BUMPY ROAD OR FAST LANE Central European countries, ERA and the LisbonBarcelona strategy Attila Hava

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BUMPY ROAD OR FAST LANE?Central European
countries, ERA andthe Lisbon-Barcelona
strategyAttila HavasInstitute of Economics,
Hungarian Academy of SciencesBudapestSix
Countries Programme workshopCROSSING
BORDERSVenturing into the European Research
AreaKismarton - Ödenburg, 30-31 October 2003
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Outline

• Methodology (aims, sources)
• Context challenges
• RTDI policy goals in the context of FP4-6
• Implementation
• ST results and socio-economic impacts of FP
  participation
• Prospectsnew instruments, Lisbon-Barcelona
  strategy
• Conclusions

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Methodology

• Aims
• recall some challenges to set the context
• summarise findings (stylised facts, no
  ranking!)
• draw preliminary conclusions, policy proposals to
  launch a lively discussion at the
  workshopprovide food for thought for follow-up
  activities
• Sources
• interviews with policy-makers 4 CE
  countriesThanks again!No reply whatsoever from
  3 countries (1 CE, 2 Baltic)
• background documents, literature

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1. CONTEXT

• Various types of challenges

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Context the main challenges

• Political and economic transition sweeping
  changes ownership, production, trade,
  employment and social structures
• demanding and socially costly process
• (re-)integrated into the EU by the late
  1990s, via trade and ownership links, supplier
  networks
• EU enlargement accession harmonisation of
  laws, adapting/ adjusting the institutions,
  values and behavioural rules cohesion
  competitiveness, quality of life
• Changes in the global settingsST, global
  production networks, China, S-E Asia,
  anti-globalisation movements, etc. ? new
  structures, rules, institutions

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Context (2)

• Enlargement Global changes ?
• the first phase of transition is over, YET,
  C(E)E is at a cross-roads, againdrifting vs.
  active strategy
• Inherent contradictions of transition
• short-term vs. long-term
• macroecon. stab., institution-building,
  sustainable development (long-term
  competitiveness)
• 4) 5) Shift in attention of policy-makers??
• fire fighting ? strategic thinking ?
  realisation of the role of STI in
  socio- economic development?

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Transition Challenges - Innovation

• Loss of former markets, and hence the need to
  find new onesBUT fragile international
  competitiveness
• Budget, trade, balance of payment deficits?
  grow out from those traps
• Poor quality of life (economic, health,
  environmental aspects)
• Brain drain (attractive conditions to reverse
  interesting projects, funds, equipment, income,
  etc. )
• Innovation is a must to tackle to above issues,
  but not a panacea

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STI System ChallengesLegacy and transition

• Severe cuts in RD spending (public, private) due
  to austerity measures and weak position in the
  power struggle
• Diminishing science base (number of RSEs,
  institutesinternal and external brain drain
  again)
• Increasingly obsolete equipment with some
  exceptions - while a strong need for ever more
  expensive ones to keep up with other countries
• Still somewhat isolated research and higher
  education
• Lack of relevant managerial skills in academia
• project development, project mgmt, networking,
  IPR, exploitation
• Weak academy-industry links
• Infant capital markets (lack of venture capital
  or lack of worthy projects??)

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STI System Challenges (2)

• Poorly integrated NIS in general
• Persistence of the linear model of innovation,
  lack of up-to-date, relevant policy
  knowledgeBalázs (1999), Chataway (1999),
  Innovation Policy in Six Applicant Countries
  (2001) JIRD Dec 2002, Trend Chart reports
  (2002-3)
• ? Drastic restructuring, institution-building
  and (un-)learning at all levels planned,
  policy-assisted creative destruction
• BUT
• Small, fragile innovation policy constituency
• Bipolar policy framework (ST or Education vs.
  Economy Ministries), lack of communication and
  co-ordination among ministries

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External Challenges/ Options

• Globalisation, changes in global settings
• threats/ opportunities of FDI and international
  production networks
• foot-loose low-tech, low-value added
  activities, low paid jobs, ready to leave for
  even cheaper sites
• OR anchored knowledge-intensive, high-value
  added activities, highly paid jobs, close
  contacts with local RD and HE, strong local
  supplier base
• integrated into international sectoral systems
  of innovation
• OR left out (marginalised as a low-cost
  production site)
• Strong NIS, clear strategic goals, conscious
  policy implementation to take advantage
• Co-ord investment, industrial, STI, education,
  regional development, competition policies

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EU Funds and Policies two facets

• Arms to fight the above challenges
• Policy challenges themselves how to use them
  effectively
• learning at various levels politicians,
  policy-makers, executive agencies, applicants
  (research organisations, firms, esp. SMEs)
• learning in various ways
• what impacts on agenda setting, policy
  discussions co-ordination, funding decisions at
  national and regional level?

