Not Good News On European R&D

This is not very encouraging:

European spending on re-search and development is falling further behind target, widening the innovation gap between the EU and competitors such as the US and Japan, two studies show.

North American and Asian companies are outpacing European businesses in R&D investment and spending more in high-technology sectors, according to data to be released on Friday by the European Commission’s research directorate.

It is doubly not very encouraging due to a point made in a paper which Brad Setser points us to. The paper is the U.S. and Global Imbalances: Can Dark Matter Prevent a Big Bang? by Ricardo Hausmann and Fredrico Sturzenegger. Basically they argue that the net US financial position is not as dire as it seems due to the existance of ‘dark matter’ (or in more converntional terms, due to the part of the iceberg which isn’t visible and measured). US assets they argue are conventionally undervalued due to the presence of ‘hard to measure’ components. Central to their argument is this point:

We would say that EuroDisney in reality is not worth 100 million (what BEA would value it) but four times that (the capitalized value at our 5% rate of the 20 million per year that it earns). BEA is missing this and therefore grossly understates net assets. Why can EuroDisney earn such a return? Because the investment comes with a substantial amount of know-how, brand recognition, expertise, research and development and also with our good friends Mickey and Donald. This know-how is a source of dark matter. It explains why the US can earn more on its assets than it pays on its liabilities and why foreigners cannot do the same.

I would say the argument that ‘foreigners’ are unable to leverage “know-how, brand recognition, expertise, research and development” is a ridiculously simplistic one, and it almost stretches the bounds of credulity that someone might believe this, but that having been said, if here in Europe we continually fail to maintain our R&D pace it will not be such a silly argument at some stage in the foreseeable future.

Les chercheurs n’y ont rien ? perdre que leurs cha?nes.

The great leftist protest movements of the past have often involved a certain questionable division of labour. The workers march and the academics think. Well, I guess France has always been a bit different.

First, Les Inrockuptibles circulates an Appel contre la guerre ? l’intelligence (Petition against the war on intelligence), accusing the Raffarin government of dumbing down French society and offering, among other things, the headscarf debate as an example. Now, it seems that the French primeminister has bugged enough of France’s academics that they are now planning on doing some marching of their own.
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Outsourcing and the Global Optimum

The last week has seen the ‘great US ousourcing debate’ hit both new highs, and new lows. On the plus side would be the declarations of the oft maligned Greg Mankiw to the effect that the “outsourcing” of jobs is beneficial to the United States economy (even with the qualification ‘perhaps’ this has merit – since despite the fact that the suggestion may not be as well-founded as Mankiw imagines, it is at least courageous in a situation where the President he is advising doesn’t appear any too clear on the question himself). Among the more evident examples of the low points would be the statement from the Democratic Presidential aspirant John Kerry to the effect that company leaders who promote business process outsourcing are ‘Benedict Arnold CEO’s’.
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Living in Denial

No this is not (yet) the title of one of my new pages (although we were looking into living in sin, but unfortunately it’s already taken). No the denial I am referring to is much nearer home for most of us, since it is up there in Brussels. “European Union nations are dragging their heels in their ambitious drive to become the world’s most competitive economy by the end of the decade” or so we are lead to believe from the EU annual survey published by the Commission on Wednesday.

This foolish piece of what the Spanish would call ‘chuleria’ (no easy translation but I suppose you could try vain self-important show-off bragging) – the pledge to overtake the US by 2010 – was adopted at the Lisbon 2000 summit. It was madness in its moment, now it looks just plain ridiculous.
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A Fistful of Analyses, or

A shameless plug:

The Center for Applied Policy Research, a think tank attached to the University of Munich does good work on the nuts and bolts of a large number of EU issues. In particular, their Bertelsmann Group for Policy Research will be covering the IGC as thoroughly as it covered the Convention and the previous summits. Their analyses – usually also available in English – get into the inner workings of the machinery and tell who will benefit from, for example, adapting different forms of qualified majority voting in post-enlargement Unions of 25, 27 or more. Their staff advises the German government fairly regularly, so if you want to see where the main stream of German debate on EU is flowing, this is a good place to look.

Plus, they’re outside the Brussels beltway, and indeed outside the occasionally fevered atmosphere in most national capitals. The distance tends to lend a cool, analytical slant to their writing on the EU.

If you happen to read German, their main page follows key developments on constitutional reform, defense policy and enlargement closely. The summary of the convention, Mutige Einschnitte und verzagte Kompromisse – das institutionelle Reformpaket des EU-Konvents, is a good example.

(Full disclosure: Some years back, I worked full time for the Center’s Research Group on the Global Future, and I continue to write, edit and translate for them. Take a look, and form your own opinion.)