Technology Policy in Europe: Explaining the Framework Programme and Eureka in Theory and Practice

Journal of Common Market Studies 021-9886 $3.00

Volume XXIX, No. 3 March 1991

Technology Policy in Europe: Explaining the Framework Programme

and Eureka in Theory and Practice*

J O H N PETERSON

Department of Politics, University of York

Introduction Technological collaboration has never strayed far from the European Community’s agenda. Plans for a ‘European Technological Community’ were included in the programme developed by Jean Monnet andothe Action Committee for a United States of Europe in the early 1950s (Sharp, 1989, p. 203). In 1957 many European leaders believed Euratom, which sought to pool R&D efforts in nuclear energy, was more likely to succeed than the EEC itself (Williams, 1973, p. 39; Harrop, 1989, p. 12). Widespread concern in the 1960s about a ‘technology gap’ separating European and American industry led to proposals (Layton, 1969; CEC, 1970) strikingly similar to those which produced expansion of the EC’s powers or acquis in technology policy in the mid-1980s.

Yet, it was only then and in the context of the Single European Market (SEM) initiative that European governments agreed to shift significant policy resources from purely national support for research and development (R&D) to pan-European, collaborative programmes such as the Community’s Framework programme and the intergovernmental Eureka “John Peterson is a lecturer in Comparative Politics in the Department of Politics at the University of York. This article is a substantially revised version of a paper presented at the Council for European Studies’ Conference of Europeanists in Washington, D.C. in March 1990. The author is grateful for comments on earlier drafts from Elizabeth Bomberg, Bob Jessop, Emil Kirchner. Dave Marsh, Rod Rhodes, Alberta Sbragia, Claire Shearman, Eric Tannenbaum, Hugh Ward, Nicholas Ziegler, and an anonymous reviewer.

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initiative. The Framework programme includes initiatives in specific technological sectors (i.e. Esprit for information technology, R A C E for telecommunications) ,1 but also promotes cross-sectoral exchange (Eclair for applying innovations in biotechnology to agriculture) and cross-border mobility among European researchers. Its budget has steadily grown and now totals nearly 1.75 billion ECU per year (CEC, 1989, pp. 27-8). Eureka (the European Research Cooperation Agency) includes all 12 EC Member States, the six European Free Trade Association states, Turkey, and the European Commission, which participates as a nominal extra ‘Member State’. Eureka now includes projects worth an estimated 7.6 billion ECU (Eureka Secretariat, 1990, p. 6).

The growth of collaborative R&D schemes points first to the need to reassess existing models of EC policy-making. Both the Framework programme and Eureka were launched in the mid-1980s after Europe’s largest and most powerful European technology producers and consumers had coalesced into broadly unified, truly pan-European industrial pressure groups. This ‘collaborative community’ profoundly influenced the original design of both Eureka and the Framework programme. It now enjoys a powerful, institutionalized role in the strategic direction and even actual management of important eIements of Eureka and individual initiatives within the Framework programme. Theories which emphasize bargaining between competing national interests in E C policy-making cannot account adequately for the role of private interests, which are now increasingly sector instead of country-specific, in technology policy-making.

Second, the shift in the focus of European technology policies from the national to the regional level suggests existing typologies of government- industry relations must be reformulated. The ‘weak statehtrong state’ distinction which still dominates research on national industrial policy- making often relies on overly broad, culturally-specific, and cliched images of the state (see Wright, 1988; Wilks, 1989). Whatever its utility at the level of the nation-state, the distinction is not very helpful in explaining E C policy-making for the simple reason that the EC is not a state. Power relations between industry, the European Commission, and national governments vary considerably between different E C policy areas and different levels of policy-making. The competing agendas that the Commission and national officials often bring to EC policy-making and the increasingly powerful influence of private interests on public policy decisions at the E C level muddles neat public-private actor categorizations. More flexible models of government-industry relations are needed to accommodate the unique complexity of government-industry relations at the pan-European level.

Finally, this article argues that the interests of public and private actors

1A list of acronyms is supplied at the end of this article.

TECHNOLOGY POLICY IN EUROPE 271 in promoting new collaborative R & D programmes converged as the Framework programme and Eureka were launched in 1985. This converg- ence of interests must be understood in the context of the more general development of political momentum which led to the SEM initiative. An interesting point for debate is whether successful pre-1985 collaborative R&D programmes helped convince European political leaders to embrace harmonized technology policies at the E C level and the SEM more generally, or whether political consensus on the 1992 initiative was required before the EC’s acquis in technology policy could be expanded. This is more than a ‘chickedegg’ debate. Here, technology policy provides a useful case study for testing the explanatory power of neo-functionalist theories of regional integration, which several E C analysts suggest may be worth ‘resurrecting’ in light of the Community’s resurgence in the late 1980s and 1990s (Taylor, 1989, pp. 2 3 4 ; George, 1990, p. 210).

Any analysis of this kind must allow for substantial differences between various collaborative programmes. The Framework programme has significant supranational elements: public funds are committed at the level of the Council of Ministers by all 12 Member States :o a central budget to fund pre-competitive or ‘pre-profitable’ R&D. Eureka is an amalgam of national innovation policies designed to promote collaborative projects in ‘market-led’, product-oriented R&D. Public funds for Eureka projects are allocated by national ministries or authorities exclusively to indigenous firms or research laboratories. Power relations between actors differ significantly between the Framework programme and Eureka, but both Eureka and important elements of the Framework programme defy the categorizations of existing models of E C policy-making and government-industry relations. Taken together, these programmes have provided industry with a significant and unprecedented role in decision- making about the goals, organization, and funding priorities of European collaborative R&D.

