosystems: A New Agenda for Measurement and Policy.Speech presented at the 6th CONCORDi Conference, Seville.Walker, M., and Myers, G. (2017). How should competitionauthorities and regulators facilitate innovation? - TheSociety of Business Economists - 09 May 2017Read s, is available at: is available at:Soete, L. (2017). Openness as driver for a 21st Centurymission-oriented research policy. Speech presented at the6th CONCORDi Conference, u, D., & Robinson, J. A. (2012). Por qué fracasan lospaíses. Editorial Planeta Colombiana, Bogotá.Cantner, U. (2017, September). Innovation Roads Ahead.Speech presented at the 6th CONCORDi Conference, Seville.Coad, A. (2017). Persistent heterogeneity of R&Dintensities within sectors: Evidence and policy implications.JRC Working Papers on Corporate R&D and Innovation, No04/2017, Joint Research CentreEC (2017a). Investing in a smart, innovative andsustainable Industry. A renewed EU Industrial PolicyStrategy. COM(2017) 479 finalEC (2017b). LAB – FAB – APP: Investing in the Europeanfuture we want. Luxembourg: Publications Office of theEuropean Union.Guevara, H.H., Soriano, F.H., Tuebke, A., Vezzani, A., Dosso,M., Amoroso, S., Grassano, N. & Gkotsis, P. (2015). The2015 EU Industrial R&D Investment Scoreboard (No.JRC98287). European Commission Joint Research Centre(Seville site).Mazzucato, M. (2015). The entrepreneurial state: Debunkingpublic vs. private sector myths (Vol. 1). Anthem Press.Moncada-Paternò-Castello, P. (2016) EU corporate R&Dintensity gap: Structural features calls for a betterunderstanding of industrial dynamics. JRC Policy Brief –JRC103361, - European Commission - Joint ResearchCentre. Seville (Spain) – November 2016.AcknowledgementsWe thank the keynote speakers of the conference, onwhich this section extensively draws: Dirk Pilat (OECD,FR), Uwe Cantner (Friedrich Schiller University Jena,DE), Scott Stern (Massachusetts Institute ofTechnology, USA) and Luc Soete (coordinator ofResearch, Innovation and Science Policy Experts –RISE - of the European Commission – UNU-MERIT,NL). Furthermore, the Scientific Committee of andauthors of papers presented at CONCORDi 2017 haveinspired the drawing up of this document. Finally,
JRC Policy Insights – Industrial R&D, December 2017 JRC Directorate Growth & Innovation, European Commission . European Commission's JRC and the OECD co-organised the 6th European Conference on Corporate R&D and Innovation (CONCORDi 2017) on 26-29 . period of slow growth and increasing inequal
military (troops deployed and military equipment); and soft (migration, tourism, sports, . be based on correlations, the correspondence of the Index with a real world 11 The JRC analysis was based on the recommendations of the OECD & JRC . The only exception to
E-mail: JRC-DDG-02-FORESIGHT@ec.europa.eu Tel.: 32 2295 8650 https://ec.europa.eu/jrc Legal Notice This publication is a Science and Policy Report by the Joint Research Centre, the European Commission's in-house science service. It aims to provide evidence-based scientific support to the European policy-making process. The scientific output
the role of industrial policy in structural transfor-mation and discuss how an industrial policy can be implemented. Section 2 provides an overview of how the literature has defined industrial pol-icy and classified industrial policy instruments. It also discusses the key conditions and princi-ples of successful industrial policy design and
A crucial issue in designing the policy response to the emergence of digital labour platforms is the lack of reliable evidence. In 2017, the JRC conducted the COLLEEM1 pilot survey2, an initial attempt to provide quantitative evidence on platform work, responding to calls by the European Council and the European Parliament.
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The next generation river radar from Alphatron Marine / JRC is the JMR-611 radar. This radar is characterized on open water by an excellent suppression of wave action (if a GPS compass is connected) and has a particularly attractive user interface. Both monitors meet the new reflection requirements that are currently imposed on radars.
Ed.: Andreas Palialexis & Nicolas Hoepffner 29th-30th September 2015, Joint Research Centre, Ispra, Italy Report of the JRC’s Descriptor 5 workshop to support the review of the Commission Decision 2010/477/EU concerning MSFD criteria
New Jersey Student Learning Standards for English Language Arts . Page 1 of 12. Grade 4 . The standards define general, cross-disciplinary literacy expectations that must be met for students to be prepared to enter college and workforce training programs ready to succeed. The K–12 grade-specific standards define end-of-year expectations and a cumulative progression designed to enable .
