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THE EUROPEAN LANDSCAPE IN THE
NEXT DECADE
Prof. dr. Richard C. Kaehler
Professor Emeritus
Pepperdine University
Director of Academic Affairs-Europe
University of Phoenix
June 23, 2001
Lisbon, Portugal
IC² Fellows Special Session
INNOVATION AND COMPETENCE BUILDING
POLITICAL
Enlargement
* Began in 1951 between six countries: Belgium, Germany, France,
Italy, Luxembourg and the Netherlands
* First Enlargement in 1973: Denmark, Ireland and the United
Kingdom
* Second Enlargement, in 1981: Greece
* Third Enlargement in 1986: Portugal and Spain
* Fourth Enlargement in 1995: Austria, Finland and Sweden
15 COUNTRIES WITH A POPULATION
OF 375 MILLION
POLITICAL
Enlargement
* There are 12 candidate countries with a combined population of
105 million people
* Six countries could be admitted by 2005-2006: Poland, Hungary,
Czech Republic, Cyprus, Slovenia and Estonia
* The remaining six countries could take a decade: Slovakia,
Bulgaria, Romania, Latvia, Lithuania and Malta
BY THE END OF THIS DECADE THE
EU COULD BECOME THE LARGEST
FREE-TRADE ZONE IN WORLD WITH
OVER 500 MILLION PEOPLE
POLITICAL
Enlargement
POLITICAL
Integration
* Germany has proposed a plan for European Integration. So far, it
has received a “mixed review”
* There will be a Constitutional Convention in 2004
* The central issue is: should the EU be a “Confederacy” with
economics as the common base, or will there be a “Federation” with
a strong central political base (a United States of Europe)
From an economic point of view, Europe “looks like” the US:
US
Euro-zone
Economy
$8.0 trillion
$6.5 trillion
World trade share
18%
18%
Exports/GDP
11%
11%
Listed Companies
9.900
9.100
ECONOMIC
Outlook
* At the summit meeting in Lisbon, EU leaders committed
themselves to the creation of the
“Most competitive and Dynamic Economy in
the world by 2010”
THE GENERAL OPINION FOR
EUROPE OVER THE NEXT DECADE
IS “BULLISH”
ECONOMIC
Activity
* Both the “old” economy and “new” economy are on the upswing
together
* Successful corporate restructuring
* Productivity growth (Renault makes 220.000 more cars with
20.000 less employees than 10 year ago)
* Substantial tax cuts (Italy, Germany, France)
* Best Employment figures in 10 years (overall 8.7%)
* Labor markets are becoming more flexible
*State-owned monopolies continue to be privatized
*Significant progress in becoming a single market
ALMOST ALL TRADE BARRIERS
HAVE BEEN ABOLISHED
ECONOMIC
EURO-zone
* The EURO has been adopted by 12 counties (the United
Kingdom, Sweden and Denmark have not joined)
* EURO-zone members have strict economic standards:
- Debt not to exceed 60% of GDP
- Budget deficits not to be larger than 3% of GDP
* The “transparency of the EURO”has made price competition
aggressive
* A single currency has made it easier for companies to raise capital
APPROXIMATELY 80% OF EUROPE’S
TRADE IS DONE WITHIN THE EUROZONE
SOCIAL
* The European population is aging
Population
Aging
* If Europe wants to keep the ratio of older people to active workers
at 1995 levels, the EU will need 135 immigrant workers by 2025
ECONOMIC GROWTH CAN BE
DRAMATICALLY AFFECTED BY
HOW THE IMMIGRANT ISSUE IS
RESOLVED
SOCIAL
Immigration
* Many Europeans are fearful of immigrant workers. (Only 36% of
Germans support the EU enlargement)
* Eastern countries will not be allowed complete access to job
markets for seven years after being admitted to the EU
* Average wages in 10 of the applicant countries are 14% of the
wages in the 15 EU countries. The fear is a “flood” of illegal
workers
SAME FEARS WITH THE ADMISSION
OF GREECE, PORTUGAL AND SPAIN,
BUT NO LARGE-SCALE MIGRATION
OCCURED
SOCIAL
Computer
Literacy
IN MARCH 2000, THE EU’S
GOVERNMENT LEADERS VOWED
TO TRANSFORM EUROPE INTO THE
MOST COMPUTER-LITERATE
SOCIETY IN THE WORLD BY 2010
* Since March 2000 the percentage of households connected to
the internet increased from 18 to 30 percent.
* In Denmark, Sweden and the Netherlands, more than half of all
household are now online, surpassing the U.S.level of 41%
* Quicker growth in IT across the board in Europe in 2000. IBM
Europe grew at 18% while IBM U.S. grew at 8 percent
SOCIAL
Entrepreneurship
* The US leads Europe in the:
- Rate of new company formation
- High-Tech business activity
- Business investment in new assets
- Business spending on R+D
- Number of initial public offerings backed by venture
capital
EUROPE DOES NOT MATCH THE US
CULTURE OF ENTREPRENEURIAL
RISK TAKING
SOCIAL
Entrepreneurship
“THE AMERICAN ATTITUDE IS LET’S
MAKE A FEW MISTAKES BECAUSE
WE’LL LEARN FROM THEM.