1. Policy Networks and Neo-Functionalism - the Theoretical Backdrop Research on government-industry relations at a ‘macro-level’ of theory (Jessop, 1982; Berger, 1987) has prompted ‘meso-level’ empirical studies which seek to fill in the essential characteristics of industrial policies in specific national settings (Zysman, 1983; Katzenstein, 1985; Hall, 1986; Hayward, 1986; DuchCne and Shepherd, 1987) and more recently, specific industrial sectors (Wilks and Wright, 1987; Grant et al., 1987; Cawson el al . , 1989; Hancher and Moran, 1989). The meso-level literature is still quite ‘young’ and methodology is still being refined. But much research now is geared to testing the claim of Grant et al. ‘that in many industries, sectoral variations do at least rnodifv national characteristics and that, in some cases, they produce a more convergent outcome than a simple

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reading-off of national characteristics would suggest’ (Grant et al., 1987, p. 314).

As focus has shifted from states to sectors in policy studies, typologies to explain power dependency relationships in policy-making have been developed which borrow from models of US government-industry relations (Heclo, 1978) and British intergovernmental relations (Rhodes, 1981; 1985). The literature is now ‘pushing’ neo-pluralist theories to account for the impacts of specialist information, technical rationality, the privileged position of selected groups, and structural interdependencies between government and industry in industrial policy-making. In Western Europe, the completion of the internal market, the expanding role of the EC in industry support and regulation, and the trend toward cross- national corporate mergers is likely to reinforce the preoccupation of research with sector-specific, as opposed to state-specific studies.

Theoretical models with clear categories and tighter conceptual defini- tions have begun to emerge slowly (see Marsh and Rhodes, 1991; Wright, 1988). Rhodes (1990) has developed the notion of policy networks as a meso-level concept which describes arenas for the intermediation of the interests of interest groups and governments. Policy networks are defined as ‘a cluster or complex of organizations connected to each other by resource dependencies and distinguished from other clusters or complexes by breaks in the structure of resource dependencies’ (Benson, 1982, p. 148). Structural dependencies are thus the key variable; they set the ‘chessboard’ where private and public interests manauvre for advantage.

An alternative model is proposed by Wilks and Wright, with more emphasis on personal relationships between actors and less on structural dependencies (Wilks and Wright, 1989, pp. 274-313). Their model insists that industrial policy-making networks are ordinarily disaggregated, industry is rarely homogeneous or monolithic, and government is usually more fragmented than unitary. However, personalized relationships between actors can have the same effect as stable political structures or clear administrative boundaries in excluding outside influence on policy-making.

Both of these models have conceptual weaknesses. The Rhodes model attempts to differentiate between different types of networks by dominant interest. It views industrial policy-making as occurring within producer networks, which are distinguished by the prominent role of economic interests, fluctuating memberships, the dependence of governments on industrial organizations for desired goods and expertise, and limited interdependence among economic interests (Rhodes, 1990). Thus, the model implies that producer networks are always loosely integrated. The case study at hand shows that sometimes they are not. The Wilks and Wright model seems to insist that the effect of personal relationships must be empirically assessed. This is a highly problematical research task

TECHNOLOGY POLICY IN EUROPE 273 because different actors naturally and often will exaggerate the degree of influence over decision-making which springs from their personal relations with other actors.

Useful refinement of the policy network typology is provided in a later work by Marsh and Rhodes (1991). A key argument is that policy networks should not attempt to conflate two variables: the relative insularity of networks, and the dominant interest within them. Instead, different types of networks should be conceptualized based on the relative stability of relationships between actors, degrees of resistance to outside influences, and especially patterns of structural dependencies. A continuum thus emerges (see Figure 1). At one end are highly integratedpolicy communities in which membership is constant, outside influence is minimal, and structural dependencies are considerable. At the other are loosely integrated issue networks, in which membership is fluid, outside influences are considerable, and structural dependencies are either weak or changeable. The issue of which interests dominate policy-making within networks is left to empirical research. Thus, producer networks may exist at any point on the continuum, and may be rigidly constructed and strongly insular or loosely organized and easily permeable.

Policy communities Issue networks

Stable membership Fluid membership Highly insular Highly permeable Strong structural dependencies

t +

Weak structural dependencies

Figure 1 . Conceptualizing policy networks

Previous work on regimes and networks as models of decision-making within the EC have generally failed to isolate specific policy sectors or to adequately specify power dependence relationships at different levels of policy-making (H. Wallace, 1984,1989; W. Wallace, 1983). By contrast, the policy network approach makes it possible to gauge power dependence relations between public and private actors in specific EC policy sectors and at different levels of analysis.

Three distinct levels of analysis must be delineated in the present context (see Figure 2). First, there is an overarching, macro-level pan-European technology policy network. The Commission and national governments compete for authority, and thus the Framework programme and Eureka compete for policy resources at this level. Broad political goals, including the Commission’s goal of expanding its acquis, have a perceptible impact on general agenda-setting at this macro-level. Outcomes of interest mediation at this level have powerful implications for policy-making at the intermediate level of the EC collaborative R&D policy network. Here

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Member States compete (particularly in the Council) for scarce policy resources, while sector-specific industrial interests compete for EC subsidies. The Commission acts as an ‘honest broker’ and seeks to satisfy the interests of both national governments and industry, since it must have the support of both to expand E C technology policy resources. Finally, there are initiative-level policy networks which correspond to individual sub-programmes such as Esprit, RACE, Brite etc. At this level, decision-making structures are sometimes highly technocratic, with the Commission and industry enjoying substantial autonomy from national governments in tightly-integrated policy communities.

