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European Law Journal, Vol. 14, No. 5, September 2008, pp. 635–654.

© 2008 The Author


Journal compilation © 2008 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford, OX4 2DQ, UK
and 350 Main Street, Malden, MA 02148, USA

The Missing Piece of the Lisbon Jigsaw:


Is the Open Method of Coordination
Effective in Relation to the European
Research Area?
Sonia Morano-Foadi1

Abstract: In the light of the subsidiarity principle, this article discusses the Community
competence in relation to the ‘European Research Area’. As such it responds directly to
the question of whether the European commitment to consider research as one of the new
emerging priorities of the EU, is reflected in the Member States domestic research
policies. To this aim, the article outlines the Community policy to enhance European
competitiveness and the goals set in the Lisbon Declaration (March 2000) and reaffirmed
in the Barcelona Declaration (March 2002) shaping the European Research Area. It then
goes on to investigate whether the Lisbon and Barcelona agenda targets on competitive-
ness are likely to be met at European level. The functioning and effectiveness of the Open
Method of Co-ordination are examined as a tool to maximise synergies between national
and community research and technological development activities. The article, using the
Italian research policy as a case study, claims there are some inconsistencies between the
Italian and the EU policies on research and technological development and transfer of best
practice.

I Introduction
In order to achieve the goal of becoming the most competitive and dynamic knowledge
based economy in the world by 2010, the EU has to ensure a strong science and
research capacity and accelerate research and development (R&D) investments in the
public and private sectors. In January 2000, a ‘European Area of Research’ (ERA) was
created to provide better overall framework conditions for research in Europe and a
community strategy for a common European research system.2
In the research policy area new modes of governance have been introduced. The EU
centrally supports research and development and at the same time co-ordinates and

1
Oxford Brookes University, Senior Lecturer in European Law. The author wishes to thank Dr Luca
Cerioni, Dr Debbie Millard and the two anonymous referees for their valuable comments. The usual
disclaimer applies.
2
European Commission, Communication, Towards a European Research Area, COM (2000), 18 January
2000.
European Law Journal Volume 14

finances activities at regional level.3 The Community intervention is based on ‘cognitive


and normative inputs’, which are considered the ‘framing mechanisms’ of the process of
European integration.4 European institutions face the challenge of choosing appropriate
tools (techniques, operational means and devices) to achieve the consensus on strategic
goals set in Lisbon.5 Together with the Community methods of integration (direct impact
of Community law) or the indirect effects of economic integration, new soft law
instruments are guiding policy-making in the research field. Soft law governance uses
tools such as benchmarking, action plans and exchange of best practice with the aim of
achieving European integration in a non-coercive manner. These soft law tools represent
various forms of the so-called Open Method of Co-ordination (OMC), which has been
utilised to achieve greater integration in policy fields where otherwise no progress could
have been made due to the principle of subsidiarity. The OMC has been applied much
more recently in research than in other areas, such as employment and economic policy,
for example, taxation. It was introduced at the end of 2003 following the adoption by the
Council of the target proposed by the Commission, that 3% of Gross Domestic Product
(GDP) be allocated to R&D, the so called 3% benchmark and, the 3% action plan also
prepared by the Commission. This soft law instrument, which goes beyond the initial
treaty provisions, is in reality designed to strengthen research and innovation in the EU.6
It has been introduced to overcome the inefficiencies of European research policy, which
result from ‘the segmentation of public research efforts and overlapping of research
programmes, and consequent underutilisation of the available human resources’.7
In an attempt to fulfil the ‘consistency’ element, which requires Member States to
conform to EU policy models, the Lisbon European Council identified a number of
OMCs with the aim of penetrating into national systems and changing internal policy
to adapt to the European framework.8 These soft law instruments direct public action
in the Member States, and, consequently, further Europeanisation.9
In the research area the Commission refers to several processes as ‘OMC’ and relates
them to five different areas: (1) the ‘3% Action Plan’; (2) human resources and mobility;
(3) science and society; (4) networking of national research programmes (ERA-net);
and (5) research and technological development (RTD) infrastructure.10 This article
focuses mainly on the ‘3%’ benchmark, which operates in support of what has been
defined as the ‘European innovation paradox’, ie a inconsistency between the EU’s high
level of scientific excellence and the lack of the economic valorisation of research
activities. What is required is a measurement system that translates national RTD
policies into commensurable indicators.11

3
R. Kaiser and H. Prange, ‘Managing Diversity in a System of Multi-level Governance: the Open Method
of Co-ordination in Innovation Policy’, (2004) 11 Journal of European Public Policy 249.
4
I. Bruno, S. Jacquot and L. Mandin, ‘Europeanization through its instrumentation: benchmarking,
mainstreaming and the open method of co-ordination . . . toolbox or Pandora’s box?’, (2006) 13(4)
Journal of European Public Policy 521.
5
Bruno, Jacquot and Mandin, ibid, at 521.
6
Kaiser and Prange, op cit n 3 supra, at 250.
7
D. Gros and J. Mortensen, ‘R&D in the EU. Can the Open Method of Coordination Succeed in Closing
the Gap?’ (2004) 56 CEPS Policy Brief 1.
8
E. Szyszczak, ‘Social Policy in the Post-Nice Era’, in A. Arnull and D. Wincott (eds), Accountability and
Legitimacy in the European Union (Oxford University Press, 2003).
9
Bruno, Jacquot and Mandin, op cit n 4 supra, at 520–521.
10
CREST Draft Summary Conclusions of the 288th Meeting of the Scientific and Technical Research
Committee (CREST), Iraklion, Greece, 27 and 28 October 2003, CREST 1203/03 7.
11
Bruno, Jacquot and Mandin, op cit n 4 supra, at 526.

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September 2008 The Missing Piece of the Lisbon Jigsaw

Even at national level, Member States should try to implement ERA policy investing
in the research sector and linking research and industry. In practice, European research
policy and those of the Member States substantially run in parallel without efficient
co-ordination. Most of the indicators on the level of R&D show that the EU as a whole
lags behind the USA and Japan. Looking at country-by-country data there are dis-
crepancies between the North and the South of Europe. Scandinavian countries at the
top of the list are comparable to the USA and Japan, in contrast with Southern
European countries and new Member States, which have a low level of R&D.12 More-
over, a number of inconsistencies are evident in some of the Member States research
policies. For example, the Italian research policy document and other economic plan-
ning documents express the country’s support for the European scientific policy and yet
Italy allocates only 1.1% of the GDP to research and development, falling considerably
short of the European goal of 3%.13
The aim of this article is to question the effectiveness of soft law governance in
relation to the ERA through reference to Italian research policy.14 The article is divided
into four sections. The first section examines the European Research policy, its objec-
tives and deadlines set in the Lisbon and Barcelona Declarations. The second section
explores the application of OMC to the research area and its idea of transferring good
practice. The third section reviews the EU strategy to achieve the Lisbon target. The
fourth section assesses whether the introduction of the OMC has made any significant
progress in relation to the Italian research strategy.

