Regional Technological Capabilities & Access to H2020 Funds
By Daniele Archibugi, Rinaldo Evangelista and Antonio Vezzani
Since the release of the Lisbon Strategy in 2000, fostering science, technology, innovation, and human capital have been considered key ingredients of all subsequent EU strategies aimed at achieving a cohesive and competitive European Union.
In recent years, regions have steadily increased their relevance as key spatial and socio-economic units as well as policy targets of both cohesion and Science and Technology (S&T) policies. Regional innovation strategies for smart specialisation, such as the RIS3, have become a key component of EU Cohesion Policy, supporting the thematic concentration of resources and reinforcing the strategic programming and orientation of policy action.
Although EU S&T policies might have an impact on the level of scientific and technological cohesion of EU, their role in influencing the dynamics of regional technological gaps or technological convergence in Europe has been largely neglected. In this blog post we discuss recent evidence of the potential role played by Horizon 2020 (H2020) research funds disbursed by the EU, highlighting how this may depend on its design and the allocation of resources across different funding schemes.
Technological asymmetries in the EU
Technological capacities in the EU are far from being evenly distributed across industries, firms and even less so at a spatial level. This is due to various factors, such as the cumulative nature of innovation and learning processes, the localised character of spillovers, and externalities in the generation and economic exploitation of technology. These features produce long-lasting spatial technological asymmetries that can produce non-reversible processes of polarization, agglomeration and clustering.
Figure 1 provides a visual representation of such asymmetries, comparing the patent per capita across EU NUTS2 regions in 2001-04 and 2013-16. The figure shows strong macro-regional differences in the patent intensity and a degree of technological heterogeneity within most EU countries. Moreover, a comparison of the two maps shows the persistence of very large gaps between the lowest and highest performing macro-regional areas of EU, with only a mild catching-up process by Eastern European regions and Portugal.
Figure 1. Patents per 10,000 habitants- 2001-2004 (left) and 2013-2016 (right)
Source: Authors’ computations on Regpat 2019a data.
H2020 and technological cohesion
Existing EU S&T policies can have a twofold effect on the regional gaps characterising the EU technological landscape. On one hand, competitive schemes may end up favouring areas of excellence and leading players and regions since they aim to strength the role of the EU innovation system in the global arena. But on the other hand, the explicit collaborative setting of part of such policies, supporting multi-country research groups with the aim to create an integrated European Research Area, may complement cohesion policies by reducing regional gaps. It is a typical example of where public policies may lead to (unintended) contrasting results. They can contribute to the cohesion target or, in contrast, exacerbate existing economic and technological gaps among regions.
Table 1 summarises the main features of four key funding schemes under H2020, which account for about 80% of the Total H2020 budget: the European Research Council (ERC), the Marie Skłodowska-Curie Actions (MSCA) the Research & innovation actions (RIA) and the Innovation actions (IA). They might have different effects on the level of technological cohesion in the EU depending on the specific science and technology activity supported, their policy design and the targeted beneficiaries. The results of our empirical analysis confirm that different schemes have different impacts.
The ERC, established in 2007 under the 7th Framework Programme (2007-2014 funding period), was the first scheme allowing the support of research projects by single researchers or teams with the idea of fostering scientific excellence. Under H2020 the ERC was entitled with a budget of 13€ billion (about 18.7% of the overall budget) to foster frontier research. Our analysis in the Journal of Common Market Studies suggests that ERC can potentially exacerbate the technological disparities among EU regions and is likely to benefit the most densely populated urban areas.
The MSCA also operates under the pillar of ‘Excellent Science’ to distribute highly competitive and prestigious research and innovation awards, allowing for: career development through mobility to a hosting institution; the support of research networks and the promotion of science to society. Our study suggests that the network orientation of the MSCA may limit its negative effect on technological cohesion.
The RIA and IA support basic and applied research to foster the development of new knowledge addressing so-called societal challenges. The former is slightly more oriented toward the earliest phases of the research and development process. The competitive logic characterising this policy scheme, which favours applications and projects involving both high and low innovative regions, is likely to facilitate technological cohesion.
Conclusion
Policies that result in opposing outcomes might still be valuable, provided they are informed by an overall strategy. This potential duality applies also to the Horizon 2020 Programme, the EU’s flagship instrument for science and technology policy.
Our econometric exercise confirms that, overall, the access to H2020 is consistent with the competitive logic of EU S&T policies. However, our work also reveals the presence of a rebalancing mechanism in the regional allocation of H2020: regions located in less developed countries tend to get an amount of funds that is higher to that implied by their technological capabilities.
This rebalancing mechanism has much to do with the collaborative-inclusive logic characterizing the policy design of RIA and IA that seem to prevail over the more ‘elite’ nature of the ERC and MSCA schemes, where access to funds increases more than proportionally with technological capabilities.
However, the actual contribution of H2020 to the EU cohesion target is likely to be rather limited, and unable to offset the stickiness of the technological gaps across EU regions. Despite H2020 being one of the world’s largest public schemes supporting research and innovation, its budget is not comparable to what top corporations spends in a year. While the yearly budget of H2020 was about 11 billion euros, in 2019 large corporations such as Alphabet (23€ billion), Microsoft (17.5), Huawei (16.7), Samsung (15.5), Apple (14.4) or Volkswagen (14.3) alone spent larger amounts on R&D.
In times of resource scarcity, a reallocation of part of the Cohesion Funds to those S&T schemes characterized by a collaborative-inclusive logic could be envisaged instead of trying to increase the share of Cohesion Funds dedicated to innovation. Relying upon top-down policy schemes such as H2020 might also bypass the lack of administrative capacity of less developed regions, which has prevented them from taking full advantage of the bottom-up logic of the EU Cohesion Funds.
Authors:
Daniele Archibugi is a research director at the Italian National Research Council, Irpps, in Rome and Professor of Innovation, Governance and Public Policy at Birkbeck College, University of London. He works on the economics of technological change, the dynamics of globalisation, EU integration and international political theory.
Twitter handle: @DanieleArchibu1
Department Twitter handle: @BirkbeckUoL
Rinaldo Evangelista is a Professor of Economic Policy at the University of Camerino (Italy). His research activity focuses on the areas of Economics of technological change and on the analysis of innovation in manufacturing and services.
Department Twitter handle: @UniCamerino
Antonio Vezzani is Associate Professor at the Roma Tre University and Research Associate at the National Research Council of Italy (CNR). His research focuses on the economics of technological change, intangible assets and intellectual property rights, local and global knowledge dynamics, and innovation policies.
Twitter handle: @AntonioVezzani
Department Twitter handle: @EconomiaRomaTre