Enterprise and industry

Issue 01│February 2014

ForewordWelcome to the second issue of the KETs Observatory Newsletter!

The Observatory, launched in 2013, is an initiative of the European Commission. It aims to provide EU policymakers, national policymakers and business stakeholders with quantitative and qualitative information on the performance of EU Member States and other competing economies, regarding the deployment of Key Enabling Technologies (KETs).

In this second issue we will discuss the Vanguard Initiative, which consists of certain regions in the EU that are committed to safe-guarding Europe’s industrial future through the use of smart specialisation strategy. We will also look more closely at one of the indicators that monitor the development of KETs (trade balance), using the fi eld of Industrial Biotechnology to give an insight into the shape of the EU’s trade balance as a whole, and the trade balance of individual countries in particular.

To fi nd out more about the work of the KETs Observatory, and to stay up-to-date with all our latest news, simply subscribe to our newsletter through the KETs Observatory website.

Happy reading!

The KETs Observatory team

ForewordWelcome to the second issue of the KETs Observatory Newsletter!

The Observatory, launched in 2013, is an initiative of the European Commission. It aims to provide EU policymakers, national policymakers and business stakeholders with quantitative and qualitative information on the performance of EU Member States and other competing economies, regarding the deployment of Key Enabling Technologies (KETs).

In this second issue we will discuss the Vanguard Initiative, which consists of certain regions in the EU that are committed to safe-guarding Europe’s industrial future through the use of smart specialisation strategy. We will also look more closely at one of the indicators that monitor the development of KETs (trade balance), using the fi eld of Industrial Biotechnology to give an insight into the shape of the EU’s trade balance as a whole, and the trade balance of individual countries in particular.

To fi nd out more about the work of the KETs Observatory, and to stay up-to-date with all our latest news, simply subscribe to our newsletter through the KETs Observatory website.

Happy reading!

The KETs Observatory team

In this issue

Policy in brief: Vanguard Initiative - Page 02

Focus on trade: Trade balance - Pages 03-05

Focus on trade in Industrial Biotechnology - Pages 06-08

Other news and events - Page 09

KETs OBSERVATORY NEWSLETTER

Page 01

Issue 02│July 2014

Issue 01│February 2014

Page 02

POLICY IN BRIEF: VANGUARD INITIATIVE

The Vanguard Initiative for “New Growth through Smart Specialisation” is driven by the political commitment of certain regions in Europe to use smart specialisation strategy to secure Europe’s industrial future through multi-level governance and investment (www.S3vanguardinitiative.eu). In order to support a new industrial growth initiative for Europe, they intend to lead by example through bottom-up entrepreneurial innovation and industrial renewal in European priority areas.

Smart specialisation is a new innovation and industrial policy concept designed to promote the effi cient and effective use of public investment in research and innovation. The Vanguard Initiative has the aim to support emerging European eco-systems to look for collaboration opportunities among cluster platforms across regions and to stimulate co-investment in demonstrators and pilot plants. They currently launched a fi rst initiative focused on a pilot ‘Smart Specialisation Platform for Advanced Manufacturing’, in cooperation with the European Commission. Within this KET, they identifi ed three themes namely 1) Advanced Manufacturing to meet the challenges for off-shore oil/gas and renewable energy applications, 2) Pilot plant for zero-defect manufacturing, and 3) High Performance Production with 3D Printing.

The approach is based on the ‘entrepreneurial discovery’ of smart specialisation in the development and application of these technologies, through a bottom-up mobilisation of experts and companies. The strengths in technology platforms and industrial actors will be mapped and existing infrastructures will be listed with the aim to connect local clusters across regions with respect to each theme. The intent is to check the existence of demonstrators, pilot plants and networks among actors, in order to develop synergies in the European ecosystem to co-create emerging industries in European priority areas. Once this strategic mapping and matching is realized and alignment with European Technology Platforms and Public Private Partnerships is ensured, joint projects can be launched and investment decisions with regard to demonstrators and pilot plants can be coordinated, exploiting complementarities.

The Declaration of the Vanguard Initiative for New Growth through Smart Specialisation was adopted on 8 November 2013 by high political representatives from 10 European regions: Basque Country, North Rhine Westphalia, Flanders, Lombardia, Malopolska, Scotland, Skåne Region, Southeast Netherlands, Tampere Region, and Wallonia.

