The European Commission (EC), represented by Research Commissioner Philippe Busquin, and the European Investment Bank (EIB), represented by its president Philippe Maystadt, signed an agreement today to strengthen co-operation in order to boost research and technological innovation in Europe by offering complementary, although independent, forms of financial support to researchers.
The main objective of this action is to make most of the grants given by the EC and the loans/risk capital granted by the EIB for research projects, research infrastructure and innovative enterprises, and hence to stimulate European economies. This objective shall be achieved by better co-ordinating the respective funding of both parties as well as through establishing synergies between the Research Framework Programme of the Union and the "Innovation 2000 Initiative" of the EIB. Fotis Kafatos, Director-General of the European Molecular Biology Laboratory (EMBL), who is currently establishing an incubator for innovative biotechnology companies within the organisation, will illustrate the practical benefits of this collaboration.
Commenting the signature of the joint memorandum Research Commissioner Philippe Busquin said: "When funding research and innovation the Commission and the EIB have always shared a number of common objectives such as fostering innovation and a competitive economy but now we will also combine our funding possibilities to optimise the effect of the money invested."
EIB President Philippe Maystadt added how much emphasis the Bank is giving to the "i2i" initiative (Innovation 2000 Initiative) which was launched last year after the Lisbon Summit and through which the EIB is supporting sectors such as R&D and Human Capital.
Investment in research and its exploitation
Europe carries out research of the highest standards and possesses many advantages in this domain. However, investment in this area is too low. The European Union invested about 1.9% of GNP in research in 1998, compared to 2.6% for the United States and 2.9% for Japan. In addition, the exploitation of research results is not on par with the excellent scientific output.
Promoting innovation in Europe
In the context of the emerging knowledge-based society, it is vital to seize the many new opportunities that are created. Hence an appropriate environment must be supported to facilitate innovation through start-ups, spin-off companies and efficient networking. A special effort is required as currently the EU is behind the US and Japan in terms of technological and commercial performance as measured by the number of patents filed or in the value of high tech exports respectively. (see annex 3)
Furthermore, high technology firms, and in particular start-ups and spin-offs, are a key to the process of converting research results into innovation, with considerable socio-economic impact. In Europe 50% of new jobs are created by these high tech SMEs, which represent only 4% of SMEs, yet these firms often struggle to obtain the funds necessary for their emergence and growth.
A European strategy
In Lisbon in March 2000 the European Council set the goal of becoming "the most competitive and dynamic knowledge-based economy" and stressed the need to work towards the creation of a genuine "European Research Area" . In particular, it asked that the necessary steps be taken to improve the networking of research activities and to improve the investment in research and technology. It also welcomed the contribution which the European Investment Bank was ready to make with the "Innovation 2000 Initiative" (i2i). Furthermore, at the Stockholm meeting in March 2001, the Council emphasised that Europe must do more to harness research and finance talent to ensure that European ideas reach the European market place first. The Community research Framework Programme should therefore make full use of its new instruments on excellence, integration and joint implementation of national programmes. Moreover, the Stockholm European Council welcomed the continued implementation of EIB's i2i initiative and invited the Bank to further step up its support of R&D activities.
Co-operation based on complementarity
Given the Community need for increased funding for research and other forms of financing and based on their common Community objective - to stimulate research and innovation in order to develop a more competitive economy - and their complementary financial instruments, the EC and the EIB have decided to co-operate actively.
The agreement signed today establishes a framework for co-operation; defines common objectives; identifies areas for joint action; and specifies the terms for co-operation. The latter will include a regular exchange of information between the two institutions and to their clients; and high level meetings to monitor the progress of the co-operation.
Co-operative action has begun in 3 specific areas:
- stimulation of research and technology development projects and subsequent exploitation of results
As was stated above, this is an area where Europe is lagging and where efforts must be pooled and increased. The financing of certain quality research projects submitted to the FP and not selected due to shortage of funds could be alleviated by the EIB and the EIF. Likewise the downstream development and exploitation of results would be improved with better access to financial resources.
The European Molecular Biology Laboratory (EMBL) provides an illustration of how a research institution can call these instruments of both institutions in a complementary manner. Research grants from the Framework programme amounting to EUR 19.4 million over 3 years are expected to be awarded for research in bioinformatics. Currently, the EIB has approved a loan for an amount of up to EUR 29 million to EMBL for the financing of incubator facilities (see annex 1).
- support to research infrastructures
Funding research infrastructures is difficult to obtain for institutions seeking to establish facilities requiring long-term financing. Here EIB loans can complement EU grants in order to ensure the maintenance and development of such infrastructures. There are several examples of large scale infrastructures funded by the EC which could benefit from EIB finance through loans, such as the national research networks interconnected through the GEANT project, or EMMA, the European Mutant Mouse Archive.
- promotion of high technology companies and incubators by the provision of venture capital
The thousands of projects funded by the EU bring together tens of thousands of researchers which include many potential investment opportunities for investors. Complementary financial resources, so vital to ensure that start-ups emerge and develop from these rich fields, will be available from EIB loans and in particular from the EIF providing equity through venture capital funds (see annex 2).
Several such cases already exist such as Imstar, a French company involved in a consortium which obtained a EUR 1.3 million research grant from the Framework Programme and also attracted equity investment backed by the EIF.
The EU's research and development policy has a Community mandate: to stimulate research and innovation in order to develop a more competitive economy. It is mainly implemented through the Framework Programmes which award research grants worth about EUR 4 billion per year in research. A new Framework Programme has been proposed with a budget of EUR 17.5 billion for the period 2002-2006.
The EIB also has this objective and supports research and technological innovation by loans, through its Innovation 2000 Initiative (i2i) which could amount to EUR 12-15 billion over 3 years and where R&D is a key element; and by venture capital, through the European Investment Fund (EIF), which could reach EUR 1 billion.
Agreement signed today
Details of the motivations and modalities of the agreement for collaboration between the EC and the EIB are set out in the joint memorandum signed today by Philippe Busquin on behalf of the EC and Philippe Maystadt on behalf of the EIB. The text of this memorandum is available as a PDF file.
Overall Performance of research and innovation systems, 1998
Whereas EU-15 is behind the USA and Japan in terms of scientific, technological and commercial performance per inhabitant, the performance of certain individual Member States like the Netherlands, Sweden, Finland, France, Germany and the United Kingdom is at least as good as and in some cases better than that of the USA.
See: European Commission, DG Research: "Key Figures 2000" page 50