National Innovation Systems, PESTLE and SWOT Synthesis
Report
Output Title
National Innovation Systems, PESTLE and SWOT Synthesis Report
Work Package
WP3- Context Analysis and Taskforce Formation
Activity
3.3- National ICT Innovation Systems studies & Regional Synthesis 3.4National PESTLE& SWOT Analysis & Regional Synthesis
Short Description
The document discusses in detail the aggregated results of the
National Innovation System Studies performed in each country, as well
as the national PESTLE&SWOT Analysis.
Status
Final
Distribution level
Public
Responsible partner
University of Macedonia
Version
V01
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Revision History:
Version Responsible Organization Comment
01
University of Macedonia
Template Created
02
University of Macedonia
First Draft incorporating analysis of competitiveness, statistics,
policies
03
ATHENA ISI, ISHAS, ICI
Provision of comments and suggestions
04
University of Macedonia,
University of Patras
Provision of reformulated draft and revised structure
05
University of Macedonia
Incorporation and reformulation with data from Serbia and
Montenegro
Revision
LEGAL NOTICE
Neither the European Commission nor any person acting on behalf of the Commission is responsible for
the use, which might be made, of the following information. The views expressed in this report are
those of the authors and do not necessarily reflect those of the European Commission.
© FORSEE Partnership, 2011
Reproduction is authorised provided that the source is acknowledged.
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Table of Contents
National Innovation Systems, PESTLE and SWOT Synthesis Report ............................................. 1
Table of Contents .......................................................................................................................... 3
List of Tables.................................................................................................................................. 5
List of Figures ................................................................................................................................ 6
Executive Summary ....................................................................................................................... 7
1
Introduction ........................................................................................................................ 10
2
Background Chapter............................................................................................................ 12
3
4
5
2.1
Task Objectives............................................................................................................ 12
2.2
Background Country Reports Countries Reviewed ..................................................... 13
2.3
Methodological Framework and Processes Involved ................................................. 15
General Economic Outlook of Countries Reviewed ............................................................ 20
3.1.1
Countries Overview ............................................................................................. 20
3.1.2
Competitiveness Aspects .................................................................................... 22
3.1.3
Europe 2020 Performance .................................................................................. 28
Policies and Priorities .......................................................................................................... 30
4.1
Background Information on European Innovation Policies ........................................ 30
4.2
Snapshot on national RTDI and Innovation Policies ................................................... 34
4.2.1
Main Innovation Policies Orientation ................................................................. 36
4.2.2
Main Innovation Systems Priorities .................................................................... 38
4.2.3
Coordination and Capacity .................................................................................. 39
Innovation Axis .................................................................................................................... 41
5.1
Human Resources ....................................................................................................... 41
5.1.1
Educational System performance and Science Base........................................... 41
5.1.2
Links between education and RTDI systems ....................................................... 44
Annual data on employment in total knowledge-intensive activities at the national level ....... 45
5.2
Knowledge flows ......................................................................................................... 46
5.2.1
Science-industry collaboration............................................................................ 47
5.2.2
Partnerships ........................................................................................................ 48
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Public-private co-publications per million populations .............................................................. 48
5.2.3
Key actors ............................................................................................................ 49
5.3
Internationalisation of knowledge .............................................................................. 51
5.4
Infrastructure and Funding ......................................................................................... 56
5.4.1
Funding Considerations....................................................................................... 56
5.4.2
Existing infrastructure in the region.................................................................... 60
5.5
6
Innovation and Business Environment........................................................................ 62
5.5.1
Market development .......................................................................................... 62
5.5.2
Industrial RTD and Innovation............................................................................. 64
Focus Theme: The ICT sector in the reviewed countries .................................................... 70
6.1.1
Digital agenda aspects......................................................................................... 70
6.1.2
RTDI /ICT Comparative Performances ................................................................ 72
7
Additional Issues ................................................................................................................. 77
8
PESTLE & SWOT Synthesis ................................................................................................... 79
8.1
Political, Economic, Social, Technological, Legal and Environmental analysis of the
Region 79
8.2
Strengths, weaknesses, threats and opportunities in the Region .............................. 84
8.3
Short Discussion .......................................................................................................... 88
9
Conclusions ......................................................................................................................... 91
10
10.1
11
Abbreviations, Glossary, References............................................................................... 93
Abbreviations .............................................................................................................. 93
References....................................................................................................................... 94
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List of Tables
Table 3.1. Structural indicators of the SEE economies and basic demographics. ................... 20
Table 3.2. Global Competitiveness Report regional rankings ................................................ 23
Table 3.3. Innovation Capacity Index Rankings 2010-2011 ................................................... 25
Table 5.1. Main education indicators in the region .............................................................. 41
Table 5.2. Spending in education ......................................................................................... 43
Table 5.3. Education and RTDI in the region ......................................................................... 45
Table 5.4. Collaboration parameters .................................................................................... 47
Table 5.5. Publication, licence and patents performance in the region ................................. 48
Table 5.6. Patents and specialisation in the region ............................................................... 52
Table 5.7. ICT trade balance and high-tech trade balance in the region ................................ 54
Table 5.8. Participaton of SEE countries in funding programmes (AT excluded) .................... 54
Table 5.9. EC Funding and participation per country ............................................................ 55
Table 5.10. Pattern of innovation followed by enterprises in the region .............................. 63
Table 5.11. Innovation profiles of enterprises in the region ................................................. 65
Table 5.12. Strategic trends of enterprises in the region ...................................................... 67
Table 6.1. Percentage of ICT sector in GDP ........................................................................... 74
Table 6.2. ICT expenditure as % of GPD in the region ........................................................... 75
Table 7.1. Regional innovation typologies in the area .......................................................... 77
Table 8.1. Synthesized regional PESTLE ................................................................................ 80
Table 8.2. Synthesized regional SWOT ................................................................................. 85
Table 8.3. Self-Assessment Tool on Features of a well-functioning NIS ................................. 88
Table A- 22: Opportunities and Challenges of financial crisis on the ICT sector ..................... 97
Table A- 23: Trade Balances in the region (difference between exports and imports) ......... 102
Table A- 24. Trade Balances in the region........................................................................... 103
Table A- 25. ICT policies and challenges at the EU level ...................................................... 104
Table A- 26. Operational Programmes Coherence .............................................................. 113
Table A- 27. Common priority axis and baseline priorities in the region ............................. 114
Table A- 28. FP7 participation per country and theme /top 20 performers in the EU .......... 130
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List of Figures
Figure 1: Synthesis Report Methodological Conceptual Schema ............................................. 15
Figure 2. Illustration of competitive aspects in the region (1) .................................................. 25
Figure 3. Illustration of competitive aspects in the region (2) .................................................. 26
Figure 4. Illustration of competitive aspects in the region (3) .................................................. 28
Figure 5. Europe 2020 indicators positioning ............................................................................ 28
Figure 6. Assessment of supply-side or demand-side public policies and technology-push and
demand factors .......................................................................................................................... 36
Figure 7. Competitiveness Aspects in Education and Rankings in the region (global rankings)
..................................................................................................................................................... 43
Figure 8. Employment in knowledge-intensive activities progress 2007-2009 ........................ 46
Figure 9. R&D expenditure by source of funds ......................................................................... 57
Figure 10. Gross Domestic Expenditure of R&D as % of GDP ................................................... 58
Figure 11. Business R&D expenditure a as % of GDP ................................................................ 59
Figure 12. Distribution of ICT BERD shares in EU countries ...................................................... 60
Figure 13. Progress of the region against Digital Agenda targets ............................................. 71
Figure 14. Weighing of ICT sector components in Europe ........................................................ 74
Figure 15. Major PESTLE forces with a potential impact in the region .................................... 84
Figure A-16. BERD in times of economic downturn .................................................................. 99
Figure A-17. Percentage of Real GDP growth rate in the region ........................................... 101
Figure A-18. Percentage of employment growth in the region .............................................. 101
Figure A-19. Emerging technologies in the context of ICT on a European Level ...................... 104
Figure A-20. Product –Service innovation ............................................................................... 131
Figure A-21. Innovative enterprises by type of innovator, as a percentage of all enterprises
................................................................................................................................................... 132
Figure A-22. BERD by sector of activity ................................................................................... 132
Figure A-23. % of population interacting with public authorities online ............................... 135
Figure A-24.Regional disparities in R&D expenditure as a % of GDP, 2007 ........................... 138
Figure A-25. Regional disparities in R&D personnel as a % of GDP, 2007 .............................. 138
Figure A-26. Regional disparities in employment in high-tech sectors as a % of total
employment, 2007 ................................................................................................................... 139
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Executive Summary
The present synthesis report aggregates the results of the eight national innovation reports on
the basis of an initial appreciation of the potential of innovation structures and systems
performance in the region. The report tries to identify the main components of the regional
innovation system by identifying the pertaining characteristics which emerge when
considering and contrasting the countries under examination together. Thus, the present
report aims at synthesizing the results of national reports and drawing upon their implications
for policies in the domain of ICT RTD. The National Innovation System reports have delivered
key insights into the nature of innovation processes, governance, institutions and partnerships
among innovation stakeholders and thus provided new insights on the strengths and
weaknesses of the innovation system in a regional scope and the degree to which it is
equipped for coping with new emerging challenges.
The pace of change has accelerated in the globalisation era, imposing high requirements for
policy-makers in the public and the private sphere, which are confronted with a high degree of
uncertainty, complexity and ambiguity. Policy-making is confronted with major difficulties in
designing, implementing and delivering effective and coherent policy initiatives due to the
complexity of innovation processes.
In general, the region is fragmented in terms of innovative potential and output. The level of
innovation in regions varies considerably across almost all countries reflecting the persisting
absence of a unified internal market for many of the most innovative sectors. The main
discrepancies among countries lay upon the GDP, government debt and employment growth.
The countries present some common patterns in terms of ICT usage and technological
readiness, as well as education and labor market.
Within the review of the national reports and the topics addressed, the main pillars and
parameters of the synthesis results have been clustered into five broad areas, namely: Human
resources pillar, including a discussion of the educational systems and links between education
and RTDI; Knowledge flows consisting of science-industry collaboration, partnerships and key
actors; Level of Internationalisation of knowledge reflecting patents, publications, participation
in European research and trade specialization; Infrastructure and Funding and Innovation and
the Business Environment, capturing firm-specific trends. General policy considerations, the
specific ICT performance and PESTLE/SWOT analysis complement the aggregated results.
These broad themes emerged as central across the reports reviewed, but they are also
important for addressing the main challenges that Europe currently faces.
Set within this context, three main conclusions can be highlighted (pertaining policies and
priorities, the PESTLE/SOWT analysis and the five pillars). First, the national reports delivered
key insights into the nature and conceptualisation of innovation within their national policies.
All countries have explicit policies with regards to RTDI and innovation, which are namely
influenced by European priorities and “umbrella” policies. The common policies pursued as key
to innovation are related to education (supply of HR for RTDI), support to SMEs and
entrepreneurship, development of innovative infrastructure, exploitation of key national
strengths, forging strong partnerships across innovation actor and reinforcing private sector in
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R&D activities. Cooperation and partnerships, quality of life, education, support of innovative
entrepreneurship and competitiveness and improvement of the institutional framework
remain on the agenda of the countries for promoting innovation and RTDI, as these broad
issues are normally considered insufficiencies and systemic failures of the systems at hand.
Secondly, the national reports under consideration have delivered insights on the strengths,
weaknesses, opportunities and threats present at a regional level so as to identify barriers and
bottlenecks preventing the region from reaching its potential. Most striking strengths are the
investments undertaken in R&D infrastructure and broadband, ICT penetration rates and
improved educational structures, while most striking weaknesses are the low investments in
information technology, the low usage of ICT in the learning process, the limited amount of
innovative enterprises and lack of financing schemes for innovative SMEs and start-ups. In
similar terms, the support for increasing science-industry collaboration and the role of the
educational system towards strategic advantages are marked as important opportunities,
while the complex insufficient system for innovation, the low responsiveness of the education
system to market demand and the centralization of innovation in certain areas are considered
major threats. The main forces that are expected to play a crucial role in the future are political
(unstable political landscape, frequent changes in leadership, incoherent spending priorities),
economic and market forces (the global recession, austerity measures, poor knowledgeintensive economy extroversion and spending cuts in the RTDI system) as well as
environmental (climate change and green culture) and last some social and cultural (increased
life expectancy and major societal challenges, improved education levels, poverty and
unemployment. Finally, technological forces include R&D infrastructure development, low ICT
expenditures as % of GDP and a diversifying picture in ICT application areas.
Thirdly, based on the ample materials reviewed and filtered, important directions for policy
emerge which indicate towards increased cooperation and coordination of the policy
landscape:
-Human resources: In general, the levels of education are considered good with adequate
graduates in science and technology; nevertheless in most of the counties, the environment is
unattractive for retaining graduates and researchers. Furthermore, there are significant
weaknesses in training levels inside companies, lifelong learning and absorptive capacity of the
RTDI systems.
-Knowledge flows: Only Austria and Slovenia have strengths between innovations actors,
intermediary units and interdisciplinary centers of excellence. In general, the picture is highly
diversified, with most of the countries (expect Austria and Slovenia) targeting basic measures
for enhancing knowledge flows such as technology transfer, cooperation and industry liaison,
technological parks, incubators, joint technology platforms. The level of gravity or actors in
each country is highly dependent on the systemic structures of the research as well as the
government system. The main actors consist of public research organizations, universities,
private research organisations and to a lesser extend private companies, incubators,
innovation zones international research centers and special services or facilities. NGO’s are
almost indictable as actors of innovation.
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-Internationalisation of Knowledge: South-East European countries are among those having
limited cross-border activities, and quite differenced trade patterns. The external balance in
ICT trade is negative in most of the countries with the notable exception of Hungary. Also,
there is a relative specialization in ICT services trade than ICT goods. In this pillar countries are
also quite diversified in patenting orientation in ICT and knowledge-intensive industries.
-Infrastructure and Funding: The share of R&D as a percentage of the Gross Domestic Product
(expenditure of the public sector) is very low in the region with the exception of Austria, which
is the only country approximating the EU goals of 3% R&D expenditures as percentage of GDP.
Slovenia presents a dynamic share, whilst the rest of the countries do not surpass 1.5%.
Business Sector expenditures on R&D present an analogous picture in terms of country
rankings.
-Innovation and the Business Environment: Slovenia and Austria are the only countries to
appear to spend less in non-R&D than R&D. The prevailing type of innovation is both
technological and non-technological innovation. In general the countries not present a unified
and mature market for addressing new to market innovation. Regarding the type of innovation
in SEE countries, product and service innovation is the dominant type, with most of the
countries evolving around the EU average. In particular, Slovenian, Romanian and Greek
enterprises are characterised by a propensity to introduce new processes and marketing
strategies as compared to the EU average. There seems to be a lack of coherence regarding
RTDI performances inside the private enterprises of the participant countries, but the whole
region appears to be performing well in the areas of open innovation as most of the countries’
indicators are above the EU average. The standpoint of enterprises in the region towards open
innovation normally exceeds the stance of EU-27 enterprises. Enterprises in the region
generally tend to use innovation stimulators such as knowledge management systems, internal
mechanisms for innovative ideas, staff rotations and cross-functional teams on innovation
projects.
It is important to note that despite some general findings emerge from a set of national
reports does not necessarily mean that all the questions have been answered. Important
future research directions emerge in the interplay between organisations and institutions, the
balance between harmonisation and diversity and the operation of effective mechanisms to
enable goal-oriented transformation processes.
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1 Introduction
The present synthesis report aggregates the results of the eight national innovation reports on
the basis of an initial appreciation of the potential of innovation structures and systems
performance in the region. Different implications in terms of research, technology and
innovation (RTDI) policies are highlighted in the process of the synthesis of the national
reports.
The national innovation system reports, as well as a PESTLE and SWOT analysis were produced
by partners to facilitate the main foresight work in terms of approaching in a holistic manner
both their innovation systems as well as specific ICT issues. In specific, the national reports
provide an initial understanding of the development, planning and implementation of ICT/RTD
policies by examining the sectors, technologies and industries that should be promoted to
enhance regional competitiveness and the key development trends and by investigating some
aspects of the innovation system central to foresight exercises, such as the design and
implementation of research and innovation policies, the main orientations, the investment
trends, education and training systems , key partnerships, framework conditions that promote
business investments in R&D, public support to innovation etc. PESTLE and SWOT analysis
were also performed as a basis for more detailed discussion about the scope of the foresight
exercises and analyze each country’s external environment to review the general frame for
implementation of exercises.
The present report was drafted in three specific stages: first the information from the national
reports was collected and assessed with a view on enabling key stakeholders access key
information that may prove useful in strategic planning and scenario building and understand
resources and constraints related to ICT foresight. The report was first drafted on the basis of
the structure of the national reports, by aggregating and synthesizing relevant sections.
Additional research was performed by accessing key documents and performance reports of
the European Union to widen the scope of the results. The information was then re-filtered on
the basis of a common methodology that provided a comprehensive framework of presenting
results on a regional level.
An important constraint reported at the outset is the divergence of the national innovation
systems, reflecting country-specific historic and economic circumstances, divergent policies
and different approaches on innovation as well as the different degree of sophistication of the
relative sections of the national reports determined by access to information and lack of
expert-validated results. These difficulties underpin the robustness of the synthesis report.
The report is structured as follows:
The second chapter provides background information on the processes of the national
innovation systems drafting and discusses in detail the methodological framework employed
for the synthesis of the results. The third section discusses policies and priorities, both
presented at an EU level and country level to enable the understanding of the regulatory
environment and conceptualisation of innovation priorities.
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The fifth section discusses the pillars of the analysis i.e. the different parameters against the
results were assessed against. In specific, five pillars are presented:
1. Human resources pillar, including a discussion of the educational systems and links
between education and RTDI;
2. Knowledge flows consisting of science-industry collaboration, partnerships and key
actors;
3. Level of Internationalisation of knowledge reflecting patents, publications,
participation in European research and trade specialization;
4. Infrastructure and Funding and
5. Innovation and the Business Environment, capturing firm-specific trends.
Section 6 discusses in detail the ICT sector in the reviewed countries, as isolated from the NIS
structural analysis. A wide range of information is presented in terms of comparative
performances of countries in ICT specific areas. This section has been enriched with statistical
information, however it is noted that in the cases of Serbia and Montenegro, the lack of
reliable and homogeneous statistics and ICT specific indicators limits the scope of analysis to
the rest of the countries. Section 7 introduces additional issues (regional typologies and
emerging trends in innovation) that are extensively covered in the Annex.
Finally, section 8 compiles and synthesizes the PESTLE & SWOT analysis and the last section
concludes.
The document Annex provides supplementary information of each of the sections, enabling
stakeholders and interested parties to access country-specific information upon which highlevel results were derived as well as some information on the effects of the current financial
crisis on innovation and ICT.
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2 Background Chapter
This chapter provides an overview of the objectives for the specific activity, as well as the
methodological considerations that underlined the formulation of the report.
2.1
Task Objectives
Within the context of activity 3.3 (National ICT Innovation Systems studies & Regional
Synthesis) and activity 3.4 (National PESTLE & SWOT Analysis & Regional Synthesis), an
extensive analysis was undertook by partners to produce national innovation system reports,
as well as a PESTLE and SWOT analysis. The underlying objectives of the National NIS, PESLTE
&SWOT report in relation to the main foresight work were:
to identify the main policies and implications for policy that lead to the definition of
priority areas
to understand the development, planning and implementation of ICT/RTD policies
to grasp the region-specific needs for foresight by including the regional
characteristics and regional goals, drivers and barriers
to identify the sectors, technologies and industries that should be promoted to
enhance regional competitiveness and the key development trends in central social
issues
to investigate some aspects of the innovation system central to foresight exercises,
such as the design and implementation of research and innovation policies, the main
orientations, the investment trends, education and training systems , key partnerships,
framework conditions that promote business investments in R&D, public support to
innovation etc.
to perform PESTLE and SWOT as a basis for more detailed discussion about the scope
of the foresight exercises and analyze each country’s external environment to review the
general frame for implementation of exercises
to enable key stakeholders involved in the foresight exercise access key information
that may prove useful in strategic planning and scenario building
to enable the FORSEE Consortium understand the resources and constraints related
to ICT foresight that would contribute to the common methodology
The information collected by the national reports will be used to inform stakeholders, map
competencies and capabilities, map implications and strategies and extrapolate positive
trends.
The report’s structure (elaborated by the Task Leader-University of Macedonia) abides both to
the SEE Programme Manual that stipulates that the innovation capacity can be described by
the education system, the human resources (level of qualification) and the institutional
framework for research and development (public and private sector, institutions, enterprises,
budgets, programmes and politics) as well as the “Oslo Manual” of the OECD that provides
guidance on innovation indicators and their interpretation. It is also enhanced by additions
based upon a scrutiny and review of European policy documents, country reports, Innovation
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Scoreboards and Competitiveness Reports generated by the European Union with a view of
incorporating components that would serve the overarching aim of facilitating foresight work.
Other conceptualisations of innovation flows (such as the concepts of innovation inputs and
outputs of the Pro-Inno Europe (1)) are taken into consideration for the analysis of indicators.
To develop their potential, and find their new role in the emerging EU25+ knowledge-based
economy, regions need to widen their focus and go beyond their own innovation landscape to
explore the European and trans-regional dimension to the full. Foresight is a key element in
the creation of future oriented and outward looking visions and strategies. Many regions
considering implementing foresight exercises need help to overcome initial barriers, such as
doubts about the usefulness and usability of foresight, problems linking foresight to existing
regional mechanisms, as well as simply lack of knowledge on how to set up and undertake
foresight activities. Easy to understand practical blueprints on how to set up a foresight
activities to suit specific regional circumstances could be instrumental in supporting regions to
implement regional foresight (2).
2.2
Background Country Reports Countries Reviewed
A National Innovation System encompasses a broad array of institutions and relationships
involved in scientific research, the accumulation and diffusion of knowledge, education,
technology development and the development and distribution of new products and
processes. It is also defined as a “set of distinct institutions which jointly and individually
contribute to the development and diffusion of new technologies in which governments form
and implement policies to influence the innovation process” (3). As hybrid systems, innovation
systems cut across other societal areas such as education and training, business
entrepreneurship, existing infrastructures or other sectoral policies that highlight the interplay
of research and innovation stakeholders and actors. The national reports employ a systems
approach analysis that is inclusive of the main components of a NIS such as human capital,
training, the institutional environment, the regulatory environment, R&D and usage of ICT as
well as the resulting linkages among the components. Taking into consideration the innovation
systems approach, the reports consider innovation as an interactive process among a wide
variety of actors (4). However, in some specific cases, a shortage of relevant sources was
noted; therefore partners had the liberty to elaborate on the components where more
information was available. In any case, the main building blocks of the innovation system were
included so as to provide the “diagnostics” of the situation inherent in every country. (5).
A definition of “innovation” as perceived in the present report needs to be elucidated at the
outset. According to the OECD innovation is “the implementation of a new or significantly
improved product (good or service), or process, a new marketing method, or a new
organizational method in business practices, workplace organization or external relations” (6).
Innovation is seen as central within the knowledge-based economy, and it is recently that a
better understanding of the complexity of the processes has been understood. Thus, the
innovation system is perceived as an all-encompassing ecosystem based upon the pillars of
science and technology institutions, the enterprise landscape, the broader framework
condition of national institutional and structural factors and transfer factors that influence the
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efficiency of innovation linkages (6). The factors, policies and institutions fostering innovation
as well as the underlying logic of analysing them in the context of the national reports are:
Institutions and the priority-setting during specific programming periods, which are
essential issues to be taken into consideration by foresight exercises
Innovation governance (the implications of governance may foster or impede
investment climate, entry to market, business innovation and general efficiency in the
system)
The macro-economic environment of the country, especially in light of the current
financial crisis, as fiscal and monetary policies can contribute to a stable domestic
environment.
The regulatory framework and analysis of competitiveness of the country (obstacles to
competitiveness and doing business may generate additional challenges for innovation
and entrepreneurship. The role of public sector procurement policies and other
conditions might prove favourable to foster innovation and they are subsequently
analysed).
ICT usage and the ICT landscape in the country. As FORSEE targets RDI ICT foresight, it
is imperative to include indicators regarding ICT with regards to trade, expenditure,
productivity, industry structure, economic significance etc. The micro-level (firms), the
report endeavours to assess capacities to absorb knowledge. Specific focus in placed
upon the specialization patterns of each country and existing infrastructure.
Other components and cross-cutting issues, such as links between industry and
academia, links between the educational system and research, funding modes are
analysed according to the degree of strength and the underlying role within the NIS.
Education and training are emphasized as drivers of innovation and are inherently
included.
The reports acknowledge recent developments in innovation literature, according to which,
interactions and linkages between actors, systemic failures and the interaction of the firm and
its environment (framework conditions) were key to understanding innovation (or the lack
thereof) from a policy perspective.
For further clarity, the methodology of the national reports was elaborated by the Task Leader
(University of Macedonia). The template, specific guidelines, points for analysis, existing
literature and references to be consulted as well as documents including statistical indicators
for each country were drafted and provided by the Task Leader (University of Macedonia). The
main limitations of this task were concerned with the measurement of NIS which is a difficult
manner, so a mix of qualitative and quantitative indicators was used. The indicators were
selected on the basis of providing a holistic picture of the state of the NIS.
For some countries (Serbia, Montenegro), most statistical indicators used in the reports were
unavailable from the European Union and the World Bank, therefore, determining the strength
of the NSI was a cumbersome task. In addition, these countries have recently introduced the
concept of innovation as a policy instrument, resulting in a lack of practice and treatment of
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measures supporting innovation. As standard metrics were unavailable and the constituent
parts of the systems dissimilar, relevant partners relied on existing literature and some
qualitative measurements when available. In addition, some factors, such as knowledge flows,
interactions and linkages and the functionality of the system were difficult to assess for many
countries. The interactions between multinational companies and local firms were also difficult
to determine. The reports also expand to the environment to involve broader factors
influencing the innovative environment in the PESTLE and SWOT analysis. For instance the
social, economic and cultural context of each country was assessed (7) to indicate
developments that might have an impact on innovation.
2.3
Methodological Framework and Processes Involved
As the synthesis report collects and analyses the results of the national reports to deliver
results on a regional level, the methodology had to be adjusted to a comprehensive framework
that would allow conclusions to be formulated for each element of the innovation system. On
a conceptual level, the methodology for the synthesis in depicted in the following figure:
Figure 1: Synthesis Report Methodological Conceptual Schema
In the schema, there are five main pillars of the innovation system in the region and each pillar
is analysed against some specific issues so as to grasp the dynamics and effects of each of the
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pillars. Before the results of the analysis are presented, a short chapter of the general
economic situation and competitiveness aspects of all countries intervenes as a “snapshot” of
the region in general terms. As innovation surveys provide a wide array of information on the
innovation process, the analysis is not usually combined with other information sources such
as economic statistics so as to measure incremental changes (8). According to the FORSEE
view, it would be inadequate to consider only science and technology issues and not
incorporate in the analysis a broad range of social dynamics such as linkages, diffusion,
entrepreneurship, finance, skill needs and education, awareness of market and social demands
for innovation etc.
The pillars and sub pillars are presented below and the principal rationale for developing the
framework and each sub pillar is included in the analysis, although the review of framework
later on serves at understanding the rationale of embodying the indicators. It has to be noted
that this framework is customised to the needs of the specific project but still encompasses
NIS literature surveys used to build the methodology (Frascati Manual, (8) (9), (10), (5)). In this
line, we do not adapt an available framework, rather we create bottom-up a project-specific
framework on the basis of the common NIS components and innovation indicators.
The umbrella pillar discusses policies and priorities, both presented at a EU level and country
level. This enables the understanding of the regulatory environment that determines the
strategic importance of innovation (and ICT/RTDI) for the development of the economy. The
way that innovation is conceptualised and the priorities are set also determine the
environment in which foresight is called to contribute. The rest of the pillars are included as
follows:
1. Human resources
a. Human resources (educational System and matrix)
b. Links between education and RTDI
This pillar includes the basic educational system for the general population, the university
system, the specialised technical training system, the science and research base and some
basic indicators on the workforce of the countries.
2. Knowledge flows
a. science-industry collaboration
b. partnerships
c. key actors
Linkages act as sources of knowledge and technology for firm innovation activities and connect
firms to other actors in the innovation ecosystem. The level of interaction differentiated welldeveloped innovation systems as well as successful clusters.
3. Internationalisation of knowledge
a. Patents,
b. Publications, participation in FP’s
c. trade specialization
According to the Oslo manual, patent statistics are increasingly used as output of research
activities since they reflect the technological dynamics and the direction of technological
change.
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4. Infrastructure and Funding
a. Funding Considerations (spending by type, venture capital)
b. Existing infrastructure in the region (connectivity, major networks available)
The degree of which ICT RTD infrastructure available is compatible with European
infrastructure or a part of it is of importance, as the efficient connection of entities and the ICT
sector with its environment is evaluated.
5. Innovation and Business Environment
a. market development
b. industrial RTD and innovation
This pillar tries to capture the range of innovative efforts carried out by enterprises, their
expenditure, the acquisition of knowledge and efforts associated with other innovation-related
parameters such as the introduction of new products and processes, organizational changes
and marketing innovations, percentage of sales to new product etc.
The focus theme in the framework is the ICT sector in the reviewed countries (comparative
performance in the ICT sector, Digital Agenda performance, etc). It discusses in more detail the
general status and resources devoted to ICT R&D. This discussion was incorporated in the
analysis of the previous draft of the report, however it was decided to disentangle the main
indicators and present it in isolation to better serve the needs of the audience.
A horizontal second pillar is the SWOT and PESTLE activity. Although SWOT and PESTLE analysis
were different tasks in the context of the workpackage, the activities were merged in this
report to provide a more comprehensive picture of the innovation systems and the forces that
are likely to impact the system and its development. A broad range of social dynamics, like
entrepreneurship, finance, scope for formation of firms, skill needs and educations, awareness
of market, patterns of economic evolution and economic organisation, environmental and
technological forces are included. The rationale behind PESLE analysis lies in that scientific and
technological knowledge will continue to evolve and be used in ways that will both shape and
be shaped by social structures and processes. SWOT on the other hand captures critical
capabilities or deficiencies either in industry of in knowledge infrastructure that is not
adequately mirrored in the innovation systems analysis. SWOT includes an initial presentation
of the strengths that need to be built on, the weaknesses that are to be overcome, the
resources and the opportunities to be exploited and the threats to be avoided. By
amalgamating the results, the regional picture presents the common characteristics on which
foresight can reside and the common deficiencies that might hamper its impact. In the present
common PESTLE/SWOT analysis, the common patterns are brought on according to their
relative robustness in the region so as to create a “prioritisation” of common factors. We
preliminarily note that the analysis is performed by the partnership therefore this analysis is
not expert-validated.
According to past literature, two basic families of S&T indicators were previously directly
relevant to the measurement of innovation: resources devoted to R&D and patent statistics.
The Oslo Manual and Community surveys (such the European innovation scoreboard and
community innovation surveys) represent the main building blocks of the indicators and the
methodology used. Other studies such as Romijn and Albaladejo (2000) Hansen and
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Birkinshaw (2007) were reviewed but their recommendation in including innovation vale chain
etc. could not be embodied in this report.
The Oslo manual acknowledges human resources indicators (The basic educational system for
the general population, which determines minimum educational standards in the workforce
and the domestic consumer market, the university system, the specialised technical training
system), the science and research base, innovation policies and other government policies that
influence innovation by firms, the legislative and macroeconomic settings such as patent law,
taxation, corporate governance rules and policies relating to interest and exchange rates,
tariffs and competition, the communications infrastructure, including roads and
telecommunication networks, the financial institutions which determine, for example, the ease
of access to venture capital, market accessibility and industry structure (firm –level) as the
main components on the National Innovation System. However, the Oslo Manual grew to
capture a wider range of innovation activities than R&D expenditures, a wider range of
innovation output indicators such as the introduction of new products and processes,
organizational changes and marketing innovations, percentage of sales to new products as well
as information about a way that innovation proceeds.
The European Union in the European Innovation Scoreboards has adopted a quite divergent
framework, where innovation input and output are distinct pillars with specific indicators.
Input consists of innovation drivers (Human resources indicators, broadband rate), Knowledge
creation (R&D expenditures, funding of enterprises) and innovation & entrepreneurship
(Businesses innovating in house, in cooperation, modes of innovation and venture capital). On
the output side, employment indicators, exports, sales, patents and trademarks are evaluated
to assess application and intellectual property of knowledge creation.
However it is acknowledged that innovation involves tangible and intangible inputs, the
process of innovation is complex and the outputs might be difficult to characterize. Recent
indicators for measuring innovation tend to drift apart from innovation surveys, indexing and
benchmarking to knowledge, networks, demand and system dynamcis
(9). Recent
approaches include intangible capital as human capita, intellectual capital and organisational
capital, investments and ICT infrastructure (11), (12), (13) In addition, available surveys are not
well-suited to provide information of the institutional environment and linkages. Finally the
Handbook of Knowledge Society Foresight (14) further developed 3 indicators to measure
knowledge society: Digital divide index (DIDIX), adaptability of work index (AWAI) and the
eCommerce index. This are included in the Digital Agenda indicators under the ICT Focus
Theme. Last, it is noted that although the systemic approach places emphasis on the
interdisciplinary approach in terms of a historical perspective and examine learning and
interactions as determinants of innovation, such a task proved extremely complex for partners,
as these issues require extensive research, which was out of scope in the specific task.
According to the SEE operational guide, context indicators should monitor the evolving socioeconomic context of the countries and it based on official statistics. To complement the
acquisition of context indicators, some additional sources were collected, such as:

