In the wake of the economic crisis and deep recession, Europe finds itselfin a weakened position as to global competitiveness. If we want to creategrowth in the EU in the coming years, it demands the willingness to makethe transition towards a knowledge and innovation based green economywhile ensuring consolidation of public budgets.The Europe 2020 Strategy lays down an ambitious framework for makingthe necessary transition of the European economy. It calls for action tocreate an Innovation Union and to develop an industrial policy for a glob-alised world while also strengthening the Internal Market, ensuring re-source efficiency, mobility and raising a digital agenda for Europe whichincludes the creation of a digital single market.

The current CIP programme

With the current Competitiveness and Innovation Framework Programme(CIP) EU has established a programme structure to stimulate growth andto foster competitiveness and innovation in small and medium sized en-terprises (SMEs) in the European Union. The current CIP programme isfunded by the multi-annual financial framework and runs from 2007 to2013 with an overall budget of EUR 3621 million.Within the framework of CIP three separate operational programmes ex-ist, namely EIP (entrepreneurship and innovation), ICT PSP (informationand communication technology) and IEE II (intelligent energy). WithSMEs as its main target CIP supports innovation activities (includingeco-innovation), provides better access to finance, improves frameworkconditions and delivers business support services in the European Re-gions. It also encourages a better take up and innovation of informationand communication technologies (ICT) and helps to develop the EU in-formation society. Finally the programme promotes the increased use ofrenewable energies and energy efficiency.Recent information on the European Economy shows a significantlylower average growth rate compared to the US and the BRIC-countries.With a lower level in research and development (R&D) and innovation,an insufficient use of information and communication technologies and aless dynamic business environment in the EU compared to other eco-

nomic partners, this calls for further action by the EU and justify the in-creased focus on growth in the Europe 2020 strategy. It also lays theground for further development of the CIP programme to meet futureeconomic challenges for European SMEs.

Perspectives for a future CIP II programme

A new Competitiveness and Innovation Programme (CIP II) for the nextmulti-annual financial framework (2014-2020) is currently planned andwill be a central instrument to realise some of the initiatives within theEurope 2020 Strategy.In that respect CIP II for instance should strengthen instruments to over-come market gaps and increase finance and guarantees for innovativeSMEs, start-ups and early growth phases for enterprises. It should alsostrive to facilitate a strong coordination between research, innovation andcompetitiveness programmes in order to orient innovative activities to-wards the needs of society.CIP II should work to exploit the EU potential to capitalize on a strongtechnology base and create a large Green Single Market, e.g. by promot-ing SMEs to use all forms of eco-innovation. It should contribute to theremoval of market barriers for sustainable energy and to creating a morefavourable business environment for increasing energy efficiency and re-newable markets.Keeping in mind the great potential of Information and CommunicationTechnologies (ICT) to further growth and innovation CIP II should alsoprioritize the digital agenda and support the introduction of the digitalsingle market. Finally CIP II should continue providing a wide range ofaccess to finance for SMEs as well as incorporating the financial perspec-tives directly to existing programmes that provide project support forSMEs.To meet these strategic challenges it is of utmost importance that the CIPII has a significant volume and an efficient design while at the same timebeing based on targeted policy principles. Denmark suggests that CIP IIshould be developed on the following general principles:The general budget for handling challenges concerning EU com-petitiveness must be increased by redeployment from other budgetcategories.Future EU framework programmes concerning EUcompetitiveness should have an increased budgetary volume inorder to meet the new policy targets set out in the EU 2020 strat-egy.The application procedure concerning the CIP II calls for pro-posals must be simplified and funding to larger scale initiativesshould be prioritized.This should ensure transparency in the EC

selection of service providers and secure fair competition betweenall SMEs regardless their size. Furthermore, CIP II should pro-mote simplification of existing specific programmes within theframework programme as well as prioritizing budgetary largerscale initiatives.CIP II should be a horizontal framework underpinning and link-ing together strategic areas and policies.The programme shouldembrace areas such as green growth, sustainable and smart growthas well as addressing the EU competitiveness and innovation pol-icy directly to SMEs. Focus should be on capturing the addedvalue in between policies by supporting them and ensuring posi-tive spill-over effects and to avoid overlaps. Furthermore, CIP IIshould be presented and thought of as a unity.