On 30 January 2014, the political leaders of 15 European industrial regions gathered in Brussels to prepare for the Vanguard Initiative for New Growth through Smart Specialisation. The leaders signed an open letter to Herman Van Rompuy-President of the European Council, to inspire and infl uence policy debates and propose the piloting of Smart Specialisation Platforms in European priority areas.

2013

2014

Issue 02│July 2014

Enterprise and industry

On 13 November 2014, the political leaders will gather in Milan to discuss how the Vanguard Initiative can strengthen the interregional dynamic in Europe, in support of bottom-up entrepreneurship and aligned to growth initiatives of the new European Commission (such as the €300 billion investment package announced by Jüncker).

Therefore, the Vanguard Initiative aims to enhance efforts for inter-regional collaboration, guided by smart specialisation principles. This pilot initiative is open to all EU regions and invites them to articulate their strengths with regard to the priority action lines set out in the European agenda.

Enterprise and industry

Issue 01│February 2014

Page 03

FOCUS ON TRADE: TRADE BALANCE

Within the framework of the Observatory, different core indicators, monitoring the development of Key Enabling Technologies (KETs), are compiled. These indicators cover technology, production and demand, trade, and business performance.

In this issue, we will be focusing on trade indicators in general and trade balance in particular. Along with signifi cance, export market share, dynamics and specialisation, trade balance is one of the fi ve trade indicators that the KETs Observatory is working with.

The trade balance measures the difference between exports and imports in relation to the total trade volume (exports plus imports) of a country. A positive value shows that a country exports more components or intermediary products that are directly based on KETs than it imports, which, in turn, indicates some type of competitive advantage.

We will be comparing the trade balance in each KET of the EU, East Asia and North America, before looking at the trade balance of the EU in Industrial Biotechnology (IB) in more detail.

Issue 02│July 2014

FOCUS ON TRADE: TRADE BALANCE

Enterprise and industry

Issue 01│February 2014

Page 04

Trade balance per KET in regional comparison**

Industrial Biotechnology Nanotechnology

Photonics Micro-/Nanoelectronics

Advanced MaterialsAdvanced Manufacturing Tecnologies*

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

East AsiaEUNorth America

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

East AsiaNorth AmericaEU

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

East AsiaNorth AmericaEU

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

North AmericaEUEast Asia

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

EU

East Asia

North America-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

East Asia

EU

North America

* Due to methodological issues, export data for Advanced Manufacturing Technologies during the period 2002 to 2006 are not comparable to those for 2007 to 2012.

**For regional comparisons (EU28, East Asia, North America), the export market share only refers to extra-regional trade.

Source: UN Comtrade database. NIW calculations.

Issue 02│July 2014

FOCUS ON TRADE: TRADE BALANCE

Enterprise and industry

Issue 01│February 2014

Page 05

Issue 02│July 2014

FOCUS ON TRADE: TRADE BALANCE

As shown in the graphs, when comparing the trade balances of the EU, North America and East Asia, it is clear that in four out of six KETs – Industrial Biotechnology (IB), Nanotechnology (NT), Photonics (PHOT) and Advanced Materials (AM) – East Asia’s economy reveals a more favourable trade balance than its European and North American counterparts. Advanced Manufacturing Technologies (AMT) is the only KET where the EU holds the leading role, with an overall positive trade balance, while in Micro-/ Nanoelectronics (MNE) all three regions show negative trade balances. This suggests that other countries that are not considered here, especially Asian ones such as Taiwan, Malaysia and the Philippines, are particularly relevant for MNE.

In IB, the outstanding position of East Asia is particularly evident. While East Asia continuously increased its positive trade balance in IB over the last 10 years, the EU experienced a sharp decline. This indicates that in IB, the EU has increasingly imported more than it has exported in the past decade, a trend that can be mainly attributed to changes in the global production chains of basic chemicals.

The East Asian trade balance for NT, PHOT and AM is also positive and well above the negative showings of the EU and North American. However, unlike with IB, the most recent trends show that the EU in particular could enhance its trade balance in these three KETs and, for the time being, stop the downward trend and improve its competitiveness.

Comparing the trade balance of the EU, North America, and East Asia

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Enterprise and industry

Issue 01│February 2014

Page 06

FOCUS ON TRADE IN INDUSTRIAL BIOTECHNOLOGY

At fi rst glance, the IB trade balance for the EU looks particularly poor. However, we can gain a better understanding of the overall trade patterns of EU Member States by examining the type of IB products that the EU exports and imports, and by performing an in-depth analysis of selected EU countries.