II The ERA: Origins and Context


A single research market and the free movement of researchers are central to the
development of the EU. Although research is a productive area of Community inter-
vention, the EU’s involvement has not followed a clear line of evolution from co-
operation, to coordination towards full integration.15 Since 1984, the EU has defined
the scale and guidelines of its research drive within framework programmes, each
lasting 5 years. The research policy of the EU has gradually evolved to become a highly
dense area of activities. These multi-annual framework programmes are the driving
force of a new collaborative approach and contributed to the creation first and then to
the development of the ERA. They are based on priorities, which emerged from broad
consultation of the political authorities, the scientific world, industrialists, and user
representatives.16 With the expansion of these programmes, research is now a major
item on the EU budget. In January 2000, the Commission adopted a Communication
on the creation of an ERA, which aimed to integrate research programmes across
borders and across disciplines rather than just basing them on loose cooperation

12
Gros and Mortensen, op cit n 7 supra, at 2.
13
CRUI, Audizione della CRUI presso le Commissioni Riunite Bilancio di camera e Senato sul Disegno di
legge Finanziaria C1746, October 2006, available at http://www.crui.it.
14
For a general overview on the ERA, see A. De Elera, ‘The European Research Area: On the Way
Towards a European Scientific Community?’, (2006) European Law Journal 559–574.
15
A. Gomitzka ‘Coordinating policies for a “Europe of knowledge”: emerging practice of the Open Method
of Co-ordination in education and research’, (2005) 16 Centre for European Studies Working Paper 15,
available at http://www.arena.uio.no.
16
European Commission, Europe an area for research, Series: Europe on the move (Luxembourg, Office for
Official Publications of the European Communities, 2000).

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between researchers and research organisations.17 Within the ERA there should be
coordination of national research policies, which account for most of the research
carried out and financed in Europe. The European research policy not only addresses
the funding of research activities, but also takes account of all relevant aspects of other
EU and national policies. The ERA in fact represents an effort to move the EU’s
research policy from mere redistributive towards more regulative measures.18
The ERA project was reinforced by the European Council in Lisbon in March 2000,
which has established a series of objectives and deadline. Although the Lisbon Decla-
ration (March 2000) set the goal for the EU to become ‘the most competitive and
dynamic knowledge-based economy in the world’ by 2010, the way to achieve such a
goal was left very vague. As such the Lisbon strategy, as it has been defined, was
considered more an agenda trying to link the social and economic aspects of European
integration, ie ‘horizontal integration’19 than a ‘full-fledged theory of competitiveness
and social cohesion’.20 It could be argued that this vagueness was necessary for reaching
consensus on some overarching common goals for the Member States.
All European summits from Lisbon 2000 onwards have underlined the contribution
of research and education in setting up the European knowledge society.21 In March
2002, to achieve this target, the Barcelona Declaration first called for a rise in the share
of European GDP invested in research (from 1.9% to 3%) and, second, for an increase
in the number of researchers (a further 700,000 researchers or 1.2 million research-
related personnel). These objectives were set to create a dynamic ERA that puts Europe
at the forefront of international scientific excellence and contributes to sustainable
economic growth, better jobs and greater social cohesion. In line with this, the VI
Framework Programme (VI FP) (2003–2006) aimed at building EU-wide platforms of
excellence. Special attention was paid to research programmes in an attempt to make
the implementation of EU policies more effective in areas such as agriculture, fisheries,
health and consumer protection, the environment, the single market, transport and the
information society. This VI FP provided a financial budget of €16,270 billion, 17%
more than the V Framework Programme22 and also proposed an increase of 3% of the
GDP to be allocated to research. It included actions aiming at supporting the devel-
opment of human resources, giving incentives to transnational mobility, training,
developing competences and transferring know how.
In 2004, the European Council and the Commission decided to prepare a mid-term
review of the Lisbon process, to be presented to the Spring Summit in March 2005.
Former Dutch Prime Minister Wim Kok was mandated by the March 2004 Euro-
pean Council to lead a group of experts with the objective of reviewing the Lisbon
strategy. This report suggested that research is a major cornerstone of the Lisbon

17
European Commission, Communication, op cit n 2 supra.
18
J. Trondal ‘Two Worlds of Europeanisation: Unpacking Models of Government Innovation and
Transgovernmental Imitation’, (2005) 9(1) European Integration online Papers (EIoP), available at
http://eiop.or.at/eiop/texte/2005-001a.htm.
19
S. Borrás and K. Jacobsson ‘The Open Method of Co-ordination and new governance patterns in the
EU’, (2004) 11(2) Journal of European Public Policy 186.
20
Gomitzka, op cit n 15 supra, at 15ff.
21
See for example European Council, Presidency Conclusions, Barcelona European Summit, 14–15 March,
No 100/1/02.
22
On 21 February 2001 in Brussels the Commission adopted the Sixth Framework Programme on research,
and innovation, more information available at http://www.cordis.lu/rtd2002/.

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September 2008 The Missing Piece of the Lisbon Jigsaw

strategy, that little progress had been made in innovating Europe’s economy and
expressed growing concern that the reform process was not moving fast enough and
that the ambitious targets could not be reached.23 The report urged a renewed focus
on jobs and growth. To achieve the 3% target, the Commission (in July 2005) pre-
sented a ‘Community Lisbon programme’ to complement the national action plans
for growth and jobs, which were finalised by the Member States in October 2005. The
programme consisted of 50 initiatives (regulatory actions, financing actions and
policy development). The renewed Lisbon Strategy adopted in 2005 introduced a
streamlined progress reporting process.24 The March 2005 European Council review-
ing the Lisbon strategy stated that alongside undeniable progress, there were short-
comings and delays in implementing the Lisbon Strategy. As a consequence Member
States presented National Reform Programmes (NRPs) including reforms detailing
micro-economic, macro-economic and employment policies for the period 2005–
2008. They presented progress reports in the autumn of 2006 and will also submit
them in the autumn of 2007 and 2008. These plans aim at strengthening the EU
Commission and Member States’ partnership to transfer effective and innovative
practices from one country to another.
In its 2006 Annual Progress Report the Commission has assessed the NRPs, point-
ing out their strengths and weaknesses and presented it to the Spring European
Council meeting. It has defined four priority areas where more action is needed.
These are the four priority areas: education and research, SMEs, higher employment
rates and a common EU energy policy.25 A group of four high-level experts man-
dated by the Commission drafted the Aho report, which assessed the situation and
made proposals to boost Europe’s research and innovation performance. The
report’s central recommendation is a ‘Pact for Research and Innovation to drive the
agenda for an innovative Europe’.26 The experts outlined the fact that current efforts
towards the revised Lisbon Agenda are not enough and they urge European leaders
to take radical action on research and innovation ‘before it is too late’.27 The report
presents a strategy and a course of action to create an innovative Europe. The VII
Framework Programme (VII FP) (2007–2013) is designed as a key contribution to
the re-launched Lisbon strategy. Although the Commission proposed a higher budget
of €70 billion, the VII FP total budget is €50,521 billion allocated differently in the
years starting with a smaller budget and then increasing it gradually every year,
which is still higher than the VI FP budget.
Based on the Commission and the Council’s suggestions for improvements,
Member States have presented to the Commission their first reports on the imple-
mentation of their NRPs. The 2007 Commission Annual Progress Report contains a

23
W. Kok, Facing the challenge—The Lisbon strategy for growth and employment, Report from the High
level Group chaired by Wim Kok, 2004.
24
The revised Lisbon Strategy focused on Growth and Jobs. It decided on a new method of Governance for
the Lisbon Strategy, which involved the adoption by the Council of Integrated Guidelines for Growth and
Jobs (Integrating the Broad Economic Policy Guidelines—divided between Macro and Micro Economic
Guidelines—and the Employment Guidelines). These Integrated Guidelines became the basis for Member
States to produce National Reform Programmes.
25
Communication from the Commission to the Spring European Council, Time to Move up a Gear,
Country chapters, COM (2006) 30, Pt 2.
26
E. Aho, Creating an Innovative Europe, Report from the High level Group chaired by Aho Esko 2006, 23.
27
Aho, ibid, at 9.

