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Ana Birulés i Bertran: Fiscal incentive for innovation

The European Council of Barcelona met on the 15th and 16th of March and suggested to its member countries that they amplify their investments in Science, Technology and Innovation over the next ten years, until they reach a percentage of 3.0% of their Gross Domestic Product. At what level are the current European investments in this area?
In Europe, the levels of investments in Research and Development are, on average, around 1.8% of the GDP. However, there is a strong participation of public investments towards universities and research centers. The weight of the private sector is relatively much lower. And this imbalance is not only a question of research and development. It also reflects the capacity to transfer pure research into technological products and services. Little is wagered on innovation. This, as a matter of fact, was the theme that Spain brought up at the Barcelona Conference.

There, for the first time in history, the Research ministers and the Industry ministers from all of the European counties met. Their evaluation was that it is necessary to advance, not only in research and development, but also in such as way as to stimulate a greater participation of the private sector that would allow for the transformation the UE into a European space for innovation, and the proposal was ratified by the conference.

Nevertheless, the proposal for increasing towards 3%, does not refer exclusively to public investments?
The objective is to invest 3% of the GDP, although the member states of the European Union should create benchmarks and favorable conditions to the expansion of company investments in R&D, in order to spur innovation. Or that is, of the 3% of the desired investments, more or less two thirds should be carried out by the private sector and one third by the public sector, on average.

In the specific case of Spain, how are the investments in S&T?
During 2000 we had an increase of 14.5% in investments in R&D. Innovation increased by 20% and doubled the number of innovating companies. However, we had come from an as yet low level of investments in this area, something like 1.7% of our GDP, taking innovation into consideration. We know that we have to speed up not only in terms of research and development, but also to put in place a fiscal benchmark for business, creating a favorable environment to the development of seed capital and venture capital.

Was the theme of venture capital also discussed at the Barcelona meeting?
Yes. Everybody was in agreement about the necessity of carrying out an integration of the European stock markets in order to stimulate the development of venture. Another key theme, also discussed in Barcelona – and which we have been applying in Spain -, is the mobility of researchers between research centers and companies. Last year we invested in mobility between scientific centers. During this year 2002, we created an act that authorizes scientists to ask for special leave, of up to four years, to collaborate with a company or to create their own company, putting forward patents and knowledge as capital. Up until now, permission had been very short and only for post doctorates. Now, after four years, they can return to their research centers without losing their working posts.

We also took the debate on researcher mobility to the meeting of the European Union, within the Barcelona Council. A plan of action for mobility was established that includes social assistance between member countries of the European Union. Mobility should not just pre-suppose work posts, recognition of qualifications, career and of the work done, but must also involve questions such as social assistance. It should be identical to that of the researcher’s native country.

How will the proposals of the Alcue Conference, embodied within the Brasilia Declaration, be received at the Summit Meeting of the heads of State in Madrid?
The Alcue had as its objective the intensification of the relationships between the European Union, Latin America and the Caribbean. We were placing science, technology and innovation on the political agenda of the governments. The Brasilia Declaration brought together very important proposals and is the key to cohesion and for new forms of cooperation. I believe that the meeting of the heads of State and governments in Madrid is going to represent an advance in political cooperation with very concrete elements, among them sustainable development and knowledge as well as the information society. The themes related to Science, Technology and Knowledge and Innovation, are more and more at the highest levels of political decision taking. And the Barcelona Conference has also demonstrated this point.

One is not only talking of advancing, growth, and future well being, but of the opening of many windows from the point of view of society. For example, in Brasilia there was a debate on the importance of Health and Society Sciences – which opens up new perspectives for society, or for the information society – which would allow for a reduction in time and space, and which would make possible that regions that don’t have fixed telephones could have the telephone and the Internet. These are important themes from the point of view of scientific and economic advances, as well as from the social point of view, for the strengthening of these countries and of democracy.

One of the concerns of the Latin American and Caribbean countries is with the S&T financing issue. What is the way out for developing countries?
Since it is a little early to make conclusions, I will give a reflection on the theme. At the Council of Industry and Research Ministers of the European Union meeting in the city of Giron, which came before Barcelona, the Board of the European Investment Bank were present because they also believed that they should focus their resources on Science, Technology and Innovation. I believe that this is an favorable arrangement that is beginning to grow between organs, banks and financial entities dedicated towards development. Today foster, development and cooperation are clearly passing through the backing of these elements that we dealt with in the Brasilia Declaration. And this will be a key issue at the Summit Meeting of the heads of State and government in Madrid in the month of May.

And on this question of financing, can business also collaborate?
It is clear that many companies are investing in innovation as well as in research and development. It is also clear that all markets are not equal. There are minimum elements of adaptation. For example, there is the desire that the content development and applications development in the universities be close to where the companies are installed, and be the highest possible since this can guarantee them greater competitiveness in the market.

As an example, Spanish companies have come to Brazil because the market is important and there is technical and scientific capacity. For the company, this environment has to be innovative. Agreements, research and development contracts with the universities or direct economic participation in the development of venture capital, are means through which the companies have been supporting R&D.

But how can one create conditions to increase private investments?
One needs to have a favorable fiscal environment. Fiscal incentive is a good to encourage development, including what is called patronage, which in the past was very common in the arts. Today one needs to look at scientific patronage. It is of interest to the companies that around them, their zone of production, that there be universities, and also an environment of information technology, that can invest money and have fiscal advantages.

Are there fiscal incentive laws for S&T in Europe?
They exist in Spain and a little in Holland, and there are some patronage situations in the United Kingdom.

Ana Birulés i Bertran is Spain’s minister for Science and Technology, president of the Research Council of the EU, president of the Industrial Council of the EU and president of the elecommunications Council of the EU