Does EU regulation hinder or stimulate innovation? CEPS Special Report No. 96, 19 November 2014

Introduction. One frequently hears the question posed in the title to this report, but there is little systematic analytical literature on the issue. Fragmented evidence or anecdotes dominate debates among EU regulatory decision-makers and in European business, insofar as there is a genuine debate at all. This CEPS Special Report focuses on the multi-faceted, ambiguous and complex relationship between (EU) regulation and innovation in the economy, and discusses the innovation-enhancing potential of certain regulatory approaches as well as factors that tend to reduce incentives to innovate. It adopts an 'ecosystem' approach to both regulation and innovation, and study the interactions between the two ecosystems. This general analysis and survey are complemented by seven case studies of EU regulation enabling and disabling innovation, two horizontal and five sectoral ones. The case studies are preceded by a broader contextual analysis of trends in EU regulation over the last three decades. These trends show the significant transformation of the nature as well as improvement of the quality of EU regulation, largely in the deepened internal market, which tend to have a favourable and lasting effect on the rate of innovation in the EU (other things being equal). Among the findings include the following: Regulation can at times be a powerful stimulus to innovation. EU regulation matters at all stages of the innovation process. Different types of regulation can be identified in terms of innovation impact: general or horizontal, innovation-specific and sector-specific regulation. More prescriptive regulation tends to hamper innovative activity, whereas the more flexible EU regulation is, the better innovation can be stimulated. Lower compliance and red-tape burdens have a positive effect on innovation. The authors recommend incorporating a specific test on innovation impacts in the ex-ante impact assessment of EU legislation as well as in ex-post evaluation. There is ample potential for fostering innovation by reviewing the EU regulatory acquis.

Europe's economic challenges and the importance of ideas and innovation. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

How will we Europeans earn our living in 20 or 30 years' time? And how can it be done, while remaining true to our values of fairness, freedom and solidarity? These fundamental questions predate the financial crisis and will still be with us once we have fully overcome it. Of all the groups in society, business leaders are probably most keenly aware of the challenge posed by globalisation. They have their finger on the pulse of global economic activity and keep alerting me that Europe is losing out. The trade unions, generally more focused on the economy's demand side, regularly call for more (public) investment. Their leadership remains highly committed to Europe but they can sense a rise of Euro-scepticism among their members. We must, and can bring these two narratives together. Yes, global change is relentless and our societies must adapt, but we can also preserve what makes Europe such a special place: a unique combination of relative prosperity, solidarity, individual freedoms, and security. This challenge was always on my mind.

Measuring firm innovativeness: towards a composite innovation index built on firm innovative posture, propensity and performance attributes. ACES Working Paper No. 12, 2008

The ability to innovate is generally accepted as a critical success factor to growth and future performance of firms. Yet, this acceptance obscures a comprehensive perspective on how firms can influence their innovation capacity and resulting performance. This paper proposes a '3P' construct of innovation measurement that simultaneously considers the Posture, Propensity and Performance related to a firm's innovation capabilities. We propose and provide empirical support showing that robust measurement of the performance implications of innovation requires the consideration of input, throughput and output factors simultaneously. Single or more limited indicators do not offer the degree of fine-tuning to a firm's innovation system that managers require. Thus, we propose the development, and future research into contingent variations, of a Composite Innovation Index (CII). We further demonstrate its use in comparing innovators and allowing managers to design a firm's innovation system.

Banking Sector Soundness, Innovation, and Development: Emerging Europe and South Asia. ACES Working Papers, 2012

While most academic and practitioner researchers agree that a country’s commercial banking sector’s soundness is a very significant indicator of a country’s financial market health, there is considerably less agreement and substantial confusion surrounding what constitutes a healthy bank in the aftermath of 2007+ financial crisis. Global banks’ balance sheets, corporate governance, management compensation and bonuses, toxic assets, and risky behavior are all under scrutiny as academics and regulators alike are trying to quantify what are “healthy, safe and good practices” for these various elements of banking. The current need to quantify, measure, evaluate, and compare is driven by the desire to spot troubled banks, “bad and risky” behavior, and prevent real damage and contagion in the financial markets, investors, and tax payers as it did in the recent crisis. Moreover, future financial crisis has taken on a new urgency as vast amounts of capital flows (over $1 trillion) are being redirected to emerging markets. This study differs from existing methods in the literature as it entail designing, constructing, and validating a critical dimension of financial innovation in respect to the eight developing countries in the South Asia region as well as eight countries in emerging Europe at the country level for the period 2001 – 2008, with regional and systemic differentials taken into account. Preliminary findings reveal that higher stages of payment systems development have generated efficiency gains by reducing the settlement risk and improving financial intermediation; such efficiency gains are viewed as positive financial innovations and positively impact the banking soundness. Potential EU candidate countries: Albania; Montenegro; Serbia

EU-US S&T Collaborations, Challenges and Opportunities for Development. Innovation Diplomacy, Special case in point: the Hellenic-American innovation bridge and its underlying dimensions. ACES Working Papers, October 2012

Developed and developing economies alike face increased resource scarcity and competitive rivalry. Science and technology increasingly appear as a main source of competitive and sustainable advantage for nations are regions alike. However, the key determinant of their efficacy is the quality and quantity of entrepreneurship-enabled innovation that unlocks and captures the pecuniary benefits of science enterprise in the form of private, public or hybrid goods (for instance, bio-entrepreneur-millionaires, knowledge for the public good - ie: public health awareness, and new public-private research centers funded partly by bio-entrepreneur-millionaires and monies levied as taxes on bio-ventures).

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