Romano Prodi: The European Commission President Tells EBF That the European Tradition of Education Does Little to Encourage Innovation on the Scale Experienced in the United States. He Was Interviewed before Receiving the Doctor Honoris Causa at the Universite Catholique De Louvain, Belgium

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EBF The European Commission paper ahead of the Lisbon summit set out a new economic and social agenda for the EU. In what way was this 'new'?

Prodi I think the Lisbon European Council was a really important turning point. It agreed the most important set of commitments we have made since 1992. The new element and the key thing about our two main policy strands as set out in the European Commission's contribution--economic reform and strengthening the European social model by investing in people--is that they are closely integrated. We need to concentrate on both for the necessary results to be achieved: Europe will not succeed to create a dynamic economy based on knowledge without the support of its citizens and this requires enhancing social cohesion.

EBF What, in your view, is the right balance between regulation and competition?

Prodi There is not, of course, any ideal balance. But to create the conditions for competition, we certainly have to organise the single market in a more complete way. It is beginning to function well, particularly for goods, but it is not finished. Public procurement, trade in services, European financial services markets and the energy and aviation markets are among the unfinished priorities. We aim, for example, to remove all remaining barriers to cross border trade in services by the end of this year. We also realise that the cost of protecting intellectual property is too high and that it should be as simple and inexpensive to acquire patent protection as it is in the US. I would like to see a cost-effective, world class Community patent adopted by 2001.

EBF The EU, though, still has a damaging reputation for burdensome regulations, doesn't it?

Prodi The cost of some of our regulations can be too high and place undue burdens on European enterprise. But we are actively tackling these problems through our SLIM and BEST programmes. Further co-ordinated action is needed to improve the regulatory environment at all levels because red tape is actually worse at national and regional levels. And don't forget--the origins of most of our legislative work are demands placed on us by the Council of Ministers and the European Parliament. Don't forget either that regulations to open telecommunication or energy markets are abolishing burdensome national rules that cause high costs and bad services for consumers and industry: that technical regulations are necessary to avoid high costs of enterprises that would have to adapt to 15 different national standards; and that environmental legislation may well impose costs to enterprises but that these costs are necessary to preserve rare resources and force enterprises to modernise their products and production processes.

EBF Europe's record for successful business start ups remains a concern--most recently, for example, there was a critical report by the employers organisation UNICE. How will you promote a more enterprising Europe?

Prodi Europe certainly must become more entrepreneurial and innovative. We need a twin strategy--firstly a dynamic business environment in which companies can be created, grow and innovate. Secondly, we must encourage risk takers, including women entrepreneurs and those from less advantaged backgrounds. We have to change the mind set. In many European countries like Spain, Germany, France and Belgium, however, there is still a problem with society's values. We must encourage--not discourage--young people to be successful. If a young person sets up a company--which employs 1,000 people before he reaches the age of 30--we should applaud that. I think in Europe we tend to waste too much of the energies of people between 20 and 30 years of age. Under our system people spend a long time at university and stay at home longer than they do in, say the US. We inject too much structure into our young people. This question of school and educational structures is in my view perhaps more fundamental than the venture capital issue. …