Network Level

European macro

EC R&D policy intermediate

technology policy

Esprit, RACE, etc. initiative

Dynamic of structural dependencies

Competition between Commission and national governments for authority

Competition between EC Member States and between industrial interests for scarce policy resources

autonomous of political influences and based on shared powers and goals

Commission-industry alliances

Figure 2. European technology policy - levels of analysis

This article argues that in the early, formative stages of the Framework programme and Eureka, the interests of private and public actors ‘dovetailed’ to produce a powerful dynamic of fusion perceptible at all levels of analysis. However, changes in wider political agendas have since altered power dependence relationships in the overarching European technology policy network. New political goals have permeated the EC’s intermediate level network, even if decision-making in many initiative- level networks remains technocratic and insular.

Finally, the quickening pace of progress toward economic, monetary and political union within the EC has resurrected interest in neo- functionalist theories of regional integration which were ‘left for dead’ in the early 1970s (Puchala, 1972; Haas, 1975). Neo-functionalist theories first assumed that integration would proceed exponentially as successful common policies in highly technical, non-controversial sectors would require common policies in other related sectors due to technical pressures (functional spill-over). Secondly, newly integrated policies would hasten the transfer of political authority to pan-European institutions largely due to political pressures from interest groups and political elites whose interests were served by European institution-building (political spill- over).

The EC’s role in European technology policy expanded in the late 1980s

TECHNOLOGY POLICY IN EUROPE 275 mostly through the growth of collaborative R&D programmes. As a highly technical area of policy-making, technology policy appears ‘ripe’, by the criteria of neo-functionalism, for tighter integration. Early collaborative experiments promoted truly pan-European alliances, marketing strategies and standards. They led political leaders to view the Single Market as a logical necessity in what may be viewed as a clear case of functional spill-over. They also led to the development of pressures for political spill-over as an influential industrial constituency emerged to press governments to transfer political authority for technology policy to the E C level. In reality, the rise of pan-European R&D schemes has been characterized by widely divergent goals and substantial political con- troversy between EC Member States, and only limited integration of national policies. Technology policy as a case study reveals that designing or redesigning one theory to explain the EC’s multi-faceted and diverse pattern of development, even in a relatively narrow area of policy, is a highly daunting exercise.

2. The Development of A Technology Producer Network The launch of Eureka and EC’s Framework programme in 1985 cannot be explained in a historical vacuum. From the late 1950s, proposals for new collaborative R&D schemes usually quickly became bound up in wider political disputes within the EC. Attempts by the Commission, particularly between 1967-72, to include broad technology policy initiatives in proposals aimed at political union were consistently resisted by Member States. In 1973 Williams observed, ‘in the science, technology and industry field the EEC Commission has been excessively preoccupied with the pursuit of an executive power which itself really presupposes a political unity’ (Williams, 1973, p. 139). If anything, the Commission’s tactics backfired. Mistrust of its motives meant that few important EC collaborative projects outside of energy R&D were launched until the 1980s. To that point, ‘[qluite simply, the reputation for technological collaboration enjoyed by the European Community had not been particularly striking’ (Shearman, 1986, p. 156).

A turning point in European perceptions about technological competi- tiveness was reached in 1985. A new ‘technology gap’ debate, remarkably similar to that of the 1960s, began to emerge (see Patel and Pavitt. 1987; Pierre, 1987). The EC’s balance of payments in information technology (IT), in surplus in 1975, had swung sharply into deficit beginning in 1982. By 1985, EC firms were supplying only 40 per cent of their own market and 10 per cent of the global market (Sharp, 1989, pp. 207-8). Meanwhile, the success of state-supported collaborative R&D schemes in Japan, such as the VLSI and Fifth Generation Computer programmes, led to European interest in mimicking MITI’s mission-oriented approach to technology

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policy and designing similar collaborative strategies on an EC-wide scale (Freeman, 1987, pp. 123-38; Phillips, 1989, pp. 1-27; Howell et aI., 1988, pp. 41-9). Moreover, the messianical American effort to attract European partners to the Strategic Defense Initiative (SDI) lent sudden urgency to discussions about the costs and benefits of pan-European R&D (Carton, 1987; Peterson, 1989).

Yet, long before collaborative R&D reached the top of political agendas in 1985, a core of leading European IT firms had begun to co-operate extensively. Siemens, Philips, Companie Generale d’Electricit6 (CGE), and to a lesser extent STET, CII-Honeywell Bull and Thomson, were involved heavily in joint pre-competitive research by 1985 (Mytelka and Delapierre, 1987, p. 231). The Commission’s role in encouraging links between these firms was substantial. In 1981-2, Industry Commissioner Etienne Davignon invited leading representatives of Europe’s largest IT firms to come together under EC auspices to form the ‘Big 12 Roundtable’ and develop proposals for new collaborative projects (Sharp and Shear- man, 1987, pp. 47-9). An executive committee resolved that the group would seek to promote collaborative R&D schemes, co-operatively develop basic technologies, and try to develop common European standards (Cadiou, 1986, p. 6; Danzin, 1988, p. 103). Thus, the Commission helped engineer an industrial consensus for new collaborative schemes, was supported by industry in urging the transfer of authority over technology policy to the E C level, and was ultimately able to convince governments to launch the Esprit programme in 1983.

