The Hindu Business Line : Innovation wave sweeps Europe

British writer, T.S. Eliot, once said: “Only those who will risk going too far can possibly find out how far one can go.” This is true of most advanced nations of Europe — all aiming far above the ground and gazing with colossal foresight.

The European Union has set itself the target of becoming the most competitive and dynamic knowledge-based economy in the world by 2010. There is now new impetus in Europe to strengthen its innovation capacity. The EU recognises that the private sector plays a key role in driving innovation and economic growth. Interestingly, it is the several small, but advanced, economies such as Sweden, the Netherlands, Finland, and Denmark that are leading the innovation wave in Europe.

Last month, I visited Denmark and the Netherlands to study how these two countries are positioning themselves to continue to prosper in this new economic environment.

Re-inventing Denmark and the Netherlands

Both Denmark and the Netherlands are doing well economically. They have attained a high level of gross domestic product (GDP) per capita, kept unemployment relatively low, and maintained a high level of quality in scientific output. Yet, both countries see an urgent need to re-invent their economies to sustain economic competitiveness. Innovation and talent are seen as key pillars in this effort.

In the light of the emerging competition from emerging economies such as India, Denmark and the Netherlands recognise that they can no longer compete on cost and price. Rather, knowledge creation and innovation have become their key to long-term growth and prosperity. In fact, investment in R&D and education is always an election issue during Denmark’s elections.

Dutch Innovation Platform

In the Netherlands, the Prime Minister is personally leading the innovation drive. He chairs the Dutch Innovation Platform, which provides a forum for leading members of the government, industry and knowledge institutions to discuss new growth strategies and advance innovation.

Both countries see fundamental R&D reforms as a key strategy to re-invent their economies and to position their countries for sustainable growth. Denmark and the Netherlands are ranked highly in terms of research quality. Strengthening the nexus between research and innovation is a key focus of their governments. Both countries want to strengthen their innovation framework to derive greater economic value from research. They call this process “valorisation”.

In the Netherlands, the government created leading technology institutes, a unique instrument to bring research and technologies at its universities and knowledge institutions closer to industry — in particular, to the small and medium enterprises (SMEs). These institutes encourage collaboration between business enterprises and public research institutions to build excellence in a number of strategic and economically valuable areas.

Why Innovation?

Europe believes it is the key to continued competitiveness and to maintain a high quality of life. High technology goods accounted for around 30 per cent of the EU’s exports and imports in 2007. Or, the equivalent of two million jobs in R&D.

One of Europe’s major initiatives to bring all the innovative elements together is the European Institute of Technology. The EIT focusses on technology and closer relationships with industry. It has a role to create “knowledge and innovation communities” made up of closely integrated staff from universities, research organisations and industry. These three elements represent the knowledge triangle.

The EIT is a major step forward in bringing these points closer together. They will work together and maintain links with organisations from all over Europe, gathering “the best of Europe” to work on key technologies for industry.

Europe Rapidly Adapting

The progressive economic integration of the countries of Central and Eastern Europe and the Baltics into the European Union is now bringing better jobs and long-awaited improvements in living standards to increasing parts of the population throughout the Continent.

But globalisation forces constant adaptation and change, as the spread of information, innovation and technical progress expands opportunities and markets for all countries. Unified Europe is adapting rapidly to the changes.

Lessons for India

The modern economy is fast-moving, dynamic and ever-changing. To be successful, Indian companies must master the art of innovation, constantly developing and adopting the best products, techniques and practices available to them.

The Governments — at the Centre and the States — must learn. Successful economies and societies will be those that can adapt to the demands of rapid change, that are flexible and creative and manage change rather than being submerged by it. Innovation has a central role to play in helping us meet these challenges.

Private Sector

It seems to me that it will be the Indian private sector that will be at the forefront of sustainable wealth creation and employment generation through innovation, in the 21st century.

The Governments must play a key role in putting in place the building blocks for the future and in creating the right policy framework for businesses to flourish.

Ensuring that the science base is properly funded and linked to industry. That the skills of our workforce meet the future needs of industry. That we build the badly required, but missing, infrastructure so that we continue to be at the forefront of the IT and services revolution.

We need to create a modern regulatory framework that drives innovation and encourages growth and increased productivity. And, we must support business, promoting innovation with more contacts between business and universities and encouraging the growth of successful clusters and tomorrow’s high-growth companies. And we must do so not only at a national level but in a way that ensures all parts of India and all sections of society benefit.

In this context, we have much to learn from Europe where innovation has helped the Continent to remain on top of the world.

(The author is former Europe Director of CII and lives in Cologne, Germany. Responses to blfeedback@thehindu.co.in)