Put Europe on the frontier of global innovation and complete its single market, urges study from EIB published at Davos
Europe’s economic success lies in its ability to innovate and complete its single market – urgently, says a major study from EIB economists. “Restoring EU Competiveness” was published in Davos today at the annual World Economic Forum meeting under the banner of “The 4th Industrial Revolution”.
The study, which was written by EIB economists and project analysts from the EU’s public investment bank, calls for decisive measures from policymakers, investors and the private sector alike to raise Europe’s competitiveness for higher levels of productivity, employment and prosperity. It says the effects of the financial crisis have made structural weaknesses worse and contributed to a legacy of economic and policy challenges that need to be tackled. These have been made more pressing by the unprecedented rise in migration witnessed over the past year, which – in all likelihood – will continue in the near future.
Speaking from Davos EIB President Werner Hoyer said, “If anyone wonders why Europe needs integration, the scale of the challenge ahead is the answer. No single European country could meet it alone. Europe still has a strong base in science and some industrial technologies; but we risk missing the boat in the technologies of the next Industrial Revolution. At the EIB we are committed to strengthening Europe’s competitiveness, through significant and unprecedented levels of financing for innovation and through the European Fund for Strategic Investments which is now off to a successful start.”
He added, “Crucially, in order to preserve its strength, the EU economy needs to be at the global innovation frontier. But investments in today’s innovation only make sense if they can rely on access to a vast integrated market and a developed digital infrastructure. Market integration is the backbone of Europe’s prosperity. Our research clearly shows the alarming proportions of the innovation gap with the US, especially in leading-edge technologies, such as digital and biotechnology. It’s time for all of us to face the urgent need to remedy decades of underspending—and under-thinking—about innovation.”
The EIB is at the forefront of financing for innovation. EIB Group support for innovative projects was a record EUR 18.7 billion last year, compared to less than EUR 10 billion in 2008.
However, the “Restoring EU Competiveness” study shows Europe needs:
- An additional EUR 130 billion a year to meet the EU’s target of spending 3 percent of GDP on research and development (taking the EU close to the R&D investment ratios of other leading economies)
- EUR 90 billion a year to keep up with advanced manufacturing technology
- EUR 35 billion a year to match US Venture Capital financing
- EUR 10 billion for state-of-the-art education facilities
- EUR 65 billion to reach EU targets for broadband, data centre capacity and cyber-security
Later this year the EIB intends to co-develop in the “Competiveness Lab for Europe” project. The aim is to pinpoint concrete recommendations to address Europe’s competiveness gap, and its findings will be presented in Davos in 2017.
The “Restoring EU Competiveness” study is an update of an EIB study prepared in July 2014. It has revised investment gaps, expanded its scope to include deeper analysis of the importance of the EU single market, and updated the section and data around EIB activities. It focuses on key enablers that require long-term investment and are critical to our future well-being. Its purpose is to help inform the identification of strategic priorities and show why action needs to be stepped up at the European level to revitalize long-term, competitiveness-enhancing investment in the EU.
Last year, as the world’s biggest multilateral financier, the EIB group (EIB and EIF combined) lent a record EUR 84.5 billion. In the coming year, one of its biggest challenges will be the management of the Investment Plan for Europe.
“Restoring EU Competiveness" study
EIB Annual Report