Here, it is important to note that IB and Nanotechnology mainly refl ect production processes. Therefore, only some products or components are actually directly linked to these technologies. In the case of IB this applies particularly to selected chemical products for which biotechnology has become an increasingly important method of production, even though not all these products are necessarily produced using biotechnological processes.

The main part of the EU28’s IB exports is made up of insecticides and prepared enzymes, which together accounted for about 30% of total extra exports in 2012. In contrast, amino-acids account for more than half of the EU28’s IB imports. Besides these, only provitamins, vitamins and their derivatives play a considerable role on the import side.

Nearly half of North America’s exports are insecticides, as well as provitamins and vitamins. Prepared enzymes, acetic acid and lysine also achieve comparably high shares within IB exports. In terms of North America’s IB imports, about two-thirds fall on amino-acids, provitamins and vitamins, and prepared enzymes.

East Asia’s trade structure is the reverse of the other regions, to some extent. Here, amino-acids form the main export position, followed by provitamins and vitamins, with both product groups accounting for more than half of East Asia’s IB exports. By contrast, imports are dominated by provitamins and vitamins, insecticides and prepared enzymes.

In conclusion, the EU28 and North America are net exporters of insecticides, whereby their overall negative trade balance is mostly determined by the high import surplus of amino-acids and provitamines and vitamins. Moreover, the EU28 shows a remarkable positive trade balance in prepared enzymes, whereas North America holds an export surplus in acetic acid and lysine. By contrast, East Asia holds a positive trade balance in nearly all IB products except acetic acid.

Issue 02│July 2014

Export and import

-80

-60

-40

-20

0

20

40

60

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

East AsiaNorth AmericaEU

Industrial Biotechnology

Enterprise and industry

Issue 01│February 2014

Page 07

FOCUS ON TRADE IN INDUSTRIAL BIOTECHNOLOGY

Export market shares and trade balances at the country levelLooking at aggregate trade values on a regional level (EU, East Asia and North America) can give us a sense of global trends, but it says little about the actual developments of IB trade patterns at country-level. The graphs to the right shows an assessment of the 20 national economies with the largest IB market shares.

-60 -40 -20 0 20 40 60 80

IsraelAustriaMexicoFinland

SpainItaly

United KingdomRep. of Korea

BrazilSwitzerland

JapanDenmark

NetherlandsIndia**France

GermanyBelgium

USASingapore

China*

Export market share %

Trade balance

Including countries that account for at least 0.5 % of total IB exports in 2012 - *incl. Hong Kong; **2003 instead of 2002.

Source: UN Comtrade database. – NIW calculations

0 5 10 15 20 25

IsraelAustriaMexicoFinland

SpainItaly

United KingdomRep. of Korea

BrazilSwitzerland

JapanDenmark

NetherlandsIndia**France

GermanyBelgium

USASingapore

China*

The export market share gives the share of exports from a certain country over global exports (measured here as the total exports of the 44 countries being considered). It shows the degree of importance of a country within global exports.

As the juxtaposition of export market shares and trade balances illustrates, countries with large export market shares do not necessarily reveal positive trade balances. Germany, for instance, has a negative trade balance (indicating that in IB, its imports exceed its exports), despite a relatively large overall market share of IB.

Given the importance of the German economy within the EU – not least refl ected by a considerable market share in IB – its negative trade balance is partly responsible for the EU’s overall negative trade balance. Similarly, Great Britain and Spain also reveal a negative trade balance, even though both countries carry much less weight in total IB exports.

In contrast, out of the EU Member States, both Denmark and Finland show very positive trade balances. However, given the smaller market shares in IB of both countries, their positive trade balances do not outbalance the negative balances of other countries. France, the third largest EU exporter (after Belgium and Germany) of IB goods, also reveals a noticeably positive trade balance in 2012, whereas the trade balance of Belgium (as the largest exporter of IB products in the EU) is fairly even.

Issue 02│July 2014

Export market share and trade balance per country for IB 2012

Enterprise and industry

Issue 01│February 2014

Page 08

Comparing the share of EU-intra-trade exports and EU-extra-trade exports in selected EU Member States

Including countries that account for at least 0.5 % of total IB exports in 2012Source: UN Comtrade database – NIW calculations.

Source: UN Comtrade database. – NIW calculations.

The graph on the right displays the development of the trade balances in IB for two larger (Germany, France) and two smaller (Denmark, Finland) EU economies over the past decade. It shows that Denmark, Finland and France did not follow the overall negative trend of the EU, but succeeded in maintaining their positive trade balance (DK) or even improved their performance (FI, FR) over time. Germany, as one of the most important exporters of IB products within the EU, experienced a more or less steady decline of its IB trade balance.

