Is Europe able to invest in high quality technology products in order to sustain development and overcome financial crisis? What policies should be followed to address the innovation era and benefit for the welfare of its people? Are current EU institutions able to turn Europe into a global player and if not what kind of reforms are needed?
The research question is whether European Economy is able to rely on ICT exports to exit the current financial crisis. More specifically, whether its institutions worth to develop policies that will encourage in this direction as to create a common Innovation policy framework that will help increase production, create jobs and profits, thus overcome current crisis. This proposal is looking to investigate appropriate public policy guidelines to European Union to advance knowledge society through innovation. EU Governance should be therefore analysed as a political system suitable for reforms in order to enhance new technologies on its institutions and act as catalyst for both social and economical modernities on innovation management. These policy guidelines for EU governance wish to answer whether Europe is able from a public policy perspective to adjust in the Innovation era using economy as the mean of social transformation.
According to the European Commission’s outlook Annual GDP this year is now forecast to contract by 0.1% in the EU and 0.4% in the eurozone. For 2014, economic activity is projected to expand by 1.4% in the EU and 1.2% in the eurozone (1). GDP in Euro area declined by 0.2% in the first three months of 2013 from its level late last year, the sixth consecutive quarter of a recession that started in late 2011. Euro-zone area GDP is forecasted to shrink annually by 0.4% in 2013, following a contraction of 0.6% in 2012. Strong economies such as France and Germany may still rise but only marginally and southern economies keep shrinking. The dissimilarity between core and periphery affects also labor markets. Unemployment in Germany was just 5.4% of the workforce in March 2013, whereas in Greece and Spain it was around 27%2. The fiscal adjustment measures under implementation in the southern Europe are limited to helping the European economy deal with their debt and deficit issues and to return normally to financial markets.
Therefore, there is a need for a sustainable strategy that will open the door to prosperity and steer the whole European economy away from an economic dead-end. This proposal wishes to examine, from a public policy perspective, whether the European economic strategy can be based on ICT(2) exports so as to increase its prospects of sustainable development and also to align itself with the development targets set in the Horizon 2020 Strategy. Specifically, Europe 2020 wishes to deliver growth that is: smart, through more effective investments in education, research and innovation, sustainable, thanks to a decisive move towards a low-carbon economy, and inclusive, with a strong emphasis on job creation and poverty reduction.
The strategy is focused on five ambitious goals in the areas of employment, innovation, education, poverty reduction and climate/energy (3). More specifically is setting the targets of :
1. Employment (75% of the 20-64 year-olds to be employed)
2. R&D (3% of the EU’s GDP to be invested in R&D)
3. Climate change and energy sustainability. Greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990, 20% of energy from renewable s, 20% increase in energy efficiency
4. Education. Reducing the rates of early school leaving below 10% at least 40% of 30-34–year-olds completing third level education
5. Fighting poverty and social exclusion at least 20 million fewer people in or at risk of poverty and social exclusion(4)
This proposal focuses on the “smart’ policies that will face the crisis of competitiveness plaguing Europe. The model that is used to compare public policies is “Svensca Modellen” of Sweden. The model is based on the experience on the Swedish banking crisis during 1990-1992 and the policies developed by the government to face the deficit created by a real estate bubble. The response of the Swedish government was to slash public spending and institute a series of reforms to improve Sweden’s competitiveness.
Subsequently, the improved outlook for the global economy, in combination with the rapid growth of the IT sector, helped Sweden emerge successfully from its crisis. Additionally, achievements in public sector’s R&D during last ten years in Eurozone of fast GDP increasing and growth such as evolution of nanotechnologies, intellectual products, microelectronics and bio technologies are a great asset from the recent past that can be examined weather EU Governance has a contribution into a new sustainable development strategy for a “smart” society. In parallel it wishes to align with the Europe 2020 strategy and examine the efficiency of the policies implemented so far, as well as the policies the will be announced under the EC’s Digital Agenda also known as Horizon 2020(5).
This proposal adheres to the theory of innovation as developed by Joseph Schumpeter. Specifically, Schumpeter examines the role played by innovation in national economies and how it contributes to economic growth. Schumpeter concludes that innovation could be likened to “creative destruction” in sense that it restructures the economy by favoring those players that are more prepared to bring about the necessary changes that will result in a more innovation oriented economy. In his own words, the author writes: “the problem that is usually visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them (6)”. The Governance model is based on Etzkowitz’s and Leydesdorff’s “Triple Helix Theory (7)” That theory promotes a sustainable model of cooperation between universities, private companies and the state so as to achieve the harmonization of means by respecting each other’s work and at the same time promote science and technological change for public benefit. In this proposal, the role of state is covered by Eu Institutions, thus EU Governance should shape its policy bodies into the suitable ones that will support this successful model.
The Policy Guidelines.
Main policy guidelines for Innovation come from EU’s Horizon 2020 policy benchmark, Innovation Union Scoreboard (8) and for EU Governance from the Buonanno, Nugent and Castaldi (9) federalist approach (10). A sustainable model will be successful if implemented by a politically strong institution. As “strong” is considered an institution armed with all necessary responsibilities and funds.
According to the European Innovation Scoreboard “The EU27 has managed to significantly close its performance gap with both the US and Japan but the gap with South Korea has increased. The EU27 has increased its performance lead over Australia and Canada and has kept its lead over Brazil, India, Russia and South Africa”. Innovation performance in the US, Japan and South Korea is above that of the EU27. Compared to last year’s results, South Korea has joined the US as the global innovation leader. The EU27 is outperforming the other countries, in particular all BRICS countries. South Korea has joined the US as the most innovative country compared to the IUS 2011″.
It is clear that a new, sustainable model of EU Governance for Innovation should be implemented and boost growth across Europe. The current crisis should act as an opportunity for closer cooperation between 27 European states and bring results for the benefit of society. This phd proposal wishes to re-examine all policy benchmarks (such as R&D expenditures, innovating SME’s, interdisciplinary academic and industrial consortia financing and establishment) under the prism of a single politically strong European institution that will be able to decide and fund all policy gaps appearing throughout the years, affecting EU’s Governance efficiency and sustain growth.
1Spring forecast 2013 – The EU economy: adjustment continues
2European economy guide Taking Europe’s pulse May 15th 2013, by Economist.com.
6 Schumpeter J. (1942) Capitalism, Socialism and Democracy
7 Leydesdorff, H., Etzkowitz, H., Emergence of a Triple Helix of University-Industry-Government Relations, Science and Public Policy, 1996
9 Roberto Castaldi, Towards a Federal Democracy in Europe? 2011
10 Laurie Buonanno and Neill Nugent, 2011