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European Economic and Social Committee
Innovation in the Economy of Knowledge
Thessaloniki, 4 October 2006
S P E E C H
given by
Mr Dimitriadis
Incoming President of the European Economic and Social Committee
Check against delivery
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Dear Presidents,
Dear Secretaries-General,
Dear Ladies and Gentlemen,
First of all, I wish to welcome you in my native city, Thessaloniki, and to express my personal satisfaction participating with you in the Plenary Assembly of Euro Chambers.
Allow me to refer to the book "National Systems of Innovation" written by the economist Lundval in 1992 who strongly believes that "the most fundamental resource in the modern economy is knowledge and that the most important process is learning … a social process which cannot be understood without taking into consideration its institutional and social context".
We are more than ever in the Age of Human Capital, flourishing through continual education and learning thus imposing the knowledge as the primary "raw material" in the worldwide economy. Unlike physical goods, knowledge and information will never be destroyed in consumption and their value is just growing up.
The knowledge is regenerating itself from its ashes when obsolete, by interacting with new experiences, new social and economic needs.
In accountancy, Knowledge is known as "Intangible", in economic theory as "Knowledge asset" and in management literature as "Intellectual capital". This "new" capital can be considered as the new currency of the current economy.
The workers of the Knowledge-based economy are called "symbolic analysts" manipulating symbols rather than machines. This kind of worker who is not producing goods but innovative ideas is the most wanted in the worldwide market. In advanced economies such as the US economy, more than 60% of workers are knowledge workers.
The concept of Knowledge innovation embodies the concept that Innovation is the main competence needed for the future economies. In this concept once knowledge is expressed and delivered to the public there is zero marginal cost to adding more users.
Consequently, the only path to acquire this knowledge will inevitably be life-long learning.
The EESC, in its opinion on The road to the European knowledge-based society (recommendations and conclusions – No. 15) is insisting that "life-long learning is the key to the knowledge society".
Life-long continuous training and education is the only solution for us to be "updated" with the globalisation effective and tremendous changes.
In Singapore, the government, introduced a programme called "Man Power 21", which is designed to ensure that every Singaporean regardless of age, education and qualification will receive life-long training and education in order to benefit from the new knowledge-based economy and society.
A strategy must be implemented step by step having as a result the reshaping, creation, sharing and finally the dissemination of the knowledge throughout Europe thus creating innovation.
The ability of each of us to modify and to handle the flow of new knowledge is either personal wisdom or the creation of favourable educational and social conditions to look after wisdom.
We must codify this knowledge, abstracting it from its context and make it then potentially more accessible, innovative and marketable by comparing "what is practised" with "what is known".
This knowledge-based society is characterised by intensive high skilled labour force, by life-long training, learning and free movement of highly qualified "brains", innovation and growth.
The quality of human capital is very decisive in order to be able to be more and more competitive and innovative. Being in a "learning society" we must use new technologies to communicate with people about innovation, something which requires a highly skilled and trained labour force.
The report The knowledge based economy made by the OECD in Paris in 1996, says that "government policies will need more stress on upgrading human capital though promoting access to a range of skills and especially the capacity to learn, thus enhancing the knowledge distribution power. It is estimated that 50% of the GDP in the major OECD economies, is knowledge based" (Source OECD -/DSTI/STAN database).
We must pay particular attention and prevent the social exclusion of many workers who are left behind and who do not feel ready and competent to follow the movement of the social and economic transformation caused by the pace and rhythm of innovation and globalisation.
Innovation may also have a negative connotation in our society because it implies drastic changes in our daily way of thinking as well as in our daily life which is something not so easy to be accepted.
If accepted, we must align ourselves, life, and mode of living, mode of thinking, acting and working with the new stream provoked by globalisation, competition and everlasting learning.
The innovation is either tailored to our needs or tailors our daily, obsolete and utopia comforts which are supposed to make us feel secure.
Moreover, the current globalisation, including knowledge globalisation, has a continual impact in the structure of the European Economies.
A great flow of information is facilitated by the ICT (Information and Communication Technologies) which does not recognise any geographical barriers or nationalities.
The nature of this globalisation can be profitable for Europe and it is absolutely necessary for its citizens to be highly trained and competent enough to "capture" it, to transform it and finally to correctly ‘canalize’ it in order to achieve continual growth and innovation.
The innovation achieved through the globalisation effect will correspond to the creation and conversion of ideas into innovative viable commercial products, in addition to building social and favourable to the employment foundations and future sustainable growth.
The successful businesses of the future will be complex, adaptative, agile, proactive, innovative and creative.
We must insist on the fact that this kind of business will not wait for market demands to change them or to transform them but on the contrary they will continuously re-invent the companies and will anticipate future demands by making risk-valued investments.
Consequently, individuals as well as businesses must re-adapt their professional "state of mind" or "behaviour" in order to be competent enough to quickly seize the opportunities created by globalisation and to transform them into innovative and creative ideas.
I wish to strongly insist on the project FP6-CITIZEN 3 (promoted by LRE/EGO-CreaNet of the University of Florence-Italy) which is centred to develop a "Mental Change" regarding especially the issues of sustainable development of networking entrepreneurship.
For this change two important "players" are directly concerned, the Citizens and the City.
The state of mind of the whole organisation of the City must be reshaped and re-oriented according to the current emerging needs, challenges and fierce competition in order to foster growth, innovation and entrepreneurship and at the same time to be attractive enough to welcome knowledge investment capital and foreign researchers.
The island state of Singapore was capable of importing highly skilled knowledge workers from abroad, with the result that approximately one third of its population consists of immigrants ("imported innovation").
