The Judicial Dimension of the European Neighbourhood Policy. EU Diplomacy Paper 08/2013, November 2013

In this paper, the expression “neighbourhood policy” of the European Union (EU) is understood in a broad way which includes the members of the European Free Trade Association (EFTA) contracting parties to the European Economic Area (EEA), the EFTA State Switzerland, candidate states, the countries of the European Neighbour-hood Policy (ENP), and Russia. The European Court of Justice (ECJ) is the centre of gravity in the judicial dimension of this policy. The innermost circle of integration after the EU itself comprises the EFTA States who are party to the European Economic Area. With the EFTA Court, they have their own common court. The existence of two courts – the ECJ and the EFTA Court – raises the question of homogeneity of the case law. The EEA homogeneity rules resemble the ones of the Lugano Convention. The EFTA Court is basically obliged to follow or take into account relevant ECJ case law. But even if the ECJ has gone first, there may be constellations where the EFTA Court comes to the conclusion that it must go its own way. Such constellations may be given if there is new scientific evidence, if the ECJ has left certain questions open, where there is relevant case law of the European Court of Human Rights or where, in light of the specific circumstances of the case, there is room for “creative homogeneity”. However, in the majority of its cases the EFTA Court is faced with novel legal questions. In such cases, the ECJ, its Advocates General and the Court of First Instance make reference to the EFTA Court’s case law. The question may be posed whether the EEA could serve as a model for other regional associations. For the ENP states, candidate States and Russia this is hard to imagine. Their courts will to varying degrees look to the ECJ when giving interpretation to the relevant agreements. The Swiss Government is – at least for the time being – unwilling to make a second attempt to join the EEA. The European Commission has therefore proposed to the Swiss to dock their sectoral agreements with the EU to the institutions of the EFTA pillar, the EFTA Surveillance Authority (ESA) and the EFTA Court. Switzerland would then negotiate the right to nominate a member of the ESA College and of the EFTA Court. The Swiss Government has, however, opted for another model. Swiss courts would continue to look to the ECJ, as they did in the past, and conflicts should also in the future be resolved by diplomatic means. But the ECJ would play a decisive role in dispute settlement. It would, upon unilateral request of one side, give an “authoritative” interpretation of EU law as incorporated into the relevant bilateral agreement. In a “Non-Paper” which was drafted by the chief negotiators, the interpretations of the ECJ are even characterised as binding. The decision-making power would, however, remain with the Joint Committees where Switzerland could say no. The Swiss Government assumes that after a negative decision by the ECJ it would be able to negotiate a compromise solution with the Commission without the ECJ being able to express itself on the outcome. The Government has therefore not tried to emphasise that the ECJ would not be a foreign court. Whether the ECJ would accept its intended role, is an open question. And if it would, the Swiss Government would have to explain to its voters that Switzerland retains the freedom to disregard such a binding decision and that for this reason the ECJ is not only no foreign court, but no adjudicating court at all.

Towards a New (European Research) Deal: The Case for Enhanced Fiscal Policy Coordination on Research and Innovation. Bruges European Economic Policy (BEEP) Briefing 20/2008

The paper reviews the evolution of research and innovation in the EU and assesses how current policies and programmes have influenced the development of Europe's research landscape. Based on existing literature, evaluation reports and practice, the paper critically examines the effectiveness of current European research funding instruments in a context of open innovation and in the presence of global spillovers. It therefore develops a subsidiarity test to assess whether current rationales still prove sufficient to justify policy intervention in this area. The paper sheds light on how to improve the effectiveness of EU action by enriching it by the use of coordinated fiscal policy for research funding. This will constitute an incentive to genuine bottom-up research, development and innovation (R&D&I) and a stimulus to local investments in innovation. The paper also assesses the potentials of a reinforced open method of coordination as well as a review of state aid law in the field of research funding in the EU.

