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«EU INDUSTRIAL POLICY: ASSESSMENT OF RECENT DEVELOPMENTS AND RECOMMENDATIONS FOR FUTURE POLICIES STUDY Abstract Following disregard in the 1980s, ...»

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Source: Authors’ processing of EU data39 The EU 2020 strategy allocates a significant amount of resources to initiatives directly and indirectly contributing to the achievement of the EU industrial policy’s objectives.

The table below provides a snapshot of the main programmes and initiatives expected to contribute to improving European competitiveness and which, as such, form part of an “EU industrial policy”.

€908.4 billion in payments (0.95% EU GNI). Source: European Commission (2013), Multiannual Financial Framework 2014-2020 and EU budget 2014: the figures, Brussels.

€450.7 billion will be allocated to smart and inclusive growth and €373.2 billion to sustainable growth (2011 prices).

on http://ec.europa.eu/budget/mff/figures/index_en.cfm?viewas=table.

–  –  –

In quantitative terms, the primary instrument at the disposal of the EU to foster European competitiveness appears to be the Cohesion Policy, under the heading Economic Social and Territorial Cohesion. In turn, the heading Competitiveness for Growth and Jobs includes initiatives relevant for industry such as the “Key Enabling Technologies” Programme, the SME instrument, the Connecting Europe Facility Programme and the programme for Competitiveness of Enterprises and SMEs (COSME). The most important initiatives are described in some details below.

ESIF/Cohesion Policy

A contribution to the achievement of EU industrial priorities is provided by the European Structural and Investment Funds (ESIF)40 under the headings of Economic, Social and Territorial Cohesion and Sustainable Growth and Natural Resources. Roughly 99% of the heading Economic, Social and Territorial Cohesion (around €322 billion) will be allocated to European regions in the framework of Cohesion Policy through the ERDF, ESF and Cohesion Fund41.

Through the principle of thematic concentration, the Commission will allow the concentration of ESIF funds in the EU 2020 flagships initiatives, which include Industrial Policy. These investments will be guided by the concept of “Smart Specialisation” (see box below) to allow Member States and regions to concentrate investments on their competitive advantages and to encourage the creation of cross-European value chains.

Including the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Guarantee Fund (EAFG), the European Agriculture Fund for Rural Development (EAFRD), and the European Maritime and Fisheries Fund (EMFF).

Transnational Cooperation Regions will benefit from the support of the ERDF, while more developed, transition and less developed regions will be supported both by ERDF and ESF. The Cohesion Fund will only target Transition Regions.

–  –  –

Box 5. The principles of Smart Specialisation The notion of smart specialisation establishes a link between regional policy and the Innovation Union of the EU 2020 agenda. It is a strategic approach to economic development through targeted support for research and innovation. It was announced in the 'Innovation Union' flagship initiative of the Europe 2020 Strategy as the key action of Cohesion Policy in the field of innovation. The legal basis of the smart specialisation can be found in Regulation (EU) 1301/2013 of the European Parliament and of the Council of 17

December 2013, which provides the following definition:

“Smart specialisation strategy means national or regional innovation strategies which set priorities in order to build competitive advantages by developing and matching research and innovation own strengths to business needs in order to address emerging opportunities and market developments in a coherent manner, while avoiding duplication and fragmentation of efforts. A smart specialisation strategy may take the form of, or be included in, a national or regional research and innovation (R&I) strategic policy framework. Smart specialisation strategies shall be developed through involving national or regional managing authorities and stakeholders such as universities and other higher education institutions, industry and social partners in an entrepreneurial discovery process”.

The development of "research and innovation strategies for smart specialisation" was proposed as a pre-condition for countries and regions availing themselves of the ERDF and EAFRD with the aim of maximising the impact of EU investments. The idea is to focus on what regions (already) do best, and do it better by combining existing innovation from underlying regional strengths and assets (e.g. existing competitive advantages). It is not necessarily about specialisation, rather about helping to create innovation that may end up linked to an existing industrial structure and which focuses only on a few priorities and thus creates sufficient critical mass to actually make a difference. More than EUR 40 billion is expected to be channelled into Smart Specialisation from community funds, leveraging funds from the public sector and the private sector, too.

Source: Authors.

Of the ESI Funds, the ERDF will specifically focus its investments on the first four of the 11 thematic priorities of the Cohesion Policy (see box below) that directly and indirectly relate to industrial policy, namely innovation and research, the digital agenda, support for SMEs and a low-carbon economy. Around €100 billion will be dedicated to these thematic priorities, of which €26.7 billion will support the shift to a low-carbon economy (energy efficiency and renewable energies).





In particular, 80% of the ERDF allocation for more developed regions, 60% of that for transition regions and 50% of that for less developed regions will be concentrated on at least two of these four priorities. The Cohesion Fund will also support infrastructure projects (including digital infrastructure) under the Connecting Europe Facility, as discussed above.

–  –  –

THEMATIC OBJECTIVES OF THE 2014-2020 COHESION POLICY (1) strengthening research, technological development and innovation;

(2) enhancing access to, and the use and quality of, ICT;

(3) enhancing the competitiveness of SMEs, of the agricultural sector (for the EAFRD) and of the fisheries and aquaculture sector (for the EMFF);

(4) supporting the shift towards a low-carbon economy in all sectors;

(5) promoting climate change adaptation, risk prevention and management;

(6) preserving and protecting the environment and promoting resource efficiency;

(7) promoting sustainable transport and removing bottlenecks in key network infrastructures;

(8) promoting sustainable and quality employment and supporting labour mobility;

(9) promoting social inclusion, combating poverty and any kind of discrimination;

(10) investing in education, training and vocational training for skills and lifelong learning;

(11) enhancing the institutional capacity of public authorities and stakeholders and efficient public administration.

