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20 November 2006

LERU Argues Case for Prioritising Public Procurement

New LERU report on universities and innovation — The role of public procurement — European Commission urged to make new public procurement policies its top priority in promoting innovation

The League of European Research Universities (LERU), of which the University of Heidelberg is a member, has today urged the European Commission to make radical new public procurement policies its top priority in promoting innovation.

A new LERU report, Universities and Innovation: The Challenge for Europe, sets out the case for why governments should use their leverage as major buyers of goods and services to provide incentives for companies to become more innovative and to make full use of universities' research and knowledge base. Although many universities have become major economic actors in their own right, producing very high rates of return on public investment, Europe's business sector, particularly SMEs, still fails to effectively exploit the outstanding research being done by many centres of excellence.

The role of public procurement

LERU suggests that the Commission's strategy for action to improve innovation should focus on three headline issues: supply-side structural changes improving the capacity of universities to contribute to innovation; demand-side incentives for the exploitation of the knowledge base; and interaction processes between universities and business. Here the relative weakness of demand is the vital issue.

To improve supply, universities need to analyse where their own strengths lie, promote the best economic strategy for their region, and ensure that academic structures foster cross-disciplinary research. They should continue to build on their particular strengths to improve their links with industry. They need to be supported in these efforts with appropriate policies and measures from the Commission and member states of the EU. Universities' efforts need to be accompanied by forward-thinking national and European policies that address the issue of university funding and stimulate business demand for the research, knowledge and expertise that universities have to offer.

Professor Geoffrey Boulton, Vice-Principal of Edinburgh University, convenor of the LERU Working Group on EU Research Policy and author of the new report comments: "Research-intensive universities in Europe are committed to and heavily engaged with the innovation process. What is needed now are incentives to stimulate demand on the university knowledge base, particularly from high-growth SMEs, which are the missing parts of the growth equation."

Specifically, LERU advocates that the Commission should use public procurement budgets to provide powerful incentives to stimulate business demand for university research. It supports the creation of a European version of the Small Business Investment Research Program (SBIR) in the United States, which requires all departments to reserve 2.5% of their extramural R&D budgets for small firms.

A procurement approach to stimulating innovation has important advantages over the traditional reliance on grants and tax incentives. Using a proportion of governments' R&D budgets to purchase contracts would encourage firms to draw on the university research base. Member states should therefore increase the proportion of their procurement budgets allocated to R&D and introduce tax reduction schemes for expenditure on R&D and innovation.

Higher education and innovation

The report also highlights the importance of a diverse higher education sector in increasing Europe's innovative capacity. It provides a number of case studies of how businesses and universities are working together to close Europe's "innovation gap". For example, the University of Tampere helped reverse the decline of manufacturing in Finland by providing technical expertise on "intelligent" production processes, whilst Europe's leading technology cluster has grown up around the University of Cambridge over the past four decades.

The presence of universities may also provide incentives for companies to relocate to a particular area, or an industry that has little or no precursor in a region may develop out of a university's research activities. For example, Wolfson Microelectronics started life as a microelectronics research group spin-out at the University of Edinburgh. After flotation on the London Stock Exchange in October 2003, it now employs 300 staff, is valued in excess of 500 million euros, and sponsors five PhD studentships annually.

The League of European Research Universities is an association of 20 leading research-intensive universities sharing the values of high-quality teaching within an environment of internationally competitive research. Founded in 2002, LERU advocates education through an awareness of the frontiers of human understanding, the creation of new knowledge through basic research, which is the ultimate source of innovation in society, and the promotion of research across a broad front, in partnership with industry and society at large.

The report is available online at http://www.leru.org/ (click on Publications).

For general comment about LERU, contact David Livesey, Secretary General of LERU, phone: +44 1223 334243 or +44 7709 624545 (mobile), david.livesey@leru.org.

For comment about the report, contact Professor Geoffrey Boulton, G.Boulton@ed.ac.uk , phone: +44 131 650 4844.

For information about LERU, copies of the new annual report, policies and position papers, contact Katrien Maes, Executive Director, LERU, on +32 16 32 99 69, katrien.maes@leru.org.

Please address any inquiries to:
Dr. Michael Schwarz
Press Officer of the University of Heidelberg
phone: 06221/542310, fax: 54317

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