Following up on Javier from Spain’s question about the need for a dedicated modernisation drive in Europe (also, see here and here), we spoke to Cypriut politician Averof Neophytou – vice-president of the centre-right Cyprus Democratic Rally Party – and asked him if he agreed.
Yes, definitely. In a remarkably short time, economic globalization has changed the world’s economic order, bringing with it new challenges and opportunities. Europe knows how to innovate and has proven so in the past. Europe is a world leader in aerospace, telecommunications and low carbon energy technology. Europeans developed the technologies to harness wind power and much more. The European Union possesses extraordinary potential for innovation. Europe has a longstanding tradition of producing breakthrough inventions; it has a wealth of creative people and can build on its cultural diversity. It has laid the foundations for one of the largest single markets in the world, where innovative products and services may be commercialized on a large scale.
If that’s the case, why do we need to bother with top-down innovation drives? Can’t we just let the market innovate for itself?
If we are reluctant to provide incentives to promote R&D and if we are complacent now, we will not just be overtaken; we will be left far behind. Europe cannot compete in this new environment unless it becomes more innovative and responds more effectively to consumers’ needs and preferences.
For instance, for every euro invested in venture capital in the European Union, five times as much is invested in the USA and in recent decades more than two thirds of innovative companies have been created in the USA. It is estimated that this year China will register more patents than the USA, Japan or Europe, helped by innovation incentives and an innovation centred economy.
China, of course, has seen record economic growth over the past few decades, driven by its particular brand of state-led capitalism. Does the EU need to learn from this model?
All we need is a coordinated, Europe-wide drive to unleash enterprise and promote R&D and innovation. Europe 2020 commits the European Union to becoming a smart, sustainable and inclusive economy. The challenge now is to make it happen, therby contributing to greater competitiveness, sustainability and job creation.
We need to understand that Europe cannot compete with China and other South East Asian economies in producing low cost and low quality goods. Labour cost in Europe is much too high for that. What Europe needs to focus on is producing high quality goods that require value-added technologies and innovations. Europe has to remain number one in high quality goods and services in order to successfully compete in a global economy. And R&D is central to achieving that.