Europe's industrial fightback: The key role of innovation

There is a growing consensus in Europe on the need to revive the manufacturing industry. It is now widely seen as the only way the EU could extricate itself from its current crisis and reply to pressing societal challenges. Stimulating growth in the face of fierce international competition is essential, and the European Commission is therefore urging that manufacturing output should be raised to 20% of EU GDP by 2020 from the current level of 16%. Yet, quite apart from their share of GDP, industrial products account for over 80% of EU exports and private sector research and development spending. As economic growth is increasingly driven by innovation and R&D, developing new cross-cutting technologies, ranging from key enabling technologies and new materials like graphene to advanced manufacturing processes and smart integrated energy systems, can improve the productivity of both emerging and traditional sectors. But competitors like the U.S., Japan and South Korea outspend the EU on R&D, raising major questions about the nature of Europe’s relative underperformance.

Within the current economic circumstances, where should the increased R&D funding come from and how best can Europeans streamline limited resources in ways that will fuel economic prosperity? Should Europe be more determined in its effort to abandon policies that protect underperforming industries and focus instead on sustainable and future-oriented sectors? What are companies doing in Europe to adapt to existing challenges, such as high energy prices, competition in global markets, climate change or health, safety and environmental concerns? Which technologies and value chains will be the future drivers of Europe’s global economic competitiveness? What policy and regulatory framework is needed to boost innovation, without however neglecting the precautionary principle? How can we better translate research into commercialisation of advanced products with added value for EU growth and jobs? Is there a recognition in Europe that innovation is also about mindset change – and what is being done to ensure this happens? How should the EU’s industrial modernisation role be made complementary to those of the member states?