Representatives from the ‘Big 12’ were intimately involved in subsequent discussions which produced the current administrative structure of Esprit, Framework’s flagship programme. The EC funds up to 50 per cent of approved Esprit projects, which must include firms from at least two Member States. Decision-making on the distribution of funds is dominated by the ‘IT task force’, made up of industrialists, academics and Commission members, which judges the technological validity of proposed projects and is entirely autonomous of Member State government control.

Each year the Commission and IT task force develop a ‘work programme’, which identifies technologies and sectors of strategic importance deemed worthy of EC support (see CEC, 1986). Dialogue with industry is considerable at this stage, and usually the Commission’s subsequent calls for proposals are extremely detailed and specific. Final approval of the IT task force’s selection list must be given by the Esprit Management Committee, on which all Member States are represented. While substantial political bargaining occurs at the Management Committee level, changes to IT task force recommendations usually occur only at the margins. The highly technical business of making distributional decisions about how E C funds are spent means ‘as such, sovereignty is not an issue’ (Watkins, 1989, P. 8).

TECHNOLOGY POLICY IN EUROPE 277 From its origins, the IT task force took on primary defucto responsibi-

lity for distributional decision-making within Esprit. The preponderant influence of large European I T firms in Esprit’s early stages was clear, with more than 80 per cent of all Esprit contracts in its first pilot phase of 1983 awarded to Big 12 firms, most of whom were represented on the IT Task Force (Sharp, 1989, p. 209; Mytelka and Delapierre, 1987, p. 245). Even as late as 1986, more than half of Esprit’s budget funded R&D carried out by Big 12 firms (Hare et ul., 1988, p. 55). In short, Esprit is as much managed by industry as the Commission itself in a highly insular, initiative-level policy community.

The success of the Big 12 Roundtable in influencing the design and management of Esprit inspired large non-IT manufacturers, increasingly the users of IT innovations, to form a similar group. The Gyllenhammer group brought together 20 leading industrialists from firms such as Volvo, Pilkington, and Volkswagen. It issued a programme in 1983 calling for an end to national subsidies, barriers between European national markets, and divided R&D efforts (Pearce and Sutton, 1985, pp. 53-4).

The combined weight of the Gyllenhammer group and Big 12 in the EC’s R&D policy network can be seen in the distribution of projects for phase I1 of Esprit, which accounted for ECU 2 billion out of the total Framework budget of ECU 5.7 billion for 1987-92 (Sharp, 1989, pp. 210-15). The percentage of projects involving Big 12 firms had fallen to 62 per cent by 1985, but more than half of all projects brought one of the Big 12 firms together with European national manufacturing champions such as Renault, Peugeot, BMW, Volkswagen, British Aerospace, Aeritalia, or MBB (Mytelka and Delapierre, 1987, pp. 245-6). Clearly, the interests of European I T producers were served by alliances with many of the most important consumers of I T innovations.

Esprit is only one of a diverse array of programmes which fall under Framework’s purview. The Commission itself is often the dominant actor in looser initiative-level networks, such as that which presides over the Brite programme for extending new technologies to traditional industries, because industrial interests are fragmented and lack common identity or purpose. Schemes to promote cross-border scientific exchange and mobility feature highly permeable issue networks in which a broad range of representatives of the European science and research community have influence.

But Esprit is and always has been by far the most expensive of all schemes within the Framework programme. Its incorporation of industry into actual policy-making has been substantially replicated in other EC initiative-level networks, even if private interests are more diffuse within them (Shearman, 1986, pp. 158-9). At the intermediate level of the EC’s R&D policy network, Member State control over Framework on the Council of Ministers is now largely confined to approving multiannual

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budgets and making broad decisions about the distribution of E C funds between various sub-programmes. Detailed distributional decisions often are taken within initiative-level policy networks where industry and the Commission are the key actors.

Industry’s role in the design of Eureka also was critical, and was enhanced by intense American efforts to attract European partners to SDI research in 1985. Eureka originally was proposed by the French government, which fiercely opposed European participation in SDI and presented Eureka as an alternative. After the SDI proposal failed to generate widespread political support among European governments, the Reagan administration announced in June that $1.3 billion would be offered directly to non-American firms and researchers (Fishlock et af., 1985; La Tribune, 1985). The French immediately responded that Eureka had entered its ‘industrial phase’ (Marsh, 1985). At this point, Eureka was a vague, ill-defined proposal which included no criteria for project selection, prioritizing technological areas, or public funding.

Within a week, meetings were convened between French, German, and British research ministers and representatives of Big 12 IT firms to map out possible Eureka projects for public support. Then, amid much fanfare, Siemens, Philips, G E C and Thomson signed a ‘declaration of common intent’ to co-operate within Eureka on the development of strategic components. A group statement urged that, ‘Eureka should be product and market-oriented. . . . Projects undertaken in the framework of Eureka should lead to finalized and saleable products and systems’ (quoted in Piper, 1985, p. 29).

The agreement brought together four Big 12 firms from four different countries. Their collective weight gave Eureka - which had up to this point been very much a political initiative - a critical endorsement from European industry. A flurry of announcements of new Eureka projects followed in subsequent weeks. Remarkably, it was not until almost six months later, in November 1985, that Member State research and technology ministers even determined Eureka’s ‘Declaration of Princi- ples’, which gave broad outline to Eureka’s objectives and methodology.

