AbstractThe widening technology gap between Europe and both the US and Japan is damaging European industry's longer-term survival. The Star Wars initiative allowed the US government a means which was domestically politically acceptable to pump around US$26 billion into science and technology. The European Community responded by expanding or initiating several programmes, including the Framework Programme and Eureka, aimed at increasing the funding of S&T projects in Europe and at improving cooperation between universities and companies across the Community.In improving Community S&T, at least four actions are needed. One is to learn from the Japanese model the social wisdom of placing S&T goals into the context of social goals; and the use of ‘research cartels’ to help companies pool their resources in the early stages of technical development. Second, unnecessary duplication of research efforts across the Community is a major waste of scarce funds. Third, a strong strategy and a much more ruthless approach to selecting projects is needed. And the current levels of funding are inadequate for any serious attack on the defects in European technology; funding must be increased.