Collaborative R&D, European Style

Technology Policy in the European Union describes and evaluates European public policies that promote technological innovation and specifically “collaborative efforts at the European level to promote innovation and its diffusion.” The book is also concerned by extension with industrial policy or “the activities of governments which are intended to develop or retrench various industries in order to maintain global competitiveness.”

In accomplishing the task they set for themselves, John Peterson, the Jean Monnet Senior Lecturer in European Politics at the University of Glasgow, and Margaret Sharp, senior research fellow at the University of Sussex’s Science Policy Research Unit, combine a thematic with an historical approach. They first describe the early history of European technological collaboration and then the evolution of economic and political theory concerning technological change and national innovation systems. This is followed by detailed analyses of the major components of European Union (EU) technology policy and an assessment of what has been achieved. Finally, they provide a critique of the current direction of European technology policy.

The presentation of the historical record is comprehensive, fair, and balanced. Commendably, it is largely unmarked by the technological chauvinism or the “U.S. envy” that mars some European works on technology policy. What comes across most forcefully in this study is the persistent strain of activism at the federal level as succeeding leaders in Brussels attempted by a variety of means to fashion a distinctly European technology policy that would achieve enough scale and momentum to allow Europe to compete with global rivals such as the United States and Japan. Indeed, though the authors admit that technologically Europe still lags behind in key areas, they argue that these interventions were important in that they helped create cross-border European alliances and synergies that will form the basis of more concrete technological advances in the future. The substantial EU emphasis on collaboration and the use of public resources to induce it stand in strong contrast to U.S. technology policy, which has only fitfully subsidized such efforts. The Advanced Technology Program and a few sectoral examples such as SEMATECH, the semiconductor consortium that received some federal support, are exceptions to the rule. Although the Bayh-Dole Act was passed in 1980 with the express purpose of fostering collaboration among government agencies, universities, and the private sector, by and large the huge increase in university, corporate, and government alliances has been the spontaneous result of perceived competitive advantages by one or more of the collaborating partners.

Enduring lessons

The authors describe the origins of EU technology policy in the era of big science in the 1960s and 1970s, in which strong “national champion” policies (under which select firms in EU member states were protected and subsidized by their governments in order to retain domestic market dominance) competed directly with early collaborative efforts in the fields of nuclear energy, civilian aviation, and space. Although few commercial or technological successes emerged from this era, the authors argue that enduring lessons were learned that informed later programs. They include the necessity of bringing into closer balance the public and commercial rates of return on investment, the positive benefits of a collaborative learning curve even when commercial success proved elusive, and the necessity of building in “scope for review and…even withdrawal” in order to avoid a rash of white elephants.

The core of the study consists of the chapters describing the origins, goals, and accomplishments of the three major EU technology policy programs launched during the 1980s. Though they represented very different approaches to the problem of achieving technological advance, all three were impelled in large part by the sense that Europe was falling behind its major world competitors. ESPRIT developed under the guidance of Etienne Davignon, the Commissioner of Industry who led in sounding the alarm that Europe was falling disastrously behind the United States and Japan in the key microelectronics technologies. Davignon helped launch a then-unprecedented public/private partnership with the “Big 12” leading EU electronics and information companies. Building on the exemption for precompetitive research from EU competition laws, ESPRIT brought companies of all sizes together with universities and other research institutions in projects aimed at upgrading EU technological capabilities in electronics. According to the authors, in its three phases between 1984 and 1994, the program achieved important successes in standardization, particularly for open, interconnective systems.

In 1987, the Single European Act for the first time provided a firm legal basis for European R&D programs developed by the European Commission and resulted in five subsequent four-year plans called the Framework programs. At the outset, guidelines reinforced the tilt toward precompetitive research, but as a result of renewed anxiety about EU competitiveness, debates over the content of Framework IV (1994-98) and the priorities of Framework V have introduced pressures to support technology development projects closer to the market and, in some contradiction, to emphasize diffusion and use rather than the creation of new technologies. (By diffusion, the authors mean policies related to the demand side of technology policy; that is, helping companies and ultimately consumers understand, assimilate, and use new technology.)

The movement downstream in the Framework program brought these projects closer to the aims and goals of the third major EU collaborative effort: the EUREKA program. To oversimplify somewhat, EUREKA resulted from the renewed perception of a “technology gap” with the United States and Japan in the early 1980s, resulting from the near panic (fueled by the French) over President Reagan’s Strategic Defense Initiative and the fear that it would lead to an insurmountable U.S. technological superiority and a cherry-picking of the best EU companies as partners. Launched in 1985, the program presented stark contrasts to existing EU R&D programs: It was firmly intergovernmental and not under the control of the European Commission, it was led by industry, and it was to be largely composed of near-market projects that would produce tangible commercial results. By 1997, almost 1,200 projects had been launched, with a value of about $18 billion, making EUREKA about the size of the Framework program. Although French President Mitterand initially wanted EUREKA to concentrate on large-scale EU-wide projects such as high-definition television and semiconductor technology, the trend has been toward less grandiose but more achievable demonstration programs.

