How France ramped up its capacity to innovate

France came 11th in last year’s Global Innovation Index (GII), an annual ranking of the innovative capacities and strengths of most of the world’s economies. That might seem less than impressive compared with some of its near neighbours, such as the United Kingdom in fourth place and Switzerland in first (see ‘Global Innovation Index 2021’). It is, however, a big improvement on its rankings of 16th in 2019 and 22nd in 2011.

The French are doing well by other measures of innovation, too. Last year, start-ups raised almost €11.6 billion ($12.4 billion) in investments in the country, up 115% year-on-year, according to the international accountancy firm EY. That is likely to have pleased the country’s president, Emmanuel Macron, who launched a €30-billion innovation-investment strategy last October and has frequently called for France to become a “start-up nation”.

Although innovation can be defined in various ways, many researchers think that France has made significant progress. “The improvements in France’s capacity to innovate that we are seeing today are the result of many changes made over the past 10–20 years,” says Victor Dos Santos Paulino, an economist at the Toulouse Business School.

Showing promise

Those who have studied France’s innovative performance say that one of the most important changes has been in the relationships between researchers doing basic research and the commercial sector. “There has been a complete transformation in the mentality of fundamental scientists,” says Didier Roux, a physical chemist and spokesman for the French Academy of Sciences in Paris. “Whereas 20 years ago they were reluctant to collaborate with industry, they are now eager to do so.”

Legislative changes have helped to drive this change, including the ‘Allègre law’ in 1999, named after Claude Allègre, the geophysicist who introduced it during his time as research minister. This enabled publicly funded researchers to keep their jobs if they launched start-ups or took on commercial consultancies. A major expansion of the research tax-credits scheme in 2008 also helped to narrow the gap between fundamental science and industry. The scheme provided tax credits to incentivize companies to do more research and development (R&D), with greater sums for those forming public–private research partnerships.

The establishment of many more public–private basic-research units called mixed research laboratories also encouraged closer relations between the sectors. The French national research agency (CNRS) had a leading role in setting many of these up. The number of these partnerships between the CNRS and private companies increased from 55 in 2010 to 200 in 2021.

French innovators, whether academic or in the private sector, have become more outward-looking. “It was previously possible to be a successful academic, researcher or innovator while only speaking French,” says Switzerland-based economist Bruno Lanvin, co-founder and director of the Portulans Institute, a think tank in Washington DC that co-publishes the GII with the World Intellectual Property Organization in Geneva, Switzerland. However, he says, this “prevented French innovations spreading beyond the country’s borders. English became compulsory in primary schools and today French innovators are more international in their outlook.”

Many business incubators and accelerators have been set up to foster entrepreneurship and to establish a start-up culture. A 2020 survey by a team at the Polytechnic University of Turin in Italy found that France had 284 start-up incubators and accelerators — more than in the United Kingdom (274), Germany (247), Spain (215) and Italy (197). “Many new structures have been created, both within and outside universities, to help people launch start-ups, which we did not have 20 years ago,” says Roux.

Could do better

Although France is climbing up the ranks in the GII, there is still plenty it could do to improve its innovative capacities, researchers say. Roux says that French politicians should reverse their tendency to create new institutions without dismantling old ones. “We have a complex picture with too many institutions involved in transferring fundamental research to industry, which slows our progress,” he adds.

There are challenges for those seeking to translate fundamental science into benefits for patients and customers. An analysis of obstacles to innovation in France, published by the French government advisory body the Council of Economic Analysis (CAE) in 2014, highlighted the fact that companies often have trouble finding staff who have both technical and commercial experience.

It’s still a problem, says Dos Santos Paulino, who co-authored the report. “We are good at producing inventions, but there is often a lack of connection between those who make the technical improvements and those in charge of selling new products and services.” Engineering schools and business schools operate independently of universities in France. Dos Santos Paulino says this restricts contacts between those studying the subjects, and that one solution would be more courses that combine the two approaches.

Start-up funding might be on the rise in France, but French innovators still face problems finding investors in the country, especially in sectors that need larger sums, such as the pharmaceutical industry. According to international financial-data company PitchBook, venture-capital investments last year totalled €9.9 billion in France, compared with €16.5 billion in Germany and €29.3 billion in the United Kingdom.

The lack of available finance helps to explain why France’s biotechnology sector lags behind those of Germany and the United Kingdom, says Margaret Kyle, an economist at the Mines ParisTech graduate school and co-author of the report Pharmaceutical Innovation: How can France Catch Up?, published last year by the CAE. “There has been some recent improvement, but there is still a lack of financing for start-ups,” she says.

Another obstacle to innovation is that decision-making is highly centralized in Paris, says Lanvin. “Innovation is budding in places like Bordeaux, Strasbourg, Lyon, Grenoble and Lille,” he says. “These should become innovation clusters, but for them to fulfil their potential we need greater decentralization, with more funding coming from local entities, like in federal Germany.”

Tax and spend

The French government has its own ideas, however. In 2019, it announced it wanted to raise the country’s R&D spending from 2.2% of gross domestic product to 3% by 2030, with the publicly funded portion increasing from 0.8% to 1% . The French Academy of Sciences says this will have little impact. “If the increase had been over 4–5 years it would have been okay, but spreading it over 10 years means it will only compensate for inflation,” says Roux. Others are more positive. “Higher spending will enable France to attract and keep better researchers,” says Kyle.

Ministers have also announced a new junior tenure-track system, which boosts the salaries of junior researchers and gives them six years to gain tenure. “These changes are vital,” says Lanvin. “You need to offer good career prospects to your best people.” Some academics disagree, preferring the job security of permanent positions.

The new system applies only to universities, not to the grandes écoles, the publicly funded specialist professional schools at which many researchers work. Most new university jobs are still being offered under the old system, but the latest arrangements can be used at the discretion of the universities’ leaders. “It’s too early to know whether the changes will have positive consequences,” says Dos Santos Paulino.

Despite the progress, there are still many areas in which France can improve its capacity to innovate. The impacts of the recent changes won’t be known for some years. Politicians, economists and others will be watching closely to see whether France can continue its upward trajectory and break into the top ten when the GII 2022 rankings are published in September.