ZEW Lunch Debate in Brussels – Appropriate Frame Conditions for Public Spending in Research & Development
ZEW Lunch Debate in Brussels
Will the public authority be able to give new impetus by capital expenditures in Research and Development (R&D) when the economy of a country stagnates? What is the use of public R&D expenditures in times of crisis and fiscal consolidation? This was the focus of the ZEW Lunch Debate on March 5, 2015, at the State Representation of Baden-Württemberg of the EU in Brussels. Dr Georg Licht, Head of the department "Industrial Economics and International Management" at the Centre for European Research (ZEW), made clear in his presentation at the very beginning of the debate that high rates of external public debt in Europe in the long term will have an extremely negative impact on public R&D budgets - if there is no counteraction.
EU countries and states need strategies to cope with their budget deficit without minimising the growth prospect. Therefore, it is necessary to find a balance between debts, the need to economise and the necessary investments in R&D, he said.
Next to Georg Licht on the panel sat Professor Maria da Graça Carvalho, senior adviser in the cabinet of the EU Commissioner for Research, Science and Innovation Carlos Moedas, Professor Reinhilde Veugelers of the Catholic University of Leuven in Flanders, and Professor Ramon Marimon, of the European University Institute in Florence. ZEW President Professor Clemens Fuest opened and moderated the event with about 80 guests. Among them were members of the EU Commission and of the Brussels EU Liaison Office of European and national research associations as well as representatives of companies and association interest groups.
According to Maria Carvalho the European-wide overall budget of R&D spending should be raised to foster economic growth. The EU has already done a decisive step by spending almost 80 billion euro for the programme for research and innovation called "Horizon 2020". Now the effectiveness of public R&D spending must be assured by the EU member states, she said.
Reinhilde Veugelers argued for a continuous evaluation to survey the quality of public R&D expenses. If the public authority invests in innovations, this could be a real economic stimulus package. For this reason, we will have to be careful with cuts. In this context we should have frame conditions that all in all support the social return on investment, she added.
Ramon Marimon put emphasis on the fact that public R&D spending aims at fostering knowledge and innovation. Times of crisis result in the political need to economise. Budget consolidation is not possible without the necessary politico-economic reforms and must not drop completely because of reforms - otherwise the country will not be competitive.
The audience added more aspects after the panel discussion: What do we need to ensure and increase private R&D spending of companies? Should the EU Commission investment programme of 300 billion euro be extended over its triannual run duration? Questions like these make clear that further discussion is necessary.
More information about the ZEW Lunch Debates and forthcoming events in this series