Janez Potocnik, Europe's commissioner for science and research, outlined the business case for the European Research Area (ERA), the Commission's plan to create a single market for European science and research, in these pages recently. He said that Europe's sophisticated markets for products and services were both commercially attractive and offered excellent opportunities for open innovation. He argued that making the most of these opportunities depends on improving our public research institutions and strengthening their links to business and the market.

Commissioner Potocnik's article accompanied the launch of his consultation paper on creating the ERA. The Green Paper discusses ways to make Europe a better place to do research, by making it easier for scientists to switch jobs, building world-class research infrastructure and institutions, sharing knowledge more effectively, optimising public programmes and funding, and increasing scientific co-operation with the rest of the world. The commissioner emphasised the importance of business backing for the ERA and encouraged companies to respond to the Green Paper.

Various efforts have drawn on those responses to try and define the best way to create the ERA. The work of several Expert Groups shows that there are many conflicting priorities in Europe's current political environment. [Disclaimer: I am a member of some of these groups.] It has also revealed how the process of implementing the ERA could easily fall into the gaps between the political machinery of the Commission, the Parliament and the member states, just when real progress is most needed.

It is clear that, for all their fine words, many governments have preferred to concentrate on domestic initiatives rather than back the joint initiatives proposed by the Commission. Presumably, each government thinks this makes sense. Understanding and explaining the factors that influence the development of the global knowledge economy is difficult: deciding on sensible policies that reflect the situation on the ground and will also secure electoral support even more so. Look at our experiences with the Lisbon agenda (to become the most competitive knowledge-based economy by 2010), and the supporting target to spend 3% of GDP on R&D. It has taken seven years to form a consensus about the nature of the gap between private-sector R&D investment in Europe and the rest of the world - against a target to close that gap in ten years.

Given this complexity, I understand why some governments prefer to focus on local issues, rather than engage with Europe-wide initiatives. Yet Europe has real economic and intellectual strengths in the knowledge economy: look, for example, at embedded systems, enzyme production and automotive parts. And it has the highly skilled people and concentrated resources, built up over many years, that have created these strengths. Providing the conditions in which these and new strengths and resources will flourish really matters to the competitiveness of European industry and the future health of all our economies. In most cases, individual European countries are unlikely to have the critical mass to sustain the necessary conditions by themselves. Widespread public ignorance of this fact makes for dangerously slow policy implementation, especially in the context of an increasingly competitive global knowledge economy and a serious risk of voter fatigue when progress fails to materialise.

Many European business organisations and policy researchers think the Green Paper was a missed opportunity. They say it was too cautious, too focused on public research, and too concerned with worthy but ultimately remedial measures for improving research performance. The Green Paper spoke about improving links between public research and businesses to help economic development, but focused on the idea that many European research institutions and teams under-perform because they have too few people and resources, and lack co-ordination in their programme planning and infrastructure development.

This approach has reinforced widespread (but, in my view, wholly incorrect) beliefs and assumptions about the ERA: that it stems from a Commission most interested in centralisation and 'one size fits all' solutions; and that it has an elitist agenda focused on public research. It's a view that was reflected in much of the debate at a Portuguese EU Presidency conference on the ERA in October, which focused on how public research would benefit.

EIRMA and BusinessEurope, as well as Professor Luke Georghiou, co-author of the 2006 Aho Report and associate dean (research) at the University of Manchester, argue for a fundamental change in approach to the ERA. To capture the public's imagination and the backing of business, the ERA must be presented as the best way to address key issues such as future economic competitiveness, the employment prospects of our children, and the region's ability to face grand challenges such as poverty and health. The political and social cases for massive investment in public research and education rest on the shared benefits that these activities will create. The benefits to business and the public are real, but a much clearer link needs to be made between increased investment in research and the jobs and wellbeing that it creates.

More realistic attitudes towards the role of research are beginning to emerge. Until very recently, it was politically impossible to address the debate over concentration versus cohesion - that is, how to develop localised strengths in a discipline without letting poorer parts of Europe fall further behind. As a senior Commission official said at a recent debate at the Commission's headquarters, simply talking openly about the issue is a breakthrough. A few years ago, it would have been unthinkable to schedule a meeting to debate specialisation. But at this meeting, there was widespread acceptance that creating European centres of excellence would be of greater long-term benefit than insisting that every country sustain some expertise in every area of science.

The launch of the European Research Council (ERC) at the start of 2007 marked a further change in attitudes. The ERC is meant to award research grants based on scientific merit, without consideration of where the researchers come from. Not surprisingly, most of the ERC's first tranche of grants is likely to end up in Britain, Germany and France. However, the principal investigators for these projects will come from across Europe and beyond: evidence that the best researchers are international and vote with their feet. People are now clamouring for a much larger budget for the ERC, to help demonstrate to national funding agencies the benefits of having more open funding policies based on competition for quality.

Other positive signs include agreement on the first Joint Technology Initiatives (in embedded systems, the development of medicines, and reducing the environmental impact of flying), providing momentum in areas of key economic importance to Europe. There is also growing recognition that Europe needs to be more sophisticated about how it collaborates internationally, especially in the light of the very focused efforts of India and China to use collaboration to build their economies.

Europe has long recognised the economic and social importance of investing in R&D - you only need to look at the seven Framework Programmes to date to see that. However, matching R&D policy to the needs of public research organisations and private enterprise has proved a much less straightforward endeavour, which is only being made more difficult by the accelerating pace of change brought on by the expansion of the Union and by globalisation. Now though, centimetre by painful centimetre, European R&D policy is becoming better aligned to the needs of public R&D, business and society in general.

The European Research Area is an important step in the right direction. It says we should make it easier for researchers to move between jobs, that we should spend our R&D Euros more wisely, help public and private research to collaborate more freely, and create the context that can sustain good science for the long term. What's missing is public and business backing for the initiative, due to a lack of knowledge or misconceptions about its purpose. If the ERA was widely presented as the best way to boost European competitiveness, tackle global warming, address pollution, AIDS and malaria, and provide the economic underpinnings for our pensions, it's hard to see that it would lack backing. Helping the research community, business and the public recognise this truth should be the next priority for European policymakers - and for businesspeople and members of the public who recognise the value of the vision.