A giant poster announcing the upcoming European elections, stucks on the facade of the European Parliament building, in Strasbourg, eastern France. The European Parliament elections are planned to be held from June 6 to 9, 2024. LEHTIKUVA / AFP

International news

A report released by leading economists from France, Germany, and Italy has launched a critical analysis of the European Union's current approach to research and development, suggesting that the EU is significantly trailing in the global innovation race. According to the study, the lack of presence among the world's top tech companies and startups signifies a dire need for a strategic pivot towards more cutting-edge and disruptive innovation projects.

Nobel laureate Jean Tirole of the Toulouse School of Economics highlights the EU's disproportionate investment in mid-tech sectors, particularly the automotive industry, at the expense of burgeoning high-tech fields like the digital economy. This imbalance has ensnared the continent in a "mid-tech trap," stifling its economic growth and reducing its influence on the global stage.

Clemens Fuest, President of the Ifo Institute, echoes Tirole's concerns, pointing out that Europe's innovation efforts are overly concentrated and lagging in sectors critical for future competitiveness. The report emphasizes the need for the EU to significantly increase its R&D expenditure, particularly in low Technological Readiness Level projects that promise transformative potential.

The recommendations extend to the governance of Horizon Europe, the EU's key funding program for research and innovation. The authors advocate for a reduction in political oversight of scientific decisions, proposing instead a model that empowers leading scientists with greater autonomy and flexibility. This approach aims to invigorate the EU's research landscape by enabling more groundbreaking innovations to emerge.

Further comparisons with the United States reveal structural inefficiencies within the EU's funding mechanisms, particularly the European Innovation Council (EIC), which is suggested to draw inspiration from the US ARPA model. The report criticizes the EU's cumbersome application processes and suggests a shift towards a less bureaucratic, more scientist-led committee structure to facilitate breakthroughs in innovation.

One of the more radical proposals includes a significant budget reallocation from the European Institute of Innovation and Technology (EIT), which the report indicates has fallen short of its objectives, to more promising areas of research.

Released in Brussels and spearheaded by prominent economists including Clemens Fuest, Daniel Gros of the Institute for European Policymaking at Bocconi University Milan, and Jean Tirole, the report titled "EU Innovation Policy – How to Escape the Middle Technology Trap?" offers a compelling blueprint for revamping the EU's research and innovation strategy to secure its place as a global leader in technology and innovation.