Keynote Address

Fientje Moerman

Vice Minister-President of the Flemish Government

Minister for Economy, Enterprise, Science, Innovation, and Foreign Trade


Mrs. Moerman said she would give an overview of what Flanders had been doing and planned to do with its research and innovation policy in Flanders. She noted that the current symposium grew out of a visit to Washington a year earlier, when she visited the U.S. National Academy of Sciences. She thanked Dr. Wessner and his team for their enthusiastic support and commitment to the event.

Flanders’ Investment in Innovation Policy

Investing in knowledge and innovation is crucial to sustainable growth, she began. At the Lisbon European Council of 2000, the EU heads of state expressed their desire for the EU “to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.” The Barcelona European Council set a target of 3 percent of GDP to be spent on research and development by 2010, with two-thirds coming from industry and one-third from government.

Before that, she said, the government of Flanders was critically aware of the importance of R&D to its economy and welfare. The transformation of Belgium into a federal state and the devolution of nearly all powers with regard to education and R&D to regional public bodies marked the start of Flanders’ strategies. At that moment Flanders’ public expenditures on R&D were far below the European average. Since 1995, however, successive governments had more than doubled public funding for research and technological innovation to a level well above the EU average.



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Keynote Address Fientje Moerman Vice Minister-President of the Flemish Goernment Minister for Economy, Enterprise, Science, Innoation, and Foreign Trade Mrs. Moerman said she would give an overview of what Flanders had been doing and planned to do with its research and innovation policy in Flanders. She noted that the current symposium grew out of a visit to Washington a year earlier, when she visited the U.S. National Academy of Sciences. She thanked Dr. Wessner and his team for their enthusiastic support and commitment to the event. Flanders’ Investment in Innovation Policy Investing in knowledge and innovation is crucial to sustainable growth, she began. At the Lisbon European Council of 2000, the EU heads of state expressed their desire for the EU “to become the most competitive and dynamic knowledge- based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.” The Barcelona European Council set a target of 3 percent of GDP to be spent on research and development by 2010, with two-thirds coming from industry and one-third from government. Before that, she said, the government of Flanders was critically aware of the importance of R&D to its economy and welfare. The transformation of Belgium into a federal state and the devolution of nearly all powers with regard to edu- cation and R&D to regional public bodies marked the start of Flanders’ strate- gies. At that moment Flanders’ public expenditures on R&D were far below the European average. Since 1995, however, successive governments had more than doubled public funding for research and technological innovation to a level well above the EU average. 

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 KEYNOTE ADDRESS Key Mechanisms of the Innovation Strategy She noted that larger budgets are necessary but insufficient for successful science and innovation policy; spending the resources in the right way is equally important. Taking into account best practices of the international environment, particularly from the European context, the Flemish government had developed an innovation strategy creating appropriate funding mechanisms and instruments to monitor and evaluate its policy on a regular basis. She summarized the main characteristics as follows: 1. Maintain a double budgetary balance—part for academic basic research and technology innovation, and part for higher education institutes and industry. 2. Adopt a bottom-up approach. Apart from the strategic research centers, the government has set few thematic priorities, funding instead projects proposed by the researchers themselves. 3. Give universities and interuniversity research institutes, such as IMEC, a large degree of autonomy. The Flemish government sets out annual block grants, long-term performance targets, and long-term management agreements. Performance-based funding is the key. Addressing the “Innovation Paradox” In 2003, the Flemish government concluded an Innovation Pact with key players from academia and industry to reach the 3 percent Barcelona target. The Flemish Science Policy Council (VRWB) was designated to monitor the execu- tion of the pact, using 11 key indicators. The first findings, published in 2005, were that Flanders is characterized by an average innovation profile and was insufficiently able to transfer excellent (academic) research findings into inno- vative products or added societal value—the “innovation paradox” that afflicts most European and other countries. Just a few, mostly international, companies accounted for all industrial research in Flanders, leaving the economy vulnerable to external events and corporate decisions. The challenge was to reduce the innovation paradox, which meant reducing a traditional culture gap between industry and academia. Academic researchers had long felt that working in industry corrupts the academic career, diminishes publication output, and restrains academic freedom. At the same time, industry described a structural mismatch between the research agenda of academia and the research needs of industry. A recent study by the Catholic University of Leuven (K.U.Leuven) sent more positive signals about the interaction between industry and academia. It suggests that the gap between industry and academia is shrinking. First, the study estimated that in 2005 about 10 percent of all R&D in Flanders was performed by academic-industry partnerships. This was in line with statistics in the Third S&T Indicators Report by the European Commission (2003), which found that the rela-