All together, in spite of the negative and declining IB trade balance for the EU28 average, the country perspective reveals that single Member States constitute net exporters or could improve their trade position over time.

Since most EU trade happens within the EU, it is interesting to compare the shares of EU-intra-trade exports with the shares of EU-extra-trade exports. As the graph on the right reveals, the high Belgian export market share is nearly exclusively attributed to EU-intra-trade. More than 90% of the Belgian IB exports remain within the EU28, something that is largely due to shipments between multinational fi rms. The same applies to the Netherlands, the fourth largest EU exporter of IB products.

For most of the other EU28 countries, IB intra- and extra-trade exports are fairly equal. The only exception is Austria, which exports over 60% of its exports to countries outside the EU.

Issue 02│July 2014

TRENDS OF IB TRADE BALANCE IN SELECTED EU ECONOMIES

FOCUS ON TRADE IN INDUSTRIAL BIOTECHNOLOGY

-40-30-20-10

010203040506070

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12

Denmark

Finland

France

Germany

Trade balance in selected EU countries forIB 2002 to 2012

Share of extra-trade and intra-trade in %

0 20 40 60 80 100

Belgium

Netherlands

Germany

Spain

Finland

Denmark

Italy

UnitedKingdom

France

Austria

extra-trade intra-trade

Enterprise and industry

Issue 01│February 2014

Page 09

NEWS AND EVENTS FROM THE KETs WORLD

Upcoming events

Issue 02│July 2014

Other newsLET’S 2014 Conference (Bologna, Italy - 29 September - 1 October 2014)

LET’S 2014 Conference (Leading Enabling Technologies for Societal Challenges), is the main event of the Italian Presidency of the Council of the European Union on KETs. The conference will investigate how to take advantage of research results and technological developments in the fi elds of nanotechnology, industrial biotechnology and advanced materials, manufacturing and processing, through the support of excellent science and of KETs, in order to face the societal challenges.

Open Days 2014 (Brussels, Belgium-6-9 October 2014)

Now in its twelfth year, OPEN DAYS – European Week of Regions and Cities is an annual, four-day event that welcomes 6 000 participants each October. During the event, cities and regions showcase their capacity to create growth and jobs, implement EU cohesion policy, and prove the importance of the local and regional level for good European governance. This year, 105 workshops and debates will be part of the main programme, with two of those workshops being on the subject of KETs and smart specialisation strategies.

The European Commission has recently adopted the Communication for Framework for state aid for research and development and innovation. This communication outlines the aid measures covered by the framework including aid for R&D projects, feasibility studies, the construction and upgrade of research infrastructures, innovation activities and innovation clusters.

The Commission has also recently adopted a new Communication setting out criteria under which Member States can grant public support for the implementation of Important Projects of Common European Interest (IPCEIs). This communication is aimed at facilitating the implementation of major projects that make a signifi cant contribution to economic growth, jobs and the competitiveness of the European industry and economy.

The scope of measures that no longer require prior approval from the Commission has been widened under the new General Block Exemption Regulation (GBER). These new rules will help Member States reach the targets of the Europe 2020 Strategy for smart, sustainable and inclusive growth, while at the same time limiting distortions in the single market.

A two-day conference on KETs in support of industrial renaissance was held in Brussels on 2-3 April 2014. At the conference the results of ongoing projects on multi-KETs pilot lines and on the contribution of cross-cutting KETs for Horizon 2020 were presented and discussed. The event brought together high-level experts from industry to share their experiences of Pilot Lines projects, as well as policy makers with insight into new funding opportunities and strategies.

Enterprise and industry

Issue 01│February 2014

Page 10

You can subscribe to our newsletter on the KETs Observatory website: http://www.ketsobservatory.eu

Do you have any news or comments? We’d like to hear from you!

Contact us at KETS-observatory@ideaconsult.be

Join our LinkedIn KETs Observatory group to be kept up-to-date with the latest discussions on KETs

If you would like to hear more about EU policies in the fi eld please contact: European Commission DG Enterprise and Industry E4: Key Enabling Technologies and Digital Economy B-1049 Brussels

E-mail: ENTR-KETS-OBSERVATORY@ec.europa.euWebsite: http://ec.europa.eu/enterprise/sectors/ict/key_technologies/index_en.htm

Issue 02│July 2014

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