To be or not to be? A Framework Programme to boost the EU’s competitiveness – new DG R&I reports provide convincing arguments for a standalone FP10.
On 17 February, the European Commission’s Directorate-General for Research and Innovation published three policy briefs: (1) RADAR, a system dynamics model: Analysing long-term impacts of R&I policy on competitive sustainability; (2) EU competitiveness: The critical role of intangible assets in EU labour productivity growth; and (3) Enhancing EU policy through complexity metrics: A new lens for research and innovation.
Uncertainty remains whether a 10th Framework Programme (FP10) will exist as such, or if Research and Innovation (R&I) funding will be incorporated under a broader Competitiveness Fund. This has raised concern among stakeholders and Members of Parliament, who continue to call for a standalone, ringfenced Framework Programme (FP) with an increased budget (see Science|Business article). While these reports indicate strong support for such a FP, it would inevitably rely on some top-down policy guidance, contrasting the bottom-up curiosity the scientific community advocates for. Though not a solution to the debate on R&I’s future in Europe, the reports highlight the benefits of a more strategic and intervention-based approach.
A key takeaway of the paper on EU competitiveness is that closing the EU-US innovation gap – a priority of the EU Competitiveness Compass – requires strategic funding for the identified drivers of the EU’s labour productivity. Renewed attention must be given to the service sector, which has suffered from insufficient investment in non-Research and Development (R&D) intangibles; e.g., software, training, organisational capital. Whilst no reference is made to the FP, it provides evidence that R&I investment in non-R&D intangibles would enhance EU competitiveness. There is, therefore, food for thought as to whether a standalone FP, with resource allocation for such R&I, would be more effective in closing the innovation gap than an overarching competitiveness tool encompassing R&I funding.
The third report highlights how EU policies, primarily driven by competitiveness, can be enhanced through applying complexity and relatedness metrics. Whilst the former identifies strengths and opportunities for diversification and growth, the latter reveals synergies between existing capabilities and new technologies. Taken together, “more tailored, data-driven interventions that align with regional strengths and promote diversification” can be created, which would undoubtedly contribute to EU competitiveness. However, it is questionable how such interventions can be implemented without a FP. This new perspective on R&I highlights the benefits of having a framework that allows for targeted funding, so as to harness and build on the strengths and opportunities identified by the complexity analysis.
The FP: an enabler for competitive sustainability
The FP10 is expected to renew the efforts of Horizon Europe to position innovation and societal challenges at the heart of the EU’s R&I agenda, but with a strong focus on competitiveness. By studying the FP’s role in supporting R&I processes, the findings of the RADAR brief provide a framework to quantify the expected impacts on several aspects of the FP10 to justify policy decisions and support the creation of a robust programme design.
Innovation is an “iterative, evolutionary, and complex process”, making an input-output lens unsuitable for measuring R&I impact. System dynamics, in contrast, analyses transformative innovation processes where market dynamics are still evolving. Using this approach, policymakers can better understand the optimal conditions for transformative technologies to be successfully developed and commercialised. By focusing on the critical technological domains of mRNA technology (biotechnology) and green hydrogen (clean energy), the study assesses the impacts of doubling the FP budget, targeted funding, and having a policy on accelerating the adoption and diffusion of transformative technologies, while supporting the EU’s competitive sustainability. The results are telling: A FP is crucial in supporting market uptake, facilitating diffusion, and providing strategic funding to achieve future breakthroughs.
First, a FP supports market uptake by enabling, in addition to upstream activities, EU R&I in downstream innovation adoption and commercialisation, through providing essential support with a magnifying effect on policy portfolios. Lack of a FP slows down and reduces progress, resulting in delays in bringing crucial innovations to the market. Second, FP funding is pivotal in driving transformative innovation, which justifies “a substantial increase in the budget to accelerate advancements in other high-impact, strategic areas.” While it is not disputed that support for foundational research and early-stage technological challenges for non-private beneficiaries in the mRNA domain remains crucial, the success of the Covid-19 vaccines has resulted in substantial private sector R&D investments. Rather than continue to fund this domain, priority of public investment should be given to basic research that enables future breakthroughs and creates strong pathways to industrialisation in other crucial technologies. Third, the FP plays a foundational and synergistic role in adoption and diffusion. Spillover effects from FP-supported foundational research, as well as its role in maximising the effectiveness of other funding organisms (e.g., the European Investment Bank), highlight the indispensable nature of an FP.
The study thus reveals that, when looking at expected outcomes facilitated by a FP, it is of value to have a robust, well-funded standalone framework to drive targeted, transformative innovation that will support Europe’s long-term and sustainable competitiveness.