CEPS Project

Regulations and R&I policies

Comparing Europe and the USA


Regulation has for a long time been considered mainly as an obstacle to innovation, especially with respect to rules that create so-called “red tape”, or administrative burdens. But academics have demonstrated that regulation can greatly facilitate innovation, by creating markets for existing ideas and stimulating entrepreneurship and inventions that contribute to social welfare. This paper looks at the US experience with pro-innovation regulatory approaches, and finds it to be a useful reference for the EU, particularly for what concerns pro-innovation governance arrangements in individual administrations, and in the shaping of innovation-friendly regulation, including through adaptive, flexible regulatory approaches. The new strategy for American innovation, released in October 2015, contains very interesting initiatives such as the creation of smart, mission-led innovation agencies; the launch of innovation labs and toolkits as well as digital service teams inside agencies; and efforts to mainstream innovation in all administrations through a “whole of government” approach. Importantly, an analysis of the US experience suggests that consensus-based regulation and negotiated rulemaking can present the risk of embedding incumbency interests into the overall regulatory scheme, tilting its balance against new entrants and smaller players. This risk deserves adequate mitigation strategies, and should be taken into account when introducing new features such as the “innovation Principle” and “innovation deals” in the EU policymaking process.

Andrea Renda

Senior Research Fellow and Head of Global Governance, Regulation, Innovation & Digital Economy

+32 (0)2 229 39 17