Will the ERC Be Able to Defeat the European Paradox?

How effective is Europe in transferring the results of scientific research into technological innovation? The so-called 'European paradox' is the conjecture according to which the quantity and quality of scientific production in the EU is comparable to that of its main international competitors, primarily the US, yet the EU has a significant lag in transforming the results of this scientific excellence in innovations and consequently in a competitive advantage. In recent years, this gap has resulted in a much smaller number of "unicorns" and tech giants compared to North America and East Asia. The idea that such a European paradox exists is not new: the term was first coined in the Green Paper on Innovation published by the European Commission in 1995.
However, the very existence of such a paradox has been questioned by several scholars, according to whom the premise behind the argument is not valid. In other words, the quality of European research would not be comparable to that produced by countries such as the US and the UK. Europe's problem, therefore, would not be that it does not know how to transform research into innovation, but that it does not produce enough high-quality research.

Meanwhile, recognizing the strategic importance of science as a driver of international competitive advantage and motivated by criticisms such as the one mentioned, the European Commission established the European Research Council (ERC) in 2007. The mission of this agency is to support excellent and frontier scientific research through the provision of funding to individual researchers. To date, over 14,000 projects have been financed for a total of over €25 billion.
Despite this massive effort, we still know relatively little about the ERC's true economic impact. To what extent can we still talk about a European paradox even with respect to scientific research of actual excellence, such as the one financed by ERC?
To answer this question, in a recent paper we collected data on the scientific production of all the projects financed by ERC. To understand the impact of scientific research on innovative activity we used patent data. The idea is that the impact of a scientific article on innovative activities can be measured by whether it is cited as "prior art" in invention patents.
The results obtained are quite significant. Scientific articles produced by ERC research have a higher probability of being cited by patents, compared to articles of comparable quality but produced by European researchers not funded by the ERC. Furthermore, patents that are based on scientific articles from ERC searches correspond to higher-quality inventions, measured by the number of citations these patents receive from other patents. In summary, publications originating from ERC projects are more likely to inspire inventions with significant technological and commercial potential.
Despite these positive notes, however, a more worrying aspect must be highlighted. The question we asked ourselves is: which are the subjects that most profit from the results of ERC research to innovate and where are they located? The answer to this question is that the inventive activity that is inspired by and uses the results of ERC-funded research is concentrated mainly in universities located in the United States. This result suggests that the United States has a more favorable environment for assimilating and exploiting high-level scientific research for innovation.

Returning to the European paradox, our work seems to suggest that even where Europe is able to produce scientific research of excellent quality, the mechanisms and capabilities to translate this research into innovation and therefore competitive advantage must be strengthened, especially when compared to the United States. Following this logic, the European Innovation Council (EIC) was established in 2021 which, with a budget of around €10 billion, supports disruptive innovations along the entire life cycle, from initial research to proof of concept, to technology transfer, financing and the growth of firms. Can we definitively leave the European paradox behind? We will find out in the near future.