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detailed assessment of the progress made and takes into account the work carried out
by the Council on selected themes.28
Progress in implementing the aims of the renewed Lisbon Strategy has been made but
still the March 2007 European Council called on Member States and EU institutions
to pursue actions to ‘strengthen the internal market and competitiveness, create
better framework conditions for innovation and greater investment in research and
development’.29
The view of the European Economic and Social Committee (EESC) and the Com-
mittee of Regions30 is that commitment to the Strategy is lacking.
The two problems identified were, first, that the EU Commission’s role is not clearly
defined in the Lisbon Strategy and consequently the implementation of the European
strategy is realised mainly at national level, and, second, that Member States have not
shown real commitment to the objectives and actions agreed upon.
Commitment is essential, as the Lisbon strategy requires Member States to introduce
reform programmes and implement them.
The EESC views the OMC as a mechanism that has not delivered the expected results
since national action-plans on employment, social inclusion and in other areas have
been transformed into bureaucratic activity reports. Fragmentation between policy
areas continues.31
Although the present EU agenda focuses on the European area of knowledge as well
as the improvement of the Lisbon process governance, the EU total R&D expenditure
falls short of the 3% target and business-funded research is decreasing. Moreover, the
brain drain phenomenon from Europe to the USA, the emerging economies like China
and high graduate unemployment rate demand more stringent policy responses.32

III The OMC and its Functioning in the ERA


EU competence in the research sector has evolved from purely funding research to
boost ‘loose’ existing cooperation between research groups, laboratories and centres
across European countries to the establishment of an internal market in research, a
common research policy and coordination of national research policies (the ERA
project). A ‘supranational turn’ in research policy has emerged in place of EU initia-
tives mainly supportive to nation-state research policies. This turn was confirmed by
the Maastricht and Amsterdam treaties counterbalanced by the principle of subsidiar-
ity.33 The Lisbon Conclusions has encouraged ‘the development of an open method of
coordination for benchmarking national research and development policies’.34 Its aim
is to ensure satisfactory progress in policy areas which are primarily within Member
States’ competence, involving an exchange of information and best practice; fixing

28
Communication from the Commission to the Spring European Council, Implementing the Renewed
Lisbon Strategy for growth and jobs—‘A year of delivery’, COM (2006) 816 final, Pt 2.
29
European Council, Presidency Conclusions, Brussels European Council, 8–9 March, No 7224/1/07.
30
Opinion of the European Economic and Social Committee on ‘The road to the European knowledge-
based society—the contribution of organised civil society to the Lisbon Strategy’ (2006/C 65/18) [2006]
OJ C 65/94; Resolution of the Committee of Region on revitalising the Lisbon strategy (2005/C 164/13)
[2005] OJ C164/91.
31
Opinion of the EESC, op cit n 30 supra, at 94–102.
32
Opinion of the EESC, ibid, at 94–102.
33
Trondal, op cit n 18 supra, at 9.
34
European Council, Presidency Conclusions, Lisbon European Summit, 23–24 March, No 100/1/00.

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September 2008 The Missing Piece of the Lisbon Jigsaw

European guidelines and translating them into national and regional policies; estab-
lishing indicators and benchmarks, periodic monitoring, evaluation and peer review
organised as mutual learning processes.35
The OMC plays an important role. This soft law tool is used not only to enhance the
performance of national research capabilities but also to develop their European
dimension spreading best practice and achieving greater convergence towards the main
EU goals. Literature on the OMC is divided between scholars who are in favour of this
soft-law tool and those who are against it. Those who are in favour of OMC argue that
it combines subsidiarity and European action in a new way.36 It is placed in between
supranationalism and intergovernamentalism with more joint responsibility than in an
intergovernmental mode without conferring legal competences to a supranational level.
However, the sceptics see the use of the OMC as the preliminary stage on the way
to legislation in areas that are particular resistant to Europeanisation. Surprisingly,
although the reorganisation of competence in the unratified Constitutional Treaty was
a main issue, no mention was given to the OMC either as a tool to complement the
existing Community Method or to introduce a new form of governance based on policy
coordination.37 There was mention of the OMC-procedure in various sectoral articles
but no reference to a separate article encompassing the method as a mode of gover-
nance. As suggested by De Burca, the setting out of specific procedures for the
co-ordination of national policies in different areas, was a concession made ‘to those
convention members and participants who continued to insist on a broader inclusion of
OMC within the Constitutional Treaty.38 As such the inclusion of sectoral articles
might reflect the position of those who see the OMC as a step towards areas of Member
States’ exclusive competence.39
The Lisbon Council has identified a number of OMCs ranging from drawing up
common guidelines to action plans. The way in which such method spreads best
practice is through the influence one domestic system has upon another. It seems that
most of the cross-national empirical literature validates the argument that the OMC is
meant to benefit national executives more than national parliaments, as the first are
considered being the main stakeholders of the renewed Lisbon strategy.40 However,
some scholars support the thesis that through such a method, national parliaments
learn about solutions in other Member States and are thus able to produce better laws
in their own countries (policy transfer).41

35
CREST Expert Group, Encourage the reform of public research centres and universities, in particular to
promote transfer of knowledge to society and industry, March 2006 Final Report presented to CREST 6.
36
M. Ekengren and K. Jacobsson, ‘Explaining the Constitutionalization of EU Governance—the Case of
European Employment Cooperation’, (2000) Score Stockholm University: Score Rapportserie 7–10;
Gomitzka, op cit n 15 supra, at 9.
37
G. De Burca, ‘The Constitutional Challenge of New Governance in the European Union’, (2003) 28(6)
European Law Journal 814–839; J. Zeitlin, ‘The Open Method of Co-ordination in Question’, in J. Zeitlin
and P. Pochet (eds), The Open Method of Co-ordination in Action: the European Employment and Social
Inclusion Strategies (Press Interuniversitaires Europeenes Peter Lang, 2005), 24; Gomitzka, op cit n 15
supra, at 21.
38
G. De Burca, op cit n 37 supra, at 821ff.
39
Gomitzka, op cit n 15 supra, at 10.
40
See the Council Conclusions, Brussels (22 and 23 March 2005), 7619/1/05 REV1, 2ff; F. Duinaand
T. Raunio, ‘The Open Method of Coordination and National Parliaments: Further Marginalization or
New Opportunities?’, paper prepared for the 15th International Conference of the Council for European
Studies, Chicago, March–April 2006, 4ff.
41
R. Tapio, ‘Does OMC really benefit national parliaments?’, (2006) 12(1) European Law Journal 130–131.

