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The differences between the various national economies in the Eurozone are becoming ever more pronounced. Whilst the economic cycle in Germany becomes increasingly stable, countries such as Greece and Portugal are still facing the effects of national debt crises. This year's annual SEEK conference, held by the Centre for European Economic Research (ZEW) from 8 to 9 October in Mannheim, was thus entitled "Overcoming the Crisis: How to Foster Innovation and Entrepreneurship in a Diverging European Economy?". Participants considered how investments in innovation and entrepreneurship might help to close the growing gap between the various European national economies. On the first day of the conference, high-profile speakers from the fields of politics and economics discussed the main areas, on which policy made in Brussels may draw, in order to actively promote innovation in Europe. Speakers included Peter Praet, Chief Economist of the European Central Bank (ECB), and Mario Monti, former Prime Minister of Italy.

The European Central Bank’s (ECB) Chief Economist Peter Praet, giving his keynote address at ZEW’s SEEK annual conference 2015

"Stable macro-economic conditions and targeted economic policy are fundamental to successful innovation," concluded ZEW President Professor Clemens Fuest in his introductory speech at the SEEK conference.

Peter Praet, PhD, executive board member at the ECB, provided insight into the macro-economic outlook in the Eurozone, "The economic sphere is increasingly characterised by on-setting pessimism in regard to long-term growth."  This prevents quick recovery, and in the long-term, may lead to falls in investment. This may in turn further inhibit economic convergence between countries in the Eurozone, explained the Economist in his keynote address. The European Central Bank is unable to play a major role here; it’s down to individual states to implement appropriate economic policies.

As Professor Mario Monti, former EU Commissioner for Internal Market, Financial Services and Financial Integration, Customs and Taxation explained in his keynote address, however, moderate reforms are needed. "The political conditions in Europe are extremely poor – we do not need a revolution, but marginal adaptations."  This must not, however, result in deviation from Eurozone policies.  Much of what German and Northern European Politicians promote is correct, "Germany ought to be proud of the Euro", he said, "as its best export product."

Entrepreneur Andreas von Bechtholsheim, who participated in the SEEK conference via telephone from the Silicon valley, explained why despite efforts made in Europe, so many more new businesses are successfully established in the USA.

What exactly is missing in Europe to make businesses truly innovative? This was the question addressed in the panel discussion with Dr. Gitte Neubauer, Director of Cellzome GmbH and winner of the EU-Innovation Prize for Women in 2011, Frédérique Sachwald, Head of Research and Development at the Ministry of Higher Education and Research in France, Franz Fehrenbach, Chair of the supervisory board at Robert Bosch GmbH, as well as Dr. Georg Licht, head of ZEW's research department "Industrial Economics and International Management". ZEW President Fuest moderated the debate. The panel quickly agreed that Europe is not lacking entrepreneurial ideas. The issue is rather that the process by which new firms are established and financed is much more complex in Europe than it is in the US.

Drawing on data from research carried out in US markets, Ufuk Akcigit, Assistant Professor at the University of Chicago and research fellow at the private US economic research institute, the National Bureau of Economic Research (NBER), showed that innovation is the basis of a large proportion of top incomes in the United States. The major difference between innovative areas in the USA, and Europe, is that young firms in Europe lack access to capital, as well as the necessary technology. "Europe lacks investment in academic training", added Akcigit in his speech on the second day of the conference (9 October 2015). A closely networked university system such as that which exists in the USA, would certainly have an impact on research and innovation.

What North America and Europe do have in common is their large-scale political plans, to ensure that all households have access to broadband internet. A recurring discussion amongst policy-makers concerns the so-called "digital gap." This is clearly a socio-economic issue of who has the opportunity to access and use information and communication technologies, such as the internet, and who does not? In his presentation, Professor Tommaso Valletti, from Imperial College Business School in London, considered whether this gap might be closed, and indeed whether it should be.  His research illustrates that unbundling individuals’ internet connections in Great Britain has led to significant improvements in the quality and speed of the internet. In other words "speed matters". According to Valletti, this is proven by the fact that increased internet speed is associated with rising property prices. Finally, the internet influences political policy resulting, for example, in tax cuts.

"Strengthening Efficiency and Competitiveness in the European Knowledge Economies", or SEEK, was established in 2010 with the aim of drawing on practical research to inform analysis of European economic policy. Since then, 35 SEEK research projects, concerning for example, the factors determining future markets and products, and organisational transformations in businesses, have been completed. Currently, six SEEK projects are taking place.

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Date

10.10.2015

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