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2. FINDINGS

• Arranged by the logic of an idealised
  Policy Planning Cycle
• Stylised facts to be validated, amended
• No ranking or beauty contest

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Policy Intentions

• Why to join FP4-6 obtain extra fundingexceeding
  membership fee similar to the A case 10 years
  ago
• not much sophistication in terms of policy
  goals and thus methods to define goals
• EU ? national ST priorities directly or
  indirectly (contributions to FP projects)to a
  different degree in CE countries no attempt in
  the other direction (? EU) yet via
  EURAB?selection among FP6 priorities ones at
  national level, sometimes implicitly (e.g.
  more staff for given programmes/ calls)
• National ? EU some influence on membership fees
  and FP6 funding new instruments vs. STREPs(CE
  countries jointly)

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Policy Intentions (2)

• Excellence vs. relevance not a (major) concern
• tensions between evaluation criteria and SE
  needs, both at national and the EU-level other
  sources of info!
• exceptions in Poland
• increased emphasis on social science and
  humanities for economic developmentbetter
  understand drivers, dynamics, impacts of
  transition
• keep national research centres to support
  HE separate ROs HE vs. research integrated
  with HE

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Policy Intentions (3)

• Creation vs. exploitation of knowledgemore
  emphasis on creation
• BUT
• special schemes e.g. in H, P, SR to promote
  academia industry co-operation? foster
  exploitation
• a new post-graduate course launched by Institute
  Jozef tefan (Sl) jointly with business a new
  way of thinking
• indirect way ROs are forced to raise extra
  funding, mainly from application-oriented projects

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Policy Intentions (4)

• No priorities in terms of types of
  participantse.g. academia business large
  firms SMEs single org. networks/ clusters
• The problem is realised in most CE countries,
  though
• More firms in FP projects would be needed/
  beneficial

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Implementation

• Schemes to assist potential participants
• differences over time ? learning occurred
• differences across countries ? more learning
  would be possible and needed
• Patterns of participation in recent FPs
• applications and approved projects by
• fields of research
• types applicants mainly ROs
• size of projects (participants, budget)
• co-ordinators (country, type of organisation)
• Preliminary result important differences, more
  data and work needed ? not to be discussed in
  detail

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Impacts of FP Participation

• Potential benefits
• ST results (publications, citations, patents,
  etc.)
• socio-economic outputs and impacts
• behavioural effects, new/ improved skills
  (writing project proposals, managing RTD
  projects, IPR issues, innovation, network
  building, co-operation, etc.)esp. in transition
  countries ASIF country case study
• Impact studies Noneinitiated in one country,
  but not started perhaps FP6
• Self-assessment None (only monitoring)
• Largely unknown approach in CE differences among
  current member states

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Prospects as seen by policy-makers

• FP6 new instruments important tools for ERA
• BUT
• not clearly defined/ explained (e.g. how many
  members in NoEs)
• big countries and large firms are favoured
• less opportunities for small countries (both
  current members accession countries!)
• Lobbying for special funds/ access to join IPs,
  NoEs open new calls (both new instruments
  STREPs)

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Prospects (2)

• Art. 169 small countries can initiate policy
  co-ordination, with EU-fundinge.g. Interregional
  Fund (A, Cr, H, I, Sl, SR)
• ERA some negotiations startede.g. F, G, P on
  nanotechnology, cancer research, transport
  technologies
• likely to be time-consuming

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Prospects (3)

• Lisbon-Barcelona process, cohesion
• differences across CE countries
• setting RD spending targets vs. broader cohesion
  strategy
• also in terms RD spending targets ( in line
  with current diff)
• differences in the same country over time
• less ? more importance by politicians
• among policy-makers
• awareness of initiatives
• importance attached to broader issues beyond RD
  spending targets
• policy goals (e.g. road construction vs.
  innovation controversial signs from Brussels,
  too!)