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The Council resolution of June 2000 called upon the Commission to set up a
methodology and indicators for the benchmarking of national research policies in
order to pave the way for implementing an OMC in the field of R&D42 Beyond being
a method of evaluation43 and/or a ‘policy learning tool’,44 the benchmarking of national
research policies aims to convert political issues into target figures, for example the
competitive ERA assumption into the ‘3%’ target. The requirement of competitiveness
implies an intergovernmental cooperation at European level and through ‘the language
of quantification’45 benchmarking aims at reconciling national conflicting interests.
This might enable governments to convene about ‘commensurable’ expectations. In
this way the ‘3%’ target might be relevant as a mean of achieving convergence on the
same political goal and not as a performance itself.46
The functioning of the OMC was placed not in the hands of the Commission but in a
permanent committee (CREST) comprising Member States representatives (top civil
servants from national research ministries) and representation from the Directorate
General (DG) Research. Its task is to write a report on the progress towards the 3% target
and provide guidelines for development of national policy measures and recommenda-
tions for Community action.47
The main embodiments of the OMC in research policy are represented by two cycles
of benchmarking national research policies. The first cycle of the OMC research exer-
cise, which started in September 2000 and ended in January 2003, used available and
new indicators of benchmarking. A High Level Group composed of representatives
from each Member State nominated by the respective research ministers was formed.
Its task was to propose relevant indicators and elaborate the methodology of the four
themes selected by the Research Council—human resources in RTD, public and
private investments in R&D, scientific and technological productivity, RTD impact on
competitiveness and employment.48 The Commission set up four expert groups for each
of the themes identified by the Council to assist in the benchmarking process. For each
theme five indicators were chosen. The main task of the expert groups was to ‘describe
good practices for their theme areas, the processes by which they were achieved and
analyse possibilities for transferring good practices in different national contexts and
draw conclusions on implication for future policy’.49 ‘Benchmarking Workshops’ were
organised building on the expert groups’ conclusions and with presentations of some
‘good practice’ experiences. Then, the CREST drafted and submitted to the Council its

42
Bruno, Jacquot and Mandin, op cit n 4 supra, at 519–536.
43
E. Monnier and E. Pitarelli, ‘Benchmarking: the missing link between evaluation and management?,
paper presented at the Conference of the Centre for European Evaluation Expertise, Lausanne October
2000.
44
B. A. Lundvall and M. Tomlinson, ‘International benchmarking as a policy learning tool’, in
M. J. Rodrigues (ed), The New knowledge Economy in Europe: A strategy for International Competitive-
ness and Social Cohesion (Edward Elgar, 2002), 203–231.
45
T. Porter, Trust in Numbers: The Pursuit of Objectivity in Science and Public Life (Princeton University
Press, 1995).
46
Bruno, Jacquot and Mandin, op cit n 4 supra, at 519–536.
47
CREST 2003, op cit n 10 supra, at 8.
48
European Commission, Development of an open method of Coordination for benchmarking national
research policies—Objectives, methodology and indicators, Working document from the Commission
services, 3 November 2000, SEC (2000) 1842.
49
European Commission, Progress Report on for benchmarking of national research policies 2001 Commis-
sion Staff Working Paper, Brussels 2 June 2001, SEC (2001) 1002, p. 9

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September 2008 The Missing Piece of the Lisbon Jigsaw

final report of the first cycle including suggestions or comments and some examples of
good practices.50
The next stage of the OMC research exercise revolved around the Barcelona target
(‘3% target’) which was the first structural indicator of the Lisbon strategy. The second
cycle of benchmarking was launched in March 2006. The benchmarking processes used
a similar expert group structure as was the case in the first cycle. Based on produced
Country Peer Reviews, Country Reports and Expert Group Reports, the CREST final
report contained 20 recommendations addressed to local and national governments for
policy action. Four policy areas were identified. The first area focuses on the overall
restructuring of public research centres. The second policy area relates to the univer-
sities as promoters of knowledge transfer to enable more efficient contribution to the
innovation process. The third area aims at the design of funding schemes, as the
knowledge transfer activity is not a very self-sustaining activity, especially in the early
stages. The last area creates incentive schemes for researchers to conduct knowledge
transfer activities.51
The Country Peer Review was seen as ‘an effective tool that directly responds to the
needs of OMC’ as it identified good examples of knowledge transfer. Its systematic use,
subject to methodological improvements, was also recommended in future cycles. The
variety of examples was considered as a positive element capable of informing policy
action at EU and country level.52 An example of best practices in relation to Italy were
initiatives such as the Fund for Applied Research (FAR), Technology Districts and
Funding reforms at National Research Council (Consiglio Nazionale delle Ricerche,
CNR).53
The CREST also recommended an evolution of OMC towards coordinated imple-
mentation, monitoring and evaluation of concrete policy actions.54

IV Quantitative and not Qualitative Tools: Is this how the EU is Planning to


Develop a Coherent and Comprehensive Strategy in Research?
In order to assess whether the Lisbon targets will be met, the policy discussion should
be based on the competitiveness criteria and on the tasks needed to reach this goal. The
question should look at the way the EU is working towards the set goals and the extent
to which the OMC is achieving the objectives.
Kaiser and Prange have argued that a serious obstacle to the application of the
OMC, in particular in relation to the benchmarking exercise, is the diversity of research
and innovation systems across EU Member States.55 They consider the OMC the most
valuable mode of governance in this area when national and regional specificies are
taken into consideration.56 I would challenge this concept on the basis of the fact that,
at least in the research area, the OMC has replaced Community integration through
law with an Europeanisation process by figures57 and this is not necessarily a good

50
CREST 2003, op cit n 10 supra, at 6–7.
51
CREST Expert Group 2006, op cit n 35 supra, at 4.
52
CREST Expert Group 2006, ibid, at 40.
53
For more details see section V, below.
54
For an overview of the recommended instruments and tools see CREST Expert Group 2006, op cit n 35
supra.
55
Kaiser and Prange, op cit n 3 supra, at 257.
56
Kaiser and Prange, op cit n 3 supra, at 251.
57
Bruno, Jacquot and Mandin, op cit n 4 supra.

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move towards integration. The aim of the ERA is to promote a shift towards more
regulative measures in relation to a EU’s research policy.58 The goal of a ‘learning
society’ model, whose cornerstone is a European knowledge area, urges a coherent
restructuring of the intergovernmental research system. Research has shown that
exchange of good practice is not enough to make progress towards the integration
process.59 This is particularly evident in situations were there is little or no participation
of the actors involved at national and regional level. In an enlarged EU where research
and innovation systems are so diverse, the mechanisms of the OMC would hamper
integration for the slow nature of knowledge transfer and apprenticeship. I would
argue that a combined approach using OMC tools and framework directives could be
a good compromise to regulate such a complex area taking into account national and
regional diversities across Member States.60
The foundation for a legal and voluntary European framework dated back to 1994
but it was the ERA project, which strengthened the framework of Member States’
voluntary coordination.61 Up to 2004 the statistical publications prepared by DG
research on the core indicators presented the national performance on a range of data
related to the R&D investment target. To overcome country diversities within the ERA
project these measures were based on comparable categories and coding procedures.
Yet the publications have had little best practice information or qualitative peer review
assessments of national performance. The introduction of the OMC has overcome the
restraints brought by the shortage of learning transfer mechanisms. The argument put
forward in its favour is based on the fact that quantitative indicators and policy transfer
are flexible and effective modes of intergovernmental cooperation.
To support a policy-making approach appropriate to a competitive ERA, bench-
marking appeared the most relevant tool to develop comparable science and technology
(S&T) indicators. It was imported from business into the public sphere to increase a
competitive spirit in the public sector, within national governments but also among
states. The Lisbon strategy endeavours to conform the European administrative ratio-
nale to a ‘quality’ management style. Benchmarking prescribes the necessity of competi-
tiveness by embedding the managerial rationality into co-operation among Member
States. This tool aims at monitoring national policy ‘performances’ and translates them
into action-oriented data corresponding to the Lisbon strategy.62 RTD policies at the
European level need to be congruent with ‘an internal knowledge market’63 and Member
States are involved in the management of ‘European co-opetition’ through ‘performance
benchmarking’.64 Member States are the driving forces of the 3% OMC and the Com-
mission’s role is limited to offering ‘assistance as a facilitator’.65

58
Trondal, op cit n 18 supra, at 9.
59
S. De la Rosa, ‘The Open Method of Coordination in the New Member States—the Perspectives for its
Use as a Tool of Soft Law’, (2005) 11(5) European Law Journal 618–640.
60
For details on how OMC and framework directive apply to other areas, see F. Scharpf, ‘The European
social model: coping with the challenge of diversity’, (2002) 40(4) Journal of Common Market Studies
645–670.
61
European Commission, Communication from the Commission, The European Research Area: providing
new momentum. Strengthening, reorienting, opening up new perspectives, COM (2002) 565 final.
62
Gomitzka, op cit n 15 supra, at 12.
63
European Commission, The European Research Area—An internal knowledge market, (2002) Brussels:
European Commission, Directorate General for Research, Information and Communication Unit.
64
Bruno, Jacquot and Mandin, op cit n 4 supra.
65
CREST 2003, op cit n 10 supra, at 8.

