LUDWIGSHAFEN, GERMANY – Innovation plays a crucial role in creating sustainable economic growth. Yet we continue to see, particularly in the European Union, obstacles being placed in the way of those best positioned to invent new products, services, or ways of doing business. At the heart of the issue appears to be the fear of risk. But investors, managers, and entrepreneurs must take risks if their ideas stand any chance of achieving commercial success.
Nowhere are these concerns more discussed, and less understood, than in Europe. Innovation has been placed at the heart of Europe 2020, the European Commission’s growth strategy for the EU. But, despite the fact that European scientific research is among the most advanced in the world, Europe lags behind its global competitors in its ability to bring these innovations to the market.
Regardless of how one chooses to measure innovation, three conditions must be in place for it to flourish: a skilled, educated workforce; excellent information and communications technology infrastructure; and a supportive business environment. In other words, successful innovation requires a stable and growing economy, fresh ideas, and an absence of unnecessary and burdensome regulation. The role of government is crucial. And it is a role that the EU seems to have misunderstood in at least one important respect: its attitude toward risk.
The EU has long-established institutions and processes for evaluating risk and ensuring that unacceptable risks are avoided. When policy is required but the science is unclear, regulatory decisions are increasingly based on the “precautionary principle,” which is designed to prevent situations in which serious harm could occur.