BUMPY ROAD OR FAST LANE?Central European countries, ERA and

the Lisbon-Barcelona strategy

Attila HavasInstitute of Economics, Hungarian Academy of Sciences

Budapest

Six Countries Programme workshopCROSSING BORDERS

Venturing into the European Research AreaKismarton - Ödenburg, 30-31 October 2003

Outline

Methodology (aims, sources)

Context: challenges

RTDI policy goals in the context of FP4-6

Implementation

S&T results and socio-economic impacts of FP participation

Prospects‘new instruments’, Lisbon-Barcelona strategy

Conclusions

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 workshop;provide food for thought for follow-up activities

Sources:• interviews with policy-makers 4 CE countries

Thanks again!No reply whatsoever from 3 countries (1 CE, 2 Baltic)

• background documents, literature

1. CONTEXTVarious types of challenges

Context: the main challenges1) 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

2) EU enlargement accession: harmonisation of laws, adapting/ adjusting the institutions, values and behavioural rules

cohesion: competitiveness, quality of life

3) Changes in the global settingsS&T, global production networks, China, S-E Asia, anti-globalisation movements, etc. new structures, rules, institutions

Context (2)

4) Enlargement & Global changes the first phase of transition is over, YET, C(E)E is at a cross-roads, again:drifting vs. active strategy

5) Inherent contradictions of transitionshort-term vs. long-termmacroecon. 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?

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

STI System Challenges:Legacy and transition

Severe cuts in R&D spending (public, private) due to austerity measures and weak position in the power struggle

Diminishing “science base” (number of RSEs, institutes;internal 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 academiaproject development, project mgmt, networking, IPR, exploitation

Weak academy-industry links

Infant capital markets (lack of venture capital or lack of worthy projects??)

STI System Challenges (2)

Poorly integrated NIS in generalPersistence 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”

BUTSmall, fragile innovation policy constituencyBipolar policy framework (S&T or Education vs.

Economy Ministries), lack of communication and co-ordination among ministries

External Challenges/ OptionsGlobalisation, 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 R&D and HE, strong local supplier base

integrated into international sectoral systems of innovationOR 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

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?

2. FINDINGSArranged by the logic of an ‘idealised’ Policy Planning Cycle

‘Stylised’ facts to be validated, amended

No ranking or ‘beauty contest’

Policy IntentionsWhy to join FP4-6: obtain extra funding

exceeding 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 S&T 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)

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 development[better understand drivers, dynamics, impacts of transition]

keep national research centres to support HEseparate ROs & HE vs. research integrated with HE

Policy Intentions (3)

Creation vs. exploitation of knowledge:more 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 Štefan (Sl) jointly with business: a new way of thinking

• indirect way: ROs are forced to raise extra funding, mainly from application-oriented projects

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”

ImplementationSchemes to assist potential participants• differences over time learning occurred

• differences across countries more learning would be possible and needed

Patterns of participation in recent FPsapplications 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

Impacts of FP ParticipationPotential benefits• S&T 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

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)

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

Prospects … (3)

Lisbon-Barcelona process, cohesiondifferences across CE countries• setting R&D spending targets vs. broader cohesion strategy• also in terms R&D 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 R&D

spending targets• policy goals (e.g. road construction vs. innovation: controversial signs

from Brussels, too!)

Similarities – differences in CE

Common (fairly similar) recent past, current challenges

Differences also matter1) size different ‘breadth’ of R&D

2) level of development ambitions, benchmarks strategy, policy targets

3) geographical size vs. R&D size

4) different chances for (different?) cohesion strategies

Differences scope, willingness for co-operation?

3. TENTATIVE CONCLUSIONS

Issues, questions, preliminary conclusions, policy proposals to launch a lively discussion at the workshop;

Food for thought for follow-up activities

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’??

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?

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 RTDI;scientific excellence vs. relevance

role,impactof RTDI?

EU Funds and Policies (2)

RTDI cohesion

Pressure on cohesion (+ EU funding opportunities) RTDImore political clout in domestic agenda setting and funding decisions

BUT

Lisbon-Barcelona processa good argument for more R&D spending vs.impetus for more coherent RTDI policiessetting mechanistic (R&D spending) targets vs.exploiting opportunities stemming from international co-operation so as to implement a ‘localised’ Lisbon-Barcelona strategy

align, mobilise public + private efforts

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 paradoxprovoke 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

RecommendationsArt. 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 S&T 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.)

Recommendations (2)

SCs/ new member states devise a strategy to influence EU RTDI policiese.g. goals, structure, tools of FPs

Do they have• a clear vision (set of goals)• negotiation skills• intellectually powerful arguments• political power behind arguments?

Summary equation

V = 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