Source: Authors The role of the ESF with regard to industrial policy will be to support the implementation of active labour market policies. The EC Communication on integrated industrial policy 42 calls for close coordination between the public sector and industrial partners in education and training policies. The number of medium-skilled workers also needs to match the demand from fast-growing industries such as the environmental and energy sectors.

Horizon 2020

With a budget of about €70.2 billion, Horizon 2020 is the financial instrument (replacing the Seventh Framework Programme) addressing the implementation of the EU 2020 flagship ‘Innovation Union’, and thus securing Europe's global competitiveness. The Horizon 2020 Programme will contribute to the achievement of EU industrial policy43 goals through its industrial leadership pillar. Important programmes are the EU Strategy for Key Enabling Technologies (KETs)44 and the SME instrument.

 Support for key enabling technologies. The programme is expected to redefine global value chains, enhance resource efficiency and reshape the international division of labour. A budget of €6.6 billion has been earmarked to finance KETs of photonics, micro- and nano-electronics, nanotechnologies, advanced materials, biotechnology and advanced manufacturing and processing. To facilitate the commercialisation of research results, Horizon 2020 is also committed to financing European Commission (2010), Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: An Integrated Industrial Policy for the Globalisation Era Putting Competitiveness and Sustainability at Centre Stage. COM(2010) 614.

‘ An Integrated Industrial Policy for the Globalisation Era’ (COM(2010) 614).

Preparing for our future: Developing a Common Strategy for Key Enabling Technologies in the EU’ (COM(2009) 512); and ‘A European strategy for Key Enabling Technologies – A Bridge to Growth and Jobs’ (COM(2012) 341).

PE 536.320 35 EU Industrial Policy: Assessment of Recent Developments and Recommendations for Future Policies more closer-to-market prototypes and demonstration projects than to date. Also, space research is identified as one of Europe's 'key industrial technologies' with a potential for enabling EU innovation and competitiveness. In this regard, the programme is committed to fostering a cost-effective, competitive and innovative space industry (including SMEs) by supporting the development of innovative space technologies and operational concepts (from the project idea to demonstration in space). A key element of the Horizon 2020 Programme is to join forces with the private sector through public-private partnerships in key industrial domains, so as to leverage further private investments.

SME instrument managed by the Executive Agency for SMEs (EASME)45. More than  €2.8 billion has been allocated for the SME instrument from 2014 to 2020, representing around 7% of the total budget of the Societal Challenges and Leadership in Enabling and Industrial Technologies (LEIT) blocks of Horizon 2020. Of this total amount, €90 million has been allocated for ICT in 2014 and 2015. The SME instrument comes in addition to the support provided through the participation of SMEs in collaborative projects continued within Horizon 2020, as well as other measures related to SMEs, such as the Eurostars programme.

Other programmes are the Eurostars programme aimed at R&D-performing SMEs that wish to exploit the benefits that come with international collaboration; the Fast Track to Innovation (FTI) scheme, which provides funding for close-to-market, business driven projects that is open to proposals in any area of technology or application; and SILC (Sustainable Industry Low Carbon), a practical, industry-based initiative aimed at finding technological and non-technological innovation measures that would allow energyintensive manufacturing and processing industries to reduce the GHG emissions of their production processes while maintaining their competitiveness.

Connecting Europe Facility

The Connecting Europe Facility - with a budget of around €19.3 billion - is a further key EU instrument financing targeted infrastructure investments. Over the 2014-2020 period €5.1 billion will be allocated to finance energy infrastructures, €1 billion for broadband infrastructures and €13.2 billion for transport infrastructures (of which €10 million will be earmarked from the Cohesion Fund). Energy, transport and digital connections are expected to create a truly integrated Single Market enabling both citizens and businesses to be connected. In particular, as part of the ‘Digital Agenda’ flagship initiative of the EU2020 strategy, the CEF programme supports the deployment of fast and ultrafast broadband networks and their uptake, including by SMEs. It also promotes the interconnection and interoperability of digital service infrastructures as well as access to such networks, including ‘Safer Internet for Children’, ‘eProcurement’, ‘Open Data’, ‘Multilingual’, ‘eHealth’ and ‘eID’.

Over the period 2014-2020 EASME will manage, on behalf of the European Commission: most of COSME, including Enterprise Europe Network (EEN), Your Europe Business and the European IPR Helpdesk; part of Horizon 2020, and in particular the SME instrument; the Energy Efficiency part of the challenge ‘Secure, Clean and Efficient Energy’; calls for proposals in the fields of waste, water innovation and sustainable supply of raw materials under the challenge ‘Climate action, Environment, Resource Efficiency and Raw Materials’; some areas of the ‘Industrial Leadership’ challenge, part of the Leadership in Enabling and Industrial Technologies;

innovation in SMEs; the Sustainable Industry Low Carbon Scheme (SILCII); the EU programme for the Environment and Climate action (LIFE); part of the European Maritime and Fisheries Fund (EMFF); the legacy of the Intelligent Energy – Europe programme; the legacy of the Eco-innovation initiative.

–  –  –

The latest European Commission Report on the targets achieved by the Digital Agenda46 shows, for instance, that there are some areas where progress is insufficient (see Figure 9).

Figure 9: How the EU scores on the Digital Agenda targets Source: http://ec.europa.eu/digital-agenda/en/digital-agenda-scoreboard.



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