By 1985, the Big 12 firms clearly had reached consensus on the notion that collaborative R&D served their collective interests. At the Commis- sion’s urging, the group had assumed responsibility for collective provision of basic technologies to the rest of Europe’s technology-intensive industries. The Esprit programme had provided incentives in the form of E C funding for the Big 12 to co-operatively develop process innovations which otherwise might have been sought through licensing or inter-firm arrange- ments with Japanese or (especially) American firms. Now, the chance to collaborate ‘closer to the market’ via Eureka on product-oriented R&D held much appeal for the Big 12.

Government-industry consultations on Eureka’s structure in 1985

TECHNOLOGY POLICY IN EUROPE 279 produced an ‘industry-led’ scheme in the very purest sense of the term. Industrial firms are entirely responsible for proposing Eureka projects, and no proposal has ever been refused by Eureka’s Council of Ministers. The role of national governments in Eureka’s decision-making process is essentially confined to decisions on public funding of individual projects. Eureka has no genuine public governing body to guide the strategic direction of the programme and there is little evidence that technology assessment is rigorously or uniformly conducted at the national level before projects are approved for Eureka status (see IDS Consultants, 1989, p. 2).

From its origins, Eureka was viewed as primarily a forum for pushing pre-competitive R&D already under way in Esprit closer to the market. By the end of 1986, large-scale projects in I T or comniunications accounted for roughly half of the total value of all Eureka projects (Eureka Secretariat, 1987; Danish Eureka Chairmanship, 1988). Half of all projects were led by Big 12 IT firms or large manufacturers, such as ICI, Peugeot, Aerospatiale, Volvo, or Rhone-Poulenc.

Eureka’s loose, decentralized, industry-led structure was more a matter of necessity than choice. The support of the Big 12 was critical to the successful launch of the initiative, and these firms logically wished decision-making within Eureka to be based on commercial, not political criteria. The French could not push a government-led, dirigiste programme on partners sceptical of their ‘national crusade’ (Shearman, 1986, p. 148) for new collaborative programmes and mindful of past French efforts to dictate their terms. Part of the French strategy in launching Eureka was to exploit even stronger EC Member State suspicions about the wider agenda which lay behind the Commission’s ambitious proposal in 1985 to spend 10 billion ECU on Framework’s first phase. In short, both the launch of Eureka and the growth of Esprit illustrated how much public and private interests had become unified within European technology policy networks by the mid-1980s. But the period also revealed that the policy agendas of national governments and the Commission remained distinct.

3. Policy Networks in a Pan-European Context By 1985, the Big 12 alliance with the Commission at all levels of analysis contained all the hallmarks of a policy community: restricted membership, limited outside influence, and strong structural dependencies (see Shear- man, 1986, p. 157). By analogy, Grant et ai.’s (1987) study of the European chemical industry during the same period argued that the concept accurately described industrial policy-making in an area where the EC’s role had similarly expanded. The European chemical industry has always been oligopolistic, technology-intensive, extremely profitable, and

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highly internationalized. In this, as in other industries, EC competition policy (on mergers, price-fixing, collaborative inter-firm agreements etc.) began to have more of an impact than that of national anti-trust bodies by the early 1980s. The internationalized nature of the chemical industry means that the E C increasingly has taken on primary responsibility for vetting mergers and enforcing health and safety and environmental standards. In short, ‘there is a European “policy community” in the chemical industry which is perhaps more important than the national “policy communities”’ (Grant et al., 1987, p. 204).

The case study by Grant et al. shows why internationalized industries may prefer a common EC regulatory regime to separate national regimes. The highly integrated and internationalized German chemical industry has pushed hard for environmental legislation to be handled at the European, rather than German domestic level whenever possible. Here, power dependence relationships favour industry more than at the domestic level:

The hope is that at the European level the legislation can either be halted by opposition from other states or, at least, can be significantly modified in an intergovernmental arena at a distance from the intrusion of domestically powerful environmental groups. (Grant etal . , 1987, p. 182)

Similarly, power dependence relations in the European IT community favour a limited number of globally competitive firms. Yet, national government intervention in the IT industry - through subsidies, invest- ment and R&D tax credits, public procurement, state-sponsored R&D schemes etc. - has been far more extensive than in the chemical industry throughout the post-war period. Patterns of state subsidy often produced a ‘chicken game’, in which national governments competed to provide more aid to their indigenous I T firms than their E C counterparts. Eventually, general disillusion with the notion that states could ‘pick winners’ in advanced technologies and new demands on European welfare states in the recessions of the 1970s and 1980s led states to withdraw from past patterns of national support of IT industries. As for the chemical industry, this implied a more substantial policy role for the EC.

Yet, fhe EC’s involvement with European I T firms is far more extensive than in the chemicals sector, largely because collaborative R&D is minimal in the European chemical industry and widespread among IT firms. In political terms, Davignon and the Commission, and later the French proponents of Eureka, required support from Europe’s Big 12 firms to place collaborative R&D on the agenda of European governments, and ultimately to channel the political momentum for new schemes to support of wider political agendas. The Commission’s agenda included overcoming the EC’s history of failure in collaborative R&D, launching new collaborative programmes, and ultimately linking support for col-

TECHNOLOGY POLICY IN EUROPE 28 1 laborative R&D to the SEM initiative. For the French, industrial backing for Eureka lent credibility to their efforts to discourage European participation in SDI and cast France as the leader of a new ‘technological Europe’. For all E C governments, collaborative R&D made it possible to reduce the costs of subsidizing national firms. Big 12 firms, realizing that the era of heavy national subsidies was over, benefited from the higher profile of technology policy in the EC‘s ‘policy mix’ and subsidies for near-market R&D provided through Eureka. Complex interdependency bound together these separate actors.