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0 INNOVATIVE FLANDERS tive share of industry in R&D expenditure in higher education in Belgium was 10.9 percent, far above EU (6.9 percent) and U.S. (6.3 percent) levels. Second, from 1991 to 2004, universities and public research institutes created 101 spin-off companies, 54 of them in the past 5 years. Third, research teams that work closely with industry also perform well in basic research. Reducing the Gap Between Academia and Industry She then turned to measures the government is taking to help reduce the gap between academia and industry. First, in 2004, the government established the Industrial Research Fund (IOF) at the universities, with an annual bud- get of about €11 million. This is distributed to universities on the basis of performance-based parameters, such as number of spin-offs created, number of patent applications, volume of industrial contract research, and budgetary share in the European Framework Programme. The IOF allows for hiring postdoctoral staff, who concentrate on research findings that show great near-term potential for market applications. This group of researchers is evaluated on the basis of their applications-oriented performance. In the near future, the IOF will also allow universities to fund strategic basic research projects. It also allows every university and associated college of higher education (“hogescholen”) to pursue its own policy of strategic applications-oriented research. The aim is to stimulate industry-oriented research and support excellent research groups in industry- relevant areas by giving them longer-term funding. Second, the government has set up interface units, or technology transfer offices, at universities. The budgets for these TTOs will double over 2 years through 2007. The goals is to help offices toward further professionalization of staff and services and help them include university-associated colleges of higher education. In addition to the IOF and the TTOs, the government is exploring additional initiatives, including intersector mobility of researchers and the use of predictive methods to assess the potential economic impact of technologies. Intersector mobility between academia and industry is paramount for the exchange of knowl- edge and methodology, to refine the research agenda, and familiarize young researchers with the industrial working environment, where more and more will find employment. The main existing fellowship scheme for PhD students is managed by the IWT, the Flemish Institute for the Promotion of Innovation by Science and Technology. Fellows submit an applied research proposal, typically for 4 years, allowing them time to obtain their PhD. The IWT also runs a limited postdoctoral program that funds researchers planning to set up their own spin-off company. These programs focus on applied research, but have not yet reached their goal of creating intersector mobility in the sense of moving people between companies and university labs in both directions.

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1 KEYNOTE ADDRESS Risks and Benefits of Foresight Exercises With regard to foresight, the major exercise being undertaken by the Flemish Policy Research Council (VRWB) is trying to identify major S&T areas of the future, taking into account their current economic capability, research potential, links with current international trends, and potential for future growth. The VRWB came up with six clusters: (1) transport; (2) ICT and health care services; (3) health care and treatment; (4) new materials, nanotech, and the processing industry; (5) ICT for socio-economic innovation; and (6) energy and environment for the service sector and processing industry. This foresight exercise contrasted with the use of thematic priorities to deter- mine funding channels, which she criticized as being “top-down” and not leaving enough “breathing space” for bottom-up initiatives and smaller research players. She preferred an open, no-strings-attached strategy, which invites research pro- posals defined by the industrial and academic communities themselves, using peer review to the extent possible. The results of the VRWB foresight exercise, she said, might be useful for choosing among new large-scale projects of research consortia. She mentioned the “clusters of competence,” bottom-up initiatives by industry to create a criti- cal knowledge platform in their sector. Open innovation is the underlying prin- ciple, with knowledge made available to all participants. Research is done in close collaboration with multiple industrial partners so that costs and risks are shared. About ten areas of competence are now funded, in areas such as logistics, food, mechatronics, geographical information systems, product development, and industrial design. Non-technological Aspects of Innovation A second major policy challenge, she said, was to broaden the concept of technological innovation to include its non-technology dimensions. Until two and a half years ago, Flemish innovation policy had only targeted the technological dimension of innovation. There was a growing awareness, however, that innova- tion also touches on management, public and private governance, labor market organization, public procurement, and design. The challenge is to develop policy elements that cover these elements. One policy priority is to “mainstream” innovation so that it becomes a hori- zontal dimension in all policy fields. The Flemish Innovation Plan, approved in 2005, specified nine main lines of action cutting through all sectors. Each year a status quaestionis of achievements will be produced. Among those designed to date: • With the Minister of Environment, she established the Environmental Innovation Platform (MIP), which brings together all relevant stakeholders and