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To be effective such cooperation should be based on clearly defined targets comple-


mented by appropriate legislative and non-legislative measures. The actors involved, ie
Member States and EU institutions, need to show a certain level of commitment.
Benchmarking national RTD policies in Europe is not a mere exercise for bureaucrats
and experts, on the contrary it needs to be accompanied by a real involvement of the
Member States. Competitiveness becomes operative if it is translated into performance
indicators, pragmatic principles and policy transfer. The States have to learn from good
practices and try to adopt them into their internal systems. Nevertheless, the mecha-
nism of the OMC including the qualitative element of practices transfer is not sufficient
to achieve the convergence objective. It is a loose mechanism and it is entirely based on
the good will of the Member States. The Commission’s role is not simply to address
uniform RTD policies, but rather to disseminate commensurable benchmarks among
Member States. Such a role needs to be strengthened in order to achieve ‘consistency’
of domestic research policies or at least ‘coherent policy processes’ within the ERA’s
common framework. As such the Lisbon strategy is not very effective as in most of the
cases the Commission’s task is restricted to efforts that ‘encourage those that are willing
to improve the conditions to do more and better research in Europe’.66 This institution
does not have sufficient and effective powers to give policy directions and monitor
progress. Although in collaboration with experts who are representative of the Member
States, it prepares a set of S&T indicators as a basis for benchmarking the performance
of the whole ERA, its policy inputs are dead letters if not converted into actions. This
requires Member States’ commitments; transfer of best practices should not be seen as
a bureaucratic mechanism but as part of a learning process.
The OMC strategy in research and education should also be based on the participa-
tion of local and regional actors. In reality, it is a ‘top-down process’, ie consultation
does exist formally but is restricted to the national level with very little involvement of
organised civil society. This seems also the case in those countries with a strong
tradition of social and civil dialogue. The consequences of such a mechanism poten-
tially produces the effect of EU reforms which miss the target and generates negative
social and economic consequences for those concerned. In this respect critics referred to
the Lisbon strategy as ‘a good exercise for bureaucrats and experts’ but ‘too abstract to
be grasped by the public opinion’.67
Through the introduction of the OMC, the Lisbon strategy has left policy choices in
the research area at national level but has promoted common indicators and also
comparative evaluations of national policy performance. Apparently, the renewed
Lisbon Strategy is achieving some convergence in national research policy ‘driven in
part by discussion and interaction between Member States and the Community level,
such as through the Open Method of Coordination [. . .] or as a follow-up to Commis-
sion Communications’.68 However, the pace of progress has been slow and its level has
not shown comparable significant advancements in the Lisbon strategy within the
enlarged EU.
The question concerns the effectiveness of such a tool as the best option to deal with
the extent of diversity of national research and innovation systems considering the lack

66
European Commission, Investing in research, an action plan for Europe, Commission Staff Working
Document, COM (2003) 226 final, 1–26.
67
Opinion of the European Economic and Social Committee, op cit n 30 supra, at 94–102.
68
European Commission, The Green Paper ‘The European Research Area: New Perspectives’, (2007) Com-
mission Staff Working Document, COM (2007) 161, 9ff.

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of commitments to the ERA goals at this level. The view of the Commission is that ‘in
general, there is little evidence that national policy makers have taken ownership of the
ERA concept, or have advanced far in their practical reflections on how national policy
can contribute to constructing ERA, by building policy coherence across borders and
across policy levels’.69
A clear weakness of the OMC lies in the absence of an alarm system enabling
warnings to be issued by the Commission with the ECJ intervention. Sanction mecha-
nisms against non-compliant Member States are not an option of the OMC processes.
Scholars have argued that sanctions can work against commitment, which is lacking in
this sphere. Harlow and Rawlings debate that sanctions are not an essential element of
accountability, on the contrary instead of increasing accountability, they can act as an
obstacle to it by creating incentives to deny responsibility.70
Hodson and Maher question the efficacy of the sanction mechanisms in relation to
the Stability and Growth Pact particularly after the recent breach of EMU’s fiscal rules
by Italy, Portugal, Germany and France. They suggest that, ‘there is no appropriate
sanction other than state pressure and, ultimately, market pressure’.71 However, they
acknowledge that a sanction, such as for example the exclusion from the euro area, has
provided a powerful catalyst for fiscal prudence during the 1990s.72 My argument is
that Member States’ failure to conform to guidelines imposed within EMU’s fiscal
policy does not provide evidence of the non-efficacy of the sanction system itself. What
is actually needed in the research area, is a ‘powerful catalyst’ to ensure commitment to
the Lisbon goals at national level.
Discussions on the legitimacy of the Lisbon strategy advocate the involvement of the
European Parliament within the OMC processes.73 According to the traditional notion
of democracy within the EU, democratic legitimacy and accountability are ensured
through the involvement of the European Parliament.74 Given the decentralised char-
acter of the OMC, the European Parliament is involved very little, contrasted with its
role in binding legislative procedures and this is a further weakness of this soft law
measure. As suggested, although the democratic debate on the OMC should take place
at national level, policy aspects with strong externalities should be debated at the
European level.75 The aspiration of a competitive EU cannot be realised only through
purely national solutions. The ERA project concerns both the Community and the
Member States (including their regions). As the response is needed at both levels purely
national solutions are not enough.76
If the mode of closer co-operation should remain unavailable, it seems important to
investigate other potential courses. In order to accommodate existing diversity in the
research and innovation systems of the Member States, a good solution would be a

69
European Commission, op cit n 66 supra, at 9ff.
70
C. Harlow and R. Rawlings, Promoting Accountability in Multilevel Governance: A network approach,
(2006) European Governance Papers No C-06-02, 4, available at http://www.connex_network.org/
eurogov/.
71
D. Hodson and I. Maher, ‘Soft law and sanctions: economic policy co-ordination and reform of the
Stability and Growth Pact’, (2004) 11(5) Journal of European Public Policy 810.
72
Hodson and Maher, ibid, at 798.
73
Notre Europe The Lisbon Strategy and the OMC, (2005) 12 Policy Paper, 17.
74
De Burca, op cit n 37 supra, at 17.
75
Notre Europe, op cit n 73 supra, at 18.
76
European Commission, op cit n 66 supra, at 8.

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September 2008 The Missing Piece of the Lisbon Jigsaw

combined approach using OMC and framework directives.77 The framework directive
is a flexible instrument shaped by each Member State to suit specific national and local
conditions and preferences. Member States would transpose this measure taking
account of their research systems. This legal instrument would have binding effect and
would be directed by Council who would issue guidelines for the Member States.
Consequently, they would present action plans and reports which are periodically
assessed by peer review. In case of non-compliance with their obligation to issue reports
or with the reports themselves, the Commission would be able to initiate the usual
infringement proceedings.
Framework directives together with the OMC would accommodate existing diversi-
ties and better suit the need for integration and competitiveness. This hybrid approach
associating hard and soft law would provide a degree of accountability and democratic
legitimacy. Formal sanctions against non-compliant Member States would then ensure
compliance. This model would combine the effectiveness of the Community method
with the flexibility of the OMC.