The design of a future CIP II should contribute positively and targeted tothe EU competitiveness and innovation by supporting the Europe 2020targets for smart, sustainable and inclusive growth as well as supportingthe coming Eco-innovation Action Plan. CIP II could fill out the role asan effective implementation platform for several policy proposals in thedifferent Europe 2020 flagship initiatives: ‘Innovation Union’, ‘Industrialpolicy for the globalisation era’, ‘A digital agenda for Europe’, ‘Resourceefficient Europe’ and ‘An agenda for new skills and jobs’. In that respectthe link to LIFE+1should also be taken into account.In addition, CIP II should promote synergies with the new frameworkprogramme for research and development (FP8) in order to establish aclear link between research and development activities and the commer-cialization of products.

Proposals for a set of policy principles in CIP II

It is of utmost importance to ensure coherence between all of the above-mentioned general recommendations in order to provide strong frame-work conditions for European SMEs. An ambitious CIP II frameworkprogramme should rest on the core principles in Europe 2020 whichcould form a solid and ground future for European work on competitive-ness and innovation policy. With this response to the EU public consulta-tion on CIP, Denmark thus proposes the following specific policy princi-ples:Support to the internationalisation of SMEs to help them benefit from theEU and global marketsCIP II support infrastructure must be prepared so that European SMEscan accommodate an increasing international competition and benefitfrom a global economy. In order to help SMEs go international, they need

the right information and support in markets outside the EU. Therefore,promoting creation, growth and internationalisation of SMEs also has tobe of part of a new EU integrated industrial policy.Denmark supports the idea of promoting SME internationalisation. How-ever, it is important to focus on real European value added and avoidingduplication of existing initiatives both in the EU and at the Member-Statelevel. Any initiatives to promote SME internationalisation should be co-ordinated and possible synergies with existing initiatives should be ex-ploited.Increased focus on high-growth entrepreneurshipHigh-growth entrepreneurs play an important role in contributing to eco-nomic growth in the EU. However, whilst the improvement of the busi-ness environment is a relevant aspect in the policy toward growth ofmany countries, most of the existing initiatives used to promote highgrowth entrepreneurs rely on the facilitation of access to finance and thesupport to research, development and innovation.Therefore, CIP II should pay specific attention to policy initiatives thatprovide support to training and skill upgrading in young and small enter-prises that have a clear growth potential; e.g. found in specific incubatorand accelerator programmes. This could also encourage the entrepreneu-rial attitude in the EU in order to stimulate more growth ambitions in newand existing enterprises.Ensuring the right business environment for SMEsThe Internal Market is an important factor for growth in the EU. In timesof an economic crisis and a new world order where the largest growth ismainly seen in the BRIC-countries, it is essential to make sure that theEU also continues to increase its growth. In relation to the Internal Mar-ket this also means that it is not only important to make sure that the In-ternal Market works in practice on the ground – and thereby delivers abusiness environment that benefits end-users in the Internal Market (e.g.businesses, consumers, and employees) – but also that the policy toolsused are modern, flexible and innovation friendly.Therefore, the right way to create a future innovation friendly businessenvironment is to use a modern policy tool box for the Internal Market.This means a policy tool box where legislators and civil servants alwayshave the end-user of the regulation in mind throughout the entire policycycle. Such a tool box will make sure that the Internal Market delivers onthe ground because the business environment will be specifically de-signed to fit the contexts and needs of the end-users. Furthermore atten-tion should be paid on implementation, application and enforcement toensure that the rules and principles of the single market effectively sup-port business opportunities throughout Europe. This also enhances com-pliance and thereby the attainment of desirable policy goals.

Increase the link between research, development and commercializationCIP II should strive to raise the total amount of funds given to pro-grammes that support market driven innovation. This counts for pro-grammes that support commercialisation of products, market applicationprogrammes as well as employee driven innovation.In this respect the synergies between LIFE+, the future FP8 and CIP IIshould undergo further investigation in order to secure a direct link be-tween research projects, development of new innovative products in theEU and the need for addressing environmental demonstration projects.The use of standards based on the latest knowledge and technologies of-ten provides an important foundation for the development of new and in-novative products and services. Hence the role of standards in the valuechain between research, standardisation and innovation is a good exampleof how research and state of the art knowledge can be effectively and le-gitimately integrated into the innovation process, thus resulting in newinnovative products.In addition, more focus could be kept on commercialization on researchinitiatives, e.g. by including commercialization opportunities as a key cri-teria for the selection and evaluation of new research and developmentinitiatives. This could contribute to a stronger interaction between re-searchers and European SMEs and increase their mutual benefits and ac-cess to new knowledge.CIP II should also be able to support bringing research results to marketi.e. by supporting proof-of-concept activities. This strives for a direct linkbetween FP8 cooperation programmes and specific sector programmes inCIP II where there are clear overlaps, e.g. ICT, Intelligent Energy andEco-innovation.Promote access to finance for European SMEsFurther priority of financial instruments managed by European Invest-ment Fund (EIF) should be given in CIP II. CIP II financial instrumentsshould provide European SME’s and high growth companies with accessto finance on market based terms with a clear focus on European valueadded.CIP II should also provide further supply of early-stage venture capital toinnovative SMEs with high growth potential and take appropriate actionin order to support their innovative-driven activities. Finally furtherstrengthening should be given to the co-investment in funds and invest-ments vehicles promoted by business angels through the existing finan-cial instrument – e.g. risk capital for innovative SMEs in their earlystages (GIF 1).Promote the use of all forms of Eco-innovation

