In March 2000 in Lisbon, EU heads of state and government set the strategic goal to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. These goals were confirmed at the Barcelona European Council, which added that investment in European R&D should be increased to 3% of GDP by 2010. A recent CEPS Working Paper by Laura Bottazzi argues that the weakness of R&D and the slow accumulation of knowledge in the EU is probably a major reason why Europe has failed to catch up with the US productivity performance during recent decades. Yet the emphasis of the Barcelona Council on the spending target for R&D could be misplaced, as the question is not so much one of increasing the level but rather of enhancing the efficiency of R&D in Europe. Further, actively subsidising investment by venture capitalists may not necessarily deliver the desired results, as a large part of European venture capital finds it way to the American capital market and thus does not necessarily benefit innovation in Europe. Consequently, policy measures aimed at enhancing the efficiency and productivity of R&D in Europe should focus on the level of knowledge of workers and the capacity of entrepreneurs to translate scientific excellence into viable technological innovation. The policy brief adds to the discussion that the relative inefficiency of European R&D is to a considerable extent the result of the segmentation of public research efforts and overlapping of competing research programmes, and thus underutilisation of the available human resources. The time has now come to create an integrated EU market for research and researchers.