Global Themes

On Globalization & Venture Capital

Innovation and Europe

In the Wall Street Journal of 28th Aug ’06, came across an Op-Ed comment on Innovation and Europe (“Innovation, innovation, innovation” by Ann Mettler, Director of Lisbon Council, a Brussels-based think tank).

It echoed a lot of thoughts and comments I have heard in various discussions on this topic. Some excerpts:

“When recently asked what his top priorities were for his country’s European Union presidency, Finnish Prime Minister Matti Vanhanen had jus three words to day: “Innovation, innovation, innovation”. A collective nod went through Europe, a continent that never tires of pledging to build a knowledge-based economy, a place where politicians incessantly talk up entrepreneurship and risk-taking…”

“Innovation European-style, on the other hand can be summed up as follows: We like the buzz of the word innovation, and we certainly want the prosperity and growth that usually comes with it. But in reality, we prefer to keep everything exactly the way it always has been. And because innovation is such a fuzzy and complex phenomenon, we thought we could attain it by simplifying it to a formula – 3% of gross domestic product spent on research and development equals innovation” and drill our officials to repeat it with prayer-like conviction. Amen.”

Complex it certainly is- but no one would argue that a large (and often overlooked) factor in this “formula” is the quality of education – particularly in schools.

So its no surprise that the article praises the Finnish school system which underwent comprehensive reforms through the 90s to move from a position slightly better than OECD average to being the top-performer in the achievement tests today.

The article pointed out that Europe spends only about half as much per college student as the US does). As I was reading it, I remembered this front-page story from the Daily Mail published just two days before (Aug 26th ’06), “Thousands of children fail to reach English and maths targets” …and remembered Boris Johnson’s lament in the Daily Telegraph, the same week, on falling interest in Science and Technology amongst University students in Britain.

So will the EU have to depend on immigrant students and researchers to make up the shortfall in science and engineering graduates? And does this have any implications for innovation? What happens if/when these researchers/ scientists decide to go back to their countries of origin…when opportunities as well as standards of living, both increase to a point where a reverse brain drain* begins? What implications does this have for national competitiveness?


*See this interview of, David Heenan author of “Flight Capital: The Alarming Exodus of America’s Best and Brightest” for some more thoughts on this.

September 1st, 2006 Posted by | Globalization, Immigration | 3 comments


  1. I have spent a very frustrating couple of years trying to navigate various forms of “innovation” and “enterprise” support from the UK Government. All these QUANGOS seem to have very swanky offices and a surplus of form-checkers and other beaurocrats, all willing to “advise” me. (which on the few times I’ve tried it – results in the phone number of another “consultant” who is also one of their “clients” …. )

    It seems that a large part of “Success” in innovation is measured by the number of people employed “doing” innovation. In my case going near any government agency has resulted in more “employment”. This normally me, on a Sunday night at midnight, filling in another form – just so trying to get a small fraction of my own money back and trying to avoid PAYE, VAT or other enquiries….

    Apparenetly there are now 4.3 Million companies in the UK. only 6000 of which employ more than 250 people.

    The DTi claims (in 2004 spending review, Patricia Hewitt) has a sceince budget of 3.3Bln (boost for science and innovation of 1Bln that year)

    Now if 10% of companies are start-up innovative companies that would be 400K companies and 3.3 Bln…. Well I’m not seeing my share, that’s for sure.

    I shared a flight with Malcolm Bruce (LibDem Shadow for DTi), and as I remember it, he agreed with my thoughts and told me that the LibDems were going basically scrap all the “Enterprise” spending. When I asked if that meant I could my money back in the form of a tax-cut, he said – oh no, we’re going to spend it on Coastal defences…

    Ho Hum — Back to the forms.

    Comment by Gareth | September 3, 2006

  2. Very interesting post, Shantanu. I wrote a position paper for one of the 3 main political parties on regional development and found during the course of writing that paper that a large chunk of the monies given small companies by the RDAs was going back to ‘consultants’ that the RDAs hoisted upon the companies. So I agree with the post by Gareth. So I guess immigrants may make for change in societal attitudes which are essential to handling the fuzzy, unstructured thing called innovation. That said increasingly work is not a place but something we do with people we have not often even seen… Therefore not sure if the reverse brain-drain thing may even come to pass.

    Comment by S Y | September 4, 2006

  3. Gareth, I have heard your lament before – from several other entrepreneurs. As a friend pointed out to me over last weekend, it is so much more easier to draw benefits in Europe than to start a company (probably a little exaggerated but I think true in spirit).

    S – Interesting finding – probably not very surprising. Will comment on the immigration angle later.

    Comment by Shantanu | September 4, 2006

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