12 September 1995

Doc. 7379

REPORT

on strategic technologies

(Rapporteur: Mr LENZER,

Germany, Group of the European People's Party)

Summary

      In recent decades, it has become clear that the societies of the future will be based on knowledge. Many governments have already increased their investment in science and technology as a means of overcoming economic difficulties and thus maintaining growth and ensuring the wellbeing of their populations.

      The new technologies now emerging, which are called "strategic" because of the substantial contribution they could make to the economy over the next decade, are the product of interaction between different disciplines. Information and telecommunication technologies, biotechnology, new materials, superconductors, optoelectronics, nanotechnology and, in the longer term, bionics will bring about structural changes which will affect over 60% of workplaces.

      Europe must show its determination to take up this challenge affecting all parameters of the world economy by encouraging governments to support innovation and combat bureaucracy, excessive regulation and traditionally cautious investment patterns. In order to ensure the effective operation of national innovation systems, which will have major ramifications in social and economic terms, it will be necessary to mobilise efforts through company partnerships, co-operation between universities and industry and the development of multidisciplinary vocational skills.

      Only a clear political impetus and new ideas will enable Europe to overcome its innovation deficit and stay up front among the leaders in strategic technology. The good record of European co-operation in certain major scientific and technology projects, for instance in the European Space Agency (ESA), the Airbus consortium and the European Organisation for Nuclear Research (CERN), bodes well for future progress.

I. Draft resolution

1.       No period of history has been as strongly marked by technological progress as the last few decades. The welfare of future generations depends to a large extend on national scientific and technological choices.

2.       An analysis of future development of economic life in industrialised countries shows the predominance of knowledge-based economic growth. Many governments have committed themselves to investing in science and technology, though to varying degrees, as a means of overcoming economic difficulties.

3.       Among highly sophisticated recent technologies, which increasingly influence our daily life, some occupy a special position. They are called "key", "critical", "emerging" or "strategic" technologies. In this context they have no military connotations, but it is generally acknowledged that they will play an essential role in economic and social life, and in world trade.

4.       Although it is difficult to draw up an exhaustive list of these technologies the following can be considered as having the potentiality of substantially contributing to the economy over a ten-year period: information and telecommunication technologies, biotechnology, new materials, superconductivity, optoelectronics, nanotechnology and in a longer time scale bionics. Some long-standing technologies such as aerospace and computers maintain, however, their importance.

5.       By the year 2000 it is expected that more than 60 % of work places will have been affected by the structural change as a result of new technologies. The annual sales in the United States alone of emerging technologies are estimated at 350 billion dollars. In Europe, the production and use of information technologies only may account for more than 10 % of GDP. These figures are significant in appraising the future parameters of world economy.

6.       The main common feature of these technologies is that they result from research in boundary areas between formerly isolated disciplines such as physics, chemistry and biology. The focus, in applied sciences, now lies in integration, interaction and synergy.

7.       In this connection there is a shift from the traditional concept of invention or breakthrough to a new model where existing knowledge and technologies are recombined and exploited in a creative manner. This is a new process of "technological innovation", in which Japan leads the way and which will be the dominant trend in the years to come.

8.       It is therefore crucial that the new model of innovation process is widely understood both by the public and private sectors. The old linear model, focused too much on Science Base with direct technological applications, is being replaced by a complex interactive process. Policies contrary to this reality will be doomed to failure and inefficiency.

9.       This novel technological culture also entails the rewarding of creativity of a certain type with which both the existing financial mecanisms and intellectual property rules appear to be out of step. This is especially true in Europe which has risk averse economic traditions and conservative banking. On average, Europeans invest 30 % less than the United States and Japan in "innovation".