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2 INNOVATIVE FLANDERS acts as a catalyst for innovation in a domain in which Flanders has much “unclus- tered” knowledge and expertise. • For FY2007, the government set aside a budget for “media innovation,” another cross-cutting area with huge economic potential. • A roundtable was organized with specific industrial sectors, such as the life sciences and chemical industries. The group has listed innovation deficiencies and obstacles to economic growth and drawn up action plans which are being executed and closely monitored. The roundtable, she said, had allowed for the frank exchange of views between the government, labor unions, companies, and research institutes, and offered practical solutions. Finally, she noted the need for strategic, international intelligence. Two fac- tors make it imperative that governments join forces across borders: (1) the grow- ing rate of globalization, and (2) complexities presented by an open innovation system in which governments no longer have sufficient instruments to create an adequate policy mix. Flanders needs to enhance the mutual understanding of its science and innovation systems, she said, both nationally and internationally. Importance of Networking for a Small Region In Flanders, science and innovation policy preparation is the main task of the recently created Department of Economy, Science and Innovation. However, high-quality, evidence-based policy can be prepared only by bringing together people who know both theory and practice on daily basis, such as the universities, junior colleges, and companies. Desk study and field work, she said, have to be combined. One challenge is to bolster the pool of S&I management knowledge in Flanders and to network the agencies and organizations that carry out science and innovation analyses, often on an ad hoc basis. The Flemish research landscape is so small, she said, and its capacity so limited, that only a networked approach can yield efficient results. It makes no sense for small and often isolated study units at various organizations to be unaware of each other’s activities. A networked approach is one of her policy priorities for the coming months and years. Another is increasing first-hand field knowledge of those responsible for policy prepara- tion. She plans a mobility program to allow for the temporary exchange of staff members between administrations, funding agencies, universities, public research institutes, schools of higher education, and companies. Such a program, she said, will make participants aware of the peculiarities of other, often unknown, envi- ronments. It should also reduce the number of superfluous rules when designing new programs. Innovation is a global challenge, she concluded. To innovate is the key to survival, economic growth, and social welfare. On both sides of the Atlantic are the assets of excellent basic science, internationally minded young scientists, and state-of-the-art research equipment. The growing complexities of open innovation

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 KEYNOTE ADDRESS and the increasing challenge of eliminating the innovation paradox are strong drivers for great mutual understanding and exchange of views. She proclaimed this Flanders-U.S. “innovation dialogue” a good start and thanked the organizers and host. Discussion Dr. Spencer said that the amount of foreign direct investment in the Flanders area was impressive, and asked whether it could be enhanced by having faculty from American and European universities spend time in Flanders. Mrs. Moerman said Flanders had developed a program called Odyssey to re-attract Flemish scien- tists who have emigrated abroad to do their research, as well as some researchers from across the world. The universities have a large degree of autonomy, she said, so they were free to attract academic researchers from various countries. A questioner asked how IP regulations affected innovation in Flanders. Mrs. Moerman said that there was indeed a culture problem. The universities traditionally receive an amount for seed funds, and the Flemish government had doubled that amount and set up a general scheme for dividing profits earned from IP between the university and the inventor, along with a fair tax measure. She acknowledged that IPR questions continued to present complications, especially where different patenting systems were involved.