The landscape of technological innovation across the world is changing, and doing so rapidly. The extent of competitive challenge faced by European enterprises in the knowledge economy from the emergence of Asian technology powerhouses, and in particular by the likes of China and India, is a genuine reflection of the changes now taking place in the international economy.

European politicians and business leaders need to become more aware of the current and future innovative capacity that these countries are creating for themselves. To be sure, Europe continues to enjoy singular competitive advantages in the sophistication of its knowledge industries, but this is most certainly no time for complacency. Instead, an outward facing strategy is required in order to grasp opportunities for partnership with Asia, whilst also recognising and responding to potential threats to Europe’s current advantage in innovation from Asia.

European platforms for nurturing its innovative advantage in knowledge sectors have both strengths and weaknesses as they shape up to respond to this challenge, and three priorities cry out for vigorous action. First, there needs to be a pan-European approach to sustaining knowledge creation through more effective promotion of collaborative R&D activity across firm clusters and in conjunction with research led universities, together with a serious public policy commitments to increasing European levels of R&D intensity, and the promotion of pre-seed funding programmes for innovating SMEs across European member states. Europe cannot afford to fall behind as the stakes are simply too high.

Second, effective policies need to be crafted that really do support the innovation process, and that stimulate individuals and enterprises to take ideas forward. The issue that most stands out in this political panoply has to be the introduction of the Community Patent, replacing the confusing mosaic that acts as a real inhibitor to protecting European inventiveness and stimulating collaboration. The failure to secure political agreement for this back in 2005 should not be used as an excuse to put the issue on the backburner. It should be a priority for our European politicians to sort this out – and to do it now.

Third, we need to genuinely embrace entrepreneurial dynamism and promote the commercialisation of ideas by inspired individuals across the Union, supporting their entry into global markets. This needs to be approached in two ways: on the one hand addressing the skills required of entrepreneurs by encouraging the crafting of imaginative diplomas that can empower people’s confidence, outside of the traditional MBA, whilst on the other hand, creating a supportive government framework that can help to unlock avenues of partnership for growing companies, and one which recognises the positive side of risk taking with fiscally attractive mechanisms to reward success.

The economic downturn must not be permitted to detract attention from policies to maintain Europe’s long-term competitive success, as new rivals from Asia are emerging with the singular purpose to embrace innovation and to compete at the global level. In this changing world, Europe certainly has the talent to succeed in an innovation driven economic system. It is now incumbent on EU policy makers at all levels to craft the framework that can ensure this outcome.