THE TENDENCY IN EUROPE IS TO
WAIT FOR ENABLING LEGISLATION”
Ester Dyson
US Venture Capitalist
TECHNICAL
* Endorsed by the Lisbon European Council in March 2000
EUROPEAN
RESEARCH
AREA (ERA)
* The Central component of the process of developing a knowledgebased economy and society in the EU to promote:
- Innovation
- Competitiveness and employment
- Sustainable economic growth
- Social Cohesion
TECHNICAL
EUROPEAN
RESEARCH
EU’s proposed framework program targets for Research and
Technology Development (RTD)
(2002-2006)
AREA (ERA)
* Integrating European Research
* Structuring the European Research Area
*Strengthening the foundations of the European Research Area
TECHNICAL
1. Integrating Research in EUR Million
EUROPEAN
RESEARCH
* Genomics and biotechnology for health
2000
AREA (ERA)
* Information Society technologies
3600
* Nanotechnologies, intelligent materials, new production
1300
processes
*Aeronautics and space
1000
*Food safety and health risks
600
*Sustainable development and global change
1700
*Citizens and governance in the European knowledge-based
225
society
* Anticipating the EU’s scientific and technological needs
2345
Total 12770
TECHNICAL
2. Structuring the European Research Area in EUR Million
EUROPEAN
RESEARCH
* Research and innovation
AREA (ERA)
* Human resources
300
1800
* Research infrastructures
900
* Science/society
50
Total
3050
TECHNICAL
3. Strengthening the foundations of the ERA in EUR Million
EUROPEAN
RESEARCH
* Support for the coordination of activities
400
AREA (ERA)
* Support for the coherent development of policies
50
Total
Total all three target areas
450
16270
TECHNICAL
Innovation
“WE HAVE NOT FIGURED OUT HOW
THE PRIVATE SECTOR CAN
CAPITALIZE ON OUR GREAT
RESEARCH CAPABILITIES. THERE IS
STILL TOO MUCH DEPENDENCE ON
GOVERNMENT SUPPORT”.
M. Hinoul
Technology Advisor Belgian Government
TECHNICAL
Innovation Relay Centers (IRC)
Innovation
* Created in 1995 under the European Commission’s Innovation /
SME’s Program
* European Network focusing on transnational technology transfer,
68 centers in 30 countries.
*The main tasks are;
1. Inward and outward transnational technology transfer
2. Promotion of transnational dissemination and
exploitation of Community and EUREKA research results
3. Stimulation of companies’ capacity to adopt new
technologies
TECHNICAL
Innovation
The European Research Area has launched it’s first “Virtual
Institute”with 17 partners combining capabilities for the maritime
industry.
A “Virtual Institute”links geographically scattered, complementary
research and industrial organizations in order to transfer and
implement research result rapidly, primarily in industrial
applications and services. It is thought of as a market-oriented
network.
TECHNICAL
* A Europe-wide Network for Industrial R&D started in 1987
EUREKA
- strengthening European competitiveness
- by promoting ‘market-driven’ collaborative RTD
- involving industry and research institutes across Europe
- Using advanced technologies
- resulting in cost effective products, processes and services
TECHNICAL
* What is a EUREKA project
EUREKA
- A High-Tech, market-oriented R&D project
- Partners from at least two EUREKA members
- Aims to develop a cutting edge, civilian product, process
or service
- Funded by the partners themselves, who receive financing
from their national governments
TECHNICAL
EUREKA
* Project Portfolio
- 628 running projects
- worth an estimated investment of 12417.17 M Euro
- involving almost 3.000 different organizations
across Europe, of which:
- Just over two third are from industry
- Just under half are SMEs
- 959 finished projects
- worth an estimated investment of 13101.56 M Euro
TECHNICAL
EUREKA
TECHNICAL
Innovation
EUREKA proposes European Innovation Area
to complement the European Research Area (ERA)
* to develop links between the Innovation Relay Center network of
the EU and the EUREKA network, to make it easier for SME’s to
enter collaborative projects
* to improve industry/university links, to identify innovative
potential in universities and prevent brain-drain out of Europe.
* to enhance local initiative and links and to motivate local public
policy makers, since creativity and initiative are important
elements for innovation
EUROPEAN
* Europe has been in transformation for fifty years
LANDSCAPE
History
* From 6 to 15 countries with a single market of 375 million people
* A single currency
* Almost no trade barriers remaining
* 80% of trade is within its own trade-zone
* Centralized and integrative research and innovation programs to
support future economic growth
EUROPEAN
To create the:
LANDSCAPE
Objectives for
2010
* Largest free-trade zone in the world
(27 countries, 500 million people)
* Most competitive and dynamic economy in the world
* Most computer-literate society in the world
EUROPEAN
LANDSCAPE
* National differences as to the nature and extent of political
integration
Difficulties
* National differences regarding admission of immigrant workers
* Minimal cultural support for entrepreneurial activity
* Improvement needed for Innovation and technology transfer
* Dependence on government action
EUROPEAN
LANDSCAPE
* The foregoing difficulties will slow down the achievement of
objectives
Opinion
* History and political will indicates that these and other difficulties
can be overcome
* It is only a question of time before the E.U. objectives will be
achieved.
INFORMATION
SOURCES
European Union
www.europa.eu.int
Innovation Relay Centres
www.coris.lu
EUREKA
www.eureka.be
International Herald Tribune
www.iht.com
The Economist
www.economist.com
International Monetary Fund
www.imf.org
Organisation for Economic
Co-operation and Development
(OECD)
www.oecd.org