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A Competitive Europe Needs Increased Investment, Innovation and Education

Austrian Parliament, 17 September 2018

European Parliamentarians Are Debating the Future of Europe against the Backdrop of Global Competition

 

Vienna (PK) – The second session of the two-day Interparliamentary Conference on SECG dealt with the question of how the EU can direct investments to areas where it is needed for Europe to be able to compete internationally in the future. Introductory statements were delivered by Iliyana Tsanova, Deputy Managing Director of the European Fund for Strategic Investments (EFSI), as well as by Member of European Parliament Nils Torvalds. Both speakers pointed to considerable investment gaps in digitalisation and innovation in Europe at present.

Tsanova: We need more Silicon Valleys in Europe

Iliyana Tsanova presented the activities of the European Investment Bank’s European Fund for Strategic Investments. The EFSI was created in the wake of the 2008 economic and financial crisis in order to channel additional investment into the economy. To date it has initiated € 335 billion in investments, thereby significantly contributing to easing the credit crunch experienced primarily by small and medium-sized enterprises. Around 700,000 SMEs in all Member States of the EU have benefited from the fund.

Ms. Tsanova sees Europe‘s greatest challenge in funding new and innovative companies that require new financing instruments. Europe is too small and too fragmented for individual states to be able to mobilise sufficient venture capital on their own, she said. Traditionally, states are overly reliant on banks and loans for investments. Often there is little success in turning research findings into new products. Differing regulations and standards, as well as language barriers, present additional obstacles for innovative, cross-border companies. Moreover, European companies are hesitant when it comes to the acquisition of new ideas, she said.

The need for investment in key strategic and technological areas, as well as for innovation, energy and sustainable infrastructure, is certainly very great, explained the EFSI Deputy Managing Director. The next financial framework will be aimed at addressing these issues; however, it will be necessary to create the proper political framework. It is incumbent on national governments to eliminate bureaucratic obstacles to digitalisation and to invest appropriately in training and lifelong learning. Without a doubt digitalisation will have an enormous impact on our lives, and we need to tackle the challenges that it will entail, she stressed.

Consequently, the EU is facing the challenge of overcoming its technological deficits, and at the same time building on its own innovative strength. It is important to seize every opportunity to gain innovation leadership. According to Ms. Tsanova, the right approach is to pool the 14 total financial instruments into one InvestEU programme. However, the question is to what extent certain regions should be allowed to experience stronger development. Nevertheless, there is no alternative to creating several regional centres of technological development - "Silicon Valleys for Europe" - she said.

MEP Nils Torvalds: We must not create disadvantaged regions

The variety of challenges facing the EU can be summed up in the term “modernisation”, according to MEP Nils Torvalds. The world is currently in the midst of the third large-scale modernisation wave, which is marked by globalisation, the digital revolution and heightened international competition. The reaction has been a general attitude that a good offense is the best defence, said Mr. Torvalds. Accordingly, all Member States are looking to invest in innovation and new technologies. However, the EU is faced with the question of how to overcome its internal differences, and how to prevent certain regions from falling further behind economically and in education. For Mr. Torvalds, the answer lies in creating an EU budget with enough leeway that makes the necessary investments possible and strikes the proper balance.

Great expectations for the new EU Financial Framework as an innovation driver

The debate focused on the question of how EU Member States can move from their very different starting points toward a common investment and research policy. There is hope for the upcoming EU Financial Framework, which is to significantly increase funding for research, innovation and education. It is important, particularly for the smaller and economically weaker Member States, that the upcoming framework programme provide them with a balanced and equal access to funding. This goes for Horizon Europe, the follow-up programme to Horizon 2020, as well as for EU investment subsidies. Horizon Europe and InvestEU must not overlap, but rather should be designed as complementary instruments, said one participant. The project aimed at creating an EU innovation advisory council was welcomed on the condition that it provide added value to the Research Advisory Council already in existence. Its remit must be to ensure that the results of innovative research find their way to businesses.

There was general agreement on the fact that Europe needed a new industrial policy, but that increased investment in education and innovation was necessary. The deepening of the Single Market was also linked to the question of mobility. The EU must speak with one voice if it wishes to keep up with the United States and Asia in international competition, and it must focus on its own strengths, according to the general tenor of the debate. (Conclusion Interparliamentary Conference on SECG)

PLEASE NOTE: Photos of the conference can be found at the website of the Austrian Parliament at https://www.parlament.gv.at/ENGL/PERK/PE/EU2018/MEDIEN/PHOTOS/ALLE_FOTOS/index.shtml.

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