V The Impact of OMC on National Policy and its Effectiveness:


The Italian Case
There has been very little empirical work on the impact of the OMC and its effective-
ness. Scholars have suggested that in addition to the difficulties in pursuing and
assessing policy transfer there is the huge challenge of analysing outcomes. It appears
almost impossible to assess whether policy coordination or transfer can be attributed to
OMC processes or to other externalities.78
As mentioned above, the means of implementation of the OMC involves tools such
as indicators and benchmarks as well as the exchange of experiences, peer reviews
and the dissemination of good practice. The effectiveness of these soft law instru-
ments is often contested on the basis of the limited capacities of this mode of
governance to handle specific tasks but there are no or little evidence or empirical
findings in this respect. In an attempt to offer some insight into the way European
countries respond to the goals set in Lisbon, this section focuses on the extent to
which the Italian research policy reflects these targets. As such, the analysis focuses
on the Italian research and innovation system in order to evaluate its convergence
with the Lisbon strategy and assesses its working methods. Although the paper is
based on Italy, some of problems experienced might also arise in other Southern
European countries such as Spain, Portugal and Greece. These countries are also
characterised by low investment in research, poor infrastructures and career perspec-
tives in the private and public research market.79 However, as will now be discussed,
the Italian situation is special in the sense that the country is experiencing a com-
petitiveness crisis and the lack of R&D investment is a chronic problem which needs
an immediate and drastic solution.80

77
Scharpf, op cit n 60 supra, at 664–665; De La Rosa, op cit n 59 supra, at 638–639.
78
E. Szyszczak, ‘Experimental Governance: The Open Method of Coordination’ (2006) 12(4) European Law
Journal 496–497.
79
S. Morano-Foadi, ‘Scientific mobility, career progression, and excellence in the European Research
Area’, (2005) 43(5) International Migration 133–162.
80
S. Morano-Foadi, ‘Key issues and causes of the Italian Brain Drain’, (2006) 19(2) Innovation: the
European Journal of Social Sciences 209–223; S. O. Becker, A. Ichino and G. Peri, ‘How Large Is

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This section is divided into subsections outlining: the main problems faced by the
country; the proposed reforms to tackle these problems; the extent to which the reforms
introduced are related to the ERA and the Lisbon strategy; and whether the OMC is a
valuable tool in this field.

A The Italian Economy and its Problems


The Italian economy is suffering from a serious growth problem and consequent
microeconomic instability and sense of social malaise. According to a recent Report on
world competitiveness the country has lost ground compared to the top league.81 The
main problems of the Italian economy are a high public deficit and unemployment rate,
which contribute to the stagnant, negative performance of total factor productivity.
Employment levels are low in Italy compared to the rest of Europe. Despite the
progress made since 1997, the gap still remains wider than it was in 1992. Productivity
growth and increased employment rate need to be linked together. In fact the strong
productivity growth that occurred until the beginning of 1990s was accompanied by
low employment rates.82
Italy presents a specialised production sector based on ‘made in Italy’, often family-
run small and medium enterprises (SMEs) operating in sectors ranging from textiles to
mechanical engineering.83 Although the Italian Government has acknowledged, on
paper, the value of R&D to increase productivity and improve competitiveness, its
R&D investment is significantly lower compared to the rest of the industrial countries.
The Italian public research sector is constituted by universities, public research insti-
tutions, state and local laboratories. Most of the research funding is represented by
public money. The government annually earmarks the ordinary funding to public
research institutions. Only recently has greater freedom been granted to universities in
the use of funds coming from the Ministry and the possibility of attracting external
funding. By contrast, the private research market is based on ‘made in Italy’ SMEs,
which operate in lower technology sectors and invest very little in research. The
Government has denied its responsibility, affirming that is the private sector’s low
propensity to invest, the main cause for an overall poor R&D investment performance.
It has then justified the low private investment as a reflection of the structure of Italian
businesses in terms of dimension and sector, affirming that public sector R&D invest-
ment are in line with the average of the countries of the Organisation for Economic
Co-operation and Development (OECD).84 This raises a question on the meaning of
indicators applied to significantly different situations as many businesses operate in low
technology sectors in Italy.
Over the past 5 to 7 years, the Italian government has tried to boost research and
innovation, through funding under a Programma Nazionale per la Ricerca (PNR)

The “Brain Drain” From Italy?’ (2004) 63(1) Giornale degli Economisti e Annali di Economia 1–32;
P. Parascandolo and G. Sgarra, ‘Crescita e produttività: gli effetti economici della regolazione’, (2005)
Centro Studi Confindustria, available at http://www.intertic.org/ItalianPapers/confindustria.pdf.
81
IMD World Competitiveness Report (2007), available at http://www.imd.ch/wcc.
82
Ministero dell’Economia e della Finanza, Economic and Financial Planning Documents 2007–2011,
available at http://www.mef.gov.it/web/apri.asp?idDoc=4706.
83
Italian Government, National Reform Programme 2006–2008, Update on Progress, 18 October 2006,
at 26, available at www.politichecomunitarie.it.
84
Ministero dell’Economia e della Finanza, op cit n 82 supra.

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September 2008 The Missing Piece of the Lisbon Jigsaw

(National Research Programme) (2003–2006).85 The PNR has identified strengths


and weaknesses of the Italian research market. According to the then Italian Minister
of Education, University and Research, Ms Moratti, weaknesses are the resources
and facilities of the scientific system, which are underdeveloped in relation to the
needs and potentialities of an industrialised country such as Italy. On the contrary,
strengths of the Italian research market are peaks of excellence in traditional sectors
and also in areas such as robotics, instrumental mechanics, microelectronics and bio-
medical technologies.
The Government is aware that a gradual increase in the growth rate of the economy
‘can only take place if total factor productivity pulls out of the long standstill of the
past few years. This requires more investment, greater innovation, and increased
research and development, as required by the Lisbon Strategy’.86

B Country Reforms to Enhance Competitiveness


Italy’s NRP which was named PICO—‘Piano Italiano per l’innovazione, la crescita e
l’occupazione’ literally ‘Italian Programme for innovation, growth and employment’—
highlighted five priorities to boost output growth and employment, as follows: extend-
ing the area of free choice for citizens and companies (by opening up energy and
services markets); granting incentives for scientific research and technological innova-
tion; strengthening education and training; upgrading infrastructure; protecting the
environment. A sixth priority, long-term fiscal sustainability, was addressed in a
separate document. The programme focuses largely on the micro-economic area, while
macroeconomic and employment policies were largely covered in the annexes.
Amongst the micro-economic priorities there were actions to boost R&D and make the
business environment more attractive to contribute effectively to growth and jobs.
Seventy per cent of the overall funding was allocated to infrastructure.
In its 2006 Annual Progress Report (APR), the Commission pointed out that the
measures contained in the Italian programme were considered by the Commission to be
‘realistic and valuable measures’ most of which were ‘already planned or on-going’,
even though they were ‘not always accompanied by timetables or information on
monitoring and evaluation procedures’.87 The Commission pointed out that to attain
the competitiveness target stronger measures were needed in fiscal sustainability, to
boost competition and to increase labour supply and raise employment rates by tack-
ling regional disparities. Italy was invited to implement such goals in an effective, full
and timely manner.88
In 2006 the Government presented the implementation report addressing some of the
weaknesses identified by the Commission, such as for example providing more concrete
targets, timetables and details on monitoring and evaluation procedures particularly in
the micro-economic area. The 2007 Commission Annual Report suggests that the
proposed reforms in relation to competition in product and services and employment
and lifelong learning strategy should be implemented and commitment in the field of

85
Ministry of Education, Guidelines for the Italian R&D Policy (2003–2006), Linee Guida per la Politica
Scientifica e Tecnologica del Governo, 19 Aprile 2002, available at http://www.miur.it.
86
Ministero dell’Economia e della Finanza, op cit n 82 supra.
87
Communication from the Commission to the Spring European Council, op cit n 25 supra, at 1–6.
88
Communication from the Commission to the Spring European Council, ibid, at 1–6.