10.       The Assembly therefore recommends that governments and parliaments of member states take account of the following proposals in drawing up their technology policies:

A.       Government role

      The government support in promoting innovation is a delicate matter and has to be handled with care. It should respect the following principles:

i.       It should be demand-driven and be designed in full consultation with industry. It should take into account the growing public expectation that R&D ought to have directly perceptible results in terms of economic growth, environmental protection and better health, thus presenting a value to society;

ii.       Publicly funded support should be given at pre-competitive level. Subsidies to near-market research could distort competition. Besides, with the exception of a few defence and prestige programmes, picking winners in industry is an unfair and dangerous game for governments;

iii.       Bureaucracy and overregulation are an additional handicap in particular in areas where technology changes rapidly. The telecommunication sector is a good example where monopolistic companies still dominate in many countries. Governments have to speed up the deregulation process;

iv.       Governments can also play a catalyst role in promoting co-operation between universities and companies and in bringing partners together especially when new technology is developped in a small start-up company which has no or limited possibilities of finding venture capital. Very often high-tech start-up firms need to cooperate with larger firms to go beyond the prototype stage;

v.       Knowledge-based economy and drastic changes in technology require reforms in scientific education and technical training. There is an even greater need for people who can understand the interface between technologies and manage innovation networks. We have to move away from sector - or, firm-specific specialists - to multidisciplinary professional competences;

vi.       In the long term, promoting a greater awareness of the importance of innovation throughout all sectors of the economy is the major task of governments. Public authorities should seek an integrated approach in organising a national innovation system, which has ramifications in finance, industry, education, training etc. and which largely determines the economic performance of a nation.

B.       At European level

      Europe has a good record of cooperation in big scientific and technological projects. the European Space Agency (ESA), Airbus and the European Organisation for Nuclear Research (CERN) are but a few examples. The EUREKA programme contributed greatly to bringing together the know-how of European firms at pre-competitive level. The 4th framework programme of the European Union on research and technological development foresees important action in the field of new technologies, with non negligible budgetary means. Despite these efforts there is an innovation deficiency which requires a rethinking of the system:

i.       In order to face international competition in this new technologies market Europe needs, above all, a common strategy. It is imperative to move towards harmonisation of national standards so that the widest possible internal market is created;

ii.       University/industry relationships is still looked upon by many in Europe with scepticism or distrust. A change in mentalities as well as the lifting of regulatory barriers may lead to better interaction, in the form of informal links or formal contracts. Involvement in industrial research should not constitute an impediment when academic performance is assessed;

iii.       Europe needs new intellectual property and patent rules more adaptable to the new concepts of co-ordination of research, technology linkage and creative marketing;

iv.       The potential contribution of the military sector to innovation capacity is beyond doubt. "Dual-mode" technology-defence funding constitutes a substantial tool in the United States as a means to boost domestic industry in leading sectors. Europe has to reconsider its strategy in this area, taking also into account the enlarged geographical context and the question of conversion of military technologies;

v.       As a concluding point the Assembly is convinced that Europe possesses the infrastructure and the technical skill in order to remain in the leading group with the strategic technologies. It needs however a new inspiration and a clear political impulse to stimulate its creative capacity. Past technological successes leave the possibilities open for new exciting experiences.

II. Explanatory report

by Mr Lenzer

Contents

I.       Introduction       6

II.       Definition and origins of "strategic technologies"       6

III.       Commercial and geopolitical importance

      of "strategic" technologies       8

IV.       Technological innovation and industrial restructuring in Europe       9

V.       Conclusions       13

Appendix 1:        New technologies in the 21st Century       16

Appendix 2:        Bionics - Learning from Nature       18

Appendix 3:        Emerging technologies and markets       19

Appendix 4:        Percentage of gross domestic expenditure on R&D financed

      by the business enterprise sector       20

Appendix 5:       Inter-firm research, technology and manufacturing co-operation

      agreements and the R&D, production and marketing spectrum       21

I.        Introduction

1.        No period in history has been as strongly marked by technical and scientific progress as the decades following the Second World War. In their time the discovery of fire and the invention of the wheel or the steam engine represented a considerable advance for mankind, but scientific and technological inventiveness has known virtually no bounds during the second half of the 20th century.

2.       From time immemorial, the economic dominance of a state has been conditioned to a great extent by its level of scientific development. Today the stakes are higher still; not only the living standard but especially the welfare of future generations depend on national scientific and technological choices.

3.       All studies on the future development of economic life in industrialised countries clearly show the predominance of knowledge-based economic growth. Around the year 2000, about 60 % of workplaces will have been affected by the structural change entailed in the application of the new technologies. These technologies are the industrial application of an increasing integration of hitherto isolated scientific disciplines such as physics, biology and chemistry. This is a big challenge because the most spectacular breakthrough of the future will come from the boundary areas between these disciplines and by their interaction. The type of co-operation between basic research, applied science and industry will be different as compared to the past.

