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Symposium 2015

Virtual Library File - Defining competitiveness – On how to measure the largely underestimated role and overall impact of innovation

The Challenge

How to design an industrial policy for Europe, which spurs innovation and enables European industries to lead in the low carbon “space race”? This is a key challenge related to two agendas on wh ...

How to design an industrial policy for Europe, which spurs innovation and enables European industries to lead in the low carbon “space race”? This is a key challenge related to two agendas on which international attention is currently focused: the COP21 of the United Nations Framework Convention on Climate Change in Paris, and Europe's recent agenda for growth, jobs, and competitiveness. Much like climate policy, the need for a new industrial policy is widely acknowledged among politicians, businesses, and the wider society. However, there is little confidence that an innovative and effective industrial policy can be designed to fit all sectors, regions, and stakeholders alike. Yet, with a low carbon market estimated at more than 4.5 trillion euros, progress in this area is vital. One promising approach is to develop a modern understanding of the role of public policy and free markets. With this in mind, the idea of "co-opetition" seeks to stimulate industrial innovation through a combination of both cooperation and competition among countries and enterprises.

Despite the fact that innovation is generally seen as an important factor driving economic success, a lot of uncertainty remains about its quantitative importance and impact on a firm’s or a country’s competitiveness. Due to the better availability of cost statistics compared to softer factors like innovation, there is a clear bias towards costs as the determining factor. Nevertheless, a new stream of research and work in recent years tries to better capture and quantify innovation and its importance. This very tentative work seems to converge to an estimated relative impact on competitiveness of around 30 to 40 percent. If this scope of influence were confirmed, it would force all parties involved to profoundly re‐think competitiveness policies, as those still are overly concentrated on cost measures.