The EU Industrial R&D Investment Scoreboard
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
ERAWATCH Inno-Reports and INNOVA sectoral innovation watch

The European Institute of Innovation and Technology

Eurostat and the World Bank

Innovation Survey Data

RIM database, European Commission.

Digital Agenda Observatory

The 2010 report on R&D in the European Union

Innovation union competitiveness report 2011
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3 General Economic Outlook of Countries Reviewed
This chapter mainly serves as an introduction of the countries’ review and their current
standings in terms of general economic performance and competitiveness. An assessment of
the Europe 2020 performance is also included. This marks a first attempt to unravel the
underlying economic dynamics and growth patterns as well as some baseline common or
divergent patterns of competitiveness. The chapter is only exploratory in nature, i.e. it does
not seek to explain variant economic features but only present the current situation to enable
stakeholders gain a short overview of the underlying economic environment. This serves as a
familiarisation tool with the specific structural characteristics of the economies that can
severely impact future projections and scenarios as well as illustrate the sensitivity of the
economies against the backdrop of the current economic turbulence. More information under
each heading is included in the Annex.
3.1.1
Countries Overview
Most of the countries under investigation currently face some critical challenges both in terms
of an emerging society and economy which do not perfectly correspond to the new realities
and of an industrial sector that needs to transit to a knowledge-intensive reality. The economic
models and industrial organisation of most of the countries (and in particular the former
socialist countries) are characterised by the rational of transition.
According to the European Innovation Scoreboard (2009), the classification of the countries
based on the innovation performance is as follows:
Austria and Slovenia are among the innovation followers
Greece and Hungary belong to the moderate innovators
Bulgaria and Romania are characterised as catching-up countries1
Before embarking on an analysis of the innovation potential and performance analysis, a brief
overview of the economic performance of the countries first takes place.
Table 3.1. Structural indicators of the SEE economies and basic demographics.
2
Bulgari
a
Hungar
y
Greec
e
Romani
a
Sloveni
a
Serbi
a
Montene
gro
139
20
40
83
23
72
n/a
41
Austr
ia
GDP (100
base value)
1
Serbia and Montenegro did not undergo an assessment in the EIS
For consistency reasons, the abbreviations of countries used therof are consistent with the Eurostat
taxonomy and are represented as follows: Austria (AT), Bulgaria (BG), Hungary (HU), Greece (GR-EL),
Romania (RO), Slovenia (SI), Serbia (RS) and Montenegro (ME)
2
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Health
expenditure
as % of GDP
11%
6.86%
7.4%
9.6%
5.27%
9.3%
5.7%
9.26% 3
Public
expenditure
on education
(% of GDP) 4
5,46%
4,61%
5,1%
n/a
4,25%
5,22%
3,52%
n/a
General
Government
debt ( % of
GDP)
72.3%
16.2%
80.2%
142.8
%
30.8%
38%
31.3%
38,6%
Gross Capital
Formation
(% of GDP)
22%
25.6%
22%
16.2%
30.5%
23.4%
23.9%
27.7%
Employment
Growth (%)
1%
-5.9%
0.2%
-2.1%
-1.8%
-2.2%
1%
(2008
)
Jobless
growth
Unemploym
ent rate
4.4%
10.2%
11.2%
12.6%
7.3%
7.3%
20%
n/a
(17.6 for
2007)
M=
4.6%
10.9%
11.6%
9.9%
7.9%
7.5%
19.2%
n/a
F=
4.2%
9.5%
10.7%
16.2%
6.5%
7.1%
21%
n/a
Inequality of
income
distribution 2009
3.7%
5.9%
3.5%
5.8%
6.7%
3.2%
5.6%
n/a
% of urban
population
30%
22%
25%
47%
16%
26%
29%
61%
Rural
population
32.6%
28.6%
32.1%
38.8%
45.6%
51.7%
27.8%
n/a
Source: World Bank and Eurostat
GDP, capital formation and employment rates represent basic indicators of the economy
whilst public expenditure on health and education as well as income inequality denote some
underlying challenges each economy faces as to its budget restrictions. The main discrepancies
lay upon the Gross Domestic Product, government debt and employment growth. Austria,
Hungary and Greece have a large government debt; however Greece further faces losses in
employment growth. Employment growth is negative for Bulgaria, Greece, Romania and
Slovenia while unemployment underpins the Bulgarian, Hungarian and Greek economies.
Additional societal challenges arise from a quite high inequality of income in Bulgaria, Greece
and Romania while half of the Greek population is located in large urban centres whilst half of
the Romanian and Slovenian in rural areas. Urban population is equally located in Montenegro.
This information will be further analyzed in the context of regional issues and regional
3
4
Base value for 2009
Base value 2008 except for Romania, where last update is 2007
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innovation capacities. In general, the countries face social and economic challenges such as an
ageing population, high expectation in regard to quality of life, in particular in healthcare and
other concerns.
For the two countries that are not members of the European Union, some further clarifications
must be made, since these countries have undergone the process of economic transition from
a planned to a market economy. The countries were marked by a late transition process with a
high percentage of the population living below poverty lines due to turbulent period during
the past years, especially for the primary sectors. GDP growth has been considerable for
Serbia, with only a recent negative projection while in the Montenegrin Economy, GDP growth
is expected to recover after a short downturn and former impressive growth. At the beginning
of the transition period there was a common expectation that there would be a considerable
improvement in the financial performance of privatized enterprises but this has been slow to
materialise. The Serbian economy is dependant on metals, furniture, chemicals and
pharmaceuticals while the Montenegrin on materials, agricultural process and consumer
goods (World Bank, Wikipedia)
The global financial crisis appears to have affected most of the SEE economies, as the real GDP
growth rate has been violently disrupted in 2008 and 2009 to regain only a part of the growth
momentum in 2010, as depicted in Figure 2 in the Annex. It has to be noted ex ante that this
disturbance bears an impact on the investments and GDP percentage channelled to promoting
innovation and growth. Similar conclusions can be drawn from the disruptive nature of
employment growth diachronically which presents rather gloomy perspective unemployment
especially for Bulgaria, Romania and Greece (Figure 3, Annex)
Another aspect of the economic profile that can potentially impinge on future developments
concerning innovation and the RTDI system is the degree of extroversion or introversion of the
economy, as demonstrated by trade indicators (Tables 3.2, 3.3, Annex). The negative external
trade balance for import-oriented countries such as Greece, Bulgaria, Romania and Serbia
appears to gradually diminish, although this amelioration is more intense for Bulgaria,
Romania and Serbia. Negative external balances normally denote a lack of a competitive
advantage in the Ricardian perspective, meaning that the national strengths have not been
able to be channelled to international markets. This trend however tends to be alleviated
when considering total high-tech trade. Indeed, external trade balance of high-tech indicates a
strong positioning of the countries in high-tech exports. In similar terms, external high-tech
trade improves diachronically with the exception of Greece. At this point, the analysis is not
advanced enough to reveal if the SEE countries in question follow a specific, isolated trend
with respect to the general EU trend (15). At the moment a short snapshot of the economy
dynamics points towards a relative specialisation in high-tech trade as well as a diversifying
picture in structural economy and major societal indicators.
3.1.2
Competitiveness Aspects
Some additional data on the competitiveness of the economies with respect to a number of
issues in terms of the different components of the NIS is given below. Different scores on the
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competitive aspects can elucidate some preliminary strengths of each country. For acquiring a
rather objective view, several sources were sought.
Table 3.2. Global Competitiveness Report regional rankings
GCR Rank
AT
BG
HU
GR
RO
SI
ME
Public institutions
Private institutions
Infrastructure
Macroeconomic
environment
Higher education and
training
Quality of education
On the job training
15
15
20
24
115
106
80
42
77
89
51
69
82
101
42
123
81
79
92
78
48
49
36
34
43
56
67
37
16
67
34
42
54
21
52
21
10
48
114
42
60
84
100
64
92
26
42
41
70
Goods market efficiency
19
82
67
94
76
39
44
Competition
23
79
51
112
74
37
40
Quality of demand
conditions
Labour market efficiency
7
82
94
66
76
51
70
32
58
62
125
76
80
39
Efficiennt use of talent
25
79
69
114
70
40
54
Financial market
development
Technological readiness
23
91
68
93
81
77
28
18
48
37
46
58
35
44
Technological adoption
17
110
49
92
96
65
78
Availability of latest
technologies
Firm level technology
absorption
FDI and technology transfer
8
100
47
59
99
38
85
16
127
70
91
108
72
90
63
98
25
109
70
101
44
ICT use
19
32
37
39
45
28
42
Internet users
23
48
33
50
62
31
49
Broadband internet
subscriptions
Internet bandwindth
25
44
35
37
43
23
41
15
7
38
44
16
35
70
Innovation and
sophistication factors
subindex
Business sophistication
13
95
51
73
91
35
56
6
95
69
74
93
36
70
Innovation
20
92
41
79
87
34
45
Capacity for innovation
11
79
46
105
72
22
51
Quality of scientific research
institutions
University industry
collaboration in R&D
Government procurement
of advanced technological
products
20
73
18
88
83
27
36
18
110
75
112
103
37
52
38
87
106
108
105
64
28
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Source: Global Competitiveness Report 2011-2012, Global Economic Forum 5
The first source classifies countries according to a wide spectrum of issues, such as institutions,
infrastructure, education, framework conditions, technological adoption, IC (institutional
capacity) and capacity for innovation. Austria lies within the countries with an impressive
scores on most of the issues at hand. The quality of demand conditions and the availability of
latest technologies as well as business sophistication place the country at one of the first
places globally, especially relating to the capacity for innovation. The rest of the countries
present a rather mixed picture, since advantages and disadvantages are not streamlined. For
instance, Bulgaria’s strengths are oriented towards the macroeconomic environment,
broadband infrastructure and ICT use while institutional capacities, training and technological
adoption and availability are less advanced components, placing the country at the 79th place
for the capacity for innovation. Education, technological readiness, FDI and ICT use as well as
innovation and quality of research institutions are among the strongest capacities of Hungary,
while the country lacks significantly in demand conditions, rather the capacity for innovation
places Hungary among the top 50 countries. Greece is positively assessed in infrastructure,
higher education, ICT use and broadband, while linkages and collaboration, efficiency of labour
market, competition and other framework conditions appear very weak. Romania is negatively
assessed in linkages, infrastructure and training, but the country is assessed as medium in the
rest of the components. Slovenia appears to possess a number of advantages in economy,
education and training, use of talent, technological readiness and availability and ICT usage
and availability and research institutions endowing he country with a remarkable score in the
capacity for innovation (22nd place). Montenegro appears to be of high potential as regards
capacity for innovation as it positions among medium to high achievers. The country scores
considerably in framework conditions such as labours and financial market efficiency but its
deficiencies focus on ICT usage, bandwidth and business sophistication.
Convergent and divergent components are exemplified in the following figure:
5
Total no of countries: 138, blue countries are included in the first quartile of competitive
countries , red in the last quartile
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140
120
100
80
60
40
20
0
Austria
Romania
Bulgaria
Slovenia
Hungary
Montenegro
Greece
Figure 2. Illustration of competitive aspects in the region (1)
A common pattern emerges in ICT usage, internet users, broadband and technological
readiness. A secondary pattern indicates a closeness of scores for Slovenia and Austria as a fist
set, and the rest of countries as a second set with similarities and differences to both previous
sets. In some cases, Greece and Austria pose the extreme positions. For instance, in education,
labor market and technological adoption most of the countries are in the same cluster.
A quite analogous finding derives from the innovation for Development report which assigns
innovation capacity to include the following pillars: Human Capital, Training and Inclusion,
Institutional Environment, Usage of ICT and R&D so as to balance a broad coverage of those
factors which affect the capacity for innovation. Countries with remarkable marks in the
institutional environment are Austria and Slovenia whereas Greece and Hungary lag behind. All
of the countries score very well in human capital and social inclusion, with the exception of
Romania which is placed in the medium-ranked countries. Similar rankings are noted in R&D
and ICT adoption for most of the countries. In R&D and ICT infrastructure, Romania and
Bulgaria score less that the rest of the countries which are classified in the top 50 countries in
terms of infrastructure. Austria is once more merely exemplary in merely all the rankings. In
terms of regulatory and legal framework (doing business in particular), the findings are not
attuned to the previous source, since Bulgaria is topped in terms of doing business, Austria,
Hungary, Romania and Slovenia have a medium score, while Greece slips into the 107th
position.
Table 3.3. Innovation Capacity Index Rankings 2010-2011
Pillars/Country
Institutional Environment
Human Capital, Training, Social
Inclusion
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General
Good
Governance
General
Education
Social
inclusion
13
60
Policy
Assessmen
t
32
21
Austria
Bulgaria
14
48
17
36
32
40
15
35
Hungary
50
39
109
28
18
31
Greece
83
50
127
20
11
27
Romania
61
56
74
48
43
50
Slovenia
28
25
38
21
8
29
Regulatory and legal
framework
Doing Business
R&D
Adoption and use of ICT
R&D infra
Patents
ICT usage
Austria
61
13
17
19
Quality of
ICT infra
6
Bulgaria
32
48
44
47
21
Hungary
53
30
26
39
77
Greece
107
40
39
36
20
Romania
52
61
51
49
85
Slovenia
56
24
28
28
13
Source: (16)6
140
120
100
80
Austria
60
Bulgaria
40
20
0
Hungary
Greece
Romania
Slovenia
Figure 3. Illustration of competitive aspects in the region (2)
Note: lower rankings are considered better positioned.
6
Blue colour denotes in the first quartile of competitive countries , red in the last quartile.
Non available data for Serbia and Montenegro
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It has to be noted that the indicators between the two sources above are quite differentiated
both in annotation and methodology, subsequently country rankings under similar headings
may be assigned to the same quartiles, but individual scores in absolute terms are diverse.
Nevertheless, strengths can be implied yet again in ICT usage, R&D infrastructure and
education.
A different standpoint on the competitiveness of the economies emerges from the World Bank
and the Doing Business Report in specific. Despite the distinctiveness of the sub indicators of
the rankings (construction permits, property, getting credit, protecting investors, paying taxes,
trading across borders, enforcing contracts and starting/closing a business, the countries in
question rank from the 30th to the 109th position out of 183 economies. Austria ranks 32nd in
2011 (and 31s in 2011), Slovenia 42nd (having ameliorated one place), Bulgaria 51st (no change
over the year), Hungary and Montenegro 46th (having stepped up 5 counties, Romania 56th
(from 54th), Serbia 89th while Greece is ranked at the 109th position (from the 97th in 2010) (17).
A political viewpoint is also included in the competitiveness discussion. According to
Transparency International (Corruption Index), Greece and Serbia are among the most
corrupted countries (3.5), Hungary, Romania, Montenegro and Bulgaria have a better
positioning (4.7, 3.7 and 3.6 respectively) while Slovenia and Austria are among the cleanest
countries (6.4 and 7.9 respective scores) (9-10 is the cleanest score) (18).
It is thus explicit that the historic developments and political foci have endowed the countries
with different perspectives on innovation capacities.
Government procurement
of advanced…
University industry
collaboration in R&D
Quality of scientific
research institutions
Capacity for innovation
Innovation
140
120
100
80
60
40
20
0
Higher education and
training
Quality of education
On the job training
Competition
Labour market efficiency
Business sophistication
Technological readiness
Innovation and
sophistication factors…
Technological adoption
ICT use
FDI and technology
transfer
Austria
Romania
Bulgaria
Slovenia
Availability of latest
technologies
Firm level technology
absorption
Hungary
Serbia
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Figure 4. Illustration of competitive aspects in the region (3)
3.1.3
Europe 2020 Performance
The Europe 2020 Strategy aims at improving conditions and access to finance for research and
innovation, to ensure that innovative ideas can be turned into products and services that
create growth and jobs so that Europe develops its own distinctive approach to innovation.
Europe 2020 builds on its strengths and capitalises on its values by focusing on innovations
that address the major societal challenges identified in Europe 2020. It is suggested that
pursuing a broad concept of innovation, both research-driven innovation and innovation in
business models, design, branding and services will add value and involve all actors and all
regions in the innovation cycle (19).
This section gathers some baseline information to juxtapose the positioning of the region
under investigation against the Europe 2020 indicators (especially in view of societal
challenges) to derive common challenges that can underpin the foresight process, especially in
view of convergence to a common strategy for inclusive growth. The targets of the strategy are
the following:
-
employment rate
Gross Domestic Expenditures invested on R&D
greenhouse emissions and energy efficiency
share of school leavers and tertiary educational attainment by gender
reduction of poverty.
EU 27
Austria
Bulgaria
Greece
Hungary
Romania
Slovenia
Target
80,00%
70,00%
60,00%
50,00%
40,00%
30,00%
20,00%
10,00%
0,00%
Employment
Gross
Early leavers
Tertiary
People at
Share of
rate by
domestic
from
educational
risk of
renewables
gender, age expenditure education attainment poverty or in gross final
group 20-64 on R&D
and training
by
social
energy
by gender gender, age exclusion (% consumption
group 30-34
of total
population)
Figure 5. Europe 2020 indicators positioning
(Source: Eurostat, 2011)
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The table above compares the performance of the region against the EU 27 performance and
the targets set by the strategy. In this context, societal challenges are more vividly depicted, as
well as inherent differences against set criteria for inclusive growth. Austria and Slovenia
appear most well-prepared to embrace this strategy, as they almost attain targets in
employment rates, early leavers from education and tertiary attainment as well as renewable
alternative sources in energy consumption. Similarly, they have the lowest rates of people at
risk of poverty. On the other hand the rest of the countries again do appear to be challenged
with a different set of issues, except for the employment rate, which is a common
denominator. Romania has apparent deficiencies in early leavers in education, percentage of
access to tertiary educational attainment as well as risk of poverty. Greece needs to pace
towards bringing the gap concerning early leavers and improve tertiary education attainment
along with Bulgaria and Hungary, as well as reduce poverty and risk of social exclusion. Energy
consumption varies according to size, population and habits while expenditure on R&D seem
underachieved for most of the countries (3% is the target set). Notable challenges thus appear
in risk of poverty, exclusion and energy. As FORSEE adopts a challenge-oriented approach
towards themes relevant to economic competitiveness and societal challenges, this section
provides all relevant information.
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4 Policies and Priorities
The following section discusses the main cornerstones of R&D and innovation policies of the
European Union to provide a comparative base upon which national policies and their
respective trends can be further assessed as to their European Union dimension. As the
innovation system consists of a set of institutions that contribute to knowledge diffusion,
governments implement policies so as to exert influence on the innovation process. The
interconnection of institutions calls upon an analysis of the policies and the implications they
have on the innovation process. An orientation of the main innovation policies among the
participating countries is also presented in terms of the common innovation systems priorities
and it examines whether there is a common orientation among the countries and it focuses on
the way in which policies are conceptualized and coordinated so as to detect common
characteristics and incongruent elements.
4.1
Background Information on European Innovation Policies
The EU approach to innovation policy demonstrates a positioning of innovation as a key driver
for a prosperous future. According to the European Commission (20), innovation is the
precondition for the creation of a knowledge-based, low-carbon economy necessary to render
the EU competitive in the globalised world and to achieve wider societal goals. The challenges
that arise at the EU level are to better exploit the potential of the partnership between the
Union and the Member states and coordinate innovation at all levels. Framework conditions,
uptake rates of innovative products and services and the proliferation of synergies soon
became the kernels of the future of innovation policy. In particular the key initiatives and
background policies of the European Union are as follows:
Innovation Union
This initiative aims at supporting innovative ideas turn into products and services that can offer
growth and employment and at improving the conditions for accessing funding for research
and innovation in Europe. In addition, it aims at improving the quality of life of Europeans and
at creating a greener society. It consists of more than 30 action points and introduces the
European Innovation Partnerships, the use of public procurement budgets, the Innovation
Scoreboard and a European knowledge market for patents and licensing. More specifically, the
planned initiatives are the strengthening of Europe’s knowledge base (support coherence
between European and national research policies and business-academia collaborations, cut of
red tape and elimination of obstacles in researchers’ mobility), supporting new ideas to enter
the market via standardization, patent protection, public procurement, smart regulation,
reinforcement of private sector investments and of European venture capital investments. In
addition, another planned initiative is to secure the involvement of all regions so as to avoid an
“innovation divide” and ensure the proper use of the remaining structural funds. The European
Innovation Partnerships in turn address challenges such as climate change, health, ageing
population and food and energy security efficiently through collaborations of private and
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public actors in EU. Innovation Union is a flagship Initiative of the Europe 2020 Strategy for a
Smart, Sustainable and Inclusive Economy targeting smart growth.