4.       The globalisation which has occurred makes it crucially important for the European countries, regardless of their differing standards of technological and scientific development, to realise that technological restructuring and innovation constitute preconditions for determining the common technological policy strategy needed to enhance Europe's industrial competitiveness.

II.       Definition and origins of "strategic" technologies

5.       These highly sophisticated and often recent technologies which increasingly regulate our daily life also have a decisive impact on the economy of countries which have gained possession or command of them. They have been called "high", "key", "critical", "emerging" or "strategic" technologies. For the purposes of this text, "strategic" has no military connotations, even though most of the technologies concerned are of military origin. The term "strategic" is used because of the general view that in the years ahead these sectors will play an essential part in social and economic life.

6.       The term "strategic technologies" originates from the United States. During the cold war it referred chiefly to weapons systems, aerospace technology or air traffic control equipment. These "strategic" or "critical" technologies were itemised in special lists. Their export was subject to stringent controls in order to delay technology transfers which might significantly enhance the military capability of potential adversaries. Such a strategy was considered highly suitable for turn-key facilities with which both weapons and civilian products could be produced.

7.       In the 1980s, as both nuclear and very advanced conventional systems were approaching saturation and equality on both sides, strategic advantage began to depend more on command, control, communications and intelligence functions. The primary technologies for these functions are derived from electronics, communication and computer industries, in which commercial technology is well ahead of military technology. Thus these areas of military importance increasingly depend on dual-use technologies1.

8.       When the cold war ended, the policy applied by the United States and other countries radically changed. The emphasis was no longer on development of technologies in the defence, space and nuclear fields but more on programmes to enhance economic performance in private industry. The same trend was observed in Europe, where the European Union and the governments of non-member states began to introduce a "technology-specific strategy for economic revitalisation".

9.       As some authors see it, strategic technologies are those with potential to contribute substantially to the economy over a ten-year period. The criteria for selecting a "strategic technology", according to the same author, are the size of the potential market, potential contributions to productivity or quality improvement, and potential for stimulating next-generation R&D and applications.2

10.       A detailed classification of new technologies is reproduced in Appendix 1. The information technology - from the application of artificial intelligence3 to image recognition techniques and multimedia systems4 - will lead the way into 21st century. Biotechnology and superconductivity5 play an important but secondary role, whereas new materials are prevalent. In general, Japan and the United States are leading where information technology is concerned. The United States also has a strong position in the field of biotechnology. Europe still holds an edge in physical technologies, new materials and process engineering.6

11.       We are still at the threshold of an age of information. Information is still generated, transferred, processed, stored and presented by electronic and magnetic means. Further developments will however take place in a different world than that of physics. Nature teaches us that information can be chemically and biologically packaged and controlled. This opens up new avenues for research and engineering. The next century will be the century of bionics or learning from nature for technological applications (see Appendix 2).

12.       Meanwhile the focus continues on optoelectronics7. The goal here is to perfect the linkage between optics and electronics to improve the transfer and storage of information. The areas of research are:

      - Fundamentals of optoelectronics and photon technology

      - Optoelectronic materials and semi-finished products

      - Manufacturing and configuration operations

      - Basic optoelectronic systems and new applications.

13.       One of these new applications is of course the broadband technology which was made possible by the use of optical fibre networks. This communications revolution is based on the greatly increased carrying capacity of the networks, the high speed, the capacity for two-way communication (interactive), and the ability to deliver any media, including video, text, audio and images. Optical fibre is manufactured from glass, the parts that carry the signals are about the width of a human hair8.

14.       In order to appreciate the impact of such technologies on everyday life, let us mention the example of multimedia systems. Their main characteristic is "interactiveness", which is the art of switching at will from one information source and medium to another according to one or several sequences. This opens up limitless commercial applications, and to make them possible, a "digital superhighway" is being developed. "Superhighway" or Information Highway (Infobahn) is the generally accepted notion of interactive cable and telephone networks conveying an enormous quantity of information.

