Advisory report 39: The dynamics of creative destruction as lever for internationally oriented ambitious entrepreneurship

Turbulent times with successive crises and the rapid loss of competitiveness against major global competitors such as the US and China demand more dynamism and resilience from our economy and society. The dynamics of creative destruction as a lever for internationally ambitious entrepreneurship is essential in this regard. To facilitate this, VARIO proposes eleven mutually reinforcing recommendations in its new advisory report. This policy mix should be applied across the entire government, spanning policy domains and levels. On one hand, the policy mix goes beyond innovation policy itself and includes other policy areas (labour market policy, competition policy, fiscal policy, etc.), on the other hand, policy levers exist at the Flemish, federal and European levels.

In summary, the recommendations are as follows:

1. In turbulent times, the dynamics of creative destruction deserve more attention
2. Facilitate entrepreneurial experimentation through innovation-stimulating regulations
3. Towards a dynamic, pro-innovation competition policy
4. Design an industrial policy that balances with competition policy
5. Improve transformative innovation policy for path dependency and green technologies
6. Establish a balanced tax regime and counter-cyclical budgetary policy
7. Strengthen the financial ecosystem for creative destruction and groundbreaking innovation
8. Translate top-tier scientific research more effectively into growth-oriented knowledge-intensive start-ups
9. Help local innovative companies scale up faster and break through internationally
10. Do not neglect skilled immigration for innovation and creative destruction
11. Work on a flexible labor market that fosters innovation and creative destruction

Given the strong link between creative destruction, groundbreaking innovations and long-term productivity growth, this advisory report is highly relevant to the productivity and competitiveness agenda of the Flemish Government (2024-2029), the Flemish Acceleration (de Vlaamse Versnelling). The Council hopes to support this important government-wide initiative. It is therefore also linked to VARIO advice-37 ‘Towards higher productivity growth’ and the Draghi report on European competitiveness losses.