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Similarities differences in CE

• Common (fairly similar) recent past, current
  challenges
• Differences also matter
• 1) size ? different breadth of RD
• 2) level of development ? ambitions, benchmarks
  ? strategy, policy targets
• 3) geographical size vs. RD size
• 4) different chances for (different?) cohesion
  strategies
• Differences ? scope, willingness for
  co-operation?

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3. TENTATIVE CONCLUSIONS

• Issues, questions, preliminary conclusions,
  policy proposals to launch a lively discussion at
  the workshop
• Food for thought for follow-up activities

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Conclusions

• Managing EU national RTDI relationships is a
  difficult enough task in itself, but it has to be
  done in a very demanding context in CE countries
• 1) Pressing needs of transition ? not sufficient
  intellectual and financial resources to tackle
  all long-term issues? only the burning ones
• long-term drawbacks, by definition, cannot be
  felt immediately
• 2) Major changes in the international
  settingsFDI, international production networks,
  EU
• Do not fight the previous war!
• Can international comparison help?
• Identify best practice??

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Conclusions Policy Learning

• No one fits all (best practice, optimal,
  ideal) way of governing national EU RTDI
  co-operation/ policies
• ? not to copy goals/ schemes of any successful
  country in a mechanistic way
• benchmarking vs. learning by interacting/
  comparing
• active participation of policy-makers in these
  processes
• What issues to focus on?

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Conclusions EU Funds and Policies

• A different EU is evolving
• different decision-making processes
• a less cohesive,
• two-speed EU?
• L Georghiou, S Kuhlmann, B-A Lundvall, M Sharp,
  L Soete
• Following FP priorities vs. tackling
  country-specific socio-economic issues by
  RTDIscientific excellence vs. relevance

role,impactof RTDI?
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EU Funds and Policies (2)

• RTDI ? cohesion
• Pressure on cohesion ( EU funding opportunities)
  ? RTDI
• more political clout in domestic agenda setting
  and funding decisions
• BUT
• Lisbon-Barcelona processa good argument for more
  RD spending vs.impetus for more coherent RTDI
  policies
• setting mechanistic (RD spending) targets
  vs.exploiting opportunities stemming from
  international co-operation so as to implement a
  localised Lisbon-Barcelona strategy
• align, mobilise public private efforts

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Conclusions Barcelona trap?

• Lisbon Barcelona strategy (RTDI in general)
• convince policy-makers to increase RTDI spending
• (public induce private)
• urge them to introduce org./ inst. changes in the
  same time
• costly measures money, intellectual resources
• disturbing strong groups (e.g. die hard
  scientists)
• ? a self-defeating, counterproductive policy
  proposal?
• YET, not to call for systemic policies is likely
  to be suicidal, too
• evoke a more visible Solow paradox
• provoke a strong (counter-)attack from
  (neo-liberal, conservative) macro economists to
  cut RTDI spending diminution of RTDI policies
  altogether
• ? study (and influence?) the policy formulation
  process

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Recommendations

• Art. 169 small countries in the driving seat?
• (i) not only new less advanced current member
  states!
• (ii) strong EU support (financial and policy)
  for those who are willing to take the lead in
  co-ordination
• (iii) RTDI co-operation to address jointly
  identified and/or transborder issues, e.g.
• cross-border regions competitiveness (clusters,
  synergies, regional ST base, HE) environmental,
  region-specific health problems
• small-country problems
• critical mass
• role of, opportunities for, SCs in international
  co-op in general, enlarged EU in particular
• SCs vs. globalisation (global production
  systems, MNCs, culture, identity, etc.)

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Recommendations (2)

• SCs/ new member states devise a strategy to
  influence EU RTDI policies
• e.g. goals, structure, tools of FPs
• Do they have
• a clear vision (set of goals)
• negotiation skills
• intellectually powerful arguments
• political power behind arguments?

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Summary equationV f(R, T, TR, S, M, P, Ve,
DS, NS)

• V speed comfort
• R road (surface, roadblocks)
• T traffic
• TR traffic rules
• S signposts
• M maps
• P traffic police

• Ve vehicle
• DS driving skills
• NS navigation skills
• What conditions can be changed, at what cost?
• Driving alone vs. in a convoy