15.       In practice this technological revolution will, for instance, enable students to use interactive TV services or CD-ROM9 to consult encyclopedias and all kinds of textual or audiovisual documents, while retaining a record on the printer. Another case of application is to be found in medicine. A child with a high temperature need simply be put in front of the camera of a videophone connected with a medical information service for a doctor's instant diagnosis. The prescription is equally simple; the practitioner generates it and it is reproduced in real time by the remote computer printer. Potential applications of information technology to the political system was the topic of a special Assembly Seminar and a report by the Committee on Parliamentary and Public Relations.

16.       As regards the classical field of materials special mention should be made of nanotechnology used in the manufacturing of molecular scale mechanisms. The application are important for:

      - High-precision machining operations

      - Configuration operations

      - Fundamentals of systems development

      - Components and pilot applications.

      Other materials research involves: photonic materials, new polymers, functional ceramics, high-performance metals and multi-functional materials.10

17.       Last but not least the laser technology has a potential which has not been fully developed yet. Laser is the ideal means for using the synergies from biology, chemistry and physics.

III.       Commercial and geopolitical importance of "strategic" technologies

18.       In the United States, only the new technologies are expected to represent by the year 2000 more than 300 billion dollars in annual sales (see Appendix 3). In the European Union, the wide spread use of information technology along with the production of equipment, will account for more than 6 % of GDP at the end of the century.11

19.       In addition, the information technology is crucial to the competitiveness of the economy. It will be particularly important for business sectors reliant on information such as financial services. The availability of an efficient infrastructure will be a key factor in attracting and retaining international companies. It is also starting to result in new ways of organising work, such as teleworking, thus having a potential impact on future employment schemes.12

20.       Another example where some extrapolation is possible using existing data is biotechnologies. In 1992, this technology represented 8 billion dollars turnover in the United States, with a growth rate of 28 % and an 13 % increase in employment. It is expected that the growth will reach 40 % in year 2000 corresponding to 52 billion dollars in the United States and 35 billion dollars in Japan. The figures for the European Union are similar to that of Japan.13

21.       Europe (specifically Western Europe) has achieved significant levels of performance in many areas: the European Laboratory for Particle Physics (CERN); the European Space Agency; Eureka and the Community programmes. It expects to pursue this course, having regard to the main points of the "framework programme of European Community activities in the field of research, technological development and demonstration - 1994-98" and the prominent place held by science and technology in the Treaty of Maastricht and the White Paper on Growth, Competitiveness and Employment.

22.       The research and technology development action programme of the European Union embodies seven topics. 1) Information and communications technologies (telematics, communications technologies, information technologies) are allocated 3,405 MECUs. 2) Industrial technologies (industrial technologies and materials technologies and measurement and testing) have received 1,995 MECUs. 3) For the environment (environment and climate and marine technology) the estimate is 1,080 MECUs. 4) The science and technology of living material (biotechnology, biomedicine and agriculture) are allocated 1,572 MECUs. 5) Nuclear energy receives 1,002 MECUs and 6) transport and 7) targeted socio-economic research 240 and 138 MECUs respectively.

23.        The Clinton administration for its part has responded to these new challenges by ordering a strategy to maintain the United States' position as world leader in research and development. The conclusions of the official document "Technology for America's economic growth. A new direction to build economic strength" (1993) can be summed up as follows: a change of tactics is imminent for the United States, which used to support R&D in strategic sectors by military programmes and government procurement. In order to retain technological leadership and ability to preserve or recover industrial competitiveness, it is henceforth imperative to support research into production technologies. The vehicle for this new policy is the Advanced Technologies Programme. This was set up in 1988 to support pre-competitive research in firms and had a budget of 68 million dollars in 1993, The Clinton administration plans to increase the budget by 750 million dollars annually until 1997. Other priority areas are civil aviation, motor vehicle safety, high-speed trains, climate change, biodiversity and various ecological issues.

24.       The figures bear out the interests at stake in this contest of giants: the "Triad" countries (USA, Japan and the European Union) account for 82% of the world's R&D investment and 70% of the production of knowledge (estimated in terms of scientific publications). 90% of patents filed in the United States originate from these countries, as do 92% of patents filed in Europe. The link with commercial strength is substantiated by the fact that these countries both supplied and received 80% of the direct foreign investments made by firms. It must be acknowledged that scientific and technological strength goes hand in hand with industrial, commercial and political might, forming a virtually closed circuit.