CIP II should strive to promote SMEs to use all forms of Eco-innovation,should underpin the coming Eco-innovation Action Plan as well as pro-viding the necessary financial and business support. In that matter CIP IIshould prioritize eco-innovation co-funding of financial instruments.Specific and innovative allocation of financial instrument to eco-innovation may be more useful than additional funding of traditionalmeasures. This will also be in line with the ambitious EU climate and en-vironmental policy and research targets.Within Eco-innovation there is a need to open up for demonstration pro-jects - the step in the innovation chain prior to ”first application” and”market replications” projects. European SMEs often find it very difficultto find the necessary funding for e.g. the demonstration of new technolo-gies within e.g. waste treatment methods and wastewater treatment. Eco-innovation could be an effective instrument to close the gap.In addition, Eco-innovation ‘first application’ and ‘market replication’project fills an important gap in the innovation support chain and shouldbe prioritized in CIP II. Encouragement to take up of environmental tech-nologies is needed in most “green areas”, which calls for an increase ofthe CIP II budget allocated to this point. Enablers for green and innova-tion-friendly public and corporate procurement should also be enhanced.Furthermore, a larger eco-innovation programme will make it possible tointroduce two yearly calls for proposals, which will make the programmemuch more in line with the planning horizon of SMEs and the overallprogramme perspectives.Creation of a digital single market in the EUCIP II shall support information and communication technology’s poten-tial to improve growth and productivity through an increased focus on thecreation of a true digital single market and thus access to high-speedbroadband and better digital skills. The European Commission estimatesthat the Information and Communication Technologies sector is directlyresponsible for 5% of European GDP and contributes far more to theoverall productivity growth (20% directly from the ICT sector and 30%from ICT investments). Despite the impressive rates, ICTs still hold greatpotential to further affluence, welfare and growth.The European Commission recently published the Digital Agenda, thefirst flagship initiative of the Europe 2020 strategy to be launched. Theinitiatives include – among others - a digital single market and e-Commerce, access to high-speed broadband everywhere and increaseddigital skills to promote use of the possibilities on the net. These prioritiesshould be reflected in CIP II.CIP II should prioritize to set up an interoperational environment buildupon national systems and infrastructures supporting SME activities. Anincreased focus on the standardization and interoperability of e.g. ICT

public contracts across national systems will provide further cross bordertrade for SMEs. This will also lead to further innovation on the ICT mar-ket for the benefit of EU growth and competitiveness.Enhance the use of renewable energies and energy efficiencySustainable energy policy has become an important part of the Europeanstrategy, set up in Europe 2020, including the so-called ‘202020’ climateand energy package from 2008. This emphasis on energy policy is alsoreflected in article 194 of the Lisbon Treaty.Current reviews indicate that EU must make extra efforts in achieving thetargets set in ‘202020’ by reinforcing the EU acquis in new and reviseddirectives, and in follow up to implementing measures. At the same time,energy supply will demand access to new resources and huge investmentsinside EU over the next decades, including substantial innovation.So obviously, an energy strategy must be supported by a multitude of ac-tions on an EU scale. This is also emphasised in the Strategic EnergyTechnology Plan (SET Plan) from 2008 and should be reflected and ac-companied by future support programmes for sustainable energy.Over the last decade, the programme Intelligent Energy Europe (IEE2)has developed as a valuable instrument in implementing sustainable en-ergy policies. The programme has expanded and is now gradually beingadjusted to the new challenges and opportunities:the clear link to climate and energy policies should be maintainedas an indispensable precondition, including the SET Planinvestments in energy efficiency and renewable energy should bestimulated furtherthe involvement and of local actors, municipalities, SMEs, build-ing work force and owners, etc. should increaseproduct innovation and market replication related to sustainableenergy could develop further, also in a global context.

Danish response to the EU public consultation on a new Competi-

tiveness and Innovation Framework Programme (CIP II)

The current CIP programme

Perspectives for a future CIP II programme

Proposals for a set of policy principles in CIP II