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fiscal sustainability needs to be translated into action.89 Amongst the reforms proposed
in the NRP to enhance competition in all markets, there is a measure aiming at the
reduction of Italy’s dependence on traditional sectors to foster SME growth and new
business development. This is a challenge the Italian economic policy is facing over the
next 5 years.
Despite some developments, the overall R&D strategy was considered by the Com-
mission still to be incomplete. The NRP expresses some reservations in general on the
relevance of the 3% parameter and in particular in relation to the Italian industrial
context.90 Such a target seems too ambitious considering the peculiarity of the Italian
industrial research market, as two thirds of 3% should be funded by the private sector.91
For such an aim, fiscal measures were introduced in the NRP to make R&D more
attractive for companies. The large number of SMEs is seen as being responsible for the
low levels of private investment in R&D made in the country. Only 0.46% of GDP
R&D spending is from private sources, compared with the EU average of 1.27%.92 The
Commission is still dissatisfied with the R&D policy as the original NRP presented no
targets for R&D spending whilst the reinforced NPR is still incomplete. It suggests a
system of tax credits and reorganisation of incentives to encourage private R&D
investment with no estimate on how these new schemes really leverage private
R&D.93
In relation to the employment policies, the Italian government, in line with the 2006
CRESTreport, considered employment ‘endogenous’ to the competitiveness element. It
considered education and training a priority in its agenda to increase employment rates
and reduce regional employment disparities. The NPR proposed a reform of the
education system to enable those who do not go into higher education to acquire
general education and vocational training for future work. Notwithstanding its main
employment priority the overall funding included in the original NRP for it, was very
limited. The Commission expressed some reservations in relation to the 2003 education
and training reform (operational as from 2007–2008) and university reform and
affirmed that significantly more efforts are needed to boost educational and training
levels up to the EU average. The Commission’s 2007 Annual Progress Report consid-
ered some of the employment measures ‘especially in terms of content, timetables and
results, not always sufficiently detailed to allow evaluation of their adequacy’.94

C Progress Made in Relation to the Lisbon Competitiveness Agenda


Some of the reforms proposed to achieve the Lisbon objectives have not been imple-
mented yet or are stopped, such as for example the university reform. Attention in this
paper is devoted to the implementation of those reforms for the achievement of the
Lisbon competitiveness goal.

89
Communication from the Commission to the Spring European Council, ibid, at 6.
90
Presidenza del Consiglio dei Ministri, ‘PICO-Piano per l’Innovazione, la Crescita e l’Occupazione, Piano
italiano in attuazione del rilancio della Strategia europea di Lisbona’, COM (2005) 24, 4.
91
Communication from the Commission to the Spring European Council, op cit n 25 supra.
92
CREST Expert Group 2006, op cit n 35 supra, at 10.
93
Lisbon Export Group, Research and Innovation in the National Reform Programme—Opportunities
for policy learning and co-operation (2006), 8, available at http://polaris.dit.upm.es/~gonzalo/
LEG%20report%201%20-%20final5.pdf.
94
Communication from the Commission to the Spring European Council, op cit n 25 supra, at 5.

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Two recent interventions, which are the Economic and Financial Planning
Document (DPEF) (2007–2011) and, consequently, the 2007 Budget Law (Legge Finan-
ziaria), are trying to tackle some of these problems.95 The DPEF establishes a multi-year
frametime and indicates the government’s actions and objectives, referring to the three
underlying objectives of growth, recovery and equity. Its aims for the years 2007–2011
are a decline of the public debt, the relation between deficit/GDP falling below the
threshold of 3% and a raising of the growth rate of the GDP by 1.7%.96 Although highly
debated the 2007 Budget Law (Legge Finanziaria), being based on the DPEF, addresses
the issues of Italy’s high public debt and low potential GDP growth rate.97 Most of the
reforms are annexes or are regulations accompanying the Budget Law.
An improvement, at least on paper, is the way funding is directed to Italian univer-
sities. Academic research funding is now subject to competition for grants either
reserved for universities, or opened to other actors. External engagements are necessary
to increase or even maintain current funding levels, based upon institutional transfer
from the Ministry of University and Research (MUR). Researchers have been giving
some incentives to commercialise research and promote cooperation between academia
and industry through the introduction of specific grants for R&D. The rules governing
access to funding for researchers employed at the National Research Council (CNR),
which governs most research institutes in Italy have changed. There has been a shift
from block grants to a project based system on an attempt to achieve organisational
and cultural progress.98 Despite this, research and innovation resources tend to be
concentrated on specific sectoral projects rather than on structural measures with a
potentially broader economic impact. On 5 April 2007 the Italian Government has
approved a regulation outlining the structure and operation of the national evaluation
agency for universities and research (Anvur). It is still too early to assess whether the
creation of this independent evaluation agency for universities and research will
increase the efficiency of public spending, since, arguably meritocracy will be the
ground for the allocation of resources to universities.99
Recruiting and developing researchers for academia and industry is a key area of
concern that the National Research Programme 2003–2006 aimed to tackle.100 This
element needed to be taken into consideration to be in line with the Barcelona target of

95
The DPEF, which is submitted by the Government and approved by the Parliament, is the main general
instrument combining financial constraints and growth targets. It sets goals and suggests legislative
reforms. The ‘formal function’ of Italy’s budgetary procedure is to establish the benchmark for the annual
budget that is enacted subsequently in the Budget Law. The Document lays it down in the form of public
finance balances which, after approval by Parliament, constitute the limits within which decisions must be
taken at the subsequent “budget session” where overall government income and expenditure are set’
(Ministero dell’Economia e della Finanza, op cit n 82 supra).
For further details on the budget bills; see G. Rizzoni, ‘Legal and administrative organisation of the
assessment of impact of legislation in the Italian Parliament’, (2001) Proceedings of ECPRD Seminar, 9,
available at http://www.riigikogu.ee/rva/ecprd/html/giovanni_rizzoni.html.
96
Consiglio dei Ministri, Economic and Financial Planning Document (DPEF) (2006–2009) 7 July 2006,
available at http://www.governo.it/GovernoInforma/documenti_ministeri/dpef2007_2011.pdf.
97
Budget law 2007 (Legge finanziaria) No 1746-bis/B and Law No 262/2006—Disposizioni urgenti in
materia tributaria e finanziaria (collegato alla Finanziaria, 2007).
98
CREST Expert Group 2006, op cit n 35 supra, at 10.
99
Accompanying Decree to the 2007 Budget Law (Decreto di accompagnamento della Finanziaria per il
2007, art 2, comma 138, decreto-legge 3 ottobre 2006, n 262, convertito con modificazioni, dalla legge
24 novembre 2006, n 286).
100
Ministry of Education, op cit n 76 supra.