IV.       Technological innovation and industrial restructuring in Europe

25.       Technological innovations might be defined as the introduction of significant technological changes at the level of processes (manufacturing and others), products or services. Innovation has been effective if its market introduction is successful. During the innovation phase, outlays will principally concern investment in technology (R&D, licences, design and engineering)14. Innovation policy is frequently equated with R&D policy15.

26.       Underlying this concise definition there is an extensive process, often critical and never free of risk. "First, technologies must be mastered, reduced to practice, supported by cost-effective production processes, and introduced to the market. Then that market position must be sustained by appropriate complementary assets, by effective channels of distribution, and by responsive customer service. That too, however, is not enough, for many innovating products have found strong initial markets, only to see other firms - sometimes in other nations - capture the lion's share of market growth through incremental functional improvements, cost reductions, quality superiority and better marketing and service. For example, IBM had remarkable success with the personal computer, capturing at one time 45% of the desktop computer market, only to see it erode to manufacturers of lower-cost, compatible "clones"."16

27.       At a macroeconomic level, only a few countries have the scientific and technical capability to generate new technologies and the further innovations which increase their scope and profitability. These are countries with a considerable domestic demand which aids the introduction of new technologies. In addition, they already possess a degree of technological refinement and a high standard of living which allow a substantial consumption of innovations. A practical example which fits this pattern is telecommunications in the United States. The development of an advanced electronics industry in that country was made possible by the insistent demand raised by the commercial, financial and industrial sectors for more effective means of managing information.17

28.        A "national system of innovation" is crucial to the success of an innovation policy. It has been defined as follows: "The network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies may be described as the national system of innovation."18

      A recent OECD study emphasises the importance of innovation systems as central to development processes in that they "determine the technological competitiveness of nations. The systems are built on national combinations of such factors as research capacity, industrial organisation, professional skills and financial resources, all of which are heavily influenced by national characteristics. These characteristics ultimately generate certain technological strengths and weaknesses."19

29.       The effect of the current recession is that in Europe the technological weaknesses are most apparent. Little wonder, considering the significant differences between the OECD countries in the level and sectoral distribution of investments made by firms in technological learning. The same process occurs with investments relating to quality of basic research and workforce training structures.20 Admittedly, this does not altogether account for the huge increase in unemployment and its devastating effects on the social fabric. However, the prevailing state of lost self-assurance again sparks off impulsive reactions kindled by sketchy analyses and raising pointless arguments. For example, according to J. Ould Aoudia, there is a strong temptation to hold the relocations caused by international production responsible for a rise in unemployment which is actually due to lack of technological, industrial and, ultimately, geopolitical innovation.21

30.       The same writer considers that Europe is malfunctioning in two respects: the fuel (innovations) has run out, and the driving force has ceased to operate in its original context but is at full capacity in the countries which follow the practice introduced from the United States 50 years ago, the mass production of industrial goods.22 To illustrate the structural nature of the changes which are occurring, the emergence of a powerful new economic pole in the Asia-Pacific region is mentioned.

31.       At the moment Europe lags behind USA and Japan in the race for new patents (See Chart below).

      Source: German patent office/Newsweek October 31, 94

      Several OECD studies demonstrate that Europe's industrialised countries have not fully realised how serious the situation is. The stagnating tendency of R&D spending as a percentage of GDP will illustrate this. In average Europeans invest 30 % less than US and Japan, in "innovation".

R&D expenditure as a percentage of GDP 23

Source: OECD

32.       An additional factor is the challenge but also the extra burden of reforms in the erstwhile communist countries, expected to bring about the introduction of a market economy. For these countries, a policy of technical innovation and industrial reorganisation is vital.

33.       A sector which at present - in Western but especially in Eastern Europe - is subjected to redevelopment, but on the other hand has always led the way in adopting technological innovations, is the military and armament sector. In the aftermath of the cold war, a wave of disarmament swept the world. The outcome was the conversion of hundreds of arms factories in Western and Eastern Europe alike. In the Western countries, this has caused many social problems. In those of Eastern Europe, not to mention the former USSR, the problems are often insoluble and successes are becoming very rare.

