The economic crisis and subsequent downturn has hit all regions across the European Union, and continues to have a huge impact on economic development. Many of our citizens are immediately affected by rising unemployment rates, and European regional policy has a key role to play in restoring confidence in the EU's economy, providing vital investment at local and regional level, and offering an anchor of stable, targeted and sustainable financing, investing in areas that will allow businesses to thrive and employment to increase.

However, to take Europe out of the crisis, above all we have to innovate, taking the research and transferring it into growth and jobs. Investment in research, technological development and innovation (RTDI) is a cornerstone for economic recovery. We need to re-focus research and innovation policies on these big issues facing our societies today – increased competition from emerging countries, climate change with risks for the environment and the economy, energy and resources efficiency, health and ageing.

Innovation is an interactive process between partners from research centres, universities, businesses and other important stakeholders from the civil society. Innovation is best developed at regional level because regions are big enough to matter and small enough to offer the proximity that is necessary to facilitate contacts between the relevant partners. The innovation process also implies cooperation between regions and between the different levels of governance to ensure coherence. In this context, regional authorities have a key role to play for providing a favourable environment and catalysing cooperation between partners with a view to develop new ideas and to turn them into innovative products and services. This is essential for increasing the competitiveness in all the regions of the European Union.

The EU already has a comprehensive set of policies, strategies, and funding programmes aimed at bolstering investment in research and technology. The lion's share of the EU budget is invested through its cohesion policy's structural funds. And a large slice of these structural funds – €86bn (about a quarter of the total of investment funds available) – is targeted for research and innovation between 2007 and 2013. By the autumn of 2009, almost 30% of this had already been allocated to RTDI projects.

The European Regional Development Fund (ERDF) can support research and innovation in different ways. It can fund research infrastructure, research projects and incubators for spin-offs, for instance, in science and technology parks. Technology transfer can be supported through ERDF-funded clusters and networks as well as through innovation vouchers offered to small and medium sized enterprises (SMEs). ERDF can also support services providing advice to universities and SMEs about patenting, and schemes promoting the training and placement of high level graduates.

A recent study of cohesion policy performance in the current 2007-2013 funding period (1) concludes that ERDF provides important support for RTDI across the EU, not only in financial terms – which is significant – but also in stimulating the development of more coherent strategies at regional level, which take into account local specificities and the needs of businesses. While more developed regions reap significant benefits in terms of the multiplier effect on private investment, less prosperous regions are now creating the preconditions for innovation in terms of institutional capacity and skills development.

More broadly, the overall impact of cohesion policy investment is detailed in the commission's fifth cohesion report, which was published in November 2010. It shows how cohesion policy has helped to transform regional and national economies through investments in infrastructure, R&D and innovation, environmental improvements, people's skills and support to business. Findings from the report demonstrate how it has brought clear benefits not only to the poorer regions of the EU, but also to the rest of Europe. There is a proven link between cohesion policy and the internal market – figures prove that intra-EU exports have increased from the more prosperous member states to those regions benefiting from significant investment from cohesion funds.

Likewise, there is a clear link between cohesion policy and growth in the EU: studies have shown that GDP in the EU-25 as a whole was 0.7% higher in 2009 thanks to cohesion policy over the 2000-2006 period. It has helped to create 1.4 million jobs across the EU, funded 4,700km of motorway and 1,200km of high-speed rail, and provided waste water treatment for an additional 23 million people, access to clean water for an additional 20 million people, and skills training for 10 million people per year, with a focus on vulnerable groups.

However, take-up of funds and innovation performance still varies across the EU-27 member countries. The commission has recently brought forward a new communication 'Regional Policy contributing to smart growth in Europe 2020', which sets out a raft of policy recommendations to tackle regional disparities and encourage higher levels of investment in innovation in the regions. Tabled in October alongside the flagship EU 'Innovation Union', it calls for a more effective use of EU regional funds to help boost innovation and meet the Europe 2020 goals on smart growth.

National and regional authorities are asked to design 'smart specialisation strategies' in cooperation with business, universities and research centres. These would help regions identify their best assets, focus on key priorities, increase cooperation with other regions, and identify bottlenecks to innovation. The aim is to concentrate resources on a limited number of priorities that are proven areas of comparative advantage, eg. on clusters, existing sectors and cross-sectoral activities, eco-innovation, high value added markets or specific research areas. To assist the regions in identifying their strengths and opportunities, the European Commission will develop a 'Smart Specialisation Platform', bringing together expertise from universities, research centres, regional authorities and businesses.

We know that we are facing fierce competition from countries that are investing at a scale, and speed, we may struggle to match. We are lagging behind our closest competitors, investing less on research and development than the US or Japan, and other new competitors like South Korea. We also need to boost research in all areas to stay competitive in the face of rising science spending in China and India.

The large differences between EU member countries and regions in terms of spending on R&D bears on our capacity to develop and absorb new technologies. Europe needs to step up a gear – become more inventive, and react more quickly to changing market conditions and consumer preferences. Promoting this objective must remain a key EU priority for the foreseeable future. Otherwise, we will be unable to sustain the high productivity jobs required in today's global environment, finance social systems in an ageing society or become a world leader in clean technologies and energy-efficiency.

The Europe 2020 Strategy – which sets out the sustainable economic development blueprint for the EU for the next decade – reiterates this ambition. It spells out a spending target of 3% of GDP on R&D. In the EU, we are currently below 2%. To achieve the goals set out in the EU's 2020 strategy, an increase in spending on research and innovation will be crucial.

This is why, in our plans for re-shaping the EU's cohesion policy for the next budgetary period after 2013, one of the top objectives is to ensure that future funding is focused on a limited number of priorities in line with the Europe 2020 goals. With the publication of the fifth cohesion report and public consultation, which ended in January 2011, we are also examining a number of ideas for simplifying and streamlining the policy's delivery system and improving performance through more effective target setting.

Regions are encouraged to make a more effective and better combined use of public funds for research and innovation, such as: ERDF (European Regional Development Funds), FP7 (7th Framework Programme for Research and Innovation), CIP (Competitiveness and Innovation Programme), as well as national and regional funds. Developing synergies between cohesion policy – the largest source of finance to support RTDI – and the other main funding sources for research and innovation is a great challenge.

To conclude, the scale of challenges faced today by the economy and society, and the fierce competition at global level, call for huge efforts to support research and innovation. The EU's sustainable growth and its leadership position on the global stage are at stake. Nothing improves public finances in the medium term like strong growth – and research and innovation are critical if we are to achieve the strong growth we need. I firmly believe that increasing RTDI spending is the best way out of the crisis. And I am confident that European cohesion policy will continue to contribute to meeting these challenges and unlock the growth potential of the EU by promoting innovation in all regions.