Why Can’t Europe Quite Master Innovation?

The European Institute of Innovation and Technology may be failing


When we think of innovation hubs on the world stage, the US invariably takes first place. The famed incubators of startups and ideas that are San Jose, California, Boulder, Colorado and San Francisco’s Bay Area are currently without parallel in Europe, though the burgeoning likes of Berlin and Amsterdam would attempt to dispute that claim. The continent that spawned some of the world’s most important inventions and advancements - think the enlightenment, the industrial revolution, etc - is in danger of being wildly overshadowed by the relatively young giant.

Asia is quickly catching up, too. The likes of Singapore, Hong Kong, Tokyo and Seoul are all working with impetus to cement their position on the world stage and, before long, Europe could lose yet more ground thanks to an environment that assesses risk before potential, and has failed to put a successful institute in place to harbor and encourage innovation. Politico use the example of the chemical industry - ‘since the turn of the millennium, China has increased its global share of scientific publications in chemistry from 7 to 28% and its share of world trade with research-intensive goods from about three to about 10%.’ Many are now calling for there to be an innovation principle embedded into all European policy making so as to avoid indirectly suffocating innovation and to best nurture startups.

Perhaps partly to blame is the widely acknowledged failures of the European Institute of Innovation and Technology (EIT), which was created to bring together business with academic research and science. In a damning report by the independent European Court of Auditors, it was found that the institute is riddled with management issues and has far too complex an operational framework, which has in turn ‘impeded its overall effectiveness.’ The auditors called for ‘significant legislative and operational adjustments’ if the body is ever to become a truly effective tool for breeding innovation, and declared it ‘not the impact-driven institute envisaged.’

The institute claims that the major criticisms laid out are being looked into and addressed, and the European Commission has set up a review panel that will make recommendations for reform by the end of this year. Interim director of the EIT, Martin Kern, said: ‘It’s important to keep in mind the audit was completed a year and a half ago and that we have made significant progress since.’ The problems with the institute run deep, though. 73% of the funding goes to five countries, leading the court to warn that ‘a two-speed Europe risks being further engrained’, and little evidence of tangible results is bringing the mismanagement into sharper focus.

There are many of the opinion that the institute simply needs time, though. Richard Templer, professor at Imperial College London and former director of the UK arm of EIT’s Climate-KIC, has called for the European Commission to be patient, allow the EIT to keep working, and to not expect immediate results. The institute was established in 2008, but Templer cites political pressure for immediate success as one of the key reasons for their failings thus far. Templer also points for the huge - mostly private - investment brought in thanks to EIT stimulus. The Climate-KIC has been particularly successful, with Templer’s own UK centre spawning 27 startups in the period 2012 - 2015, raising $65.5 million in investment over that time. Within the next two years that number could rise as high at $120 million and, according to Science Business, for every euro spent by the EIT, €12 of external funds have been pulled in.

The future of the EIT is unclear, but unless the institute can find a way of bringing in tangible results in the near future, it could be handed wholesale and potentially disruptive changes come the end of the year. The European Research Council also holds an important role in the promotion of successful innovation in Europe and, unless the two can find a way of pulling Europe out of its current slump, it could see itself fall further behind not just the US, but Asia in the coming decades. 

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