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increasing research staff as part of the competitiveness goal. Although the country
reported to be engaged in the reform of recruitment of the university personnel and the
restructuring of the national research centres, the reform in reality was stopped.101 A
number of drastic changes need to be introduced as a matter of urgency and the
Government is promising a reform without delivering it. The recruitment system is still
based on cumbersome recruitment procedure, ie the concorsi system and the issue of
brain drain requires proper policy responses.102
Italy has the highest average age for university researchers in Europe and a very low
index of researchers/support staff compared to other systems. The new Budget law
partially addresses the problem trying to retain researchers but fails to provide
adequate mechanisms to attract to the country Italian or foreign scholars working
abroad.103 The Commission has pressurised Italy to provide information on recent
education and training reforms, including the stalled university reform. It has also
outlined that the Government has failed to propose detailed measures aimed for
example at increasing researchers’ mobility or at the reform and internationalisation of
universities.
The Government has introduced a new tax credit system to stimulate private
research investments and financial incentives for promoting knowledge exchange
between academia and industry to encourage business cooperation with research insti-
tutions. Law n 297/99 is aimed at creating a favourable context for industrial invest-
ments in research, seeking in particular to engage SMEs.104 This has established the
‘Fondo per le Agevolazioni alla Ricerca’, literally ‘Funds for incentives to research’
(FAR) and Technology District considered by the CREST Report, examples of good
practice in the cooperation between business (in particular SMEs) and the public sector
(Ministries and the Regions). The FAR has provided an integrated set of tools prima-
rily targeted to industrial research and pre-competitive development. The Technology
District model reflects Italy’s growing strong regional structure, but is also an example
of the importance of networks.105 Its aim is a shared vision for the future development
of the region based on synergies between its intellectual and industrial actors such as
the national and regional government, universities and companies. National actors are
compared to a tailor who sews together the different actors in a complex system
through the scope of research projects and funding incentives.106 Any region can apply
to MUR for the formalisation of a Technology District, to be co-financed by FAR.
Despite the introduction of these initiatives, one of the weaknesses of Italy is regional
disparities particularly in terms of employment rate and R&D investment. Doubts are
raised in relation to the effectiveness of the transfer of practice mechanism between
different regions within the same state or among diverse member states.

D A Proposed Solution: The Hybrid Legal Framework


Notwithstanding some minor progresses, results are still to come as Italy has lost its
international competitiveness. The country needs to improve its R&D base to avoid

101
Communication from the Commission to the Spring European Council, op cit n 25 supra, at 5.
102
Morano-Foadi, op cit n 80 supra.
103
See Budget Law 2007, op cit n 88 supra, art 40.
104
This law is entitled ‘Reorganisation of measures and simplification of procedures in support of scientific
and technological research, technology dissemination and mobility of researchers’.
105
CREST Expert Group 2006, op cit n 35 supra, at 9.
106
CREST Expert Group 2006, ibid, at 44.

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September 2008 The Missing Piece of the Lisbon Jigsaw

losing its standing in world competitiveness. This is in part the reason why there is lack
of commitment to the specifics of the EU agenda. One of the main problems the
country faces is the capacity to translate action plans into practical measures and this
was acknowledged by the Commission in its annual report.107 The extent to which Italy
fulfils the Lisbon objectives depends on its policy priority. Any convergence with the
Lisbon strategy is happy coincidence as the peer review system works in policy areas
considered at the top of its domestic agenda. This is not a sign of ownership of the ERA
concept or the Lisbon agenda. To regain competitiveness the country needs to show a
real commitment to the Lisbon strategy and therefore should direct its efforts towards
research and innovation. The Government has admitted the need to increase R&D
investments but it has considered the lack of private investments responsible for
the poor performance of R&D policies. Instead of creating the necessary trust of the
private sector towards the government, Italy has failed to implement its plans as
submitted to the Commission. It has often interrupted reforms due to sudden changes
in its internal priority or in the political scene, such as for example in the case of the
university reform. Although it is undoubtedly the case that Italy has a flexible and
diverse production base and SMEs do not readily engage in R&D activities, the private
sector’s trust depends on the government’s track record in setting similar objectives. An
interrupted or stagnant reform ‘can be interpreted to be a sign of lack of true govern-
ment commitment’ and ‘can seriously corrode the trust and reduce the commitment of
the private sector’.108 To obtain significant advancement in the R&D field it is vital that
the government commitment in the form of R&D and innovation budget is accompa-
nied by implementation of concrete policy measures. To be credible there needs to be
a sufficiently long-term commitment. Trust by the private sector will be obtained if
there is an effective ‘control and sanctions’ system, which could force the government
to implement the promised reform and give continuity even under an instable political
scene.
As no effective control mechanisms are in place, Italy can easily escape its respon-
sibility towards the Lisbon agenda. Peer pressure and Commission’s annual reporting
system are good incentives for the country but, in the case of proposed reforms not
implemented, fail to provide a powerful enforcement mechanism. Under such circum-
stances a pure coincidence of internal and European priority agendas is not an effective
enforcement model to achieve the Lisbon target by 2010. Italy needs to improve its
overall performance taking into account structural diversities of productivity depen-
dent on sectoral and territorial dualisms. Notwithstanding the Commission and the
peer pressure, there is no sign of ownership of the Lisbon objectives. As such a hybrid
legal framework based on framework directives and the OMC processes would suit
better the Italian situation. This system would force Italy to adopt R&D policies
compatible with the EU research policy as in case of infringements of Community law
the Commission and the European Court of Justice (ECJ) would be involved in the
process. The sanction element then would impose implementing the measures needed to
be in line with Lisbon and eventually Italy would make the efforts and find adequate
internal leeway.
The Commission foresees the need for Italy to present a clearer strategy which covers
all policy areas and the links between them. In particular, it is not satisfied with the
overall R&D strategy and has invited the Italian government to present, in future

107
Communication from the Commission to the Spring European Council, op cit n 25 supra, at 6.
108
Lisbon Export Group, op cit n 84 supra, at 7.

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European Law Journal Volume 14

reports on the implementation of the NRP, progress in relation to fiscal sustainability,


competition, labour supply and employment rates, including tackling regional dispari-
ties and education and lifelong learning. Taking due account of the above, the Com-
mission has invited Italy to implement its NRP with vigour.109 Legitimate doubts lie on
the real commitment the Italian government will show in implementing its action-plans.

VI Conclusion
Research and innovation have been considered the milestones on which the Lisbon
competitiveness goal is based. Yet the flexible tool of the OMC, which was chosen to
overcome national and regional diversities amongst Member States in relation to
research policy, has shown some limitations. Reference to the Italian research policy
has illustrated how in some cases the OMC might not achieve the ‘consistency’ objec-
tive for the lack of a powerful enforcement mechanism in relation to transfer of best
practices.
The peculiarity of the Italian system, which prima facie might be present in other
Southern and Eastern European Countries requires an effective ‘control and sanctions’
system.
Although, in principle, the OMC tool would assist in the complex research and
innovation field, its working would pretty much differ amongst Member States.
Arguably, whilst the Northern European countries would be more prone to apply
good practices compatible to their political and social systems, Southern and Eastern
European states would need a more regulative system. Therefore a hybrid model
comprising framework directives and soft law methods would be a good compromise
able to respond to the need of each Member State respecting country diversities. The
Italian case is presented as an exemplification of the way and the extent to which the
‘convergence’ element between European and national research policies is achieved and
as such is not extensible to all Member States. Despite so, the hybrid model of hard and
soft law might represent a suitable approach to the research and innovation policy area
for all the European Member States.

First submitted: June 2007


Final draft accepted: December 2007

109
Communication from the Commission to the Spring European Council, op cit n 25 supra.

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Journal compilation © 2008 Blackwell Publishing Ltd.