34.       Redevelopment of the arms sector in the European Union carries a high social and financial cost: the number of jobs directly depending on the industry fell from 928,000 in 1983 to 670,000 in 1991 and the axing of another 200,000 to 300,000 jobs is anticipated.24 The gravity of the situation is partly due to unpreparedness and failure to incorporate the sector into a coherent industrial policy framework. There has been insufficient political resolve, investment and redesign of the technical apparatus in both Western and Eastern Europe. The firms compelled to switch production are venturing into a market of telecommunications, electronics, information processing and other techniques where the competition is keen and the players are several highly experienced firms. This lack of experience, commercial strategies and financial resources can be pinpointed as the main reason for the infrequency of successful conversions.

35.       In Eastern Europe and Russia, the redevelopment of the defence industry and the retraining of an often highly skilled workforce have alas all too often resulted in waste and financial loss. This is due not only to economic recession but also to the weight which the military-industrial complex and its related sectors carried in the planned economy during the communist era. Despite the priority placed on dual military and civilian applications of existing technologies and the development of dual-use advanced technologies, exportable if possible, and although military-civilian consortia have raised finance and launched joint ventures with foreign firms, the results have been disappointing. At the beginning of 1994, 70% of firms in Russia's military manufacturing sector were at a standstill because the State had not paid its debts.25

36.       The conversion of military sector is a vast topic which can not be treated within the scope of this report. However its potential contribution to Europe's technology effort and innovation capacity is beyond doubt. So far Europe does not seem to have a common strategy in this area, nor the political determination to design one.

V.       Conclusions

37.       Today, all advanced societies accept the importance of science and technology as significant factors underlying economic growth and improved quality of life. However, that acceptance is by no means unqualified. Rather, there seems to be an increasing public pressure for research with directly perceptible results in terms of economic growth, environmental and health protection.26 The new technologies can not escape to this rule.

38.       A leadership position in a new technology, however spectacular or challenging, is not an end in itself. Its value to society depends on its basic purpose and its successful application. Therefore the public authority is put before a difficult choice: by what criteria to determine what is a "strategic" technology and to what extend to support it with public funds ?

39.       It could be argued that each government willing to sustain the competitivenss of its industry and commerce should have its own specific criteria. However, government support, if any, should comply with two main principles. First, the technology in question should have a high enough rate of just return (economic or public goods) to justify public investment. Second, the support should be given at "pre-competitive" level by promoting basic research. Subsidies to "near-market" research could distort international competition. They should only be allowed in exceptional cases, for instance when the research results are retained in the public domain (exemples: environment protection).

40.       The cost of investments in the strategic technologies sector is such that private-sector firms (see appendices 427 and 528) will be under stronger compulsion than ever to join forces. In the electronics/computer sector most of them seek alliances with US companies. Of course, at the level of individual firms alliances make sense. However, when considered globally this is a sign showing that Europe needs technological blood transfusion in order to hang on for life in the market. The performance of EUREKA - intended to promote co-operation at pre-competitive level among European industrialists in order to make up the delay in industrial and commercial applications - shows that this is a worthy example to follow and develop. The same applies to the public sector (at the local, national and even international level). International co-operation now occurs chiefly in the aeronautics and space industries but could be extended to other sectors.

41.       If Europe is to play a leading role on this new strategic technologies market, it is imperative to move towards harmonisation of national standards of technological development so that the widest possible internal market is created. Meanwhile, commercial strategies and large investment resources stimulated by tax concessions - from the design stage to the marketing of stratuncegic technologies - will be crucial. It is a matter of economic and commercial survival.

42.       In general, Europe must be diagnosed as presenting all the symptoms of a continent with an "innovation deficiency". The following factors are largely responsible for this problem:

i.       Public spending on teaching and basic research activities in the higher education sector underwent increasing cuts in several OECD countries during the 1970s and 1980s, accompanied by signs of worsening scarcity of scientific staff and engineers. Science and engineering at all levels of qualification no longer seem to be attracting enough students. In the Eastern European countries, a "brain drain" is conspicuous;

ii.       Europe has a tradition of conservative banking. There is a dramatic lack of venture        capital. Young, unknown innovators (start-ups) have extreme difficulty in finding sponsors for their projects. This is perhaps linked to an economic culture which has an aversion for risk in general29;