The last two chapters of the book tackle two related questions: What has been accomplished during the past four decades by the varying tactical approaches to R&D collaboration, and what is the proper course for the future of R&D at the European level? Peterson and Sharp evaluate EU collaboration programs according to five criteria: enhanced competitiveness, a strengthened science and technology base, greater economic and social cohesion, the encouragement of cross-national alliances, and the stimulation of education and training of young scientists. They give the highest marks to the stimulation of cross-national collaborations and the concomitant transfer of knowledge and skills. By stimulating collaboration, the programs also helped further two other goals: the education and training of young scientists and the strengthening of the science base.

On the issue of competitiveness, the authors admit that “the EU actual performance in high technology sectors has deteriorated” but then disparage such overall judgments of any economy and argue that the programs “may have achieved quite a lot of other equally important goals.” As examples, they mention “new competencies” for participating firms and a general “sharpening of the EU’s research skill.” This is the least convincing section of the book. The authors cite with approval MIT economist Paul Krugman’s contention that competition among firms, not among nations, is what really matters, but they fail to acknowledge his most prescient admonition: that an obsession with competitiveness will lead to the kind of expensive, unproductive subsidies that, as Peterson and Sharp document, are an important element of EU technology policy.

Globalization’s impact

Before setting forth policy prescriptions for the future, the authors point to recent change in the landscape of the EU and world economy that demand vastly different approaches and strategies for technology policy. Global companies and markets increasingly dominate the scene, which in turn has produced two emergent challenges: 1) policies to attract investment in the EU by these dominant multinationals, and 2) policies that will foster firms in associated networks that will supply and service these firms. Negatively, this means that in the late 1990s, it no longer makes sense to subsidize EU multinationals to collaborate: “The ESPRIT model has outlived its usefulness,” the authors write.

Globalization, with the premium it places on flexibility, mobility, and ever-greater labor skills, is the driving force behind the authors’ four policy prescriptions: 1) more resources for basic research as the font of ideas for intra- and intercorporate networks, 2) more resources to produce greater cross-national mobility of researchers as a means of spreading ideas to all areas of Europe, 3) more emphasis on upgrading technical standards to reinforce the synergies of the single market, and 4) an emphasis on diffusion as the EU’s most important technology policy goal because of the need for new ideas to be assimilated by essential smaller businesses.

These policy recommendations are quite sensible, and two of them-increased support for basic research and granting top priority to diffusion-have echoes in recent reports on U.S. science policy by the National Academy of Sciences (Allocating Federal Funds for Science and Technology) and the Committee for Economic Development (America’s Basic Research: Prosperity through Discovery). However, because of the global challenges spelled out by the authors, more important policy changes that go beyond the technology policies described in this book are needed. They relate to such things as removing regulatory obstacles to venture financing, reducing the social costs of hiring new workers, legislating more capital-building tax policies, and stepping up competition policy enforcement to prevent still-dominant national champions from muscling out newcomers.

In addition, even within the confines of traditional technology policy, the book leaves some questions and issues hanging. First, the authors strongly applaud what they perceive as a movement away from the “contradictory obsessions” and tensions between the emphasis on precompetitive research and the downstream projects aimed at increasing EU competitiveness. Although one can agree with their recommendation that the diffusion of frontier technology rather than the subsidizing of new technologies should be the top priority for future Framework agreements, the current EU Commissioner for Research and Development, Edith Cresson, has made dirigiste “near market” proposals aimed at increasing competitiveness a hallmark of her tenure. Indeed, in a recent editorial Nature magazine criticized the just-published mission statement of Framework V, arguing that its “insistence on quick delivery of socio-economic benefits threatens the program’s success” and “will probably put off many scientists.” Added Nature, “This is relevance with a vengeance.” Clearly, these issues remains highly contentious, and it is obvious that not all EU policymakers agree that it is time to move on.

Second, although at several points the authors remind readers that the EU collaborative programs that are the focus of the study constitute only 5 percent of total R&D spending by EU nations, they fail to convey any sense of how the record of the EU effort compares in content, priorities, and accomplishment with the R&D programs of key EU member states. It would have been particularly useful to analyze the quite different innovation systems of France, Great Britain, and Germany.

On a more positive note, however, the study will undoubtedly become an indispensable reference for understanding the history of EU collaborative technology policy during the past four decades. For its dispassionate fair-mindedness and attention to detail, it can be recommended to anyone interested in Europe’s technological past and future.