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France offers grants to keep research groups at home

French Prime Minister Dominique de Villepin announced plans in July to spend 1.8 billion US dollars on 63 industrial projects spanning from aerospace to medicine.

This effort focuses on creating rivals to hubs like Cambridge in Britain and Silicon Valley in California, where academic researchers mix with entrepreneurs. More than 100 applicants entered proposals for funding, a combination of tax cuts and other credits for research and development, to be doled out between 2006 and 2008.

In past years France has been struggling to stay globally competitive at a time of rapid industrial change. Many businesses find it increasingly cheaper to make products and deliver services by setting up abroad.

France has focused more than any other European country on using state resources, including funds from privatizations, to finance next-generation industries.The funding includes 365 million US dollars in tax breaks, 487 million US dollars in government loans and at least 973 million US dollars in new grants and subsidies from state research and innovation agencies.

The French government identified six projects as ''global contenders'' eligible for priority support:

• a health cluster in the Rhône-Alpes region
• aerospace cluster around the cities of Bordeaux and Toulouse, where Airbus is based
• cluster around Paris for complex transport and navigation systems
• group for secure telecommunications technologies in the south
• nanotechnology cluster near the city of Grenoble
• biotech cluster around Paris

Patrick Dubarle, an analyst for regional development in Europe with the Paris-based Organization for Cooperation and Development, said the French initiative was probably the largest of its kind in Europe and stood a good chance of helping French companies take risks on uncertain technologies.

''French companies seem to prefer a secure bet, but the negative result of this is that French entrepreneurs often end up moving to the U.S. or even Asia. When that happens the potential is lost." Dubarle said.

Even so, Dubarle cautioned, the choice of nearly 70 winners could dilute the effect of the subsidies.

''There is a risk that in this current round of funding that France will just scatter the money by trying to please everyone,'' he said.

Source: Forbes