Lead Market Initiative (LMI)
The LMI consists of the European policy for six important sectors through which new products
and services can enter the European market. The identified markets are: eHealth, protective
textiles, sustainable construction, recycling, bio-based products and renewable energies. It
further recommends the creation of conditions that can foster the transformation of
technological and non-technological innovation into products and services in innovationfriendly markets. The policy tools relate to the improvement of regulations, the
encouragement of public procurement, a more innovation-friendly standardization and
supporting activities. This can accelerate the market expansion of fast-growing products and
services in involved in lead markets. The LMI is one of the nine priorities that the
Competitiveness Council of December 2006 had set for reinforcing the innovation action at EU
level.
Social Innovation Europe (SIE) and Regional Innovation
With the aim of addressing social needs and changes, Social Innovation is an initiative that
focuses on innovative new ideas that can create new types of collaborations. Social
entrepreneurship is illustrated as means through which social innovation can be
conceptualized and implemented. Regional Innovation is an initiative that aims at exploiting
the potential of regional performances in the stimulation of innovation. It focuses on networks
that facilitate the interaction between businesses and the rest of the stakeholders
(universities, research institutes etc) active at the regional level as well as to regional
governments which have the budget and the competences to efficiently innovate. An example
of the abovementioned networks is the clusters initiative at the regional level.
In the context of societal challenges, the Strategic-Energy-Technology Plan (SET Plan) is a
thematic priority of ERA and a strategic plan by the EC to support the development and
deployment of cost-effective low carbon technologies. It is the first step to establish a policy
for energy technology in Europe and aims at achieving the 2020 Energy and Climate Change
goals and the transition to a low-carbon economy by 2050. The European Industrial Initiatives
(EIIs) bring together the Commission and the Member States as well as the industry and the
research community in public-private partnerships so as to achieve the rapid development of
energy technologies. A joint programming framework and the alignment of the R&D activities
to the priorities of the SET Plan are undertaken by the European Energy Research Alliance
(EERA).
Other relevant trends and drivers
 Clusters have been set as one of the nine priorities set by the Competitiveness Council
of December 2006 for reinforcing the innovation action at EU level. Their objective is
to support the cooperation between enterprises and research institutions and other
relevant actors in the same geographical area, to raise the levels of openness and
excellence of clusters, to increase the transnational collaboration between clusters
and to facilitate the integration of innovative SMEs into clusters.
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 The protection of Intellectual Property Rights (IPRs) has been considered as a priority
by the Competitiveness Council of December 2006 for reinforcing the innovation
action at EU level and as a means of increasing the competitiveness of Europe in the
global marketplace. The creation of a knowledge market for licensing and patents is in
the center of the EC’s action for the improved economic exploitation of IPRs.
 Standardization can reinforce the efficiency of innovation in Europe as the definition of
(technical) specifications can lead to improved future technological developments and
to large scale markets. For these reasons, Standardization in support of innovation was
set as a priority in the Competitiveness Council of December 2006 for reinforcing the
innovation action at EU level. In addition, a White Paper is currently being prepared in
the area of standardization of ICT.
 Public Procurement for Research and Innovation is seen as an instrument that public
authorities can use to stimulate private investment in research and innovation. In this
way, lead markets for new technologies can be created and firms can get the
opportunity to suggest innovative solutions. The integration of technology
requirements into tendering procedures is proposed and explained by the EC in the
document “Guide on innovative solutions in public procurement. Since 2008, thematic
networks of public procurers which focus on the LMI sectors are being supported with
the aim to increase their demand for innovation in products and services. Public
Procurement for Innovation has been set as a priority by the Competitiveness Council
of December 2006 for reinforcing the innovation action at EU level.
 The transformation of research results into commercial products and services as well
as the proper collaboration of public research institutions, industry, civil society and
other relevant actors for the success of this transformation are regarded as significant
elements for the industrial innovation. The elimination of barriers that affect this kind
of collaborations and the creation of an environment that supports knowledge transfer
can increase public investment in research.
 Including resource management and process management, Eco-Innovation is an
initiative that appears in several sectors of the Lead Market Initiative (renewable
energy, recycling, sustainable construction).
 The importance of know-how as a vehicle for the efficient commercialization of new
services and products is considered significant for the leap towards a more innovative
Europe. The initiative targets at the development of a more digitally literate workforce
and at the improvement of education levels and “soft skills”.
 The Innovation in Services policy aims at strengthening the innovative potential of the
service economy in Europe and draws the attention to non-technological innovationrelated services as well. With the exception of the ICT services sector, the innovation
level in the services sector is low and this policy has the objective to increase it. In
addition, Innovation in Services has been set as a priority by the Competitiveness
Council of December 2006 for reinforcing the innovation action at EU level.
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 The creation of national frameworks for venture capital funds is considered essential
for a more integrated venture capital market in Europe. EU aims at facilitating the
access to financing for innovative small enterprises by creating a common regulatory
environment among its members. In December 2011, the EC presented the Single
Market Act, which contained several legislative proposals that focused on venture
capital funds.
 Public Private Partnerships in Research (PPPs) is another thematic priority of ERA.
Three Public Private Partnerships in Research (PPPs) have been launched in 2009 by
the EC with the aim to engage top industrial companies, SMEs and research
organizations in Europe in the reinforcement of their research activities in three
significant industrial sectors -automotive, construction and manufacturing- so as to
achieve a more green and sustainable economy through innovation.
The role of ICT and other key technology enablers
Information and Communication Technology is viewed by the EC as the most significant
characteristic of successful innovation. It is a means of increasing the competiveness levels at a
European level, as ICT and other key technology enablers (such as micro- and nanoelectronics,
nanotechnology and other) can re-invent the way in which business is conducted and in which
products and services are created. The Competitiveness Council of December 2006 has set two
additional priorities for reinforcing the innovation action at EU level.
 Joint Technology Initiatives (JTIs): Joint Technology Initiatives (JTI) is a mechanism for
the performance of research at EU level which was firstly established in 2007 by the EC
(Cooperation Programme). They are long-term public-private partnerships to support
large-scale multinational research activities in key areas which can reinforce the
industrial competitiveness of Europe. The partnerships can involve industry actors, the
research community and public authorities. In addition, JTIs have been created to
function as a coordinating mechanism for the activities of the European Technology
Platforms (ETPs). The structures implementing JTI are independent legal entities which
function in an integrated way so as to carry out research.
 A Digital Agenda for Europe: This initiative, which is the successor of the i2010
initiative, aims at the creation of a new digital Single Market with simpler regulations
and management and at reinforcing greater interoperability for the ICT products and
services. The specific action areas are delineated shortly so as to provide the basis of
understanding of relevant policies at the national level.
1. A vibrant digital single market (telecom, internet services)
2. Interoperability and standards (between IT products and services) to ensure a
digital society
3. Trust and security (protection of infrastructure, information security)
4. Fast and ultra fast internet access (basic broadband etc)
5. Research and Innovation: the main challenges identified in national R&D
systems are the investment gap is related to weak and dispersed public R&D
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effort, market fragmentation of financing and the slow uptake of ICT-based
innovations, notably in areas of public interest. The R&D targets therefore are
to step up efforts and efficiency (e.g. 2020 flagship, cloud computing for
government and science), to drive ICT innovation by exploiting the single
market (public sector innovation, knowledge transfer, open access) and focus
on open innovation and open platforms for new products and services.
6. Enhancing digital literacy, skills and inclusion through digital literacy and skills
and inclusive digital services.
7. ICT-enabled benefits for EU society through the smart use of technology and
exploitation of information to address major challenges such as ICT for
environment , sustainable healthcare and support for independent living, c
cultural diversity and creative content, eGovernment and Intelligent Transport
Systems for efficient and mobility
8. International aspects
In general the level of innovation in the ICT sector in the European Union related to
fragmented technology policies (15), scarcity of large-scale projects and slow decision making.
However, the same report outlines some factors that are likely to shape the future of the ICT
industry: convergence of industries, embedding and integration of technology and closer links
between technology and applications. Crowd-sourcing and open innovation also surfaced as
critical issues for products and services (21) in which participatory innovation addresses
challenges related to the Single Market for knowledge intense services. Prospective challenges
at a EU level are ingrained in the level of ICT uptake in the economy (skills and demand) and
especially in the public sector. Public procurement has the potential to favour innovative
solutions and support R&D and innovation. In this regard, ICT R&D innovation is related to
both general issues (promotion of the knowledge economy, promoting adoption, investing in
R&D) and technological and market-oriented issues, skills and collaboration and suppliers.
Therefore, ICT RTDI cuts across a wide spectrum of horizontal activities and policies. The
remaining section thereof discusses policy issues in the countries under view to extrapolate
common challenges or fragmented logic of public intervention.
A table illustrating the main policies from a review of EC documents and work programmes can
be found in the Annex.
4.2
Snapshot on national RTDI and Innovation Policies
As a general overview, the general policy orientation and the priorities set in the countries
under review have been strongly influenced by their pronounced accession to the EU and its
inherent model towards development and growth. The level of influence is exacerbated by the
previous development model, as the partnership is represented by Greece that has accessed
the EU in 1980, Austria which accessed in 1995, three previously communist countries that
accessed in 2004 (Bulgaria, Romania and Slovenia) and two countries that are not members of
the EU (Serbia, Montenegro having gained candidate status). Our goal is not present a
thorough investigation of the development paths and the homogeneity with the EU Common
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Market structures but expose the degree of congruence with European policies and check
whether implementation and coordination of policies take place in similar settings.
In a typical, supply driven system, orientation and S&T priorities are driven by funding
opportunities and not by market demand. This bears several effects to the analysis. It is
acknowledged that the innovation policy mix should consist of both supply-side measures and
demand-side instruments (22). Policy mixes focusing on demand factors for innovation are
found to spur modernisation of the economy and accelerate catching-up of countries and
regions and in turn affect economic development. In this section in general, the importance of
the public sector in the process of innovation is examined in general and demand-based
innovation policy measures through the mobilisation of public procurement, regulation and
accompanying systemic measures such as lead markets etc. in particular. Supply-side measures
such as subsidies, loans and venture capital do have a positive impact of RTDI activities in the
private sector and are presented in conjunction with previous policies when available. Specific
demand-side innovation policies started to surface in Slovenia and in Austria, when in the
other countries it is still in deliberation. In Specific, public (green) procurements started to
flourish in Slovenia as well as open innovation paradigms. In Austria, public procurement for
societal challenges in the public sector and green energy appear to gain in importance, while
there are some Lead Market initiatives in Western Greece. However, this might have an impact
on foresight, since a shift in emphasis from supply to demand-side policies might change the
policy mix and delivery of services. According to the Innovation Union Competitiveness report
(23), successful demand-side policies are reported by enterprises to have a positive effect,
while supply-side measures were less likely to have positively affected enterprises’ innovation
activities since 2006, except from enterprises in knowledge-intensive services sectors
(although ICT RTD in countries where the state is the main developer of infrastructure could be
connected to non competitive sector through state procurement as well).
90
80
70
60
50
40
30
20
10
0
Greece
Slovenia
Supply-side
Romania
Demand side
Austria
Technology-Push
Bulgaria
Hungary
Demand-Pull
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Figure 6. Assessment of supply-side or demand-side public policies and technology-push and
demand factors 7
Figure primary source: Innovation union competitiveness report 2011 and authors’ calculations
The predominance of demand in boosting innovation is evident with some diversification in
Bulgaria and Hungary, where supply-side is considered more important, however this might be
generated by the existing industrial sectors and the export economy as well of the existence of
a strong local RD institutional setting, therefore in such a case the boundaries between supply
and demand led policies is blurred. It is illustrated that the majority of companies state that
only changes in technology-push factors are positive, thus the importance of public sector
policies on a national or supra-national level is obviated.
4.2.1
Main Innovation Policies Orientation
Sustainable development and economic growth is the main objective behind the main policies
among the participant countries (22). Taking into consideration the innovation gap between
certain countries it was expected that several differences regarding the orientation of the
innovation policies would occur. In fact, Austria’s position as an innovation follower – with the
aim of becoming an innovation leader in the forthcoming future- is incongruent with the
innovation position of the other countries, especially of those that are in the catching-up
phase. However, the domains towards which the orientation of the participant countries is
common are many, since formal national programs tend to include policy concepts included by
current trends. Nevertheless, there are some policies that direct efforts towards different
channels. The section discusses these channels in details along with the degree of occurrence
of patterns. The references under each country that support this categorization are given in
the Annex.
Two specific cases are discussed in more detail (Serbia and Montenegro) where international
and historic circumstances have imposed a quite different NIS model on these countries.
Serbia on the one hand has not synchronized documents with the Lisbon guidelines and
documents. The first attempts of Serbia towards putting priorities into the restructuring of the
RTDI system were only taken in 2006 with two new laws for science and innovation that aim at
the reduction of budget-based financing, introducing competition for all sorts of support for
R&D activities in the country, the inclusion of private sector into the competition process and
the creation of innovation infrastructure as part of government strategy for S&T and economic
development. In a similar case, Montenegro was faced with different challenges that
influenced ICT and RTD. The transition process had some negative effects related to
standardization of ICT RTD on the national level as well as harmonization with key regulations
and strategies on EU level in recent period. Current legal and regulatory background related to
ICT RTD has showed improvements towards introduction and harmonization of the “Acquis
7
Technology-push factors include the emergence of new technologies for exploitation while
demand-pull factors are pressure from competitors, new opportunities for market entrance,
new demand generated by government and the public sectors or commercial clients.
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Communautaire”. However, there are some regulations which need to be adopted in the
future, such as the Law on Mandatory Financing of ICT RTD, while some of laws need further
revision (Law on E-commerce, Law on Digital Signature).
The common priorities are shortly discussed below:
Increase of support towards all research-relevant actors – Supply of HR for RTDI (8/88)
Various measures here aim at lifelong learning, doctoral research, and in general the
knowledge and innovation based society by increasing support to the relevant actors in
research. Common patterns concentrate on the upgrade of higher education and increase
stimulation of research.
Support to SMEs- Entrepreneurship (8/8)
Support to SME’s is the cornerstone of national policies, where the majority of the countries
stress the importance of boosting investment of SME’s especially in new technologies amidst
the particular difficult economic downturn. Specific supply-driven measures are envisaged,
especially through innovation coupons, direct subsidies and access to finance. It is a common
priority for all countries since as it will be available later on BERD levels are extremely low for
most of the countries.
Development of Innovative infrastructure, Centers of Excellence, Technology
Transfer (7/8)
The main priorities here include innovative infrastructure and strentgening of regional
infrastructure. Innovation zones, incubators and spin offs are more pronounced in Hungary an
Greece. By contrast, in Serbia and Montenegro, the emphasis is still placed on new research
equipment and ICT infrastructure while in Montenegro some technology and science parks are
also envisaged and incubators in Serbia.
Increase of competitiveness- Exploitation of key national strengths (7/8)
Most of the countries have set targets to increase the competitiveness of their economies and
their business sectors so as to make their regions attractive places to invest and work in.
Greece, Hungary and Serbia and Montenegro have pronounced their competitive capacities in
various sectors.
Reinforce the participation of the private sector in R&D activities and fundingInnovativeness of companies (6/8)
Such priorities might be explicit or more implicit in other sets of policies for some countries,
nevertheless the collaboration of research actors, especially innovative companies and
research institutions.
Cooperation (6/8)
A sustainable basis for cooperation is in the centre of the policies of most countries. However,
the type of collaboration that is supported differs from country to country. For instance it may
be captured in terms of a sustainable education-business-science relation, among the main
8
denotes number of countries (countries where relevant policies have been identified.
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research intensive sectors or institutions or between applied research and the industry.
Cooperation might also connotate bringing research results into market or participation in
common calls for RTD projects. Nevertheless, cooperation is explicit for the majority of the
countries. In Montenegro, the emphasis is placed on international cooperation.
Improve quality of life and services through the use of ICT (3/8)
Improving quality of life and services through the use of ICT is only visible in Romania, Austria
and Greece, demonstrating a gap and limited attention of policy makers towards societal
challenges, which were outlined in the previous section.
Restructuring of the RDI system in a more functional and efficient way (2/8)
This priority (mainly in Greece and Romania) targets functional identified failures of the RTDI
systems and the re-organization of the systems so as to reduce fragmentations and make
optimal use of resources. It has to be noted that this priority is not explicit in the case of Serbia
and Montenegro, as the RTD systems of these countries are relevantly new and directly target
at deficiencies.
4.2.2
Main Innovation Systems Priorities
Priority setting cannot be easily measured and presented ( (22)(Inno-Europe 2012). Current
analysis only underlines the policy priorities found in the policy mix. The most common STI
policy priorities related to innovation detected among all the participatory countries relate to
the support and improvement of scientific research and infrastructure, the support of
innovation activities in SMEs as well as of the economic competitiveness of each country. In
addition, the promotion of entrepreneurship and increasing of productivity levels are further
common points. Most of these priorities seem to accommodate priorities set in the European
Innovation Policies and more specifically with the Europe Strategy 2020 and the Flagship
Initiatives Innovation Union and the Digital Agenda, including some nation-specific challenges
which are not present at EU level. Most of the declared priorities focus on supply side
elements.
The following list presents the common characteristics on the main priority axis of the
countries and baseline common priorities:



Education-Training/Lifelong learning and knowledge society. Country-specific
measures under this heading are not identical but tend towards the quality in human
resources, increasing the number of researchers and improving investments in
knowledge and excellence. the acknowledgement of lifelong learning is also gaining in
importance
Research Infrastructure: Most of the countries aim at the creation of either ICT
broadband infrastructure or technology transfer, business pareks r and investment in
larger facilities, such as supercomputing centers or R&D institutions. .
Addressing Societal Changes- Elimination of Risks and Inequality: this measure is only
visible as such in about half of the countries that take into consideration societal
challenges and improving the quality of life, such as employment, sustainability, health
facilities and combating social exclusion and climate change .
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