iii.       National "prestige" is still high on the agenda. Some big high-tech companies        receive state aid irrespective of their market performance;

iv.       Bureaucracy and overregulation in some areas is an additional handicap to already        existing structural disadvantages stemming from an extremely diverse work culture, methods and languages;

v.       In some key sector such as telecommunications many European countries are still        dominated by one monolithic company, usually overstaffed and overpriced. The deregulation is under way but slow. This situation will also obstruct the future development of high-speed information highways;

vi.       In the OECD/Europe area, there are considerable differences as to the level and        sectoral distribution of corporate expenditure on technological grounding, staff training and basic research.

43.       Furthermore, innovation has changed. It has shifted away from models based on absolute novelty and breakthroughs to the routine and systematic exploitation of existing technologies. This change has precipitated a crisis in the area of intellectual property rights, particularly in sectors where the new innovation model is most widespread such as biotechnology, software, consumer electronics. Also, this change underlines the emergence of a new economy in which the capacity to distribute knowledge so that it can be recombined has become the central organisational factor in the technology creation process, as it is very much the case in Japan. In other words, the future seems to lie more in innovation rather than in invention.

44.       The traditional forms of intellectual property institutions and patent mechanisms now appear to be significantly out of step with the new model. Western mechanisms are inflexible and cannot easily adapt to new innovation models. One solution might be to envisage intellectual property rights as an integral part of the co-ordination of research and innovation activities in free market societies rather than as a reward for independent inventors.30 However, this is a radical change from the existing systems and it cannot be achieved overnight.

45.       Last but not least, governments and parliaments need to set up efficient structures capable of examining and assessing the usefulness of new technologies to society. Technology Assessment schemes have been operational already for some time in a certain number of countries. However, recently the interest is shifting from traditional assessment to "technology foresight"31, which assumes that there are numerous possible futures and that choices can be made to influence the outcome. Technology foresight is the systematic attempt to look into the longer-term future of science, technology, economy and society with a view to identifying emerging technologies likely to yield the greatest economic and/or social benefits. This sheds additional light on the planning of R&D strategies and on government support.

      As regards the funtionning of bodies for assessment of scientific and technological choices in parliaments, it will be recalled that work in parliaments, is proceeding in the Parliamentary Assembly Committee on Science and Technology and will certainly enable us to take stock of the situation in various parliaments of Europe.

Appendix 1

New technologies in the 21st Century

(Source: Bundesministerium für Technologie (BMFT), Dr Werner Gries)

Appendix 1 (cont.)

Appendix 2

Bionics: Learning from Nature 1

Functions of Bionics

Applying engineering investigation and description methods to biological systems

Applying the insights obtained about functions and structures and engineering problems

Bionics: Learning from Nature 2

Source: BMFT (Bundesministerium für Technologie)

Appendix 3

Appendix 4

Appendix 5

REFERENCES

Reporting committee: Committee on Science and Technology.

Budgetary implications for the Assembly: none.

Reference: Doc. 7039 and Reference No. 1934 du 15 avril 1994.

Draft resolution unanimously adopted by the committee on 6 September 1995.

      Members of the committee: Mr Roseta (Chairman), Mrs Terborg, Mr Birraux (Vice-Chairpersons), Mrs Baastrup, MM. Bartodziej, Bauer, Berger, Bogár, Mrs Brenden, MM. Caccia, Cunliffe, De Decker, Dees, Deguara, Dumont, Galley, Golu, Gregory, Guia, Guidi, Gusenbauer, Mrs Hoffmann, MM. Hurta, Inönü, Johansson, Konstandinidis (Remplaçant: Korahais), Leers, Lekberg, Lenzer, López Valdivielso, Luczak, Maass, Metelko, Mitolo, Mocioi, Molnár, Olrich, Pecriaux (Remplaçant: Seeuws), Poças Santos, Požéla, Prokes, Sinka, Speroni, Mrs Stiborova, Mr Theis, Sir Donald Thompson, Mr Jack Thompson (Remplaçant: Lord Newall), Tiuri, Toshev, Vrettos, Yürür.

N.B. The names of those members who took part in the vote are printed in italics.

      Secretaries to the committee: Mr Perin et Miss Theophilova.