Brussels, 20 February 2002

Research Commissioner Philippe Busquin has called for moves to counteract what he describes as the 'reversal of the European paradox,' the phenomenon of Europe's failure to fully exploit research results and new knowledge for economic and industrial gain.

Speaking at the second international forum on 'Economie, recherche, innovation' in Paris on 14 February, Mr Busquin said that in spite of politicians' recent focus on the European paradox, 'if there is a paradox, this paradox is reversing - Europe is starting to do better in terms of innovation [while it still] invests much less in the production of knowledge, that's to say in research and technological development, than its major partners and competitors the United States and Japan.'

Mr Busquin warned that this gap 'has widened considerably in recent times and is continuing to grow - to the extent that our system of innovation risks running out of steam in comparison with an American system of innovation which draws on a body of R&D [research and development] superior to our own.'

At present, the European Union's research effort has stagnated at just 1.9 per cent of GDP (gross domestic product), while expenditure has reached 2.6 per cent in the USA and almost 3 per cent in Japan, and is continuing to grow. Mr Busquin drew particular attention to levels of R&D spending by enterprises, which represents 1.1 per cent of GDP in Europe and 1.8 per cent in the United States. Furthermore, the research efforts of enterprises has grown three times more quickly in the USA than in Europe since 1995. 'If this evolution continues,' said Mr Busquin, 'not only will we not reach the Lisbon goals, but we will regress.'

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The Commissioner said he hopes to combat this trend in three ways - by highlighting the issue of research among Europe's decision-makers at the Barcelona European Council in March, by working with Member States to build the European research area (ERA), and through the Sixth Framework programme for research (FP6).

He explained that urgent effort is needed to mobilise instruments for the public financing of research in enterprises. 'A collective European effort must be made to use the different instruments for the financing of research in a more efficient and systematic way,' he said. He pointed to several key financial instruments, including direct state support, tax incentives and other fiscal measures, guarantee mechanisms and capital risk. Progress has been made in several areas, said Mr Busquin, drawing attention to the promotion of capital risk initiatives in the biotech sector set out in the European biotechnology strategy launched in January this year, and France's incremental tax credit system for enterprises carrying out research.

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'Experience shows that these different instruments don't reach their full potential unless they are used in a combined way, in the framework of coherent research and finance policies,' said Mr Busquin, calling on the Commission and Member States to work together to evaluate the impact of different financial instruments and exchange best practice, and to formulate new ways of using these mechanisms for the benefit of research and innovation in Europe. 'All the possible formulas have not been exhausted,' he explained, 'and I would encourage actors to use their imagination.'