Creation and support of partnerships: The majority of countries aim at the creation of
partnerships in RDI fields between research actors, the private sector, financial
institutions, national-wide national networks and improving collaboration. These
commonly articulated policies are correlated with weak collaboration ties among
research actors.
Improvement of the institutional framework: This is also a commonly articulated policy
with measures aiming at addressing failures and bottlenecks in the institutional
frameworks and market access conditions to ensure efficient and coherence in
policies. In some cases, demand-side measures are also discussed.
Promotion of innovation activities in enterprises: Assistance towards SMEs, research
incentives in the private sector, stimulating investments. Specific supply-side measures
vary from country to country.
Improvement of the business environment: Measures here are similar to the
improvement of the institutional framework but instead focus on internationalization
of knowledge, exports, patents and start-ups.
Support of innovative entrepreneurship and competitiveness: Another common
denominator in policies aiming at developing knowledge centers throughout all
education levels, technology transfer schemes and access to capital or taxing facilities.
in low-performing countries these policies are more generically articulated towards
the reorientation of the productive base towards entrepreneur investments.
Horizontal support of ICTs: Romania and Greece specifically support application of ICTS
as a means of improving quality of life or electronic public services.
The relevant table is presented in the Annex for more information. Except for the common
priority axis, there are also thematic priority axes of each country in accordance with national
strategic frameworks.
Some common priorities can be identified at a first glance, such us: ICT, energy and the
environment, biotechnology, space and security and new materials for innovative products.
Still, these particular common axes reflect international patterns or reflect specific interests in
national contexts. Therefore, these particular fields may appear on national policies but that
does not necessarily entail actual implementation, instead there are on the rhetoric level.
Some additional conclusions on common sectors, though on a more generic level can be drawn
from an initial analysis of the Operational Programmes in each of the countries, thus pointing
to different foci when Structural Funds are involved. These are relevant only at the regional
and cross-border level and regard specific areas of intervention, such as environment,
transport infrastructure and increase of economic competitiveness. Relevant tables can be
found in the Annex.
4.2.3
Coordination and Capacity
The main issue arising from the coordination of policies is the lack of a central coordinating
mechanism that can coordinate the activities of the ministries , of other RTDI related actors or
even the policies themselves due to the fragmentation of their governance. In general the
mode of coordination is not explicit, relying on the interaction of several Ministries and
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organizations. Only Hungary and partially Greece and Montenegro have a more explicit
organization or interministerial structure devoted to coordinate STI policies. The clarity of the
systems and its coordination is different to conceptualize on a synthesis level due to the
divergent structures inherent in each country. Still, the degree of stability of the structure in
most of the countries is relatively low, as frequent changes take place in governance
structures. Furthermore, good governance elements cannot be reported, as the measurement
of the density of linkages, the frequency of consultations and the results of consensus-building
in corresponding countries remain unknown.
Coordination or RTDE in most of the countries takes place among various Ministries and
advisory bodies. Ministries with a common mandate to innovation activities include the
Ministries of Finance, Education, Information Society and Science. Another issue arising from
screening the national reports is that RTDI policies are not usually distinct but intertwined in
complex national settings of policy making and governance. A short overview of coordination
mechanisms in each country is again provided in the Annex for clarity and easy reference.
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5 Innovation Axis
This chapter presents the synthesized results for each of the pillars identified in the
methodological section, i.e. Human Resources, Knowledge Flows, Internationalisation of
knowledge, Infrastructure and Funding and Innovation and Business Environment.
5.1
Human Resources
This subsection provides further information on Human resources and the drivers and barriers
of the educational system to produce innovation inputs based on Human Resources.
Educational profiles and HSRT rates in the region are delivered and some issues such as the
importance of life-long learning and the robustness of other policies conclude the analysis.
5.1.1
Educational System performance and Science Base
As one can assume, the educational systems and the profiles significantly diverge in the region,
mirroring inherent differences in educational traditions and the prioritization of human
resources as an enabler for innovation.
The following table recapitulates basic indicators in human resources, so as to enable an
extrapolation of common strengths and weaknesses on a regional level. Secondary and tertiary
education attainment seems to be high in the region (exception of Romania indicating a low
tertiary level attainment). There a clear shortage in lifelong learning in most of the countries
scoring low and very low, but sufficient structures in Slovenia and Austria. Brain drain seems to
be a problem, even with countries with scarcity in RTDI. In particular, Bulgaria, Hungary and
Serbia are characterized by a scarcity of talent in RTDI, Romania and Austria have good supply
rates, while in Greece and Slovenia, the situation is about average. Another major weakness is
the RTDI graduates employed. The situation is somehow better in Hungary and Slovenia but
for the majority of the countries reviewed employment is low either due to unattractive
working conditions or structural mismatches in employment.
Table 5.1. Main education indicators in the region9
Education
indicators
GR
RO
AT
SI
BG
HU
RS
Secondary
level
education
attainment 10
High
(83%)
High
(78%)
High
(85%)
High
(89%)
High
(84% )
High
(84% )
High
(89%)
9
No relevant data have been provided for Montenegro, for Serbia
2010 data, Eurostat , comparison to EU average(79%)
10
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Tertiary
education
attainment 11
Medium
(28.4)
Low
(18%)
Medium
(23.5%)
High
(34.8%)
Medium
(27.9%)
Medium
(25.7%)
n/a
Level
of
lifelong
learning 12
Low
(3%)
Very
low
(1.3%)
High
(13.7%)
Very
High
(16%)
Very
low
(1.2%)
Low
(2.8%)
Low
(3.95%)
Scarcity
of
talent in RTDI
Relative
(12.5%)
Good
supply
(24.9%)
Good
supply
(21.1%)
Relative
(16.2%)
Scarcity
(12.4%)
Scarcity
(10%)
Scarcity
(10%)
Outward
mobility
of
researchers 14
High,
increased
supply
Brain
Drain
Diaspora
n/a
n/a
Brain
Drain
n/a
HSRT in total
employment
Low
Low
Low
Medium
to high
Low
Medium
to high
n/a
Low
0.3%
Low
0.9%
Medium
to high
Medium
Low
0.3%
Low
0.4%
n/a
13
15
Doctoral
degree
attainment
(%
of
population)
Source: National Innovation Reports
In addition, most countries suffer from high levels of unemployment in RTD personnel. The
educational structures of all countries serve a long-lasting tradition in science and therefore
provide skilled workforce, especially in IT. Only Austria shows a relatively low share of
graduates in science and technology, whilst the country is ranked as top in tertiary education.
A common challenge is to update the educational systems in terms of skills in RTDI. In most of
the countries the innovation RTDI systems are not yet well-structured and mature to enable
absorption of researchers and highly skilled personnel to stimulate research careers, as shown
by HSRT in total employment. This is also confirmed by the amount and strength of RTDI
actors, discussed later on. In Serbia and Montenegro in specific, the educational system is
characterized by an availability of scientists and engineers.
Still, all countries have experienced increases on public spending on education (both in terms
of expenditure and both on DGP on education), except Hungary. Although these metrics do
not entail the quality of the education system, as funds might be channeled to personnel,
infrastructure etc. it indicates a commitment to increasing science base and improving Human
Resources.
11
2010 data, Eurostat , comparison to EU average(33.6%%)
Share of persons having participated in education and training, 2009 data, comparison to EU average
(9.1%)
13
2009 data, percentage of population graduates, comparison to EU average (19.2%)
14
Partnership evaluations
15
R&D personnel in ICT sector and employment in high technology activities for 2009 combination
12
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Table 5.2. Spending in education
GDP on education
Public spending on Education
2009
2007
2008
2009
2007
2008
Hungary
5,3
5,1
10,4
10,4
Bulgaria
3,9
4,4
10
12,3
Romania
4,3
Serbia
4,7
4,9
Austria
5,3
Slovenia
5,2
11,8
5
8,9
9,3
5,5
11,1
11,2
5,2
12,2
11,8
9,5
Source: World Bank Statistics, 2011 (data unavailable for Greece and Montenegro)
120
100
80
60
40
20
0
AT
BG
HU
GR
RO
SI
ME
Quality of education
On the job training
Higher education and training
General Human Capital and Training Index.
Education
Figure 7. Competitiveness Aspects in Education and Rankings in the region (global rankings)
The figure above recapitulates information from section 3.12 (competitiveness aspects) as
regards education and science. Different rankings appear, and countries between 0-20 show
considerable global rankings, while between 20-40 upper global rankings. As indicated, Austria
and Slovenia are considered leaders in almost all aspects. Deficiencies can intuitively be
identified in higher education, on the job training in most half of the countries (Bulgaria,
Greece, Romania and partially Hungary). The general education quality pillar is admirable for
most of the countries, especially, Greece, Hungary and Slovenia. Quality of education appears
to be the third deficiency in most countries. It also appears that on the job training is a crucial
challenge, as most of the countries do not ensure good matches of skills between higher
education and the market, nor do they provide sufficient training and skills. Consequently, in
terms of this pillar 3 categories emerge bottom-up: Austria and Slovenia in one cluster,
Hungary and Montenegro in the second and Greece, Romania, Bulgaria and Serbia in the third
one. This clustering is intuitive and does not take into consideration the excellent ranking in
human capital and education in Greece.
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5.1.2
Links between education and RTDI systems
The participant countries appear to have different challenges to address in terms of education
and RTDI. Each country presents different levels of education (especially tertiary education)
and lifelong learning participation. Thus, the landscape consists of rather contradictory
elements.
Each of the identified clusters is presented in more detail. More specifically, Austria and
Slovenia appear to have very good levels of education, PhD graduates and lifelong learning.
The only challenges that the countries face are the rates of unemployment due to the vast
number of tertiary graduates, and the shortage of human capital in RTDI which is however
being addressed by new policies. These two countries score very close to EU average in terms
of employment in knowledge-intensive activities.
The second cluster (Hungary), presents increasing but insufficient levels of S&E graduates and
PhD holders and an unattractive environment for the retention of the existing graduates that
results to brain drain. When considering Montenegro, good quality research institutions and
availability of scientists and engineers appear to be a common denominator in the overall
system.
Countries in the third cluster present significant weaknesses in training levels on technological
innovation inside companies, lifelong learning and absorptive capacity of the RTDI systems. In
spite of the scarcity of tertiary graduates in Bulgaria, these countries experience brain drain
and unemployment as well as a non-conducive environment for employment in research and
technology. Therefore, the most striking element that could be said that most countries share
is the talent scarcity in the RTDI sector for which Greece and Romania report an amount of
human capital that cannot be absorbed by the country itself, resulting to significant brain drain
to other countries. Greece and Romania further suffer regional inequalities in total
unemployment as well in knowledge-intensive employment, although the total rankings along
with total number of researchers of Greece can classify it in a different cluster. Both Greece
and Serbia in this cluster possess increased capabilities in total number of R&D researchers.
Pronounced misalignments between the industry’s needs and the response of the education
system are about present in each of the clusters with a different degree of importance.
The links between education and RTDI can be better reflected in the percentages of
employment in Knowledge-Intensive high technology services as well as R&D personnel. The
percentage of employment in knowledge-intensive activities in high technology represents a
fraction between 1.5-3% on a country level.
Bulgaria, Romania, Hungary and Greece are characterized by a descending trend between
2007 and 2009 while in Slovenia the trend is increasing (and marginally for Austria). No major
differences are noted on a regional level and the EU-27 level, although Greece and Romania
perform fewer than 2% of total employment. The situation in these two countries in
exacerbated by regional inequalities in total unemployment as well in knowledge-intensive
employment ranging from 0.5% to 3.%. The general picture on employment in knowledgeintensive activities (all sectors) is more encouraging as a range of about 30-35% is noted in
Austria and Slovenia as well as Greece and Hungary. Romania scores the lowest percentage of
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19% while Bulgaria precedes the 30% threshold. The employment rates however in both
columns indicate that about 1/10th of the personnel employed in knowledge/intensive
activities is employed in high-technology knowledge intensive activities ( in Greece this
percentage is notably smaller). The diachronic development of employment in knowledgeintensive activities is illustrated in the schema below, indicating stagnation between 2008 and
2009 probably due to the global financial crisis. ICT personnel in the economy (as % of total
employment) are relatively low in all countries (Eurostat, 2011). 2007 data denote that only
Hungary maintained a 3.7% percentage, followed by Austria and Slovenia (2.5-2.7) while the
rest of the countries fluctuate around 1.5%. However, when examining R&D personnel in the
ICT sector, it occupies around 15-20% (except from Romania) indicating an increased relative
weigh of ICT in total R&D. These indicators do not necessarily disclose links between academia
and industry but provide a picture on R&D personnel and possibly the “weighing” of intensity
in each economy.
The situation is complemented by total R&D personnel and researcher in each country, in
order to cover Serbia. As a percentage of total employment, an increased share or R&D
personnel in employment is noted mainly in Austria and Slovenia, as well as Greece. Bulgaria
and Romania are noted by a small percentage, while in Serbia the percentage lies within the
median of national scores.
Table 5.3. Education and RTDI in the region
Number of employed persons in knowledgeintensive high-technology activities in
business industries/ total employment
European Union (EU27)
Austria
Bulgaria
Hungary
Greece
Romania
Annual data on
employment in
total knowledgeintensive activities
at the national level
Total R&D
personnel and
researchers in
all sectors unit
2007
3,29%
33,13%
2.363.460
2008
2,58%
36,94%
2.471.292
2009
2,62%
38,2%
2.554.862
2007
2,59%
30%
53.252
2008
2,41%
34,86%
58.077
2009
2,62%
36,52%
58.002
2007
2,54%
22,1%
16.940
2008
2,18%
27,27%
17.219
2009
2,08%
29,06%
18.230
2007
3,28%
28,2%
25.954
2008
2,27%
33,24%
27.403
2009
2,19%
34,23%
29.795
2007
1,95%
25,51%
35.629
2008
1,66%
32,52%
2009
1,72%
32,88%
2007
1,52%
14,4%
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28.977
Slovenia
Serbia
2008
1,19%
18,98%
30.390
2009
1,26%
19,83%
28.398
2007
2,8%
26,45%
10.369
2008
2,78%
31,19%
11.594
2009
3,16%
32,29%
12.410
2007
-
18.153
2008
-
19.321
2009
-
20.067
Source: Eurostat-- Science and Technology-- High tech industry and knowledge intensive (non
available data for Montenegro.
Annual data on employment in total knowledge-intensive activities at the
national level
45,00%
40,00%
35,00%
30,00%
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
2007
European Union (EU27)
Hungary
Slovenia
2008
Austria
Greece
2009
Bulgaria
Romania
Figure 8. Employment in knowledge-intensive activities progress 2007-2009
5.2
Knowledge flows
Knowledge flows are considered as the “blood” of each innovation system, enabling either
strong performance or creating fragmentation of actors and weaknesses in commercialisation.
Weak knowledge flows hamper the creation of a knowledge-base economy, as activities are
becoming increasingly knowledge-intensive and the economy required skilled people for high
technology industries (24), (25). Mapping knowledge flows proved to be rather a complex task
for the national reports, as limited bibliography and evaluation has been devoted. However,
some channels for knowledge flows and bottlenecks have been identified as hampering factors
to innovation performance. We note that knowledge flows consist of a separate pillar, as it
clearly reflects the systemic approach to innovation underlying by the present study. More
specifically, the chapter draws the attention to the measures that countries have in place to
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ensure and promote the collaboration between different actors of science such as universities
and research institutes and actors of the industry such as big companies and SMEs.
5.2.1
Science-industry collaboration
The overall situation is characterized by rather low levels of collaboration between science and
industry. Most of the countries involve report a rather weak collaboration of the research
triangle; however this cannot be based on metrics. The only metric available refers to the GCR
rank reported previously and in particular the “University-industry collaboration in R&D”. The
results classify Austria and Slovenia in considerable global rankings (18th and 37th respectively),
which is distinctively different from the rest of the countries. Hungary and Montenegro score
in medium terms, however Greece, Bulgaria and Romania are classified among the last ranks
globally (112th, 110th and 102nd) indicating severe structural inefficiencies within their systems.
In the same context, the robustness and amount of measures put forward in each of the
countries serve as a measure of the intention to “correct” such failures. For instance, Austria
reports a sufficient number of institutions for public/private partnerships, and Slovenia reports
a small number but strong relationships between firms and research centers. Hungary has
several measures in place to support further collaboration of this kind. The rest of the
participant countries (Greece, Bulgaria, and Romania) lack strong intermediary mechanisms
and efficient ways of commercially exploiting research output. However, they report that there
are measures and policies in place for the improvement of the situation. These measures are
under OPs and mainly aim at the creation and development of technology transfer centers,
innovation poles, technology incubators and platforms and other means of reinforcing the
collaborative links between science and industry (e.g. programme “cooperation” and clusters
in Greece, technology transfers, commercialization, pre-procurement strategies, PPP’s etc.).
The issue of these links is a long-lasting challenge and needs concentrated action. In countries
such as Austria, Slovenia and Hungary, historically there are long-established partnerships
between businesses and higher education institutions and intermediary organizations have
been “bridging” mechanisms deeply embedded in the innovation culture, characteristics that
are almost non-existent in the rest of the countries, in which the research systems corresponds
to an orientation in a more traditional productive sector.
In a different survey, Serbia and Montenegro feel about university-industry collaboration in
R&D that businesses and universities collaborate adequately but not intensively.
The following matrix revises most of the information and measures put forward in each
country, that might have some explaining power on the specific structures. Further
information can be found in the Annex.
Table 5.4. Collaboration parameters
Collaboration parameters
AT, SI
16
HU, MEN16
GR, BG, RO,RS
Information on Montenegro and Serbia are very limited.
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Strengths
actors
between
++++
++
-----
Intermediary units
++++
++
---
Inter-disciplinary
centers of excellence
++++
++
?
Measures 17
Centres of Excellence,
Technology Platforms,
Clusters
Policy support measures
such as pre-commercial
procurement
Jointly-run
competence centers
and Joint technology
platforms in Austria
knowledge
circulation
and the exploitation of
research results. Joint
university-industry
research
centers
in
Hungary.
Technology transfer,
clusters, cooperation
enhancement
measures,
industry
liaison
offices,
business incubators,
technological parks,
Joint
technology
platforms in Greece
Technology/innovation
centers in Montenegro
Source: National Innovation Reports
5.2.2
Partnerships
The degree of cooperation among key actors and the links between European policies and
initiatives and the policies that each country has in place is also explored here. Publication
rates and further indicators are presented for all the countries in which data were available.
Partnerships and collaboration schemes are conceptualized and implemented differently in
each country thus the only emerging paradigm regards strength in patenting and a general
tendency towards innovation absorption. Hence, the situation in each country is presented
separately in this section, as commonalities are very limited and we run the risk of
generalisation. The per country analysis can be found in the Annex.
Table 5.5. Publication, licence and patents performance in the region18
European
Union (EU27)
17
18
Scientific publications
among the top 10%
most cited publications
worldwide as % of total
scientific publications of
the country
License and patent
revenues from
abroad as % of
GDP
Public-private copublications per
million populations
0,11
0,21%
36,2
Existent for the first two groups , planned and existent in the third.
No data for Montenegro
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Austria
0,12
0,19%
56,3
Bulgaria
0,03
0,02%
2,3
Hungary
0,05
0,62%
19,6
Greece
0,09
0,01%
12,5
Romania
0,04
0,12%
6,3
Slovenia
0,07
0,08%
51
Serbia
-
0,1%
4.2
Source: IUS2010, Thomas-Reuters database, Eurostat
The parameters held in the table cannot however be viewed as decisive of partnership
strengths. They only provide an approximation of research outputs that reach the academic
community or create added-value in their economic system. As expected, Austria scores best
in scientific publications and co-publications, followed by Greece, Slovenia and Hungary.
Greece’s lower score in co-publications is indicative of the partnership strengths. In license and
patent revenues the situation is quite different, as Serbia and Hungary manage to create
revenues in their economies and to a lesser degree Austria and Romania. In Greece and
Bulgaria, revenues are only marginal. This is also an indication of the low level of
internationalization of knowledge, discussed later on.
5.2.3
Key actors
SEE countries under investigation present a diversified picture in terms of the level of actor
involvement in the National Investment Systems in accordance to GERD and funding
specificities. The level of gravity or actors in each country is highly dependent on the systemic
structures of the research as well as the government system. Thus, any strategic direction in
R&D might affect or be affected by the degree of adjustability of the main research actors in
new strategic directions. The main actors in RTDI and the degree of variance in the countries
are listed below, however it is noted that the different categorization scheme in every country
poses some complexities in the following classification:
Public Research Organizations: Public research organizations receive state funding for
theoretical or applied research. These organizations are extremely important for
Romania and Greece as well as in Bulgaria, where academies of science are important
state actors. Science units in government and government agencies cover a notable
share in research in Bulgaria while in Greece, competitive calls through ministries is a
norm of research activity distribution. Serbia also has an important amount of
government-owned institutes (57) relative to its size; however there is no evidence on
prominence or excellence.
Universities: Universities are the main research performers in most of the countries,
especially in Greece and Serbia and to a lesser extent in Austria and Hungary.
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However, universities play a vital role in every country’s research system with high
records in excellence.
Private Sector Research Organizations are more visible in Austria. In specific, the
relatively high share of BERD obviates the undertaking of research on behalf of private
Austrian research organisation.
Private companies and Multinational Companies (MNC’s): Again, research activity is
remarkable in Austria and Hungary. Especially in Hungary, major business actors such
as Ericsson and Nokia, Microsoft and SAP have partnerships with higher education for
research. The Business enterprise sector is significantly smaller in Serbia (Kutlaca,
2008)
Other actors: A wide array of other actors also partakes in the RTDI system such as:
Incubators and technology/incubation centers (Montenegro), innovation zones
(Greece and Romania), Technology platforms (Slovenia), international research centers
and special services or facilities (Romania). NGO’s part in the RTDI agenda is detectable
in Bulgaria and R&D centers in Serbia, occupied with technological development.
Private investors only occupy a marginal part in research activities while interest
organization only have a small part in Slovenia
Regional actors are notable in Serbia and Montenegro, such as entrepreneurship
enhancement centers, institutes and agencies, as well as chambers.
In general, the proliferation of public R&D organizations and research centers in the countries
indicate some implementation of the political rhetoric to invest in R&D. A notable exception in
this landscape is notable in Serbia, where the number of R&D organizations actually decreased
from 1980 and the number of R&D organizations and the private sector is almost not
integrated in the R&D system and private educational institutes do not partake in research
activities at all. Specifically ICT is a strong thematic profile for some business incubators,
technology transfers and information centers in Romania, Serbia and Montenegro to a lesser
degree. ICT centers for excellence also exist in Bulgaria as well as several Academies in Bulgaria
and Universities.
There are some notable specificities per country that we shortly refer to:

In Slovenia, the research stakeholder research is less distinct with types of
collaborative tri-sector participation and high degree of diffusion among stakeholders.
The tri-sector participation is mainly among technology platforms, centers of
excellence and clusters. Centers of excellence for example combine research facilities
at different public research units, thus the nature of RTDI is inter-disciplinary. In
addition the classification of research actors pole apart from the rest of the countries,
as there are government executing, bridging institutions, technology innovation
support organisations, financial intermediaries and interest organizations.

Regarding excellence, in Greece there are top performers in Chemical engineering,
Molecular biology, biotechnology and genetics, Agrobiotechnology, Computer Science,
Roman and Greek antiquity, Byzantine studies, Applied and computational
mathematics, Immunology, Astroparticle physics and Oceanography as well as
agriculture.
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5.3

In Austria, competence centres exist for advanced computing, mechatronics,
eCommerce, Microsystems, ETourism, Materials, Processing and Product Engineering,
Industrial Biotechnology, Information and Communication Technologies in Austria. In
Bulgaria, excellence is dispersed in mathematics and informatics, mechanics, system
engineering, robotics and ICT.

