Europeans Still Grapple With Technology Policy

Will government programs ever be nimble enough to keep pace with technology leaps?

AFTER decades of experience with technology policy, Europe should have a firm grasp on it.

But it doesn't. Like the rest of the world, European nations are dissatisfied with their technology programs. They are casting around for something better.

"There's a general feeling that there have to be better ways" to encourage technology, says an official with the Organization for Economic Cooperation and Development (OECD).

The latest defeat: the continent's high-profile high-definition television (HDTV) standard. After years of work and billions of dollars spent on an analog system, the alliance is unravelling. The Europeans appear to be following the American lead and developing digital HDTV.

This dissatisfaction with technology policy is not solely European. For different reasons, the United States and Japan are also unhappy. The US has inventions but too few commercial products. Japan has commercial products but too few inventions. Technology moves so fast and so unpredictably that skeptics doubt governments will ever be nimble enough to keep up.

The skeptics may be wrong. But at the moment there are no yardsticks to judge how well government techno-policies are doing and whether their benefits outweigh their costs.

Europe has made a promising start. Last month a group of independent experts released a report on Eureka - an eight-year-old initiative to boost Europe's technological strength.

The panel investigated 417 completed or relatively advanced Eureka projects, reviewed completed questionnaires from 1,170 industrial and another 487 research-oriented Eureka participants, and took an in-depth look at 70 representative projects. Its overall conclusion: "The great majority of both large and small firms found participation in Eureka a worthwhile experience." But even eight years into the program, the panel warns that its conclusions are partly based on expected results. Only 11 percent of t he projects were completed.

Eureka is decidedly different from previous European technology initiatives. Instead of jump-starting whole new industries or mega-projects such as the supersonic Concorde, Eureka tries to help existing industries create new products. The private sector is supposed to initiate the projects, which range from integrated circuits to agricultural robots to low-priced diapers.

Serge Gregory, French National Project Coordinator, does not even consider Eureka pure technology policy. "It's a system that responds well to the challenges of industries," he says. "It brings together companies that probably would not have come together otherwise." It is these kinds of initiatives that the Clinton administration proposes in its technology policy program.

The panel found several Eureka benefits:

* Nearly two-thirds of the firms sampled felt they had improved their worldwide technical standing.

* About 40 percent had come up with a new or improved product or process and an additional 48 percent expected to do so.

* Four out of 10 Eureka companies expected a moderate to large increase in sales.

* The program has encouraged vertical networks, where the companies that design, manufacture, and use the potential product all worked together to develop it. High-tech policy proponents in the US see this kind of vertical collaboration as a key to improving competitiveness.

But the panel also discovered problems with Eureka:

* Some money was wasted. While public funding helped the majority of companies undertake projects they otherwise would not have done (or done differently), another 18 percent said they would have done the project anyway. In a few cases, Eureka funding persuaded companies to continue fruitless projects that they otherwise would have abandoned.

* Though less political than the much bigger European Community technology projects, Eureka did not escape political influence. Two German companies said their project was not conceived as a Eureka project until their government suggested they apply. In at least two projects, some participants were not even aware they were part of Eureka.

* Some firms apparently cheated. They continued projects when all but one participant had dropped out or when all the companies were from the same country. (Eureka rules require the collaboration of at least two firms from two countries.) In other cases, the partners were subsidiaries of the same firm. The panel found such "creative interpretation of the Eureka principles" in 10 percent of the companies.

The program has not come cheap either. Eureka's 816 projects represent $17.4 billion in investment.

Was it worth it? Mr. Gregory says yes. Just over half of the participants said they would join in new Eureka projects. (Most of the rest were undecided.) But observers in Europe and the US are not so enthusiastic.

"I don't know if [Eureka] is particularly successful," says the OECD official. Information technology (IT) alone consumes a quarter of Eureka's budget. That total does not even include two of Eureka's biggest projects: a $4.5 billion microelectronics push dubbed JESSI and the ill-fated $1 billion HDTV initiative. But "if you look at the European IT industry, it's in third place" behind the US and Japan.

"My impression is that the Eureka projects have not yielded as much as they were expected to yield," says Cynthia Beltz, technology policy analyst for American Enterprise Institute. "Their HDTV case is a stunning example of failure."

Gregory disagrees, saying the HDTV exercise did give European companies the know-how so that they could participate in a consortium vying to develop the new US digital HDTV standard.