Outline

1. 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

2. 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

3. 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 countriesThanks again!No reply whatsoever from 3 countries (1 CE, 2 Baltic) • background documents, literature

4. 1. CONTEXT Various types of challenges

5. Context: the main challenges • Political and economictransition 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 enlargementaccession: harmonisation of laws, adapting/ adjusting theinstitutions, values and behavioural rulescohesion: competitiveness, quality of life • Changes in the global settingsS&T, global production networks, China, S-E Asia, anti-globalisation movements, etc.  new structures, rules, institutions

6. Context (2) • Enlargement & Global changes  the first phase of transition is over, YET, C(E)E is at a cross-roads, again:drifting 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?

7. 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

8. 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 academia project development, project mgmt, networking, IPR, exploitation Weak academy-industry links Infant capital markets (lack of venture capital or lack of worthy projects??)

9. 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 (S&T or Education vs. Economy Ministries), lack of communication and co-ordination among ministries

10. 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 R&D and HE, strong local supplier base integrated into international sectoral systems of innovation ORleft 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

11. 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?

12. 2. FINDINGS Arranged by the logic of an ‘idealised’ Policy Planning Cycle ‘Stylised’ facts to be validated, amended No ranking or ‘beauty contest’

13. 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 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)

14. 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 HEseparateROs & HE vs. research integrated with HE

15. 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

16. 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”

17. 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

18. Impacts of FP Participation Potential 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

19. 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)

20. 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

21. Prospects … (3) Lisbon-Barcelona process, cohesion differences 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!)

22. Similarities – differences in CE Common (fairly similar) recent past, current challenges Differences also matter 1) 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?

23. 3. TENTATIVE CONCLUSIONS Issues, questions, preliminary conclusions, policy proposals to launch a lively discussion at the workshop; Food for thought for follow-up activities

24. 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’??

25. 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?

26. Conclusions: EU Funds and Policies role,impactof RTDI? 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

27. 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 R&D spending vs.impetus for more coherent RTDI policies setting 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

28. 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

29. 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 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.)

30. 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?

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