In Romania, the activity profile of scientific and technological parks includes ICT,
electronics and microelectronics, environment protection and unconventional energy
sources, micro and nanotechnologies, micro engineering and new materials,
chemistry, physics, control of technological processes, bio-technologies, food industry,
audio-video technologies, economical sciences, marketing.
Internationalisation of knowledge
In a more “narrow” sense, internationalisation of knowledge refers to the capacity of an
economy to utilise complementary resources associated with a local innovation system and
the mostly regards foreign-located R&D (26). In this report however, our intention is to
examine only spill-overs of knowledge in terms of patents, publications (codified knowledge)
as well as external trade indicators in the knowledge economy. It is not a normative intention
to isolate knowledge flows but rather present some indicators related to the degree of
extroversion of the economy in terms of knowledge. We note that in literature (27), the
openness of the NIS was measured by R&D in multinational firms, technical alliances,
technology transfer abroad, international trade and international flow of scientific personnel.
Due to difficulties in gathering such information we only focus on 3 basic assessment
indicators.
South-East European countries are among those having limited cross-border activities, and
quite differenced trade patterns. It has been previously shown that the external balance in ICT
trade is negative in most of the countries with the notable exception of Hungary, which
exceeds the rest of the countries also in high-technology exports, as part of total
manufacturing exports, revealing a clear national advantage in ICT manufacturing. Greece and
Austria also perform well in high-tech exports. Another remarkable finding of the analysis is
the relative specialization in ICT services trade than ICT goods. This trend is notable in Bulgaria,
Slovenia but Romania in particular, where ICT service exports are about 1/5th of its national
service exports. These findings are herewith combined with firm-level data and their
propensity to engage in cooperation with other countries. According to the Innobarometer
report 2011 (28), Greek enterprises are most willing to outsource tasks exceeding the EU
average along with Slovenia, while Hungarian enterprises are less willing to engage in
outsourcing. Enterprises in Austria, Bulgaria and Romania consider outsourcing an important
activity. As regards investments, Austrian and Slovenian firms are most active in making
investment in other countries, while Hungarian and Romanian firms are the least. Hungary and
Romania are also least likely to recruit employees from other countries, while Austria, Slovenia
and Greece are more open to international recruitment. In summary, the highest proportion of
cooperation with countries outside the EU was found in Slovenia (26%), Austria and Greece
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(20%). The lowest proportion of innovative enterprises cooperating is in Romania and Bulgaria,
one of the lowest in the EU.
The following table summarizes some the key data for patenting, trade specialisations and
participation in Framework Programmes. Other indicators to manifest commercialisation
routes were not identified and in most of the cases the reference year is not very recent. ICT
and patent applications in societal challenges present relative strengths in the area (apart from
Romania and Bulgaria), indicating a relative advantage and scientific strength in these areas. As
trade indicators signify, the common strengths in high-technology exports are electronic and
telecom, pharmacy and computer/office machines. Still, according to these data
commercialisation routes appear to be weak, considering the strengths in patenting and
cooperation in terms of research projects through Framework programmes and relative
performances.
Table 5.6. Patents and specialisation in the region19
GR
AT
BU
RO
SI
HU
Patents
ICT
patents
applications
(as
percentage of
total) 2006
25.2%
23.7%
9.3%
6.9%
9.7%
6.6%
Biotechnology
patent
applications,
(as
percentage of
total) 2006
6.3%
4.4%
n/a
1.5%
6.1%
3.3%
Patent
applications in
societal
challenges as
percentage of
total, 201020
29%
14%
10%
6%
25%
25%
Trade Specialization
Hightechnology
trade as % of
total, 2009
19
20
8.5%
imports
10.6%
imports
6.3%
imports
8.7%
imports
7.1%
imports
17.2%
imports
5.9%
exports
10.8%
exports
3.6%
exports
5.4%
exports
5.2%
exports
20.2%
exports
Data non available for Serbia and Montenegro
OECD data
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High
technology
exports (% of
manufacturing
exports)
11.25%
11.48%
8.2%
10%
6.5%
24%
Hightechnology
exports
by
group, 2008
(only notable
segments)
Electronics,
telecom,
aerospace
and
pharmacy
to an equal
degree
Electronics,
telecom,
and to a
lesser
degree
pharmacy
Electronics,
telecom
dominant
sector and
some
computer
and office
machines
and
scientific
instruments
Electronics,
telecom,
pharmacy
to an equal
degree
Electronics,
telecom
computers
and office
machines,
scientific
machines
to an equal
extend
Electronics,
telecom
dominant
sector and
some
computers
and office
machines
Average of FDI
inflows and
outflows,
relative to
GDP (%),
201021
0.4%
2.9% (from
1.7%)
0.5%
0.1%
0.4%
0.6% (from
1.9%)
Low
High
Low
Cooperation
Participation
in Framework
Programmes
(number
of
projects and
financial
contributions)
High
High
Low
Source: Eurostat, 2011
It would be theoretically challenging to examine the trade patterns permeating ICT and hightechnology products in general. The external balance in ICT trade is negative in most of the
countries with the notable exception of Hungary, where ICT trade (exports) represent about ¼
to 1/5th of its national trade. Serbia on the other hand presents the most negative external ICT
trade balance, since the country does not present any advantages in ICT manufacturing or
investments. Hungary exceeds the rest of the countries also in high-technology exports, as part
of total manufacturing exports, revealing a clear national advantage in ICT manufacturing.
Greece and Austria also perform well in high-tech exports. Greece and Hungary in particular
have increased the share of high-tech manufacturing exports sharply from 2007 to 2009.
Another remarkable finding of the analysis is the relative specialization in ICT services trade
21
The percentage for Serbia in 2008 is 6%
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than ICT goods. This trend is notable in Bulgaria, Slovenia but Romania in particular, where ICT
service exports are about 1/5th of its national service exports. These trends need to be
validated further in order to reveal competitive advantages.
Table 5.7. ICT trade balance and high-tech trade balance in the region
Source: World Bank statistics
Table 5.8. Participaton of SEE countries in funding programmes (AT excluded)
Austria
Bulgaria
Hungary
Greece
Romania
Slovenia
Serbia
2007
2008
2009
2007
2008
2009
2007
2008
2007
2008
2009
2007
2008
2009
2007
2008
2009
2007
2008
2009
ICT goods
exports (% of
total)
ICT service
exports (% of
service exports)
ICT goods
imports
6,13%
5,77%
5,49%
2,37%
2,62%
3,58%
24,52%
24,62%
2,97%
3,21%
2,99%
3,14%
5,34%
8,36%
2,87%
3,52%
3,79%
1,49%
2,22%
6,43%
6,14%
6,54%
4,33%
5,59%
5,61%
7,40%
8,26%
1,61%
1,68%
2,17%
18,02%
15,81%
18,93%
5,15%
6,72%
7,16%
6,11%
6,69%
7,99%
7.5%
6.89%
7.02%
5.9%
5.5%
6.4%
20.64%
78.83%
6.29%
5.61%
5.87%
7.3%
7.5%
9.4%
4.83%
5.1%
5.6%
6.7%
5.36%
Hightechnology
exports (% of
manufacturing
exports)
11.31%
10.92%
11.48%
6%
6.56%
8.2%
25%
24%
8%
9.95%
11.25%
3.66%
7.23%
10%
5.34%
6.10%
6.5%
FP6 share
FP7 success
rates
No of COST
actions
Areas of interest
BG
0.62%
17%
109
GR
3%
17%
196
Physics and
Medicine
Engineering and
Medicine
RS and MEN
0.18%
14%
84
Engineering
RO
0.81%
16%
116
SI
0.83%
18%
122
Materials,
Physics,
engineering
Materials,
Physics,
engineering
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Source: (29)
Table 5.9. EC Funding and participation per country
Country
Percentage of total
Participations
participation
Greece
4.16%
592
Austria
3.56%
502
Hungary
0.56%
129
Slovenia
0.46%
87
Romania
0.32%
82
Bulgaria
0.19%
62
Serbia
0.12%
36
Montenegro
0.002%
4
In a pan-European context, Germany, the UK, Italy, France and Spain remain top recipients of
funding. Greece and Austria are in the 8th and 9th place on a pan-European scale. Greece is
the 6th country in the EU in terms of coordination of projects. A further analysis shows that on
a regional level, Attica in Greece and Wien in Austria are among the top 50 European regions
by participation and funding. On the other hand, the rest of the countries’ participation hardly
equals half of Austria’s participation. Additional information is provided in the Annex. It is
equally noted that it is hard to extrapolate areas of strength from participation in FP7, as in
some countries, national funding might also heavily influence orientation of research and R&D
structure and the variant success rates in different areas complicate the situation further.
It is clear that the financial volume of FP7 grants is received by Greece with signed financial
grants equaling more than €312M. Engineering, physics and medicine are the most common
areas of interest of SEE countries for participating in European Funding Programmes.
In addition, the European Commission’s ICT statistical report for FP& Annual Monitoring (30)
for the ICT theme of the 7th Framework Programme indicates a difference between old and
new Member States in terms of participation and Funding
In terms of clustering on this pillar, the following table presents the results. To date, the EC
financial contribution awarded to signed agreements for SEE participations represent 64% of
the initial requests.
Cluster
Medium
Low
Slovenia, Bulgaria
Romania, Hungary
Patenting
in Greece, Slovenia
knowledge-intensive
Austria, Hungary
Bulgaria, Romania
High
technology Hungary
Trade orientation
Austria, Greece
Greece,
Slovenia
Bulgaria,
ICT trade orientation
Austria, Romania
Greece,
Bulgaria,
Patenting
orientation
High
ICT Greece, Austria
Hungary
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Slovenia
5.4
Infrastructure and Funding
Whilst infrastructure can be considered a characteristic of the genesis of an innovation system,
funding is a more “horizontal” issue that merits isolated treatment. However, albeit
heterogeneous, these two elements are presented together as baseline enablers of
innovation.
5.4.1
Funding Considerations
It is equally important to conceptualize the funding mechanisms used for RTDI and innovation
in each country, as at the regional level, the funding models of RTDI policies present significant
differences. The specificities on funding models of RTDI policies might affect regional foresight
since policy-making needs to orient itself according to the modes and differences in each
country. This in turn might affect centralized decision making and implementation of
scenarios, as different contributions of the public and private sector bear different significance
and financial implications.
Regarding the contribution of the private sector in RTDI funding there seems to be a big gap
with countries in which its contribution is insignificant (such as Bulgaria and Greece) on the
one hand and countries in which its contribution is increasing (such as Romania, Austria,
Hungary and Slovenia). Public funding appears to be of high significance especially for Bulgaria
and Greece. In addition, there is a tendency towards the support of applied research for
countries such as Austria and Romania. Moreover, the dependence on the European
Community Funds appears to be very strong for certain countries such as Greece and
important for others such as Slovenia and Romania. Tax incentives assist RTDI only in certain
countries. Goals of achieving higher performance in RTDI funding (GERD as a % of GDP) seem
to be feasible only for few countries (such as Slovenia and Austria).
The discrepancies can be seen as follows:22




22
Some countries (Austria, Greece, Hungary) receive a significant amount of community
funds for research through framework programmes. According to (31)these countries
receive about 5% of EU funds. Serbia and Montenegro receive about 0.18%
Greece, Bulgaria and Romania as well as IPA countries (Serbia, Montenegro) are quite
dependant of structural funds, although it is difficult to assess what part where
dedicated to R&D
Direct government is very strong in the majority of the countries. Especially, Greece,
Bulgaria, Romania, Serbia and Montenegro are dependent on public funds. In most of
these countries, about one third goes to university funding.
Austria and Slovenia are the only countries with increased BERD levels (Business
Expenditures on R&D) and within their goals is to reverse the percentage of public
information is not homogeneous among countries
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
funding to the minority of funds. These countries also use indirect funding (eg. through
tax regimes) as an instrument for spurring R&D amounts.
Companies in Montenegro appear to spend little amounts on R&D (44th rank out of
142 countries) while Serbian enterprises only spend a minor amount of R&D.
On average, SEE countries were granted around €6 per inhabitant for FP7 projects, compared
to €32 for the EU27. On a per capita basis, Greece and Slovenia have better performed FP7
grants but in contrast, Romania was in top in terms of absolute financial grants and in respect
to the number of eligible. (29). The section discusses synthesized findings on funding; however
for Serbia and Montenegro, data are not available.
In summary R&D expenditure by source of funds can be illustrated as follows:
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Austria
Slovenia
Business sector
Hungary
Greece
Government
ABR
Bulgaria
Romania
national sources
Figure 9. R&D expenditure by source of funds 23
(Source: Eurostat, 2008 and own calculations)
Another funding aspect is venture capitals, which is among the innovation enablers. Venture
capital investments are defined as private equity being raised for investment in companies
(Eurostat). The volume of venture capital in GDP is rather small ranging from 0 to 0.005% of
GDP. By using the amount of venture capital as a proxy for the relative dynamism of new
business creation, relative data from Eurostat indicate a range from 0.002 to 0.05%. Notable
increases of venture capital expansion can be observed in Austria, Hungary and Greece
(however in Greece this trend was reversed in 2009).
23
ABR refers to other sources
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To provide a more holistic picture of R&D, we first present the expenditure on R&D as
percentage
of
the
GDP
(government
and
business
sector)
Gross Domestic Expenditure on R&D (GERD) as % of GDP
3,00%
2,50%
2,00%
1,50%
1,00%
0,50%
0,00%
2007
European Union (EU27)
2008
Austria
Bulgaria
Hungary
2009
Greece
Romania
Slovenia
Figure 10. Gross Domestic Expenditure of R&D as % of GDP
(Source: Eurostat, 2011)
The share of R&D as a percentage of the Gross Domestic Product (expenditure of the public
sector) is remarkable for Austria, which is the only country approximating the EU goals of 3%
R&D expenditures as percentage of GDP. Slovenia presents a dynamic share, whilst the rest of
the countries do not surpass 1.5% and in some cases, like Bulgaria, Greece and Romania the
respective amounts are around 0.5% of government expenditure.
GBAORD appropriations (Government Budget Appropriations or Outlays on R&D) referring to
budget provisions for the same reference years, not to actual expenditure are quite similar to
the actual expenditure, with the exception of Austria, presenting about 1.5% budget
appropriations, less than actual government expenditure. Romania and Bulgaria also projected
about a 0.8% expenditure, however actual expenditure were lessened, probably indicating a
change in budgetary priorities (Eurostat data, 2011)
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Figure 11. Business R&D expenditure a as % of GDP
(Source: Eurostat, 2011)
Business Sector expenditures on R&D present an analogous picture in terms of country
rankings. Austria actually surpasses the EU average with increasing shares reaching about 2%.
Slovenia has also surpassed the 1% threshold, followed by Hungary which demonstrates an
increasing trend. The lack of data for all years renders further comparisons complex, however
in most of the cases the share falls between 0.01 % and 0.5% which remains below the EU 27
average. We then go a level of detail further and indicate the distribution of BERD shares in the
countries.
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I
Figure 12. Distribution of ICT BERD shares in EU countries
(Source: 2010 report on R&D in the EU)
In order to further link RTDI and ICT, we present the R&D expenditure of business in the ICT
sector as a percentage of total R&D expenditure in all sectors. The percentage of the ICT sector
fluctuates between 10%-20%. Bulgaria spends about 19.93% to ICT, followed by Austria and
Slovenia (17,41% and 16.23% respectively). The Hungarian business sector spends about
13.86%, while Greece and Romania 11.5% (Eurostat, Information Society indicators, 2011).
However data availability is valid only for 2007, thus a comparative analysis of the shares
dynamics cannot be achieved for recent years.
5.4.2
Existing infrastructure in the region
This section discusses some of the background drivers for innovation such as existing
infrastructures well as the science and personnel. In terms of infrastructure, hard
infrastructure (such as telematics networks, backbones, participation in connectivity networks
etc) is explored to identify the readiness of the countries in the ICT market and special markets
that have potential of improvement. Progress towards digital agenda, online sophistication
and delivery of services (eGovernment, eBusiness etc) is discussed in the next section to
indicate the maturity of the internet and digital market.
Most of the structural funds in the region where channelled towards the development of such
infrastructure so as to ensure the conditions for research. Such prioritization was given
especially to Greece and Romania. Austria on the other hand was one of the early adopters of
backbone structures.24 Available hard R&D infrastructure in the region consists of:
National Research & Technology Networks: Normally, such networks interconnect
academic and research institutions, education and worldwide networks. For example,
the Greek Research & Technology Network connects education and academic
networks upon a broadband network with optical fibres. The National Network for
24
No relevant information was provided for Hungary and Slovenia
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Education and Research in Romania serves the same purposes in conjunction with
scientific databases and inventories for research results. Austrian infrastructure
ensures connectivity. In Bulgaria, the National Research and Education Network is a
partnership connecting science centres, academia and public administration.
National Portals of public administration. In Greece , portal “ Ermis” ensures the use of
eGovernment services upon a high eSophistication level as well as the national public
administration networks ensuring broadband communication for public administration
Regional networks: In Greece Metropolitan Area Networks are optical rings
infrastructures in municipalities and wireless networks in cities.
Grid infrastructure for research: Developed in Bulgaria, Greece, Hungary, Romania,
Serbia by the national Grid Initiatives
Supecomputing centres exist in Romania and Bulgaria, consisting of high level
infracture for modelling and simulation in several science fields.
There are also some International connections and memberships such as:
International partnerships are quite dominant in Romania, where infrastructure was
built or operated under collaborations with conventions and initiatives such as as the
European Space Agency, the European Strategy Forum for Research infrastructures the
European Grid initiative etc. In addition, the Romanian Agency for Administration of
the Romanian Informatics network for Education and Research is a member of the
GEANT network of SEE countries and a member of the High-Performance Computing
Infrastructure for South East Europe’s Research Communities HP-SEE.
Austria’s networks of research is also part of the GEANT network
Bulgaria’s supercomputing centre is a partner of the PRACE pan-european
infrastructure as well as the Bulgarian language electronic resources for language and
culture is apart of CLARIN.
European public administration network ‘s-TESTA’, - Greek National Public
Administration Network is connected
Greek Research & Technology Network is also part of the pan-European GEANT
network, PRACE, and EGI, EGEE, and SEE-GRID.
Such categorisation though may be generic to omit some country-specific R&D infrastructure.
For instance in Greece, some regional initiatives in eHealth exist (e.g., in the Region of Epirus
and Crete) providing integrated environments for health care delivery through telematics
networks. In Bulgaria, there is also adequate infrastructure to support ICT technology transfer,
including Technology Transfer Offices (TTO) and Centers (TTC) as well as High Tech Business
Parks (HTBP) innovation offices, university High Tech parks and the R&D sectors
(administrative units) at the universities that complement the network of TTOs. Nevertheless,
it is noted that cloud computing infrastructure for government and science is not a widespread
and developed concept though the region.
Serbia and Montenegro have primarily invested in internet and 3G mobile connectivity, as well
as broadband strategies so as to reach the European targets (50% of households with
broadband connectivity). Apart from these investments, Serbia has a national research and
academic network (AMRES), an important actor in the Information Society development in
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Serbia. Through this network, universities, high education systems, accredited scientificresearch organizations, researchers and students can join. In budgetary terms, investment in
capital and innovation infrastructure is still a priority for the two countries with budgetary
provisions for ICT infrastructure. No clustering can be performed across the parameters of this
section.
5.5
Innovation and Business Environment
The business environment within an innovation system is very hard to delineate or isolate. As a
source of information, assessments within the national report are used along with innovation
patterns in EU publications. In this section the level of analysis is strengthened by presenting
the general market trends in the area with an emphasis on a firm level. The specificities of the
sectors, specialisation and key trends in innovative enterprises are explored to reveal possible
conflicts or identify vicious circles of enterprise performance and policies set.
5.5.1
Market development
Market development mainly refers to innovation patterns and innovation profiles of
enterprises in the region as well as factors spurring innovation policies. As seen in the previous
sections, BERD shares are in general at a very low level in most of the countries. One of the
first challenges is thus to further investigate whether the expenditures of enterprises in R&D
and non–R&D innovation expenditures are connected. Consequently, when measuring nonR&D innovation expenditures such as investment in equipment etc., Slovenia and Austria
appear to spend less in non-R&D than R&D, however the methodological limitations of the
measurement base of R&D and non R&D expenditure (% of expenditure and % of turnover)
cannot strengthen this argument. It is however a fact that on average, enterprises in the
region spend about 0.83% of their turnover in non-R&D expenditure. This percentage has
increased from 2009 to 2010 (except from Slovenia) by about 0.2%. Concerning the EU-27
average (0.71% for 2010), Bulgaria, Romania and Slovenia seem to surpass it. The general
trend in product and service innovation as well as R&D and non-R&D innovation in the
countries under review and the European Union are shown in the Annex. As far as
technological and non-technological investment is concerned, Greece and Slovenia
experienced an increase up until 2008 in technological innovation, more than EU average,
while Romania, Austria scored in about EU average. Bulgaria and Hungary were amongst the
last places. The situation is similar in non-technological innovation as well, with Greece,
Romania and Slovenia exceeding EU average, whilst Bulgaria and Hungary also take last
positions. As in the previous section, this sections endeavour to perform an initial distinction
between R&D and the ICT profile of enterprises than innovate. The prevailing type of
innovation is both technological and non-technological innovation, with Bulgaria being the
only technological innovator by majority. Non-technological innovation occupies an equally
large share of enterprises in Romania. Austrian enterprises innovate by about a 60% share of
total enterprises, exceeding the EU-27 average, about half of the Slovenian ones, while the
rest of the countries oscillate from 25-35%.
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Another parameter under investigation is the sales of new-to-market and new-to-firm
innovation, i.e. the sum of turnover of new or significantly improved products, measuring the
turnover of new or significantly improved products, new to the market or to the firm. This
helps disentangle whether enterprises in the region channel their R&D efforts to introducing
product or service-related innovation.
The table below presents both the sales of new-to-market and new-to-firm innovation as well
as the pattern of innovation followed. As defined at the outset, there are essentially four types
of innovation identified (8):
Product/service innovation: product innovation involves a good or service new or
significantly improved either in technical specifications, components and materials,
software or other functional characteristics.
Process innovation; process innovation again embraces a new or significantly improved
production or delivery method, including changes in techniques, equipment, software,
etc.
Marketing innovation; which involves a new marketing method with significant
changes in product design or packaging, placement, promotion or pricing.
Organisational innovation; this involves a new organisational method in the firm’s
business practices, workplace organisation or external relations
The scores in the first column are indicative or a general failure of innovation to reach the
market and commercialisation routes. As a deviation above the average, Greece achieves the
highest score (25%) indicating a mature market for addressing new to market innovation
(however due to very low BERD amounts, this may not have multiplier effects). Regarding the
type of innovation in SEE countries, product and service innovation is the dominant type, with
most of the countries evolving around the EU average, apart from Hungary. Thus, the
percentage of enterprises that appear to innovate is quite satisfactory. Organisational
innovation is the second preferred type. This especially holds for Greece, in which 75% of its
enterprises introduced new organisational structures, exceeding the EU average by far.
Romanian, Slovenian, and Austrian enterprises, share this rationale by surpassing the EU
average, while Hungarian enterprises only share this type by 16%. Process and marketing
innovation attract approximately similar shares of enterprises. Again Slovenian, Romanian and
Greek enterprises are characterised by a propensity to introduce new processes and marketing
strategies as compared to the EU average. Two facts have to be elaborated at this point: The
share of Hungarian enterprises that innovate, as compared to the country’s RTD performance
and trade patterns and the share of Greek enterprises than innovate, considering the very low
BERD shares of the country.
Table 5.10. Pattern of innovation followed by enterprises in the region
Country
Sales of new
to market and
new to firm
innovation 2010
Product or
servicerelated
innovation
(as
compared
Companies
introducing
new or
significantly
improved
processes
Companies
introducing
new or
significantly
improved
marketing
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to no
innovation)2009
strategies
structures
European Union
(EU27)
13,26%
67%
46%
45%
49%
Austria
11,24%
68%
49%
45%
47%
Bulgaria
14,2%
55%
36%
36%
34%
Hungary
16,44%
38%
12%
17%
16%
Greece
25,65%
62%
59%
56%
75%
Romania
14,87%
71%
45%
48%
52%
Slovenia
16,31%
78%
59%
50%
62%
Serbia
10,01%
n/a
n/a
n/a
n/a
Data source: Innovation Union Scoreboard and Innobarometer 2009
Some additional variables can shed some light into these questions by distinguishing the
expenditures of the enterprises in R&D by sector of activity. Manufacturing is the dominant
mode for Slovenia, Hungary as well as for Austria, but to a lesser extent. Bulgaria appears as
the only country that is service-oriented and Greece is more divided between manufacturing
and services. Romania has a slight focus in manufacturing, but other sectors employ about 10%
of its BERD (28). The preponderance of manufacturing can possibly consist an interpreting
factor of the low shares of innovative enterprises in Hungary and its strong trade orientation,
however in the case of Slovenia, domestic market maturity might absorb the majority of
improved products and services (78% of enterprises innovate in product and services). One of
the underlying differences could be the degree of economy extroversion in RTDI and ICT. The
table can be found in the Annex.
5.5.2
Industrial RTD and Innovation
Enterprises in the region interpret innovation opportunities mainly as increased demand for
sustainable or energy-efficient products and services as well as new export markets in
emerging countries outside Europe (32). Notwithstanding national differences (Greek
enterprises are more oriented to exporting to emerging markets and Hungarian/Bulgarian
enterprises feel there are limited opportunities for innovating) these two opportunities. Three
notable trends are notable:


