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Home » Focus, Netherlands

Time to Act for Growth

Submitted by on 12 Jul 2012 – 12:34

By Maxime Verhagen, Deputy Prime Minister and Minister of Economic Affairs, Agriculture and Innovation of the Netherlands

 

As the European debt crisis deepens, economic growth is stagnating and every European is suffering the consequences of budget cuts. Across Europe, politicians, businesspeople and ordinary citizens are calling for measures to stimulate growth. I hear the same calls from European colleagues, MEPs and Commissioners. They are right. Now is the time for Europe to act for growth.

But we must do so wisely and effectively. We cannot afford to waste taxpayers’ money. So what is the best way to stimulate growth?

I don’t believe in hand-outs. Subsidies for swimming pools in Andalusia or golf courts in Holland’s Flevoland won’t help.

I believe in smart fiscal consolidation. We need to restore our public finances and at the same time invest in research and innovation – the lifeblood of economic recovery and growth.

To be effective, the 27 countries of the European Union need to act in concert, at both national and European level. History has taught us that we are better off working together in Europe. It is vital for peace and prosperity. Vital for economic growth and jobs. Vital for meeting the major challenges facing society, like population growth and ageing, climate change and scarcity of energy and natural resources.

In other words, we need innovation without borders if we are to meet the challenges of today and tomorrow. This recipe for growth requires three main ingredients.

 

First, we need innovative companies and sectors that are leading in international markets. They determine Europe’s competitiveness, which in turn determines Europe’s capacity to grow, create jobs and deal with challenges. Innovation is the key to competitiveness.

Europe is lagging behind the US and Asia is catching up with us. So I am glad that the Commission has proposed investing heavily in growth and innovation. My colleagues and I in the Competitiveness Council also recently took a step forward by agreeing on the priorities of the new European research and innovation programme, Horizon 2020. This programme helps the best European researchers and businesses to jointly develop new knowledge and products that address societal challenges and strengthen European competitiveness.

At the national level, member states should spare public budgets for research and innovation, as the Netherlands is doing. We all need to restore our public finances, yet we must not compromise our capacity for growth and innovation.

In the Netherlands, we have mobilised companies and research institutions in nine top sectors of our economy – knowledge-intensive and export-driven sectors ranging from energy and water to agri-food and life sciences. The sectors themselves indicated what they need in order to innovate and compete in the global marketplace. Their proposals laid the foundation of my innovation policy, which aims to improve the climate for innovation and smooth the path from lab to market. Together, companies, research institutions and the government have pledged to invest over €2.5 billion this year and next in knowledge and innovation. Public and private money!

I see great things happening. Take the Sand Engine, an innovative and cheaper method of coastal protection that is being tested by Dutch companies and research institutes. They piled a huge amount of sand on the coast and let the wind, waves and currents spread it. We call this ‘building with nature’. The sand will gradually be incorporated into the dunes and the beach and make the coast broader and safer.

Fresh ideas and true innovations come not from government but from society. From researchers and entrepreneurs. We should not be deciding in Brussels or The Hague what is good for them. They know best! So we need to involve them. This is the only way to stimulate competitiveness and develop saleable products and technologies that society really needs.

Europe’s track record in this respect needs improving. In the last fifteen years, business participation in European Research Framework Programmes has decreased from 39% to 25%. I hope that Horizon 2020 will reverse that trend and that business participation will increase to at least one-third. I urge both the Commission and member states to actively involve businesses, particularly small and medium-sized enterprises.

The second ingredient for innovation without borders is a healthy investment climate throughout the European Union. This means reducing obstacles to doing business, cutting red tape, improving regulation, and ensuring sufficient investment capital for business. The Dutch government has taken several measures to improve access to capital for innovation, including the launch of a new Innovation Fund for SMEs that provides businesses with risk capital and loans. Money that is paid back once the research is made profitable, so that it can be used to help other companies do research and innovate. The Netherlands would like to see a European Investment Fund, run along similar lines.

Third, for true innovation without borders, we need knowledge to flow freely within Europe. This requires strengthening the digital internal market, as the Commission has proposed. It must be made easier to download e-books, for example. Why should a company need a separate licence for every country? Introducing the unitary patent is a matter of real urgency. Companies can no longer afford to spend ten times more on a patent in Europe than in the United States. So let’s agree on the Commission’s proposals to slash patenting costs!

Innovation will also benefit if knowledge, research data and academic articles can be freely exchanged within Europe. That is why the Netherlands supports a European Research Area. Intellectual property rights will of course have to be taken into account, as will the interests of companies that have invested in public-private research.

In times of austerity, we must invest in innovation without borders. This requires involving companies in European research programmes, ensuring that companies have access to investment capital and allowing knowledge to flow freely within Europe. We can achieve all this if we work together. This is how Europe has successfully overcome crises over the past sixty years. This is how we can provide for growth and jobs in Europe. The recipe for growth is well-known. Now is the time to act.