European Presidency Conference on innovation and clusters
Stockholm 22nd January 2008

Ladies and gentlemen,

I have already stressed the importance of EU innovation capacity for global competitiveness and growth and jobs at many occasions. Let me add today that this capacity is for me also the key for marrying economic success and sustainability. I trust that this conference on the specific role of clusters can also be seen as a contribution to the achievement of this overarching objective.

The decision to organise the conference in Sweden has not been made by chance. Sweden is well known as a leading world innovation power. Part at least of this success story is linked to Sweden's long tradition in cluster development. Cluster-focused state programmes have succeeded during the last two decades to reinforce existing private local initiatives. Today, Sweden hosts a number of internationally recognised world-leading clusters, giving birth to innovative start-ups, attracting foreign investments, and talents from all over the world.

The Swedish Agency for Innovation Systems, together with other innovation agencies in Sweden, has played a central role to this success and I would like to take this opportunity to thank VINNOVA for being the host organisation and for co-sponsoring this Conference.

Ladies and Gentlemen,

Sweden is a prime exemp1e that through innovation it is possible to marry global competitiveness and our European “way of life”. This is also our ambition for the EU as a whole - deliver to our citizens a high standard of living, more and better jobs, and an economic and social system in line with their values. An ambition which is fully realistic if we are able to pull in the same direction, learn from each other and build on synergies. I am convinced that the Partnership for Growth and Jobs that we have established three years ago provides us with the right framework to achieve this.

As you know, last month, the European Commission presented its analysis of progress made since 2005 and outlined areas on which we would like to put particular emphasis in the years ahead.

Looking back we have reasons for optimism. The number of jobs created and the overall economic performance have improved considerably in recent years. Since 2005, 6.5 million new jobs have been created. And according to our forecasts, another five million jobs will be created in the next two years. We are moving close to reaching the employment rate target of 70%. Unemployment has decreased to levels not seen in many years.

The strong economic performance since the renewal of the Lisbon Strategy in 2005 is of course partly related to the favourable economic cycle and a strong global demand. But let us not be too modest here. The EU as a whole also strongly benefited from the quickly improving economic situation in the new Member States after their accession to the EU.

I leave the debate on whether the good recent economic results are a predominantly cyclical or a predominantly structural phenomenon to economists. The important message for me is that the renewed Lisbon strategy has undoubtedly played a positive role for the implementation of structural reforms all around the EU. Our conclusion in December last year was therefore clear – the renewed strategy, based on an open and operational partnership, works.

This does not mean that everything is perfect. Implementation of reforms has not always been sufficient - notably in the crucial area of research and development. Experience so far as well as the aggregation of the national objectives for 2010 suggest that the overall 3% target will not be reached. Efforts must be stepped up decisively. While public R&D spending also needs to increase, it is clear that the large gap vis-à-vis our main competitors is mainly linked to private sector investment.

I do not need to explain to the distinguished economists you are how important framework conditions are for private investment decisions; All the more so in the long perspective often needed for investments into research. Let me be clear – creating such a framework has been and will remain the prime focus of this European Commission and after all the underpinning of the Partnership for Growth and Jobs itself.

But I also do not need to explain that investors and managers often have a choice between realizing short term profit and investing into long term competitiveness. Taking such decisions is not only about numbers – they also involve a judgement based on values. This is what the Commission had in mind when it wrote two years ago that contributing to the achievement of the objectives of the growth and jobs strategy is the main expression by business of its sense of social responsibility. And I call on all EU businesses to reflect on this.

Ladies and Gentlemen,

I said that we decided to keep the main thrust of the Lisbon Strategy. The four areas on which we wish to focus therefore come as no surprise: increased efforts regarding the knowledge society and innovation; the social dimension of the strategy, and in that context education and training and modernisation of labour markets; energy and climate protection: concrete steps towards a low carbon economy and last but certainly not least, improving the entrepreneurial potential and the environment for SMEs, where the Commission is making concrete proposals for the reduction of administrative burdens and will present a "Small Business Act" for Europe in the course of this year.