Increased opportunities in sustainable (energy-efficient products) export markets in
emerging countries
More limited opportunities in terms of innovative products and services to meet
ageing population and new demands for social, education and health services
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
About 1/5th of enterprises feel that these opportunities will not lead to innovation
which is about the double amount of the EU average. This could be either a more
pessimistic viewpoint towards innovation or it could indicate new emerging
opportunities in the area which are not yet identifiable.
In Serbia and Montenegro the sources of information is different, therefore the results are
presented in accordance with reported information. Montenegrin companies obtain
technology based on licensing or imitating foreign companies rather by conducting formal
research or pioneering their own products and processes. Serbia’s rankings with this respect
are decreased, indicating a very strong tendency towards licensing rather than formal R&D.
There seems to be a lack of coherence regarding RTDI performances inside the private
enterprises of the participant countries. In certain countries such as Slovenia and Austria,
there is a rather satisfying amount of innovative enterprises and the levels of expenditures for
RTDI are high. In Hungary, innovation performance is considered “moderate” in general and
most enterprises do not feel the pressure to innovate. In other countries, such as Bulgaria and
Romania, companies present lower levels of RTDI performance and in some cases indicators
show far lower performance than the EU average. In Greece, there are certain indicators that
appear to be promising, still however there many issues that need to be resolved for the
situation to improve. It is worth mentioning that the whole region appears to be performing
well in the areas of open innovation as most of the countries’ indicators are above the EU
average. For more inclusive conclusions, the following table presents all the relevant
indicators.
Table 5.11. Innovation profiles of enterprises in the region
Indicator (2008)
Innovation in high-tech
sectors -- Share of
enterprises with
innovation activities
Innovative enterprises
engaged in extra mural
R&D expenditure as a
percentage of innovative
enterprises
Innovative enterprises
engaged in intra mural
R&D expenditure as a
percentage of innovative
enterprises
Innovative enterprises
involved in all types of
cooperation as a
percentage of innovative
enterprises
Innovative enterprises
that receive public
Slovenia
Greece
Austria
Romania
Bulgaria
Hungary
34%
n/a
43 %
36%
24%
21%
36%
n/a
26 %
9%
7%
26%
74%
n/a
48%
23%
8%
47%
48%
n/a
39 %
13.80%
17%
41%
24%
n/a
40 %
9.70%
9%
27%
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funding as a percentage
of innovative enterprises
Innovative enterprises,
process and product
19%
n/a
22 %
10%
7%
8%
oriented, as a percentage
of total number of
enterprises
Source: Eurostat-- Science and Technology-- High tech industry and knowledge intensive
services: economic statistics at national level
The following indicators of innovation, depicted on the above table reveal some interesting
trends. Austria scores first in the percentage of innovative enterprises (as a percentage of total
enterprises), followed by Slovenia with a score of 19-22%. Romania, Bulgaria and Hungary
present percentages equal or lower to 10%.
Innovation in high-tech sectors is apparent in Slovenia, Austria and Romania, while in Austria in
specific about half of the enterprises innovate in high-tech sectors. In Bulgaria and Hungary
these trend drops to about 1/4th and 1/5th of the enterprises. Interestedly, extra mural R&D
expenditure is quite significant in Slovenia and to some extend to Austria and Hungary,
(extramural R&D provides expenditure data performed outside the enterprise (eg outsourcing,
joint development etc)) indicating a propensity to innovate, but not always in-house.
Cooperation of enterprises is also notable in Austria, Slovenia and Hungary. The degree of
public funding might be an enabling factor in innovative performance, taking into
considerations that countries scoring admirably in most of the indicators (especially Austria,
Slovenia) receive public funding. Hungary presents the peculiarity of low percentage of
innovative enterprises despite the amounts of funding.
A country-by country analysis is presented in the Annex to elucidate some of the findings,
combining various data from different sections.
Table 5.11 highlights the differences that occur among the participant countries regarding
innovation trends inside companies. Apparently, Slovenia has the best percentages in most of
the indicators and Bulgaria and Romania have the lowest percentages in most of the
indicators. The table presents a more concise picture of the specificities of enterprises in the
region, with regards to their stance and preference towards a number of innovative indicators.
Specifically, with regards to strategic partnerships, Greek and Slovenian enterprises seem to
actively value strategic relationships with customers, suppliers and other companies. However,
strategic relationships with research institutes and educational institutes remain limited in
preference, verifying the narrow links of the countries in the knowledge triangle. A notable
exception is Slovenian enterprises which remain more focused in the links with educational
institutes.
The standpoint of enterprises in the region towards open innovation normally exceeds the
stance of EU-27 enterprises with the exception of Slovenian enterprises that are more mature
in open innovation and Bulgarian that lag behind the rest of the countries. Support to open
innovation consists of product/service creation within forums, allowing free access to test
products or services, involving end-users in the productive process or sharing IP licences. The
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importance of open innovation as an emerging issues of innovation-spurring policies seems to
be shared among the enterprises in the region, considering that recent literature indicates that
open innovation practices reinforce the importance of innovation, improve its effectiveness
and diversify its networks. Still, there is a large number of external factors to the firm affecting
is ability to adopt open innovation practices, such as the supply of outside knowledge, highlyeducated personnel, effective legal systems and IP protection. Thus we can conclude that in
the region the factors spurring open innovation-stimulating policies are quite crucial.
Collaboration with foreign countries seems to be a quite unexploited issue of innovationspurring activities in enterprises, not only in the region but in the EU as well. Slovenian
enterprises again have a propensity to engage in kinds of cooperation in other countries,
especially in recruiting employees and testing in other markets. This last trend is equally
shared by Greek enterprises as well.
Table 5.12. Strategic trends of enterprises in the region
Indicator
EU27
Slovenia
Greece
Austria
Romania
Bulgaria
Strategic partnerships to support innovation
Str. Relationship with
specific customers
39%
45%
46%
49%
35%
19%
Str. Relationship with
suppliers
42%
44%
48%
44%
39%
22%
Str. Relationship with
other companies active in
their field
29%
36%
28%
37%
35%
21%
Str. Relationship with
research institutes
15%
17%
19%
19%
11%
14%
Str. Relationship with
educational institutes
24%
44%
24%
32%
24%
17%
Indicators of open innovation
Creation/participation in
internet-based forums in
support of innovation
13%
17%
19%
12%
21%
18%
Allow free access to test
products or services to
users
26%
32%
34%
20%
37%
19%
Involving potential users
in in-house innovative
activities
24%
35%
21%
19%
23%
10%
Share/exchange of
intellectual property in
support of innovation
22%
30%
29%
31%
16%
19%
Collaboration with foreign countries
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Outsourcing tasks to
enterprises located in
other countries
10%
13%
18%
8%
7%
Making investments in
enterprises in other
countries
6%
12%
7%
3%
5%
Other forms of
cooperation with local
partners in other
countries
17%
34%
30%
22%
17%
Recruiting employees
from other countries
16%
30%
17%
5%
12%
Market testing innovative
products in other
countries
13%
30% (1st
rank)
19% (7th
rank)
11%
8%
Innovation stimulators
Knowledge management
systems in support of
innovation
35%
47%
48%
32%
21%
30%
Internal mechanisms for
employees to submit
innovative ideas
46%
71%
43%
54%
37%
41%
Staff rotations and
secondments
40%
59%
38%
43%
23%
36%
Creation of crossfunctional teams on
innovation project
35%
45%
28%
46%
16%
36%
Skills/Competencies that enterprises look for
Companies targeting team
working capacity in
support of innovation
56%
41%
57%
57%
Negotiation skills
46%
35%
48%
45%
Successful communication
with other cultures
32%
32%
40%
31%
Creativity
48%
45%
56%
44%
Source: Innovation Scoreboard, EU innovation report
Enterprises in the region generally tend to use innovation stimulators such as knowledge
management systems, internal mechanisms for innovative ideas, staff rotations and crossfunctional teams on innovation projects. This trend is not particularly shared by Romanian
enterprises. Again, Slovenian enterprises indicate a strong preference to use innovation
stimulators; however these indicators cannot lead to further conclusions, since they depend
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on organizational practices especially related to personnel. An interesting aspect however,
interrelated with human resources is the skills and competencies valued by enterprises, a
shared vision towards team working, negotiation, intercultural communication skills and
creativity. Whether organizational practices channel these skills effectively in the innovationstimulating processes remains still unexplored.
Although this section examines trends of enterprises (therefore clustering of countries would
be methodologically wrong), it appears that innovation in enterprises and strategic trends in
enterprises towards innovation are more prominent in Slovenia, Greece and Austria. A second
cluster could be Romania and Bulgaria and since there is no further information, no other
clusters can be formed.
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6 Focus Theme: The ICT sector in the reviewed countries
This section synthesizes an overview of the comparative performances of the countries
reviewed in the ICT sectors. The key task is to elucidate and map the state of play in the ICT
sector in the countries. We do not employ a sectoral system perspective, as the interplay
between knowledge and technology, ICT actors and networks and institutions are building
blocks which cannot be assessed within the present report (4). As the ICT sector is broad
enough to encompass technologies between ICT and broadcasting and telecom, with extended
complementarities this section presents some results in terms of ICT performance and Digital
Agenda aspects.
6.1.1
Digital agenda aspects
In the present report, it is crucial to embrace and evaluate aspects that can maximise the social
and economic potential of ICT in the region. One possible benchmark is the Digital Agenda,
adopted by the European Commission in May 2010 (33), consisting of a strategy to take
advantage of the potential offered by the rapid progress of digital technologies as part of the
overall Europe2020 strategy for smart, sustainable and inclusive growth.
This benchmark rests on the assumption that the ICT sectors contributes actively to the
European GDP and to productivity growth, due to the level of innovation inherent in the
sector. In the words of the Digital Agenda “successful delivery of the Agenda will spur
innovation, economic growth and improvements in daily life. Wider deployment and more
effective use of digital technologies will thus enable Europe to address key challenges and
provide with a better quality of life”. We thus use the Digital Agenda as a showcase of
standards that could contribute to the same objectives in the region.
The pillars of the Digital Agenda consist of a vibrant digital single market, interoperability, trust
and security, internet access, research and innovation, digital literacy, skills and inclusion as
well as ICT-enabled benefit for the society. The specific objectives demonstrated to pinpoint
progress towards the goals are:
o
o
o
Broadband coverage for all
o 50% of citizens using eGovernment
50% of citizens buying online
o 25% of citizens using eGovernment
20% of citizens buying online crossand returning forms
border
o 11bn R&D in ICT public spending in
o 33% of SME’s buying online
2020
o 33% of SME’s selling online
o 50% of households have subsciptions
o 75% internet regular use
larger than 100 Mbps (2020)
o 60% internet use by disadvantaged
o 100% coverage of larger than 30
groups
Mbps (2020)
o 85% internet use
Not all objectives are included in the regional analysis, as the goal is to identify the level of
digital maturity in the region as an enabler for growth in the context of foresight. In this
context, disparities in internet penetration rates or different level of absorption of ICT services
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can significantly impact envisages scenarios. The results of regional performance in
comparison the EU-27 and against the targets set are shown in the following figure:
Broadband coverage for all
(2013)
25% of citizens using
eGovernment and returning
forms
50% of citizens using
eGovernment
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
50% of citizens bying online
20% of citizens buying
online cross-border
85% internet use
33% of SMEs buying online
60% internet use by
disadvantaged groups
33% of SMEs selling online
75% internet regular use
EU 27
Hungary
Austria
Romania
Bulgaria
Slovenia
Greece
Target
Figure 13. Progress of the region against Digital Agenda targets
(Source: data are extracted from http://ec.europa.eu/information_society/digitalagenda/scoreboard/index_en.htm)
It is explicit from the figure that an emerging regional pattern is a very good performance in
broadband coverage and a relatively poor performance in e-Commerce.25 Austria, Hungary and
Slovenia are more well-prepared markets with an advanced level of maturity in internet use
and eGovernment use. The level of absorption of enabled broadband technologies does not
appear to benefit Greece, Bulgaria and Romania, as these indicators fall behind. In Ecommerce however and buying online behavior, all countries except Austria are lagging behind
the targets set. Cross-border online commerce remains underdeveloped again with the
exception of Austria.
Slovenia remains one of the leading countries in the adoption of e-Government with 100%
availability of citizens' services and 88% availability of businesses' services. Take-up by citizens
is slightly above average while usage by enterprises at 88% remains among the highest in
Europe. Take up of internet services is around the EU average. In Austria, the full range of basic
public services for citizens and enterprises are available online and take-up of eGovernment
services by businesses is relatively good, although lower for citizens. eCommerce appears to be
a popular activity.
25
Serbia and Montenegro state in their reports that broadband coverage is still inadequate.
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Internet use has expanded in Hungary and the percentages of internet use are similar to the
EU average, but differences exist among services. The availability and use of eGovernment are
also close to the EU average but less for eBusiness.
In Bulgaria, rates of internet use have been gradually improving over the last few years but
take-up is very low, putting the country at the bottom of the rankings. The availability of
eGovernment services is below EU average but progress has been made in certain services.
Broadband take up is quite low in the country. In Greece, regular internet use is the pattern
but the ranking in the use of various internet services remains one of the lowest. eCommerce
is underdeveloped while the availability and take-up of eGovernment services for both citizens
and businesses is one of the lowest in the EU. In Romania, the low connectivity is reflected in
low rates of internet use and low degree of internet services usage. The same holds for the
area of eGovernment, where Romania is classified at the lowest place in the EU for both
citizens (8%) and businesses (34).
An interesting aspect of the regional performance is the seemingly convergent degree of
broadband penetration. A more careful screening of national performances indicates a quite
divergent picture in terms of infrastructure and resulting uptake levels. For instance, in
Hungary, fixed broadband penetration increased and about 86% of connected households
have a broadband subscription. 73% of Austrian households have an Internet connection and
64% have a broadband subscription, slightly better than the EU average. Internet take-up
among businesses reached 97.2% explaining the extended take up of various online services.
Slovenia demonstrates higher broadband coverage of rural areas with well-developed
connectivity while there is also take-up of wireless internet on laptops and mobile phones.
In Bulgaria, Broadband take-up stands at 15% as a percentage of overall population, translating
into both low take-up by households and businesses. A positive trend though is high
broadband speeds. In Greece, broadband performance has improved due to the focus on
infrastructure through structural funds, but take up of broadband is still below the EU average
and wireless broadband is still infant. Correspondingly, internet usage and take-up of services
is not indicative of the progress made in broadband improvements. Last, in Romania,
broadband take-up and coverage lag significantly behind, entailing low take-up by both
households and businesses. Broadband subscriptions are fast nevertheless and the Romanian
government aspires to increase household take-up rate to 80% by 2015. The unsatisfactory
penetration and usage rates can be attributed to the share of the rural population which is
characterized by low income, low PC penetration and low DSL coverage. Penetration rates are
increasing sharply for Montenegro as well.
Therefore the clustering in Digital Agenda aspects consists of 3 clusters: Austria and Slovenia,
Hungary and the rest of the countries. This classification does not encompass the dynamics of
each country in terms of real increase rates, but only present screenings.
6.1.2
RTDI /ICT Comparative Performances
RTDI plays a pivotal role in innovation activities, while other sectors rely more on the adoption
of knowledge and technology. Although we have already referred to differences in innovation
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activity in a broad sense, we increase the level of analysis of analysis sophistication to include
the ICT sector. ICT and innovation are interrelated concepts, since intrinsic innovation takes
place in sectors where ICT plays a catalytic role. In addition, a high level of innovation in the
ICT sector is associated with R&D intensity and the level of skills.
The ICT sector is considered highly pervasive and it underpins most sectors in the economy, as
the largest R&D investing sector of the economy (35). EU data indicate that the ICT sector
represents about 4.8% of GDP and 3% of total employment, employing 32% of researchers. In
specific between 2002 and 2007 the number of researcher in the ICT sector grew by 15%. In
addition employment increased by 27% in ICT services, mostly in computer services and
software (35). In addition, the ICT sector shows a sustained increase in BERD and employment
and R&D investments by EU companies have been increasing in almost all ICT sub-sectors. It is
clear that ICT is a major contributor to the knowledge economy, as the pervasive impact of ICT,
its inherent R&D intensity, performance and dynamics confirm the central role ICT plays in the
EU economy and the EU’s economic recovery.
The ICT sector R&D in the new Member States is also notable in the services sector and in
particular computer services and software. According to the 2010 R&D scoreboard, most of
the new Member States combine low ICT BERD intensity with low BERD intensity of the rest of
their economies giving a decreasing ICT BERD trend, nevertheless most of the new Member
States have been improving their performance. Most of these countries have high rates of ICT
BERD growth, which can be seen as “catching-up” and choice for specialisation. It has been
suggested by the Commission that that the current underinvestment in ICT R&D is a complex
issue due to Europe’s economic and industrial structure and a coordinated policy mix is
required to favour industrial restructuring to high-tech, high-growth, high added-value sectors
fuelled by ICT-enabled innovations (35) (32).
The importance of ICT innovation is that in combination with other innovation it can lead to
new products and services by connecting people and systems, providing remote access to
resources and combining ICT with existing services. The analysis therefore starts with the
pervasiveness of ICT in national accounts and sectors of the economy. According to the 2010
report on R&D in the European Union, from 1999 to 2007, employment increased by 27% in
ICT services sub-sectors and brought the share of ICT services employment to 68% of the total
ICT sector. From 2002 to 2007, BERD increased by 40% and employment of researchers by
56%. A further analysis of the ICT Scoreboard shows that R&D investments by EU companies
have been growing in all ICT sub-sectors.
ICT services account for nearly 70% of total ICT employment. The ICT sector is significantly
ahead of other economic sectors in labour productivity, both in manufacturing and service
industries. The ICT sector employs more researchers than any other sector in the economy (
2010 report on R&D in the European Union)
The new Member States as well as some SEE countries have also recorded an increase of the
ICT sector R&D, where services sectors record half of the total national ICT R&D, denoting a
specialisation pattern and catching-up phase of most of the countries especially in services
sectors. The weight of the ICT sector in the economy of the countries is illustrated below:
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Figure 14. Weighing of ICT sector components in Europe
(Source: The 2010 report on R&D in the European Union)
Hungary is the 4th European country in ICT weighting, with the following sub-sectors in
increasing importance: telecom services, computer services, components, telecom and
multimedia equipment, measurement instruments and IT equipment. IT equipment is visibly
occupying the largest share in the EU, possibly due to the Multinational Enterprises in the
country and their sales orientation. Bulgaria in specific has outpaced the growth of GDP
though the growth of the ICT sector (especially in telecom services and less in computer
services) and is next to the EU average, compared to the rest of the countries under
investigation. Next, Romania and Slovenia also heavily rely in telecom and less in computer
services, although measurement instruments and components also occupy a small fraction in
Slovenia. Austria is classified next, with a more balanced picture in terms of telecom and
computer services, though the first outweighs the latter. Greece is among the 4 last countries
in classification with a clear orientation to telecom services as compared to computer services.
It is evident that most of the new Member States in general concentrate their R&D efforts
towards the ICT sector; however it is not easy to discern the true significance of technology
diffusion or ICT-enabled growth as explanatory variables.
The following table also recaps the percentage of the ICT sector on GDP for two subsequent
years26 It is equally explicit that Bulgaria and Hungary show a relative increase, followed by
Slovenia and Austria, although in these latter countries the trend is diminishing.
26
Unfortunately data for recent years are not available and therefore the effects of the financial crisis
are not discernable.
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Table 6.1. Percentage of ICT sector in GDP
Austria
2007
3,76%
2008
3,21%
Bulgaria
2007
5,98%
Hungary
2008
2007
2008
5,36%
5,84%
5,91%
Greece
2007
2,71%
Romania
2008
3,34%
Slovenia
2007
2008
4,08%
3,41%
Source: Eurostat, Benchmarking Digital Europe Indicators-ICT sector, 2011
Table 6.2. ICT expenditure as % of GPD in the region
Country
Year
European
Union
2008
2.9%
2.4%
2009
3%
2.5%
Austria
2008
2.2%
2%
2009
2.2%
2%
2008
5.7%
1%
2009
5.8%
1.1%
2008
4.2%
1.6%
2009
4.7%
1.8%
2008
3.3%
1%
2009
3.3%
1%
2008
3.5%
1.1%
2009
4.3%
1.3%
2008
3%
1.6%
2009
3.3%
1.7%
Bulgaria
Hungary
Greece
Romania
Slovenia
ICT expenditure as
percentage of GDP in
communications
ICT expenditure as
percentage of GDP in
Information Technology
Source:Eurostat,ICT indicators, 2011
An emerging pattern is the dominance of the share of ICT expenditure in communications
rather than information technologies, interrelated with the progress made in broadband,
infrastructure and connectivity, especially in Bulgaria, Greece and Romania. The most
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divergent expenditure can be distinguished in Bulgaria and Hungary, where ICT expenditure in
communication is about triple of the expenditure in information technologies. The relative
propensity to spend in communication and telecommunications might bear two distinct
explanations, the first being related to the priorities to invest in infrastructure and connectivity
and the second with the gravity of ICT goods imports from abroad.
So far, the analysis has been focused on domestic components of the ICT/RTD sectors. As
shown in section 5.3, external balances for ICT trade are negative in most of the countries with
Hungary as the sole exception (due to ICT manufacturing). A notable performance in high-tech
exports is clear for Greece and Austria and a relative specialization in ICT services trade (than
ICT goods) in Bulgaria, Slovenia and Romania.
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7 Additional Issues
Two more issues are explored in the present report:
1. Sub-Regional Issues
An exploration large diversity regarding patterns of innovation performance where the
countries in the region. This takes place especially for Romania and Greece, where regional
strategies are present and where disparities should not be isolated from the general
framework of innovation capacities. This analysis seeks to touch upon issues that differentiate
the regional typology in innovation performance and let some further cluster emerge. The
Regional Monitor (36) confirms that there is a large diversity regarding patterns of innovation
performance where the countries in the region are characterised as follows:
Table 7.1. Regional innovation typologies in the area
Countries
Innovation typology
Characteristics
Austria, Slovenia
“Balanced
regions”
innovative entrepreneurship and high R&D
expenditures
entire
country
of
Bulgaria, Romania and
most of Hungary
“knowledge-absorbing
regions”
innovation performance are below the
average, innovative entrepreneurship is
lower, small share of innovators , most of
R&D expenditure is non-R&D
Capital
regions
of
Bulgaria and Hungary
“Public
regions”
high score on ‘public knowledge’ , the
average R&D expenditures in government
research organisations are high and good
shares of tertiary educated work force.
Greece,
Romania
“knowledge-absorbing
innovative regions”
Eastern
innovation
knowledge
higher average score on innovative
entrepreneurship and non-R&D innovation
expenditures
low scores on technological innovation
and patenting
Greece (Thrace and
Western Macedonia)
“industrialised innovating
regions”
innovative entrepreneurship is below
average, in turn resulting from
industrialisation patterns
Source: (36)
2. Emerging Themes
Some further information is provided against the backdrop of emerging patterns of innovation
and emerging themes as a tool to better anticipate changes that the regional is likely to be
faced within the next years such as:
New service opportunities, created by technological change and stimulated by demand
for new types of knowledge
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ICT growth allow firms to develop new services and produce existing services more
efficiently and increases the tradability of services
Technological change, growing stock of information and knowledge available increases
knowledge intensity
Open innovation patterns in user industries
The creative industries have large growth potential in supporting innovative activities,
encouraging economic growth and creating jobs Some new member states have very
high annual employment growth rates in the creative industries
Knowledge-intensive services (KIS), including knowledge-intensive business services
(KIBS), are among the most dynamic industries in the economy
Social enterprises are another emerging aspect in the EI as they are active in launching
new services or products and an important source for sustainable and socially engage
innovation
R&D investments in the field of energy have been growing rapidly in the past years.
This regards in particular, the development of new energy technologies driven by
security of energy supply and environmental concerns.
Living labs and cross –border cooperation can create eRegion between Austria,
Hungary and Slovenia. Slovenia is more mature in living labs.
These trends are derived from EU reports (top-down approach) and some other information of
National reports (bottom-up) are revealed in terms of national strengths. Additional sources
such as EU targets of the Framework Programmes are also used to provide futher refinement
of issues and themes.
Additional information on both these issues is provided in the Annex.
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8 PESTLE & SWOT Synthesis
8.1
Political, Economic, Social, Technological, Legal and Environmental analysis of
the Region
In formulating strategies, there are external factors with long-term influences and drivers of
change that need to be taken into account. The questions asked by strategists are which
factors are currently affecting and are likely to affect the country and what the relevant
importance of these factors at present and tin the future (Curtis, 2005). The areas covered
under each heading of the analysis are given below:
Political/legal: legislation leading to competition distortion, tax policy, employment
law, environmental protection laws, trade regulations, government continuity and
stability
Economic: inflation rates, unemployment, money supply, costs of material and energy,
economic growth trends, business cycle (national and international).
Socio-Cultural: population changes, age distribution, lifestyle changes, educational
level, income distribution, attitudes to work and leisure.
Technological: new innovations and development , obsolescence, technology transfer,
public and private investment to research
Environmental: energy consumption patterns, alternative technologies for the public
and private sector.
In the context of the present task, PESTLE is undertaken by the partnership as a means to
formulate the ground for future analysis and provide a rudimentary understanding of the
national system and some baseline future trends. In this line, it is partnership-generated and
not expert-validated.
The following regional PESTLE intends to depict the current situation in the SEE region, taking
into consideration the input of the participant countries. The macro-environment of the region
is analyzed in terms of political, economic, social, technological, legal and environmental
factors.
The following table reveals the common elements deriving from the PESTLE analysis and their
relative strengths (most common elements to less common, number in parenthesis denotes
frequency). Isolated data, identifying country-specific elements are not included in the report.
Our attempt to extrapolate general statements is also influenced by the different structure of
the PESTLE reports in Serbia and Montenegro which have some distinct characteristics:
1. A series of national reforms undertook as enablers for EU accession, mostly existent in
other countries
2. Contrasts between dynamic and growing sectors of the economy coupled with
contradictory policy frameworks
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3. Recent NIS with gradual incorporation of systemic R&D elements, cross-cutting the
economy. Innovation and R&D are now being established as priorities.
4. Digital gaps, differentiated penetration rates and investments in infrastructure.
The synthesized regional PESTLE therefore isolates trends that might affect the innovation
landscape on a more general level. It is noted again that in the case of Serbia and Montenegro,
affecting factors are more related to the general environment of the country, rather
innovation-specific factors, due to recently formulated systemic innovation systems.
Table 8.1. Synthesized regional PESTLE
Relative
strength
Item
Comments
Political /legal institutional issues
Very high
(8)
Medium (5)
Low (3)
Participation in international organization
(EU, OECD, NATO, ISO, UNESCO, Interpol
etc), creating stability
Incoherent political landscape, having
repercussions in the priorities set and the
budget used for implementation at a
political level. Elections in most of the
countries
Inefficient country-specific policies
Low (3)
The meaning and importance of innovation
needs to be re-established
Low (3)
Positive impact of participation in EU and
coherence of national goals and regulations
Low (2)
Low central budget dedicated to
innovation
Trade liberalization policies and reforms
Low (2)
For Serbia and Montenegro
its actually application for
memberships
It may vary from very stable
(Austria) to circumstancespecific (Greece), with
frequent leadership changes
This is a generic result, for
example in Slovenia, the
judicial system is ineffective,
in Greece the
implementation of policies
etc
In countries such as Austria,
Greece and Romania, the
importance of innovation in
policy agendas is not
prominent
Greece is an exception, as
the Europe 2020 targets and
flagship initiatives (raise in
GDP in innovation,
employment etc) are
contradictory to the imposed
austerity measures
Montenegro and Serbia specific finding
For countries not present in
the EU (Montenegro/Serbia )
Economic and Market issues
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Very high
(7)
Very High
(6)
Medium (4)
Global recession might raise austerity
measures and restrictive public spending
Import-dependent economies, poor trade
extroversion
Spending cuts in research affect RTDI
activities of relevant actors
Medium (4)
Increased burden of taxes and contribution
for companies, resulting in a businessunfriendly environment
Recovering levels of GDP
Medium (4)
Medium (3)
Medium (3)
Medium (3)
Very good quality of scientific research
institutions
Inefficient venture capital market
Medium (3)
Improving macroeconomic environment
for Austria, Bulgaria and Slovenia,
decreasing for Greece
High inflation rates
Medium (3)
Unstable competitive rankings
Medium (3)
Market efficiency
Low ( 2)
Gradual reduction of state’s ownership of
companies, which might alter orientation
Low ( 2)
Low contribution of the private sector in
RTDI funding due a lack of an innovation
driven type of demand
Low (3)
Access to joint R&D funds or Dependence
on Structural Funds
Low levels of Foreign Direct Investment
(FDI
Orientation towards open economy and
equal economic development , , business
environment improvements,
harmonization with current EU systems
Recovering funding opportunities for R&D
Low (3)
Very Low
(2)
Very Low
Slovenia is currently the only
country having increased
private sector investment in
R&D and public funding for
R&D
Particularly true for Slovenia,
Romania and Greece. Austria
is an exception.
Particularly true for Slovenia,
Romania , Montenegro and
Austria, but not for Greece
or Hungary.
Austria, Hungary and
Slovenia
Particularly true for Slovenia,
Romania, Greece and Serbia
Abrupt droppings in
competitiveness (Greece,
Bulgaria, Hungary)
Decreasing for Greece and
Bulgaria
Slovenia and Greece are
most likely to privatize
companies.
Romania and Greece are
countries most inflicted.
Slovenia is the most
successful country.
Particularly true for Slovenia
and Greece and Serbia
Particularly true for Slovenia
and Greece
Montenegro/Serbia
Serbia, Montenegro
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(2)
Social, Cultural and Demographic issues
Very High
(6)
Very High
(5)
Medium (4)
Medium (4)
Increasing life expectancy resulting to aging
population and need for new solutions for
health and social care
Good Literacy rates, improved education
levels
Income inequality, threatening percentages
of population towards poverty line
Scarcity of talent in the labour market but
in different domains in each country
Medium (4)
Good rankings in social inclusion
Medium (4)
Low degree of HSRT in total employment
Medium (4)
Reduced employment
Medium (4)
Uneven regional development resulting to
uneven intensity of innovation activity and
centralization
Very Low
(2)
Very Low
(2)
Very Low
(2)
Slow population growth rates
Very Low
(2)
Reducing expenditures on education
Very Low
(2)
Very Low
Decreasing feeling of social security
Mobility to urban regions
Barriers for the establishment of new
businesses
Multiculturalism
Improving structure of adult
population
Especially true for Romania,
Hungary and Greece
Might trigger need for skilled
immigrants and returning
diaspora
Might alter consumer
preferences and
demographic indicators
Especially pertinent to
Slovenia, Greece,
Montenegro, Serbia and
Romania
Especially true for Austria
and Bulgaria
This has implication for the
labor market structure,
entrepreneurship barriers
and business demographics
Especially true for Slovenia
and Greece
Especially true Romania and
Hungary
Montenegro
Technological issues
Very high
(7)
High (5)
Broadband development
Medium (4)
Emphasis on hard R&D infrastructure
Medium (4)
Increased ICT expenditure as percentage of
Good internet use
Romania and Serbia as
exceptions
Greece, Austria, Bulgaria,
Hungary
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GDP in communications
Medium (4)
Medium (4)
Low (3)
Low (3)
Low (3)
Low ICT expenditures percentage of GDP in
information technology
New policies to encourage academiabusiness collaboration (AU), clusters and
innovation poles creation (GR) flexible
labour market and sustainable job creation
(RO)
eGovernment rates
Availability of latest technologies very good
for Austria and Slovenia, non availability for
Bulgaria and Romania
Low patenting rates for high-rate products
Very Low
(2)
Innovation in Public services
Very Low
(2)
Very Low
(2)
Very Low
(2)
Very Low
(2)
Very Low
(2)
Share of researchers in the economy
Excellence in mathematics and
computational mathematics
ICT strategic importance in economy
Lack of information literacy and
monopolies in ASP
Regional inequalities (digital gap)
Limited for Montenegro
Especially true for Slovenia
and Bulgaria
Facilitation of public services
due to technological
innovation
Especially true for Slovenia
and Greece
Austria and Greece
Mopntenegro , Serbia
Montenegro
Serbia, Montenegro
Environmental issues
Very High
(7)
Medium (3)
Medium (3)
Low
Climate change is either a priority in the
government agenda or the core of policy
documents/measures
‘Green Culture’ Green entrepreneurship
and green ICT are becoming priorities
Especially true for Greece
and Austria, and to a lesser
degree in Slovenia
Accession to environmental Treaties
through the EU
Low awareness among citizens
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Economic/Market issues
Global recession, austerity measures
Poor knowledge-intensive economy
extroversion
Spending cuts in the RTDI system
Political /legal issues
Participation /accession in the EU
Political landscape, frequent
changes in leadership
incoherent spending priorities
Environmental issues
Priority in climate change and green
culture
Low ICT expenditures as % of GDP
Reforms and policies conducive to
technologicalSocial/cultural
innovation issues
Life expectancy and major societal
challenges
Improved education levels
Threatening % of poverty and
unemployment
NIS
Technological issues
Broadband and sufficient use rates
R&D infrastructure development
Low ICT expenditures as % of GDP
Reforms and policies conducive to
technological innovation
Diversifying picture in ICT application
areas.
Figure 15. Major PESTLE forces with a potential impact in the region
8.2
Strengths, weaknesses, threats and opportunities in the Region
The following table reveals the common elements deriving from the SWOT analysis and their
relative strengths (most common elements to less common, number in parenthesis denotes
frequency). Isolated data, identifying country-specific elements are not included in the report.
It has to be noted that the SWOT analysis for Serbia and Montenegro are quite diversifying, as
they mainly draw on reforms and newly born priorities in RTDI. It is not asserted that their NIS
is immature; however it has recently gained in structural traits comparable to other countries.
The SWOT takes into consideration their statements however the bullets below isolate some
issues pertaining their specific NIS:







