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Collected from http://www.Bijili.com
With the U.S. economy poised once again to come out of recession quicker and
stronger than Europe; politicians here are once again wondering what it will
take for Europe to catch up.
Could more spending on technology be the cure? Even as technology companies
in the U.S. continue to struggle after last year's downturn, there's little
doubt that many products developed by those companies continue to keep the
U.S. in the forefront of innovation. Some economists even believe that
technological innovations introduced in the past decade made the U.S. more
flexible, enabling the economy to escape with only a mild recession last
year.
In the early 1990s, Washington fretted that the U.S. was losing the
technology race to Japan, which prompted the Clinton administration to boost
spending somewhat on commercial technology. More importantly, industry made
massive investments in research and development. The results were legendary.
Europe's problems run deeper and require sweeping changes. "For Europe to
advance technologically, the problem is more political than technological,"
says European Union research chief Philippe Busquin.
Fundamentally, the U.S. is a single market; Europe, for all its hype, isn't.
The EU is a collection of 15 nations that trade freely with each other, but
regard each other as competitors technologically. That means Paris eyes
London nearly as suspiciously as it does Washington and doles out research
funds to promote French interests; whether that helps Europe is a very
secondary concern.
Overall, the U.S. government spends about $60 billion annually on R&D,
compared to about $45 billion for EU governments, according to EU
statistics. But Mr. Busquin figures that 20% of Europe's spending is wasted
because one EU nation's project duplicates another's.
Putting together pan-European efforts can be nightmarish because EU politics
requires that each member get a piece of the action. Research funds don't
flow as they do in the U.S. to a relatively small number of academic
powerhouses such as the Massachusetts Institute of Technology. In Europe,
the funds are scattered among hundreds of lesser universities. In Italy,
Austria, Spain and elsewhere, European regulations make it hard for
researchers to commercialize their work.
"Every scientist working in the U.S. is always thinking of starting a
company; it's not the same in Europe," says Steve Brown, a geneticist at the
Harwell research center in England.
Political infighting also makes it hard to create a Europe-wide stock market
to finance technology start-ups. Where would the market be headquartered?
Wouldn't it unseat London or Frankfurt markets? A EU-wide patent has been
held up for years because governments can't agree on what language the
patent should be filed in. As a result, European commercial investment in
technology lags behind the U.S. Between 1995 and 1998, the U.S. invested
about $500 billion more in research and development, venture capital and new
equipment than the EU, and most of that spending was done by industry, EU
research analyst Ugur Muldur estimates.
That probably won't change until the EU dismantles political barriers.
"Europeans believe they are backing every project that will produce a
return," says Philip Anderson, an INSEAD business-school researcher in
Fontainebleau, France. "But if the market is more fragmented than the U.S.,
rational calculations will lead to lower investment."
Some of the changes needed are prosaic. Zoning laws across Europe favor
small retailers, while Germany, Belgium and other nations sharply limit
discounting. On average, it takes 43 months to get regulatory approval to
open a new gas station in Europe, three times as long as the U.S., according
to a study by UNICE, a Brussels business lobby. The result: Few U.S.-style
superstore chains, which demand leading-edge software.
Silicon Valley benefits from a steady influx of talented engineers from
India and China, who may be frightened off by Europe's anti-immigrant
sentiment. A German government Web site looking to lure foreign researchers
to Germany tried this selling point: "Germany, as the statistics show, is no
more xenophobic than other European countries."
The German parliament recently passed a plan to liberalize immigration, but
it may be held up by a constitutional challenge. More is needed. For Indian
engineers, says Narayana Murthy, chief executive of the Indian software firm
Infosys Technologies Ltd., "the U.S. is the most open country."
Changing Europe's worker-rights rules would also be difficult. Italian Prime
Minister Silvio Berlusconi and UK Prime Minister Tony Blair criticize
labor-law "rigidity -- Euro-speak for laws that make it difficult to fire
people and provide ample severance packages. The additional costs deter
entrepreneurs. Collected from
www.bijili.com
With the U.S. economy poised once again to come out of recession quicker and
stronger than Europe; politicians here are once again wondering what it will
take for Europe to catch up.