R&D, Spillovers, Innovation Systems and the Genesis of Regional Growth in Europe. Bruges European Economic Research (BEER) Papers 5/October 2006

Research on the impact of innovation on regional economic performance in Europe has fundamentally followed three approaches: a) the analysis of the link between investment in R&D, patents, and economic growth; b) the study of the existence and efficiency of regional innovation systems; and c) the examination of geographical diffusion of regional knowledge spillovers. These complementary approaches have, however, rarely been combined. Important operational and methodological barriers have thwarted any potential cross-fertilization. In this paper, we try to fill this gap in the literature by combining in one model R&D, spillovers, and innovation systems approaches. A multiple regression analysis is conducted for all regions of the EU-25, including measures of R&D investment, proxies for regional innovation systems, and knowledge and socio-economic spillovers. This approach allows us to discriminate between the influence of internal factors and external knowledge and institutional flows on regional economic growth. The empirical results highlight how the interaction between local and external research with local and external socioeconomic and institutional conditions determines the potential of every region in order to maximise its innovation capacity. They also indicate the importance of proximity for the transmission of economically productive knowledge, as spillovers show strong distance decay effects. In the EU-25 context, only the innovative efforts pursued within a 180 minute travel radius have a positive and significant impact on regional growth performance.

The Economics of Subsidies for R&D: The Intrinsic Difficulty of Determining Optimum Subsidies and Implications for Reform of EU State Aid Rules on R&D. Bruges European Economic Research (BEER) Papers 26/February 2013

The European Commission is reforming state aid rules. An important element of the reform is to prevent the granting of excessive subsidies. This paper shows that the determination of the optimum subsidy for research is difficult. What appears to be the socially optimum level of research effort depends on the benchmark of comparison and whether this benchmark is the situation before subsidies or the situation after subsidies. In the presence of asymmetric information, policy makers should induce firms to reveal their true costs and should grant subsidies to the relatively more efficient firms by allocating subsidies not on a first-come-first- serve basis but through a competitive process. However, competitive selection of subsidy recipients is not a panacea as it may not be possible to be effectively used in all cases and for all research programmes. This is because in principle public subsidies should support those programmes with the largest value for society, rather than with the lowest costs. Although this paper focuses on R&D, its findings are relevant to any subsidy whose aim is to remedy market failure caused by positive externalities.

Exporting the Internal Market – Panacea or Nemesis for the European Neighbourhood Policy? Lessons from the Energy Community. EU Diplomacy Paper No. 2, 2014

Over the last decades, a constant feature of the relations between the European Union (EU) and the countries in its neighbourhood has been the export of European law. Achieved through bilateral or multilateral agreements, the export of law has led to the ‘juridification’ of external policy. The energy sector is in the vanguard of this development. European energy law has been made applicable to third countries through the European Economic Area (EEA) and, most important for the European Neighbourhood Policy (ENP), the Energy Community. Bilateral agreements of relevance for energy include the (draft) Association Agreement with Ukraine which was rejected in November 2013 and came on the agenda again following a revolution in the country. Geopolitics has played and continues to play an eminent role in this respect. What does that mean for the export of European law to neighbouring countries? This paper argues that the export of European (energy) law does not only remain possible but is preferable to purely diplomatic relations between the EU and its neighbours if certain conditions are fulfilled. Based on the experience in the EEA and the Energy Community, multilateral integration agreements can be successful if they offer a well-designed institutional and procedural architecture based on mutual commitments, extend the benefits of the internal market to the participating third countries and create ‘win-win’ situations in satisfying also the participating third countries' vital interests in return for undergoing the hardship of economic reforms.

Prepared for a Symposium on Country Development at the European Meeting on Cybernetics and Systems Research, Vienna, Austria, April 2012 (Untitled). ACES Working Papers, April 2012

In Kazakhstan doctoral students are not expected to make a contribution to knowledge, as is required at Western universities. Rather, their task is to become familiar with what is known and then make policy recommendations for Kazakhstan. For example, how can the human capital in Kazakhstan be improved? This is a very broad subject for a PhD dissertation. However, it does require a holistic perspective, and such dissertation topics may create an opportunity for systems scientists. When Russell Ackoff created the Social Systems Sciences PhD program at the Wharton School of the University of Pennsylvania, he had his students solve practical problems for business or government managers. That program graduated a large number of people who became consultants. A few became academics in several countries. The program created a philosophy and methods for holistic management. Large issues in developing countries may be a source of clients for systems scientists who want to further develop philosophy, theories and methods by working with large social systems.