Orientation to an open economy paradigm, conducive to innovation and
entrepreneurship
Pertaining ICT barriers such as lack of ICT skills in the wider population
Emerging role of the knowledge based economy and ICT focus in national strategies
Alignment with the “acquis communautaire”, reform-intensive structures
Low investments into ICT RTD but emerging spending in infrastructures
High dependence of RTD on government funding and lack of clear instruments to
satisfy needs for R&D
Relatively small number of international projects across all scientific areas
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

Weak transfer of research to the market, weak partnerships
Fragmented public policies
These two countries present recent institutional changes in order to promote research and
innovation and strong transition attempts to a knowledge-oriented economy. They have
recently put forward strategies, plans and instruments to encourage innovation and RTDI
however they are faced with policy challenges that most of the countries have surpassed to
some extend due to their membership in the European Union and coordination mechanisms
thereof.
Again, relative strength is denoted by the frequency of the statements present in national
reports. As the countries only had an indicative list on SWOT statements, they had the liberty
to elaborate according to national specificities. Therefore, the fact that some statements only
gained in low relative strength does not necessarily entail that they are not present in the
actual NIS, rather that they did not get acknowledged by partners.
Table 8.2. Synthesized regional SWOT
Relative
strength
Strengths
Relative
strength
Weaknesses
Medium
(4)
Investments (and plans) in hard
R&D
infrastructures
and
broadband
High (6)
Low BERD percentages /weak
contribution of the business
sector
Medium
(4)
High
levels
of
penetration/growth
ICT
High (5)
Low investments in information
technology
Medium
(4)
Improved
structures
educational
High (5)
Low level of lifelong learning
High (5)
Low usage of ICT in the learning
process and in eBusiness
High (5)
Few innovative enterprises
High (5)
Lack of Venture Capital/Risk
Capital Fund for innovative
SMEs and start-ups
Medium
(4)
Low
international
competitiveness levels
Medium
(4)
Adequate policy mix to support
RTDI
Medium
(5)
Priority of ICT in national
strategies
Low (2)
Good orientation to open
innovation schemes inside
companies
Low (3)
High burden of taxes and
inflexibility in the labor market
Low (2)
Shift from basic to applied
Low (3)
Little
support
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to
innovative
research
start-ups
transfer
and
technology
Low (2)
High level of know-how of
companies
Low (3)
Limited capacity to attract EU
funding, Inability to absorb EU
funds for R&D or High
dependence on EU funding
Low proportion of researchers in
the economy
Low (2)
Fundamental
and
strong
knowledge creation, good track
record in natural sciences and
engineering as key to support
other areas
Low (3)
Low (2)
Research
integrates
with
networks (eg ERA, FP6, FP7 etc)
Low (2)
Lack of dedicated evaluation
mechanisms for innovation
Low (2)
Increasing
prominence
of
funding for research, human
resources and infrastructure
Low (3)
Lack of strategic focus while
implementing regional RDI
policies to benefit form regional
strengths
Low (2)
Stable public funding (2)
Low (3)
Poor exploitability of research
output and poor demand
conditions
Very low
New emerging players and
institutions in R&D
Low (2)
Administrative barriers
governmental control
Low (2)
Low level of online public sector
services for companies
Low (2)
Lead Market Initiatives non
existent or at a primitive stage
Low (2)
Low levels of innovation
absorption capacity in industry
Low (2)
Poor commercialization routes
and patenting performance
Low (2)
Overlapping competencies of
actors in policy implementation
Low (2)
Lack of clear focus in research
Low (2)
Knowledge transfer to the
applied sector is quite weak
Low (2)
Limited
international
cooperation and mobility
Low (2)
Lack of awareness on RTD and
innovation
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and
Low (2)
Lack of an evaluation culture for
innovation policies
Low (2)
Lack of focus in eCommerce and
other ICT application areas in
some countries
Relative
strength
Opportunities
Relative
strength
Threats
High (5)
Exploitation of niches/ new
domains, based on regional
knowledge
High (5)
Cuts in expenses for RTDI
Medium (4)
Support for increasing scienceindustry collaboration
Medium
(4)
Responsiveness and adaptation
of the education system to
market demand
Medium (4)
Focus on innovative clusters in
strategic industries
Medium
(4)
Rigid,
complex
insufficient
system for market efficiencies
Medium (4)
More
strategic
implementation of EU policies
and programmes
Medium
(4)
Regional disparities regarding
distribution of innovation
Medium
(4)
Lack of vision for an innovationled culture
Medium
(4)
Brain drain to other countries,
insufficient HSRT in national
employment due to conditions
Medium (4)
Educational system can be geared towards
strategic advantages
Low (3)
New measures to support
private R&D investments
Low (3)
Slow
implementation/inadequate
mechanisms of national RTDI
policies
Low (3)
Promising reforms for the
venture capital and funding
sector
Low (3)
Potential capital drain to other
countries due to investment
climate
Low (3)
Increase cooperation
knowledge sharing
and
Low (3)
Domination of HEIs in RTDI
Low (2)
Promising
reforms
in
educational structures to
enable
industry-academia
responses
Low (3)
Need for stronger
industry links
Low (2)
Existence of ICT-dedicated
public research centres
Low (3)
Dominance of traditional sectors
over
knowledge-intensive
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science-
technologies
Low (2)
Increasing R&D intensity
Low (2)
Loss of security, privacy and
trust in the Internet, leading to
the loss of its commercial
potential
Low (2)
Increase
of
strategic
innovative strategies inside
companies
Low (3)
Unattractive climate for foreign
investment and transfer of
potential and know-how
Low (2)
Wider implementation of ecommerce/digital services
Low (3)
Relevantly low R&D spending of
businesses
Low (2)
Creation of
innovation
Low
Demand-supply gap in terms of
innovation
Low (2)
Measures
to
increase
investments of businesses in
R&D
Low (2)
Increasing targets of GDP for
R&D (might be non applicable
due to budgetary cuts)
Low
(country
specific)
Societal awareness of Europe
2020 challenges and research
to address these threats
Low
(country
specific)
Increase definition of societal
role of research
8.3
demand
for
Short Discussion
From the PESTLE and SWOT analysis, it was obviated that the countries have highly distinct
economic, social, infrastructural, technological and administrative and institutional disparities
and diversities, due to specific historic circumstances. The Innovation Union Policy report has
generated a self assessment tool, concerning the features of a well performing national and
regional research and innovation systems. We use this template as a basis for further
discussion of the capacities of the region. The results once again are not expert-validated. The
table only represents a first endeavour to derive high –level conclusions on the functioning of
the regional innovation system.
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Table 8.3. Self-Assessment Tool on Features of a well-functioning NIS
Self assessment tool: Features of well performing national and regional research and innovation
systems
Feature
Current situation in the Region
Promoting research and innovation is
considered as a key policy instrument to
Enhance competitiveness and job
creation, address major societal
challenges and improve quality of life
and is communicated as such to the
public.
Public action in the region appears to acknowledge the
pivotal role of promoting research and innovation in the
national economies. Nevertheless, public action does
not cut across all relevant policy areas (eg. financial
market, labour mare, business environment, industrial
policy, territorial cohesion, etc.)
Design and implementation of research
and innovation policies is steered at the
highest political level and based on a
multi-annual strategy. Policies and
instruments are targeted at exploiting
current or emerging national/regional
strengths within an EU context ("smart
specialisation")
Government structures in the Region are quite blurred
as concerns research and innovation policies. Steering at
a high political level does occur with clear mandates and
based on multi-annual programmes. In most of the
cases, national consultation with stakeholders lead to
specific policies.
Policies recently and in some cases only acknowledge
addressing major societal challenges without concerted
action noted.
Implementation of policies is rather complex without
focusing on diffusing results to all stakeholders.
Smart specialisation is not very widespread in the area in
the European context. However, most of the countries
state areas of national strengths.
The strategies of the countries (besides Serbia and
Montenegro which are in a pre-accession state) reflect
EU priorities.
Effective monitoring and reviewing systems with
international benchmarking are not in place.
Innovation policy is pursued in a broad
sense going beyond technological
research and its applications
Most of the examined countries in the region base their
policies on a broad concept of innovation, but a clear
definition is not always explicit.
Supply-side policies are the main instruments for
stimulating innovation, while some countries (Austria,
Slovenia, Greece) have started to deliberate on demandside policies.
There is adequate and predictable
public investment in research and
innovation focused in particular on
Public investments in education, research and
innovation are in most of the cases budgeted in multiannual plans with complementary measures of the
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stimulating private investment
Structural Funds. Stimulation of private investment is
very explicit on a policy level.
Still, the countries (expect 1-2) heavily rely on GERD for
innovation financing. BERD is very limited in the area.
Excellence is a key criterion for research
and education policy
There is a rationale on allocating research funding on a
competitive basis.
Nevertheless, higher education and public research
organisations are heavily reliable on GERD and national
budgets.
Research careers are not particularly attractive in the
area. Although some measures are taken to re-attract
researchers, countries suffer from brain drain.
Education and training systems provide
the right mix of skills
Educational systems perform well in the area and there
is sufficient supply of graduates in science and
technology. Still, there is limited absorption of graduates
in national RTDI systems. There are some mismatches in
lifelong learning and education towards addressing
innovation skills.
Partnerships between higher education
institutes, research centres and
businesses, at regional, national and
international level, are actively
promoted
Partnerships
and
collaboration
schemes
are
conceptualized and implemented differently in each
country The overall situation is characterized by rather
low levels of collaboration between science and
industry. On a policy level, strong partnerships consist
priorities.
Framework conditions promote
business investment in R&D,
entrepreneurship and innovation
This is probably the main deficiency of the area, as
framework conditions are not interconnected with
policies and the business environment. Specifically, the
venture capital market is deficient, the rules for starting
up and running a business are not without complexities.
The IP system has not been sufficiently researched in the
area.
Public support to research and
innovation in businesses is simple, easy
to access, and high quality
Market failures are well identified in the provision of
private funding for innovation. Funding support is
available, however not always tailored to the needs of
SME’s. Commercialisation of ideas is not actively sought.
The public sector itself is a driver of
innovation
The public sector provides incentives in the delivery of
public services only in the case of some countries. Public
procurement policies for innovative solutions are
considered rather weak.
From the PESTLE and SWOT analysis, it was obviated that the countries have highly distinct
economic, social, infrastructural, technological and administrative and institutional disparities
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and diversities, due to specific historic circumstances. The regional RTDI system has a longterm vision
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9 Conclusions
The present synthesis report aggregated the results of the eight national innovation reports on
the basis of an initial appreciation of the potential of innovation structures and systems
performance in the region. Different implications in terms of research, technology and
innovation (RTDI) policies were highlighted in the process of the synthesis of the national
reports.
Public action in the region appears to acknowledge the pivotal role of promoting research and
innovation in the national economies. Nevertheless, public action does not cut across all
relevant policy areas (e.g. financial market, labour mare, business environment, industrial
policy, territorial cohesion, etc.). Partnerships and collaboration schemes are conceptualized
and implemented differently in each country. The overall situation is characterized by rather
low levels of collaboration between science and industry. Efficient framework conditions
probably remain the main deficiency of the area, as framework conditions are not
interconnected with policies and the business environment. Policies recently and in some
cases only acknowledge addressing major societal challenges without concerted action noted.
Government structures in the region are quite blurred as concerns research and innovation
policies. Steering at a high political level does occur with clear mandates and based on multiannual programmes. In most of the cases, national consultation with stakeholders leads to
specific policies. The strategies of the countries reflect current EU policies towards the
paradigm of a knowledge-base society and smart and sustainable growth.
Supply-side policies are the main instruments for stimulating innovation, while some countries
have started to deliberate on demand-side policies. Public investments in education, research
and innovation are in most of the cases budgeted in multi-annual plans with complementary
measures of the Structural Funds. Stimulation of private investment is very explicit on a policy
level. Still, the countries heavily rely on GERD for innovation financing while BERD is very
limited in the area .
Most striking strengths are the investments undertaken in R&D infrastructure and broadband,
ICT penetration rates and improved educational structures, while most striking weaknesses are
the low investments in information technology, the low usage of ICT in the learning process,
the limited amount of innovative enterprises and lack of financing schemes for innovative
SMEs and start-ups. In similar terms, the support for increasing science-industry collaboration
and the role of the educational system towards strategic advantages are marked as important
opportunities, while the complex insufficient system for innovation, the low responsiveness of
the education system to market demand and the centralization of innovation in certain areas
are considered major threats. The main forces that are expected to play a crucial role in the
future are political (unstable political landscape, frequent changes in leadership, incoherent
spending priorities), economic and market forces (the global recession, austerity measures,
poor knowledge-intensive economy extroversion and spending cuts in the RTDI system) as well
as environmental (climate change and green culture) and last some social and cultural
(increased life expectancy and major societal challenges, improved education levels, poverty
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and unemployment. Finally, technological forces include R&D infrastructure development, low
ICT expenditures as % of GDP and a diversifying picture in ICT application areas.
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10 Abbreviations, Glossary, References
10.1 Abbreviations
Abbreviation
Full name
BERD
Business Expenditure on R&D
EU
European Union
EC
European Commission
ICT
Information and Communication Technologies
GBAORD
Government Budget Appropriations or Outlays on R&D
GERD
Government Expenditure on R&D
RTDI
Research, Technology and Development and Innovation
PESTLE
Political, Economic, Social, Technological, Legal,Environmentatl
SEE
South East Europe
SWOT
Strengths, Weaknesses, Opportunities, Threats
WP
Work Package
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Annex I: The Implications of the Current Financial
Downturn on Foresight and ICTs.
Most of the countries in the area have been heavily influenced by the currnet economic crisis.
Economic stimulus packages to address the economic situation have been formulated mainly
to restore the health of the banking sectors and stimulate short-term demand. Most of the
countries also apply austerity measures, therefore the projections on R&D might be altered in
the light of government cuts.
According to a recent report by the OECD (37) performance in the ICT sector experienced a
decline during the past years and therefore ICT policies need refinement in the crisis for quick
recovery. During the past, ICT policies have been integrated into broader strategies such as
eGovernment, cohesion, societal challenges, the environment etc. Governments worldwide
aim at fostering growth through supply-side investments and formulating favorable conditions
for innovation.
The ICT sector is particularly sensitive to the financial crisis due to three main drivers of ICT
production:



Good long-term prospects for the ICT sector, as ICTs become embedded in all activities
Volatile ICT investment that might magnify changes downwards in periods of
depression
Sharp downward changes in consumer spending and consumer confidence exerting
pressures particularly on ICT goods expenditures.
Therefore, depending on the overall business cycles, a fall in ICT spending and a period of
under-investment are not being excluded. The economic crisis can trigger both opportunities
and challenges (37):
Table A- 4: Opportunities and Challenges of financial crisis on the ICT sector
Opportunities
Challenges
ICT sector restructuring opportunities
Greater reliance on ICT and the internet
Outsourcing of services
Declines in R&D and innovation activities
Decreasing access to capital and start-ups
and financial difficulties to finance
investments
Pressures on IT budgets in all sectors
Public
sector
investments
through
procurement
New ICT R&D innovation priorities as growth
ICT
manufacturing
countries
experience declines in ICT trade
Fall in demand
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might
driver
Growth in digital content applications
Socio-economic challenges as a driver for ICT
growth
Decline in R&D and innovation activities
Dropping
priorities
and
innovation
opportunities
Resistance to change slowing ICT-enabled
innovation
Slower ICT uptake and diffusion through
economy might slow down the sector even
more.
According to the Economic Recovery Plan (38) there is a vicious cycle of falling demand,
downsized business plans, reduced innovation, and job cuts. This could further lead the EU
into a deep and longer-lasting recession with stagflation. Nevertheless, there have been
countries that actually used foresight to increase R&D expenditure in turbulent economic
circumstances so as to lay the foundations of a strong position in innovation. In Europe,
specifically, it has been proposed that Public-Private Partnerships (PPPs) could provide a
means for boosting research efforts in sectors affected by the downturn. Differentiation
strategies instead of catching-up strategies are also proposed to build upon existing R&D
strengths, articulating short term and longer term strategies. The overall EU strategy calls for
optimizing European assets, transforming the research systems by providing an attractive
environment for young researchers and creating disruption by the use of foresight, as “a
vision-setting and policy coordination device as well as a catalyst for systemic disruption” (38).
This may involve countries moving towards new sectors before their competitors and target
investment in knowledge and lead structural change. This verifies the strategic role of the
project, especially in a region. Direct-short actions for improving long-term competitiveness
could be based on smart investments (skills for job creation in areas such as energy efficiency
and clean technologies and investing in modernized infrastructure to boost other sectors as
well). According to the same document structural reforms need to be oriented to supporting
employment and improving flexibility and reducing administrative and regulatory burden on
businesses, promoting entrepreneurship through the EGAF and enhance access to finance for
businesses ( loan subsidies, guarantees, start-ups and micro-enterprises).
The impact of the financial crisis can be found on four different layers of innovation, as put
forward by a slighter older innovation report (39):
1. The Social and Economic Framework conditions (actual depth of the crisis on the
financial situation, labor market etc.)
2. The Innovation policy framework i.e. changes in public policies influencing innovation
3. Spending on innovation (both public and private)
4. Internationalisation of innovation (FDI, Trade, scope of activities)
We can thus conclude the multi-faceted impact of the financial crisis upon innovation, as most
of the components of the NIS are interrelated. Although an evaluation per country is not yet
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available, the general trends so far indicate a decline in demand, capital and liquidity
problems, limited access to funding, falling innovation expenditures and decreasing
employment rates.
As concerns the specific behavior of enterprises in times of economic turbulence (BERDrelated issues, the recent Innobarometer (28) indicates that most enterprises did not report
any change in innovation expenditure during 2009. Of those who changed expenditure, 22% of
companies assert they have cut back on innovation spending, as compared to only 9% that
increased the innovation budget. Another report (40) states that during the current economic
crisis, firms are keeping their R&D activities unchanged or slightly increase them. Thus, the
report finds a different firm behaviour from the pro-cyclical norms during times of economic
downturn.
High-tech manufacturing companies adopt a “forward-looking” behaviour as to innovation.
Cost cutting has been very widespread in Greece (44%), due to the specific political and
economic circumstances that may have undermined business and market confidence in the
country. Figure 1 below presents the percentages of enterprises in all European countries.
Enterprises in SEE countries appear particularly vulnerable as innovation followers and mainly
maintain innovation expenditure at the same level with, with decreasing costs of innovation
expenditures at second position.
Figure A-16. BERD in times of economic downturn
Source: Innobarometer 2009
According to the 2009 Survey on investment and business trends, the companies’ R&D
investment is expected to grow by 2% annually over the period2010-12, half the amount
expected according to last year’s survey, reflecting the ongoing effects of the economic crisis.
This expectation does not cut across all R&D areas, as medium R&D intensity sectors expect a
stagnation in R&D investments. Certain ICT areas, such as software and computer services are
expected to produce approximately 5% growth, while technology hardware and equipment
are expected to produce a less than 1.5%. The willingness of many firms to increase R&D
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investment underline the role R&D plays to maintain or enhance competitiveness. Still,
national debt levels, accompanied by low growth rates of the economies place additional
challenges upon companies in dealing with a complex market environment.
Therefore innovation measures should focus on preventing long-term negative impacts on the
competitiveness. Whilst supply-side measures can stimulate short-term impact on private
R&D&I activities (especially in terms of funding and subsidies), the stabilisation of the
innovation system to the benefit of all actors involved could enhance resilience of a NIS.
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Annex II: Background information and analysis
Supplementary information to Chapter 3:
The global financial crisis appears to have affected most of the SEE economies, as the real GDP
growth rate has been violently disrupted in 2008 and 2009 to regain only a part of the growth
momentum in 2010, as depicted in the following figure. It has to be noted ex ante that this
disturbance bears an impact on the investments and GDP percentage channelled to promoting
innovation and growth. Similar conclusions can be drawn from the disruptive nature of
employment growth diachronically which presents a rather gloomy perspective for
unemployment especially for Bulgaria, Romania and Greece. The following figures present the
GDP growth rate, employment growth and trade balances in most of the countries.
Figure A-17. Percentage of Real GDP growth rate in the region 27
Real GDP growth rate (%)
10,00%
8,00%
6,00%
4,00%
2,00%
0,00%
-2,00%
2007
2008
2009
2010
-4,00%
-6,00%
-8,00%
-10,00%
Austria
European Union (EU27)
Slovenia
Bulgaria
Greece
Serbia
Hungary
Romania
Source: Eurostat, 2011
Figure A-18. Percentage of employment growth in the region
27
Same growth rates apply to Montenegro, - 5.7% for 2009 and 2.5 for 2010, therefore the
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Employment growth (%)
4,00%
3,00%
2,00%
1,00%
0,00%
-1,00%
2007
2008
2009
2010
-2,00%
-3,00%
-4,00%
-5,00%
-6,00%
European Union (EU27)
Austria
Bulgaria
Hungary
Greece
Romania
Slovenia
Serbia
Source: Eurostat, 2011
Table A- 5: Trade Balances in the region (difference between exports and imports)28
Austria
Bulgaria
Hungary
Greece
Romania
Slovenia
28
2007
5,77%
2008
5,79%
2009
4,53%
2007
-19,71%
2008
-20,51%
2009
-7,92%
2007
1,59%
2008
1,22%
2007
-11,97%
2008
-12,72%
2009
-10,61%
2007
-12,12%
2008
-12,78%
2009
-6,92%
2007
-1,72%
2008
-3,02%
2009
1,52%
No available data for Montenegro
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Serbia
2007
-23,94%
2008
-23,35%
2009
-16,49%
Source: World Bank Statistics, 2011
Table A- 6. Trade Balances in the region
Balance
Austria
Bulgaria
Hungary
Greece
Romania
Slovenia
Imports
Exports
2007
0,30%
10,80%
11,10%
2008
0,20%
10,60%
10,80%
2009
0,10%
11,60%
11,70%
2007
-3,10%
6,60%
3,50%
2008
-2,70%
6,30%
3,60%
2009
-2,60%
7,20%
4,60%
2007
2,40%
19%
21,40%
2008
3,00%
17,20%
20,20%
2007
-3,50%
8,20%
4,70%
2008
-2,60%
8,40%
5,80%
2009
-3,90%
10,60%
6,70%
2007
-4,90%
8,40%
3,50%
2008
-3,30%
8,70%
5,40%
2009
-2,60%
10,80%
8,20%
2007
-2,50%
7,10%
4,60%
2008
-1,90%
7,10%
5,20%
2009
-2,00%
7,50%
5,50%
Source: Eurostat, Science and Technology Indicators, 2011
Additional information to Chapter 4:
Supplementary Information on Background Information on European Innovation
Policies
Some other emerging technologies in the context of ICT are illustrated in the following figure:
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Figure A-19. Emerging technologies in the context of ICT on a European Level
Source: (21)
Some further information on European policies is given in the following table. the Areas are
derived from European Policy Documents including Lead Markets, Digital Agenda, Key
Technologies reports and ISTAG recommendations to provide additional details on policies and
specific topics that lie in the heart of the European RTDI agenda.
Table A- 7. ICT policies and challenges at the EU level
Wide Area
Description
Key Emerging
Technologies (KETs)
KET s are knowledge and capital
intensive technologies associated
with high R&D intensity, rapid
innovation cycles and highly-skilled
employment, cutting across many
technology areas with a trend
towards convergence and
technology integration
Innovation
infrastructures
E-infrastructures for R&D , together
with services supporting the
management of scientific data and
access of open data for specific
purposes
Proposed Industrial
leadership in ICT (EU
level)
Specific topics