Could more spending on technology be the cure? Even as technology companies
in the U.S. continue to struggle after last year's downturn, there's little
doubt that many products developed by those companies continue to keep the
U.S. in the forefront of innovation. Some economists even believe that
technological innovations introduced in the past decade made the U.S. more
flexible, enabling the economy to escape with only a mild recession last
year.
In the early 1990s, Washington fretted that the U.S. was losing the
technology race to Japan, which prompted the Clinton administration to boost
spending somewhat on commercial technology. More importantly, industry made
massive investments in research and development. The results were legendary.
Europe's problems run deeper and require sweeping changes. "For Europe to
advance technologically, the problem is more political than technological,"
says European Union research chief Philippe Busquin.
Fundamentally, the U.S. is a single market; Europe, for all its hype, isn't.
The EU is a collection of 15 nations that trade freely with each other, but
regard each other as competitors technologically. That means Paris eyes
London nearly as suspiciously as it does Washington and doles out research
funds to promote French interests; whether that helps Europe is a very
secondary concern.
Overall, the U.S. government spends about $60 billion annually on R&D,
compared to about $45 billion for EU governments, according to EU
statistics. But Mr. Busquin figures that 20% of Europe's spending is wasted
because one EU nation's project duplicates another's.
Putting together pan-European efforts can be nightmarish because EU politics
requires that each member get a piece of the action. Research funds don't
flow as they do in the U.S. to a relatively small number of academic
powerhouses such as the Massachusetts Institute of Technology. In Europe,
the funds are scattered among hundreds of lesser universities. In Italy,
Austria, Spain and elsewhere, European regulations make it hard for
researchers to commercialize their work.
"Every scientist working in the U.S. is always thinking of starting a
company; it's not the same in Europe," says Steve Brown, a geneticist at the
Harwell research center in England.
Political infighting also makes it hard to create a Europe-wide stock market
to finance technology start-ups. Where would the market be headquartered?
Wouldn't it unseat London or Frankfurt markets? A EU-wide patent has been
held up for years because governments can't agree on what language the
patent should be filed in. As a result, European commercial investment in
technology lags behind the U.S. Between 1995 and 1998, the U.S. invested
about $500 billion more in research and development, venture capital and new
equipment than the EU, and most of that spending was done by industry, EU
research analyst Ugur Muldur estimates.
That probably won't change until the EU dismantles political barriers.
"Europeans believe they are backing every project that will produce a
return," says Philip Anderson, an INSEAD business-school researcher in
Fontainebleau, France. "But if the market is more fragmented than the U.S.,
rational calculations will lead to lower investment."
Some of the changes needed are prosaic. Zoning laws across Europe favor
small retailers, while Germany, Belgium and other nations sharply limit
discounting. On average, it takes 43 months to get regulatory approval to
open a new gas station in Europe, three times as long as the U.S., according
to a study by UNICE, a Brussels business lobby. The result: Few U.S.-style
superstore chains, which demand leading-edge software.
Silicon Valley benefits from a steady influx of talented engineers from
India and China, who may be frightened off by Europe's anti-immigrant
sentiment. A German government Web site looking to lure foreign researchers
to Germany tried this selling point: "Germany, as the statistics show, is no
more xenophobic than other European countries."
The German parliament recently passed a plan to liberalize immigration, but
it may be held up by a constitutional challenge. More is needed. For Indian
engineers, says Narayana Murthy, chief executive of the Indian software firm
Infosys Technologies Ltd., "the U.S. is the most open country."
Changing Europe's worker-rights rules would also be difficult. Italian Prime
Minister Silvio Berlusconi and UK Prime Minister Tony Blair criticize
labor-law "rigidity -- Euro-speak for laws that make it difficult to fire
people and provide ample severance packages. The additional costs deter
entrepreneurs. Collected from
www.bijili.com