However, the European technology policy network is clearly less cohesive and integrated today than in the period immediately after the Framework programme and Eureka were launched. The lock that Big 12 and Gyllenhammer group firms had on EC funding in the early stages of Espirit has loosened over time. The EC has recently launched a high- profile campaign to assist small and medium-sized enterprises (SMEs), especially in technology-intensive industries (see CEC, 1988). Funding for sectors such as biotechnology, environmental technologies and software engineering - where SMEs or non-commercial research insti- tutes benefit from relatively low barriers to market entry - has increased substantially under the Framework I11 programme for 1990-4 (CEC, 1989, pp. 26-7). For example, Framework I11 increases by more than one-third the funding for R&D in biotechnology, a ‘young’ science where capital costs for R&D are relatively small, links between basic research and commercial development are often direct, and university or public laboratories are major players. The EC also has recently proposed a sharp increase in spending to promote the technological developments of its poorest regions via the Stride programme (CEC, 1990a, p. 42).

The spread of Eureka projects across technological sectors also has broadened considerably since 1986. Four times more new projects have been launched in biotechnology, robotics, and environmental technologies combined than in IT since 1986 (Eureka Secretariat, 1989, p. 4). The role of SME’s has expanded substantially, with nearly two-thirds of all projects including SMEs by 1988 (Eureka Secretariat, 1988, p. 3) and the percentage increasing sharply in 1989-90.

These shifts are due to several factors. First, the Big 12 IT firms and large manufacturers are still competitors in many product sectors. There are very limited incentives for collaboration in product areas where firms are still dominant in their national markets. The Big 12 firms often still gain more in terms of access to technology or markets through collaboration with Japanese or American firms. In the language of the policy network literature, the economic interests of the Big 12 firms are characterized by limited interdependence.

Secondly, political pressures from smaller EC Member States, who often lack large, integrated national champions of their own, to spread the

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benefits of collaborative R&D to a wider coterie of firms (especially SMEs) have clearly had an impact at the intermediate level of the EC’s R&D policy network. The dominant share of Esprit’s funds secured by Big 12 firms during its early stages led to small state insistence on the Council that one-quarter of all funds be reserved for ‘type B’ projects which require less funding and facilitate SME participation (Howell et al., 1988, p. 178). This overtly political concession to small members has produced dissension among larger states, who think the efficacy of the Framework programme is diluted by earmarking funds to promote the technological development of less advanced firms and Member States. Yet, agreement on Framework’s overall budget still requires unanimity on the Council and this compromise is viewed as a necessary evil by large states.

Thirdly, technology policy priorities have changed at a macro-level in response to the rise of environmental concerns to the top of European political agendas. Phase I11 of Framework effectively doubles funding for environmental R&D while spending for IT and communications R&D is slightly reduced. The recent increase in environmental projects within Eureka is even more striking. The number of environmental Eureka projects tripled in 1989 with an increase of nearly 50 per cent in total value. Curiously, for an initiative designed to promote ‘near market’, product- oriented R&D, more Eureka projects were approved in this sector than in any other in 1990 (Eureka Secretariat, 1990, p. 10).

The EC R&D policy network is less insulated from political pressures than the network within which the chemical industry is regulated since, by nature, subsidized collaborative R&D requires distributional decisions rather than mainly regulatory decisions. The E C cannot ignore the general principle of ameliorating economic divergences between richer and poorer regions of the Community in technology policy since this would effectively redistribute resources from poorer to richer Member States. Despite their common interest in increasing public funds for collaborative IT R&D, there are limits to the interdependence of economic interests among the Big 12 since they are still competitors in many respects.

However, the Commission still enjoys a level of autonomy at the initiative level where Esprit and other Framework sub-programmes are managed which is unmatched in most other areas of industrial policy. This is largely because the Big 12 firms, in alliance with the Commission, convinced member-governments in the mid-1980s that the EC’s technological decline required expedient , technocratic decision-making structures. For its part, the Commission has generally been a willing partner in moulding the EC’s initiatives to suit the wishes of industry. For example, the Commission spent over 200 million ECU more than had been budgeted on Esprit projects in 1988, citing ‘the high quality of the proposals, the industrial commitment underlying them and the urgency of

TECHNOLOGY POLICY IN EUROPE 283 the work proposed’ (quoted in The Financial Times, 30 July, 1988). This necessarily reduced funding for the remaining three years of Esprit’s phase 11, and obviously was designed to put pressure on E C governments at the intermediate level of EC R&D policy to allocate more funds to Esprit.

In late 1989, the new Commissioner for Research, Fillippo Pandolfi, thus asked for an additional 2.7 billion ECU over and above what Ministers approved for the general Framework budget for 1987-92. The new funds were requested as part of a wider proposal for spending nearly 7.7 billion E C U on Framework I11 (1990-4), including 3 billion ECU for IT and communications research. Pandolfi also proposed changes to rules for approving Framework’s budget so that ministers would in future approve budgets for specific initiatives (i.e. Esprit, Brite etc.) by major- ity vote, after agreeing to an overall Framework budget by unanimity. Past spending commitments to individual initiatives have been agreed simultaneously with an overall budget. The UK and West Germany both denounced the new approach, calling the proposal a ‘blank cheque’ for research (MacKenzie, 1989).