I strongly believe that the main ingredients of a city fostering innovation and growth are the following:
- to be knowledge based
- to be economic based
- high level of quality of life
- high level of accessibility
- high level of urban diversity
- high level of social equity
- having policies reducing industry entry barriers
- facilitating new entries by start-up business
- providing strong antitrust regulations (thus encouraging competition and entrepreneurship).
Regarding the City as an entity, the concept of CSR (Corporate Social Responsibility) is directly affecting this mental change.
Mr Martens, CEO of the European Brussels Policy, says that "Competitiveness can be measured via several purely economic factors like growth, GDP and the balance of payment BUT also from more intangible factors like the Quality of public institutions, low corruption level, level of innovation and flexible labour market".
The CSR influences the competitiveness and the successfulness of nations, regions and of Europe as an entity.
When in the Global Economics Paper – No.99 (GS Global Economics Website) they predict that "over the next 50 years, Brazil, Russia, India and China (the BRIC’s economies) could become the larger force in the world economy", they give as one of the explanations that these countries "maintain policies and develop institutions that are growth and innovative-supportive".
Consequently, the role of the "City" is major in which growth, innovation, entrepreneurship, mental change and culture are going to THRIVE.
An example which reveals that the mental state of Europe must be reshaped to fit in better with its citizens and their daily life is the fact that demographic indicators show that the proportion of the European population in the world’s population is declining … from 35% in the 1950s to 13% today and 8% in 2050.
Contrary to the BRIC, according to the same report I mentioned above, the decline in working-age population is generally projected to take place later than in the developed countries.
Consequently, the current European mental state and culture has a double impact for its citizens and countries. Among the European population we can observe a declining knowledge labour force and as far the desired immigration of new knowledge workers is concerned, the foreign knowledge workers are sceptical to immigrate to Europe.
A revealing example about the change of the mental state of a country is the fact that Britain was estimated to be the leader in e-commerce with £2 million online and $1 trillion for U.S during 2004 .
But this is not about internet … it is about the change of the mental state of the two countries that means how technologies have transformed and reshaped the way we THINK and ACT.
The Green Paper on Entrepreneurship (European Commission, DG Enterprise, 2003) states that "we have to change the ATTITUDE among young people and bring them into the entrepreneurial and innovative world as a first step".
I have already stated the importance of different economic and social factors for growth, life-long learning, innovation and creation of new jobs.
Now, I particularly wish to insist on the innovative, creative and risky role of the entrepreneurship (individual or not) in the worldwide economy and society, which now more than ever it is requested to reshape and to transform our behaviour towards an innovative human capital-based economy.
In the 17th century, the enlightenment philosopher, J. Locke, stressed that "every human being has a fortune in their own personality".
In the 21st century, the CEO of the biggest American internet search engine believes that "people want to believe that they are going to make a difference. There has to be more to satisfy their psyche than just the pay cheque. They have to believe that they are creating something great in order to throw one hundred per cent of their human effort into that".
The two characteristics mentioned above constitute the image of the modern entrepreneur who is called to play a crucial role in the modern economy.
We must consider the entrepreneur as a state of mind and not a profession.
We must consider the entrepreneurship as a matter of satisfaction of one's personal ambitions
We must consider the entrepreneur as the source of innovation, creating new ideas and turning these ideas into new viable innovative products or concepts by taking risks or better by evaluating the risks, cutting across accepted boundaries and refusing to go status quo.
The entrepreneur is the heart of our economic and social model. He will be the one who will create, via the existing technologies and marketing, NEW NEEDS which are going to constitute the re-fuelling of the vehicle called economy.
Consequently, the entrepreneur will be called to restart once more the process of innovation in order to satisfy these new needs, having as a result the creation of VALUE through INNOVATION.
We must try to change all the negative connotations surrounding this term in our culture and way of thinking and acting.
Entrepreneurship is still too often associated with the start-up of new jobs, seen as individualistic. In the Japanese society and culture, entrepreneurship is linked with the desire to make money and the education system teaches people that this is a bad thing.
I believe that the first urgent thing to be done is to change our mental state, culture towards entrepreneurship. We must create a climate that supports entrepreneurial behaviour and appreciation of why entrepreneurial behaviour is important.
This change must begin from the foundations of our society which I consider among others is education.
To tailor the education, learning and training upon the new needs, parameters of the modern society and economy and to enhance people's ability to develop entrepreneurial skills.
The Green Paper on Entrepreneurship (European Commission, DG Enterprise, 2003), states that we have to change the attitude among young people and bring them into the entrepreneurial and innovative world as a first step.
In the European level, we have the JADE (European Confederation of Junior Enterprises) promoting entrepreneurial education.
The EESC has already signed a cooperation agreement in order to promote the entrepreneurial education by young people.
For instance, in the US, there are more than 90 university-based centres of entrepreneurship.
The European economies are obliged to be ready to welcome these young entrepreneurs by offering them favourable conditions for growth and innovation.
Entrepreneurship must be entitled to access to capital that means access to funds for entrepreneurial initiatives.
Entrepreneurship must be entitled to the right regulatory and tax environment. Unnecessary regulation can impede the decision making and ability to exploit new opportunities.
European economy must consider entrepreneurship as a creating value concept.
Value in this sense is not necessarily associated with profit but as a cultural change.
Successful entrepreneurial cultures will encourage people to attempt to create new ventures and to minimise the risk aversion behaviour.
The responsibility to create successful entrepreneurial cultures does only rely on the others ….