While staying with the winning strategy we took all opportunities to increase what I would call the implementation potential:

First, we reinforced the comprehensive character of the strategy by complementing the national reform efforts by a true EU level reform agenda - the so called Community Lisbon Programme. This will focus on 10 key objectives directly related to the four mentioned areas. Actions to achieve them are expected to bring considerable Community value added and to have a strong impact on growth and jobs.

Second, we put more emphasis on the external dimension of the strategy. Our approach is based on two pillars – we will continue to eagerly promote openness of markets worldwide, but we will also stand ready to stay firm against unfair competition.

And third, we further strengthened the so called Lisbon “governance” mechanism, in particular by better defining the responsibilities of the different actors. On the side of the EU the Community Lisbon Programme should henceforth be owned by all parts of the decision-making process – the Commission, the Council and the Parliament. On their side, Member States are invited to update their National Reform Programmes as necessary in line with the proposed common orientations, which I hope will be endorsed by the Spring European Council.

Ladies and Gentlemen,

I have already suggested that the success of the Lisbon Strategy will depend on our capacity to develop an innovation-intensive environment in Europe. In a situation where Europe cannot compete on nominal costs, it is bound to offer products and services and to use production techniques and skills which are better than those of our competitors.

I am glad to see that due to the efforts made at all levels and in all EU countries over the last 10 years, we can see a clear improvement of European performance and a progressive narrowing of the gap vis-à-vis best world performers. Our efforts should therefore continue and even intensify to maintain and accelerate this positive trend in the future.

This starts with a further improvement of our technological capacity as expressed by the 3% target. But if we are to retain the innovation edge and to improve it further we not only need to invest more in research, we also need to enhance our capacity to turn these research results into commercially successful products and services.

Second, we also need to realize that with the increasing speed with which technologies spread around the world, competition is increasingly won on non technological forms of innovation such as design or organisational innovation in management practices.

That is why our new innovation strategy – adopted in September 2006 - is a broad-based strategy. It not only covers all forms of innovation, it also aims at embracing both the supply and the demand sides.

One example of this broader approach is the recently adopted “Lead Market Initiative” for Europe. In this context, we have so far identified six promising emerging markets and developed concerted policy action to help their development, including the streamlining of legal and regulatory environments and accelerating the growth of demand.

Ladies and gentlemen,

History and numerous recent examples around the world, including Europe, show that geographical concentration of expertise, knowledge and qualified staff can create a highly fertile environment for innovation. Such “innovation hot spots” will certainly play a central role in the future to boost modern economies to higher performance, provided that a number of appropriate mechanisms and necessary instruments have been successfully put in place to support this process.

Experience shows that “clusters” are seldom created from scratch – they typically build on existing structures and benefit from specific local competencies.

Financial support is certainly necessary in order to modernise physical and research infrastructures, but is not sufficient. To achieve world-class excellence, “innovation hot spots” continuously need to make use of knowledge and talents that at times may be available elsewhere. Intensive networking and trans-national cooperation, which is one of the core objectives of our approach, is a promising way to achieve this.

Europe can develop and host internationally attractive poles on its territory and be among the most attractive places in the world. To realize this, it is necessary to work together under a common strategy with clear objectives and milestones and building upon the successful experience with the Growth and Jobs strategy.

We have already achieved a lot. I refer to the establishment of the “European Cluster Observatory” for mapping clusters, the “European Cluster Alliance” for facilitating cluster policy cooperation and recently the “European Cluster Memorandum”, which will be discussed during these two days. The Memorandum - open for signature until July 2008 - offers a good start with common guiding principles for our strategy. We will also inspire ourselves from the results of this conference. Together with the European Cluster Memorandum, it will help us to identify the new challenges in this area and to exchange ideas about the way we should act at EU level.

I wish you a successful event.
Source: By European Union