State Aid to Infrastructure: Do Competitively Selected Operators Obtain an Undue Advantage? Bruges European Economic Research Papers (BEER) 33/2015

Addressing high and volatile natural resource prices, uncertain supply prospects, reindustrialization attempts and environmental damages related to resource use, resource efficiency has evolved into a highly debated proposal among academia, policy makers, firms and international financial institutions (IFIs). In 2011, the European Union (EU) declared resource efficiency as one of its seven flagship initiatives in its Europe 2020 strategy. This paper contributes to the discussions by assessing its key initiative, the Roadmap to a Resource Efficient Europe (EC 2011 571), following two streams of evaluation. In a first step, resource efficiency is linked to two theoretical frameworks regarding sustainability, (i) the sustainability triangle (consisting of economic, social and ecological dimensions) and (ii) balanced sustainability (combining weak and strong sustainability). Subsequently, both sustainability frameworks are used to assess to which degree the Roadmap follows the concept of sustainability. It can be concluded that it partially respects the sustainability triangle as well as balanced sustainability, primarily lacking a social dimension. In a second step, following Steger and Bleischwitz (2009), the impact of resource efficiency on competitiveness as advocated in the Roadmap is empirically evaluated. Using an Arellano–Bond dynamic panel data model reveals no robust impact of resource efficiency on competiveness in the EU between 2004 and 2009 – a puzzling result. Further empirical research and enhanced data availability are needed to better understand the impacts of resource efficiency on competitiveness on the macroeconomic, microeconomic and industry level. In that regard, strengthening the methodologies of resource indicators seem essential. Last but certainly not least, political will is required to achieve the transition of the EU-economy into a resource efficient future.

The Israeli lobby for Research and Innovation in the European Union. An example of efficient cooperation in the European Neighbourhood? Bruges Political Research Papers 49/2015.

Israel figures among the world-leaders in R&D expenditure and has a high-performing scientific community. Since the 1990s it has been associated with the Scientific Policy of the European Union via the European Research Framework Programmes (FP). The cooperation between Israel and the EU in this domain has gradually increased and benefits the scientific communities on both sides. In 2014 the association of Israel to the latest and biggest European FP ever adopted (Horizon 2020) was renewed for the fourth time. Based on all the scientific evidence provided, the elaboration of a European Research Policy can be identified as a highly regulated domain, offering relevant ‘channels of influence’. These channels offer Israel the opportunity to act within the Research Policy system. Being a member of several formal EU bodies in charge of implementing EU Research Policy, Israel is able to introduce its positions effectively. This is accompanied by an outstanding level of activity by Israel in linking concrete EU Research Policy measures to the Israeli Scientific Community at the national level. To carry out this task, Israel relies on an effective organization, which remodels the provided EU structures: European ‘National Contact Points’ (NCPs) are concentrated within the ‘Europe Israel R&D Directorate’ (ISERD). ISERD connects efficiently all the relevant actors, forums and phases of EU-Israeli Research Policy. ISERD can be recognized as being at the heart of Israel's research cooperation with the EU, and its structure may be a source of in

The European Union’s growing innovation divide. Bruegel Policy Contribution Issue 2016/08 April 2016

There is a significant divide between the European Union countries with the greatest capacity to innovate, and those with the least capacity to innovate. The difficult convergence process has been proceeding only very slowly and unevenly, and more recently seems to have come to a halt. A particular weak spot for the EU is corporate investment in research; in this area, the intra-EU divide is growing. As the business sector is responsible for the persistent R&D intensity gap between the EU and the United States and Asia, the persistent failure of lagging EU countries to catch up in this area provides much of the explanation for the EU’s weak performance compared to other economies. The evidence shows that the deployment of public budgets and the mix of policies employed by EU member states have tended to aggravate the intra-EU divide. The EU needs to better understand its growing internal innovation divide if it is to achieve its ambition of becoming a world innovation leader.