In the event, the Commission has obtained most of what it wanted. The Council approved a revised budget of 5.7 billion E C U for 19904, with 2.2 billion ECU earmarked for IT and communications technologies. The issue of rule changes for deciding Framework’s budget was put off pending a new inter-institutional agreement to be decided in 1993, which could alter the relative powers of the Council, Commission and European Parliament in decision-making on Framework. Still, the Com- mission proposal is evidence of its new, heightened assertiveness in technology policy generally, which is also manifest in its recent boldness in claiming a unilateral power to enforce liberalization of telecommunications services (Europe, 1989a, p. 7 ; Europe, 1989b, pp. 7-8).

However, the complexity of EC decision-making on budgetary issues, manifest in intense bargaining between Member States within the intermediate level E C R&D policy network, means that funding collaborative R&D will always be a highly political exercise, however voting rules are altered. At the macro-level, European governments continue to embrace Eureka largely because it provides purely national control over the targeting of subsidies for collaborative R&D. Sovereignty may not be an issue when detailed distributional decisions are made about how Esprit’s budget is to be carved up between projects and firms. But the principle of juste retour is still a powerful rule of the game in macro and intermediate level technology policy networks. While the Commission ultimately seeks to expand its independent authority over industrial policy-making through expanded collaborative R& D spending, it is wise to accommodate in its strategy the differing national prerogatives Member States bring to the game.

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4. Conclusion Despite the entrenched institutional power of producer groups in other EC policy networks, such as those for chemicals (Grant et al., 1987) or agriculture (Peterson, 1989, pp. 466-7), E C policy analysts would have been hard pressed in the early days of Esprit and Eureka to find any producer group with a more powerful voice in basic distributional decisions at the regional level than the Big 12 Roundtable. However, the political strategy of the Commission has changed over time and this is crucial to understanding the relative decline of the Big 12 firms’ influmce on E C technology policy. National governments now generally accept that funding large-scale I T and communications R&D between Big 12 firms is a high priority at the initiative levels of both the Framework programme and Eureka. Thus, the Commission has moved onto moulding the Framework programme to accommodate Member State priorities in non- IT areas. Eureka’s focus also has been broadened by the recent addition of far more non-IT projects. National governments clearly want collaborative R&D programmes to take on wider goals beyond the narrow focus of IT research. This imperative is perceptible within both macro and intermediate level technology policy networks.

The Commission’s strategy for expanding its role in technology policy is now less dependent on its alliance with the Big 12 and more aimed to convince national governments that EC policies effectively complement those which remain under national control. Thus, in response to repeated urgings by key Member States (German Presidency of the Council of Ministers, 1988; Clarke, 1988) the Commission has made expanding links between the Framework programme and Eureka a ‘new and essential feature’ of Framework I11 (quoted in Eureka Secretariat, 1989, p. 7; see also CEC, 1990b, p. 23; Europe, 1990, p. 13). The EC has for several years provided substantial funding and support to selected high-profile Eureka projects, particularly the JESSI and High Definition Television projects, whose primary participants are Big 12 firms such as Siemens, Philips, and Thomson. The Commission thus used Eureka to fund collaborative R&D between Big 12 firms which was not clearly pre- competitive and could not be conducted easily under the Framework programme because of conflicts with EC competition law. It strengthened its alliance with the Big 12 in the process.

But now the Commission seems determined to go further and push more pre-competitive EC-funded projects, including those in non-IT areas, closer to the market via Eureka. Here, the Commission is attempting to satisfy national governments by linking a wide range of its own programmes to Eureka, which ironically was designed to limit the shift of authority over European R&D policy from the national to EC level. The Commission thus has begun to apply the principle of subsidiarity to

TECHNOLOGY POLICY IN EUROPE 285 technology policy, or the notion that ‘R&D activities must only be pursued through the Framework programme if existing national or international mechanisms cannot promote them sufficiently well’ (Aigrain et al., 1989, p. 12). To expand its autonomy at the initiative level, the Commission realizes it must play its hand wisely within macro- and intermediate-level technology policy networks.

The Commission also has opened up its R&D programmes and administration to more scrutiny by independent assessors, largely at the insistence of national governments. Two recent independent reports (Aigrain et al. 1989; TRN GroepNolder & Vis, 1990) urge wider application of the subsidiarity principle and criticize the Commission for its rigid bureaucracy and especially ‘a worrying lack of communication’ between DGs XI1 (Science, Research and Development) and XI11 (Telecommunications, Information Industries). There is evidence of significant rivalry between the two DGs which must temper any suggestion that the Commission’s view in technology policy is monolithic. DG XI11 is by nature and outlook ‘dirigiste’, with an institutional focus on ‘market pull’ strategies and technology applica- tions. By contrast, D G XI1 has a ‘looser organization well fitted to academic research’, and is more concerned with expanding opportunities for SMEs and ‘technology push’ strategies (Aigrain et al., 1989, p. 10).

D G XI11 has been principally responsible for the Commission’s close ties to the Big 12, and the pre-1985 Esprit programme and early Framework programmes reflected its administrative ascendancy in the E C R&D policy network. But Framework 111’s heightened emphasis on non-IT R&D and SME participation means that DG XI1 has significantly expanded its own role in E C technology policy. The lesson is that changes in broad political agendas within macro-level policy networks can change power dependence relationships within intermediate-level policy networks. What once appea- red to be a tightly integrated policy community at the intermediate level of E C R&D policy has evolved over time into a more permeable policy network because politics has moved on.

How may neo-functionalist theory be deployed to describe and explain the evolution of E C technology policy? One might argue that the successful launch of Esprit in the early 1980screated functional spill-over pressures for more spending on collaborative R&D, with supranational funding and administration. The Commission increased its acquis by encouraging Big 12 firms and the Gyllenhammer group to organize themselves into truly pan- European interest groups in the neo-functionalist sense. These groups, in concert with the Commission, pushed national governments to create the internal market and expand the EC’s role in technology policy, thus creating pressures for political spill-over.

Yet, the explanatory power of neo-functionalism ebbs when the details of the case study are considered. First, national technology policies are still far from harmonized. Increased funds for Framework 111 still equal less than

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the Commission originally proposed to spend on the programme in 1985, and less than the UK, France or West Germany each spend on purely domestic R&D support (Sharp and Shearman, 1987, p. 86). Eureka was launched as a strictly inter-governmental scheme in part because national governments wanted their own say in how collaborative R&D was to be funded and organized, and wished to check the integration of a closed IT policy community in which the dominant actors were the Big 12 and the Commission. Eureka still lacks any element of supranationalism, as evidenced by disharmonized public funding policies among Member States. The point is that while political consensus on the desirability of collaborative R&D has solidified, policies to promote it, even in the relatively narrow sectorsof ITandcommunications R&D, are still far from being ‘integrated’ in the neo-functionalist sense of the term.

Secondly, technocratic decision-making structures within initiative-level policy networks do not mean EC technology policy has become depoliti- cized. The shift in political authority from states to the EC at the macro- level of the European technology policy network has not proceeded very far. The Commission has increased its acquis, but only through the skilful and politically-sensitive use of engrenage (Coombes, 1970) or seeking and then responding to purely national positions in the process of drafting new proposals. Increased funding for non-IT R&D, especially in environmental technologies, as well as more emphasis on support for SMEs and regional cohesion in E C technology policy are evidence that changing political agendas and divergent national interests still constrain the Commission’s independence within the intermediate level E C R&D policy network.

Thirdly, political disputes between Member States traditionally have over-ridden economic or technological imperatives which made collaborative R&D a logical response to European competitive liabilities throughout the EC‘s history. Commission proposals not unlike the one for Framework in 1985 got nowhere in the late 1960s and intergovernmental schemes such as Unidata and Concorde collapsed or ended in commercial failure because governments approached them with conflicting political objectives. It is unclear that the successful launch of the Framework programme and Eureka in 1985 would have been possible without existing political consensus at amacro-level on the overarching need to create the Single Market, and on the usefulness of collaborative R&D in hastening the process.

The broad question of why political consensus for the creation of the SEM emerged in the mid-l980s, and not before, is complicated and beyond the scope of this article. There is no question that the 1992 initiative was inspired in part by the development of pan-European industrial pressure groups. Moreover, the pre-1985 Esprit initiative did help to generate an industrial constituency for the SEM and political interest in new collaborative R&D initiatives.

But it is not clear that European governments were directly or uniformly

TECHNOLOGY POLICY IN EUROPE 287 persuaded by the Davignon initiatives and the early Esprit experiments to give up substantial national prerogatives over technology policy to the Commission and substantially increase funding for collaborative R&D. The Commission’s funding proposal for the first Framework programme in 1985 was cut by almost 40 per cent and then was held up at the Council for nearly a year by German and (primarily) British doubts about the Commission’s political agenda in proposing such a huge spending increase (George, 1990, pp. 198-200)’ Even on an intergovernmental level, only France has ever committed a large tranche of public funding to Eureka and Member State commitments are still very uneven.

Subsequently, the Framework programme and Eureka have both grown slowly and only because political consensus on the need to move forward quickly on the 1992 initiative has solidified over time, particularly since the Cecchini report in 1988 made clear the potential benefits of the SEM (Cecchini, 1988). In the process, the Commission has abandoned its single- minded determination to support only collaborative R&D which directly increases its own authority over technology policy. The Commission has expanded itsacquis at the initiative and intermediate levels only because it has responded to the reality that national technology policies do and will remain distinct and harmonization will proceed only very slowly at a macro-level.

In short, collaborative R&D appears to require political consensus before it can effectively proceed, instead of acting to create it over time. Neo-functionalism thus does not explain the evolution of E C technology policy in the 1980s very comprehensively or satisfactorily. This does not mean that neo-functionalism should be entirely abandoned as a heuristic device for explaining particular policy developments at the E C level. But clearly more case studies are needed before we can make wide claims that neo-functionalism is worth resurrecting. This article does not seek to propose an alternative ‘macro-theory’ to neo-functionalism. It does argue that research on policy networks shows a great deal of promise for highlighting the different dynamics and power relationships between government and industry in specific areas and at different levels of E C policy-making. But more generally, it poses a fundamental question: can any single macro-theory explain comprehensively the increasingly complex, eclectic and rapid development of the E C as a whole? Pessimism of the intellect among policy analysts seems likely to temper optimism of the will among theorists in the 1990s.

Appendix: Acronyms Brite - Basic Research in Industrial Technologies for Europe CEC - Commission of the European Communities CGE - Companie Generale d’Electricite ECU - European Currency Unit Eclair - European Collaborative Linkage of Agriculture and Industry through Research

288 JOHN PETERSON

Esprit - European Strategic Programme in Information Technologies Euratom - European Atomic Energy Community Eureka - European Research Cooperation Agency GEC - General Electric Company MITI - Ministry of International Trade and Industry (Japan) RACE - Research in Advanced Communications for Europe SDI - Strategic Defense Initiative SEM - Single European Market SME - Small or Medium-Sized Enterprise Stride - Strategic Technologies for Regional Innovation and Development in Europe

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Documents

Technology Policy in Europe: Explaining the Framework Programme and Eureka in Theory and Practice