Photonics (n/a)
Manufacturing
Nanotechnologies
Biotechnology
Advanced materials (n/a)
Micro-nanoelectronics
E-infrastructures for R&D and
related services

ICT based on strengths
such as systems-ofsystems and urban
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


Health, Demographic
change and well-being
e-Health, ICT for patient
empowerment, innovation in social
care systems
ISTAG orientation for ICT
R&D and innovation
beyond 2013

Inclusive, innovative and
secure societies
challenge





Digital Agenda






ICT inventions in societal
domains
Social innovation
ICT to meet industrial
existing strengths
Technological and social
innovation
Integrating social
challenges
Rediscover emerging
themes of innovation
Single market in telecom
and internet services
Trust, security,
interoperability and
standards, fast internet
access
Cloud computing for
government and science]
Open innovation
Digital literacy and skills
Major societal challenges
Lead markets
highly innovative marekts,
providing solutions ob strategic,
societal, environmental and
economic challenges but changes in
legislation must be taken into
consideration
Key sectors for investing
in the future
The sectors emerge from previous
estimations and the European
management
New ICT functionalities
triggering social change
ICT for societal challenges
Future internet (internet of
things, smart cities, smart
traffic)

Related enabling ICT

Eg ICT for green and safe
transport, smart energy,
smart communities,
affordable healthcare
Non-specific











Access to content, data
protection, eGovernment
Internet technologies
Cloud computing
Open platforms
ICT for environment,
sustainable healthcare,
cultural diversity, eGov,
transport systems
e-Health
Sustainable construction
Protective textiles
Renewable energies
Bio-based products
Recycling
Low carbon economy
Infrastructure for technology
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Economic Recovery Plan
diffusion
Energy and environment/transport
High-speed ICT networks
Pan European research
infrastructures
Clean technologies
Green cars
Other trends
Need for collaborative partnerships (PPP’s, tripartite financing, academiaindustry, etc).
moving from fundamental research to meeting market and civil society
needs, moving towards open innovation, involving industry in agendashaping.
Bring stakeholders together through cross-sectoral and cross-borders
platforms (both new thematic platforms and building on existing
platforms)
EU-wide services and platforms in cross-border, co-funded initiatives and
partnerships. This notably includes development and support to common
platforms and reference architectures as binding sets of structures,
processes, interfaces, and data exchange standards and documentation
standards
Focus on creative industries for encouraging economic growth and
creating jobs. This is a crossroad between arts, business and technology.
Knowledge-Intensive services (KIS) fuelled by the applications of new
technologies, new service concepts and changes in demand (mainly
computer services and R&D). Extremely important for creating linkages
and services with neighbouring countries.
Emphasis on demand-side policies
Other forms of innovation:
o
o
o
o
Open innovation models (user-driven innovation , know-how
trading, model in which firms can use external ideas and paths
to market)
Community/Social innovation (referring to strategies and
products to meet societal needs from working conditions to
education and health)
Soft innovation (cultural industries, aesthetics, creativity and the
creative industries)
R&D and Innovation in support of major societal problems
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Snapshot on national RTDI and Innovation Policies
The main information presented in this section relate to a theoretical introduction on national
RTDI and innovation policies and supplementary information derived from national reports.
Overview and theoretical introduction on national RTDI and Innovation policies
General policy orientation and the majority of policies in the national innovation systems of
the countries under review have been strongly affected by the accession to the European
Union, the funding provided by the Structural Funds as well as other supranational
institutional structures such as the open method of co-ordination, the Lisbon agenda or the
Innovation Union. However, some reports (Pro-Inno Innovation progress report 2009, FORSEE
country reports) reveal significant divergences between policy declarations and actual
implementation. Poor cross-country interactions and co-ordination is also noted. It is thus
essential to examine STI policies in the region, their political weight in national agendas, and
whether co-ordination and implementation take place in similar settings and with similar
funding dependencies.
Innovation policy in the countries under investigation seeks to couple different kinds of policy
instruments to address challenges, themes or sectors although the level of policy debate and
of concrete actions in the field is very diverse . In Bulgaria and Romania, there is no evidence
of such debates on demand-side innovation policies, as the focus lies in fostering business
innovation. In Slovenia, demand-side innovation policy is not a focus of attention, but the level
of sophistication of national policies is mature enough. Specific demand-side innovation
policies are listed as follows (ibid in conjuction with NIS) :
 In Slovenia, public procurement has started to flourish, especially with regards to
green procurement. User-driven innovation and living labs are also more mature in
Slovenia.
 In Austria, a new concept or public procurement for societal challenges and innovation
in the public sectors is being developed. Also, regulations on green energy aims at the
efficient use of funding instruments for green energy technologies to reach the
market.
 An e-Health, protective textile, sustainable construction, recycling and renewable
energies Lead Market initiative takes place in Western Greece.
Demand-side measures broadly stimulate innovations in energy and the environment, as well
as healthcare, communication and security. According to the (41), market regulation and legal
frameworks are suitable for low R&D intensity sectrors.
Supplementary Information on Main Innovation Policies Orientation
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On a country level, the information on main innovation policies orientation is given in the list
below:
1. Increase of support towards all research-relevant actors, supply of HR for RTDI
Bulgaria (National Scientific Research Strategy 2020), Romania (Governing Programme 20092012), Austria (National Reform Programme), Greece (OP “Education and Life Long Learning”,
Archimedes III, Heraclitus II, Thales), Hungary (“‘Bolyai Janos Research’ Scholarship”,
“Hungarian Eotvos Scholarship”, “Mobility”) and Slovenia (Training and Financing of Young
Researchers in Research Organizations) aim at the development of the knowledge and
innovation based society by increasing the support to all the relevant actors that participate in
research (universities, scientific institutions and other organizations). More specifically,
Bulgaria supports young researchers and the creation of integrated scientific centers in
universities. Romania’s target is to increase the number of researchers with international
scientific results and the attractiveness of scientific careers and promote young researchers.
Austria has set the target of a budget for science and research of 3.76% of GDP with at least
66% deriving from the private sector and a percentage of 38% of population with tertiary
education. Greece intents to upgrade higher education and increase investment in human
capital via better education and skills as well as to increase the stimulation of PhDs. Hungary,
draws the emphasis on outstanding research activities of young researchers and provides
them with financial support and supports their mobility and international experience. Slovenia
promotes the stimulation of PhDs, the recruitment of researchers and science education).
Moreover, Bulgaria and Romania aim at the repatriation of the scientific Diaspora. In Serbia,
Development of Human Resources is one of the priorities in The National Strategy for Scientific
and Technological Development 2010-14, although the main emphasis is still placed on
infrastructures. In Montenegro, the goal is to emphasize the significance of human resources
potentials for science and technology development, primarily through development of young
researchers and inclusion in the European Research Area (ERA) to stimulate technological
development and innovations and promotion of scientific results and development of new
technologies the products of which are attractive to the market through the Strategy of
Development and Financing of Higher Education in Montenegro (2011-2020)
2. Development of Innovative infrastructure, Centers of Excellence, Technology
Transfer (7/8)
Austria, Slovenia (Reform Programme for achieving the Lisbon Strategy Goals and OP
“Strengthening regional development potentials”), Bulgaria (Innovative infrastructure and
infrastructure for SMEs development) and Greece support the strengthening of regional
infrastructure via the creation and support of Innovation Zones, incubators, spin-offs,
technology clusters. Similarly, Hungary has several policies in place (“Support to accredited
innovation clusters”, “Support to innovation and technology parks”) to reinforce the joint
projects of accredited clusters and to facilitate the establishment of innovation and technology
parks in the “pole cities” through the development of the appropriate research and ICT
infrastructure. In Romania, the Registry of accredited entities belonging to the network of
specialized technology transfer and innovation institutions (RENITT) published at 30.03.2011,
includes 53 positions (technological and business incubators, technology transfer centres,
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technology information centres). In Serbia, New Research Equipment (70 mil €) and ICT
infrastructure including “Blue Danube” supercomputing center (50-80 mil €) are envisioned
Initiative for Investment in Science and Technology Infrastructure”. In Montenegro, Necessary
scientific research infrastructure and supporting research-oriented RTDI infrastructure are
major goals of Strategy of Development and Financing of Higher Education in Montenegro
(2011-2020). Montenegro also has an action plan for increasing ICT incubation.
3. Increase of competitiveness- Exploitation of key national strengths (7/8)
Greece (OP “Competitiveness and Entrepreneurship), Bulgaria (Innovation Strategy, OP
Competitiveness), Romania (National RDI Strategy) and Governing Programme 2009-2012 and
Slovenia (Target Research Programmes) have set targets to increase the competitiveness of
their economies and the competitiveness of their enterprises so as to make their regions
attractive places to invest and work and so as to exploit domains with a comparative
advantage. Moreover, Greece (Strategic Development Plan for Research, Technology and
Innovation under 2007-2013 NSRF) supports R&D activities in key areas of national strength. In
addition, Slovenia (OP “Strengthening Regional Development priority: Competitiveness of the
enterprises and research excellence”) provides support to enterprises that conduct research
that is strategically important and promotes inter-sectoral cooperation for R&D projects of
public interest so as to increase the competitive capacity of the country and ensure its
successful development (Target Research Programmes). In addition, Hungary (“National
Technology Programme- Support for Strategic Research”) supports application-oriented R&D
products which can improve life quality and enhance the competitiveness of the country
particularly in the fields of life sciences, competitive industry, competitive agriculture and food
industry, liveable and sustainable environment and security and safety. In Serbia, National
Strategy is putting emphasis on specific national priorities: Biomedicine and human health,
New materials and nanosciences, Environment protection and countering climate change,
Agriculture and food, Energy and energy efficiency, Information and communication
technologies amd Improvement of decision making processes and affirmation of national
identity. In Montenegro, this is not very clear but the country in its national strategy does
emphasise the importance of science and research within the context of further socialeconomical growth and transformation into modern knowledge based society; In Montenegro,
the Ministy of Science has approved RTD projects in key areas including energy, new materials,
interdisciplinary projects, natural sciences, competitiveness, science and education,
agriculturist, medicine, ICT and tourism.
4. Support to SMEs- Entrepreneurship (8/8)
Slovenia in particular places a lot of emphasis through several policies on providing support to
SMEs. More specifically, there are policies in place to support investments of SMEs in new
technologies (Programme for the promotion of entrepreneurship and competitiveness 20072013), to facilitate SMEs access to loans (Annual Programme of Slovene Enterprise Fund, OP:1
2007-2013), to provide subsidized costs of consultancy in order for older enterprises to
modernize and new founded SMEs to survive the initial critical years (Programme for
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promotion of entrepreneurship and competitiveness). In addition, Greece (Innovation
vouchers for SMEs, Development and support of new highly knowledge intensive innovative
enterprises, Support newly established firms in R&D and Support groups of SME's in their R&D
activities) provides advanced support services for firms (Venture funding, Business Angels,
Mentoring, seed capital) as well as support for firms at the pre-incubation phase and in spinoff and spin-out creation. Bulgaria (Innovative Infrastructure and infrastructure for SMEs
development) has in place policies to ensure the improvement of the business environment
and to foster start-up ventures. Austria too regards as a priority the funding of SMEs research
and supports that via innovation vouchers, co-funding and tax incentives. The structural
programme COIN-cooperation and innovation- is in place to stimulate and increase the RTDI
activities of firms, especially SMEs and promote their collaboration with the academia.
Hungary aims at strengthening the innovation capacity of SMEs and their profitability
(“Technological upgrading of firms”) by facilitating market entry, supporting export-oriented
companies with growth potential, increase value-added etc, finances innovative start-up SMEs
with a large growth potential (“Corvinus Venture Capital Fund”), promotes equity financing in
the early stage of risky SMEs (“Start Equity Guarantee Fund”), facilitates loans, promotes
deductions of R&D expenditures from their taxable income and finances projects and
researchers with high potential of generating outstanding results. In Romania examples of
support provided to innovative enterprises are the Network of specialized technology transfer
and innovation institutions, the National technological platforms (32 in 2010), the SOPs
“Increasing economic competitiveness”, “Regional Development” and “Human Resources
Development”, the Inno-voucher, introduced in collaboration with the Europe INNOVA
initiative, with a budget of 2 mil. Euro in 2011In Montenegro the Strategy for Development of
SMEs 2011-2015 envisages a better promotion and investing in innovation and research in
SMEs will positively influence overall business performance of SMEs in Montenegro. In Serbia,
SME’s are targeted through the Access to Finance The ‘Project for Supporting SMEs to Invest in
Innovation (2009)’ supported by the Ministry of Economy and Regional Development, while
the ‘Project for Supporting the Development of Competitiveness of SMEs and Innovation
(2009)’ is managed by the National Agency for Regional Development. Strategy on Developing
SMEs in Serbia 2008-2013
5. Reinforce the participation of the private sector in R&D activities and fundingInnovativeness of companies (6/8)
Romania (National Reform Programme 2011-2013), Greece (National Reform Programme for
Growth and Jobs 2008-2010), Austria (National Reform Programme), Bulgaria (National
Research Strategy 2020), Hungary (“Support to innovation activities of firms”) and Slovenia
(Programme on promotion of technology development and information society 2007-2013) set
policies that reinforce the participation of the private sector in funding RDI. Slovenia in
particular, reinforces the R&D co-financing actions of micro, small and medium enterprises as
a means of offsetting the consequences of the recession. Bulgaria targets at a more stimulated
private sector attitude which will contribute to RDI as a provider of direct investment and as a
reliable beneficiary of scientific output. Moreover, Greece (Support new businesses for R&D)
supports the collaboration of newly-established SMEs with public research institutions in order
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to increase their participation in R&D funding. Hungary, aims at intensifying the RTDI activities
and the competitiveness of companies by strengthening the growth potential of innovative
companies, fostering experimental activities and the exploitation of research output etc. mIn
Romania projects funded by the National Research Programmes are co-financed by
participating private enterprises. In the National Programme “Innovation”, where projects
consortia are coordinated by beneficiary private enterprises, the private contribution was
about 51% of the budget in 2010. New mechanisms to support the public-private partnership
in RDI are envisaged to be adopted according to the 2011-2013 National Reform Programme,
including the innovation clusters oriented towards high technology areas and strategic sectors
including ICT. In Serbia and Montenegro, the exact proclamation of policies is not present in
the national reports, but may be implied in certain strategies. In Montenegro, the strategy plan
for SME’s outlines most measures for competitiveness, however innovation and technological
development regard the stimulating measure for financing innovation in the economic sector
and marketing support for innovation actors, including public research institutions.
6. Cooperation (5/8)
Bulgaria (National Research Strategy 2020) supports the establishment of a sustainable
education-business-science relation. Greece (Legal Framework for the Development of
scientific and technological research) enhances cooperation among research centers. Austria
(10 Future Messages of the Minister of Science and Research (in the context of the Research
Dialogue)) places the emphasis through various programmes on the cooperation of applied
research organizations and the industry. Slovenia (Technology for Security and Peace 20062012) promotes R&D cooperation between public institutions and private business enterprises
in the area of defense and security technologies. Hungary (“Development and strengthening if
research and development centres”, “Support to market-oriented R&D activities”) has several
policies in place channeled towards the strengthening of the cooperation of research centers
with firms in order to achieve the best exploitation of the research results and their
development into marketable products. In Romania, the collaboration between enterprises
and academia in order to support the implementation of the 2007-2013 National RDI Plan is
considered a major priority in stimulating the RDI investments in the private sector. In
Montenegro, ministries started to be involved in Innovation and RTD activities and participate
in research projects together with the Ministry of Science. One of examples of successful
cooperation is a Call for proposal for RTD projects. Thus, cooperation is not viewed as explicit.
In Montenegro, international cooperation aims at the reorganization of the systems for
researchers mobility and participation in international actions
7. Improve quality of life and services through the use of ICT (3/8)
In Romania (National RDI Strategy), strategies in the field of ICT on universal service in the
field of electronic communications, broadband electronic communications, eRomania
suporting eGovernment services for citizens and business environment), Greece (Digital
Strategy 2006-2013) Austria (Programme Benefit, Programme Ambient Assisted Living Joint
Programme) have policies in place to promote the improvement of the quality of life through
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the use technology. Austria in particular draws attention to improving the quality of life of
elderly people.
8. Restructuring of the RDI system in a more functional and efficient way (3/8)
Romania (Governing Programme 2009-2012) and Greece (Law for the Institutional Framework
of Research and Technology) aim at the reorganization of the research-innovation system in a
more functional way so as to reduce the fragmentation of research activities and move
towards performances of excellence. Other more national-focused orientations include the
optimal use of the national and European funds and programs so as to achieve a more visible
effect (Bulgaria), skill development and energy (Austria), awareness raising and innovationfriendly attitude (Greece) and the creation of legal infrastructure for RTDI activities, regarding
the IPR protection abroad, the protection of activities of SMEs, individuals, PROs and higher
education organizations (Hungary) ), strengthening the capacity and increasing the
performance of RDI system, stimulating the growth of RDI investment in the private sector,
developing the European and international dimension of RDI policies and programmes as three
main RDI reform directions identified in the National Reform Programme 2011-2013
(Romania). Montenegro’s strategy aims at reforming the institutional framework for engaging
in scientific-research activity, but this cuts across many reforms in many sectors so as to
allocate funds towards research institutions and technological development projects.
•
•
•
•
Greece: exploration and exploitation of the earth, environment, exploration and
exploitation of space, transport, telecommunication and other infrastructures, energy,
industrial production and technology, health, agriculture, education, culture,
recreation, religion and mass media, political and social systems, structures and
processes, general advancement of knowledge: R&D financed from general university
funds, general advancement of knowledge: R&D financed from other sources, defence.
Bulgaria: energy, energy efficiency and transport, development of green and eco
technologies, health and quality of life, biotechnologies and ecological foods, new
materials and technologies, cultural and historical heritage, information and
communication technologies
Hungary: transport, automotive industry and logistics, health industries, ICT, energy
and environmental technologies, creative industries (no actual measures, more
declarations)
Austria: Austria demonstrates core competencies in e-areas such as e-commerce, egovernment, embedded systems, grid computing, knowledge based systems,
Mechatronics, Semantic systems, Security and software engineering,
Telecommunications, visual computing. Especially strong topics are signal processing,
sensor systems, GIS, modeling and simulation and formal languages. In addition,
international excellence is identified in both academic and industry research in
embedded systems, microelectronincs, smart cards/RFID/security. Scientific ICT
research can be found in visual computing, semantic systems, artificial intelligence,
organic electronics, quantum information science, algorithmic mathematics,
mathematical and simulation control basics.
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•
•
•
Slovenia: advanced materials and nanotechnologies, energy efficiency and sustainable
construction, renewable energy sources and environmental technologies,
biotechnology, biomedicine and biological resources, high-performance computing
and networks, analytical capacities, national digital resources, research infrastructure
for social sciences and for applications in the space and safe and healthy food, metallic
and nonmetallic materials, complex systems and innovations, information and
communication technologies and medical sciences.
Romania: ICT, energy, environment, physics, health, agriculture, food safety and
security, biotechnologies, biology and genetics, materials, processes and innovative
products, space and security, social, economic and humanistic research.
Montenegro: international cooperation
The tables below provide information on the national operational programmes and crossborder programmes to check for coherence on a regional level.
Table A- 8. Operational Programmes Coherence
National Programmes
Sectors
Operational Programme “Regional Development” Bulgaria
Operational Programme “Regional Development” –
Romania
Operational Programme “Strengthening Regional
Development Potentials” - Slovenia
Regional Development
Operational Programme “Environment and Energy”
– Hungary
Operational Programme “Environment and
Sustainable Development”- Greece
Operational Programme "Environment"- Romania
Operational Programme “Development of
Environment and Transport infrastructure”Slovenia
Environment
Operational Programme “Transport” –Bulgaria
Operational Programme “Transport” –Hungary
Operational Programme “Transport” –Romania
Transport
Bulgaria, Hungary, Romania
Operational Programme “Development of the
competitiveness of the Bulgarian Economy” –
Bulgaria
Operational Programme “Economic Development”Hungary
Operational Programme “Competitiveness and
Entrepreneurship”- Greece
Operational Programme “Increase of Economic
Competitiveness”-Romania
Economic Development and
Competitiveness
Bulgaria, Romania, Slovenia
Hungary, Greece, Slovenia, Romania
Bulgaria, Hungary, Greece, Romania
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Supplementary Information on Main Innovation Systems Priorities
The Table below synthesizes information from the national reports regarding common priority
axis of national innovation policies and specific measures taken. The table mainly serves at
identifying the corrective measures each country takes for each deficiency identified and how
it conceptualises approximating each priority axis in accordance with the level of sophistication
of its system.
Table A- 9. Common priority axis and baseline priorities in the region
Priority Axis
Relevant
Countries
Specific measures
Slovenia
Improvement of the quality and investments
in human resources, through the upgrade of
the
educational
system
and
the
encouragement of life long learning
Bulgaria
Greece
Romania
Slovenia
Increase of the number of researchers and
improve their professional performance
Montenegro
1. Education-TrainingLife Long LearningTowards the
Knowledge Society and
Performance of
Excellence
Hungary
Addressing the issue of the shortage of supply
of HR for RTDI as well as reinforcing the
capacity of tertiary education in RTDI so as to
achieve stronger cooperation with the
industry and enhance their effectiveness
Greece
Improve the investments in Knowledge and
Excellence as a tool to assist the
reorganization of the economy and aims at
generating knowledge in priority sectors of
interest and at turning knowledge into
innovative products.
Austria
Increasing possibilities to achieve higher
qualifications, and recognizing non-formal and
informal learning for disadvantaged groups.
Austria also aims at improving monitoring of
adult learning sector and analyze effects of
reforms for adult learning.
Montenegro-
Professional development of researchers,
stimulation of Doctorates in priority
development areas; Establishing connections
between the Educational system and labor
market and enhancing entrepreneurial and
innovative character of education.
Serbia
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Priority Axis
2. Research
Infrastructure
3. Addressing Societal
Changes- Elimination of
Risks and Inequality
Relevant
Countries
Specific measures
Bulgaria
Creation of new technological centers and
parks as well as at strengthening the existing
offices for technological transfer.
Greece
ICT
and
broadband
infrastructure
development but also technology transfer
(Innovation Vouchers for SMEs) and cluster
development .
Austria
Expanding cooperation of research institutions
and firms on the basis of shared
infrastructure, participation in EU and
international infrastructure and support
networking infrastructures to achieve critical
mass.
Hungary
investment in large scientific facilities
(Government’s mid-term STI policy strategy)
and the development of R&D supply by
providing the necessary infrastructure.
Montenegro
Necessary scientific research infrastructure;
business parks and clusters.
Serbia
New
Research
Equipment
and
ICT
infrastructure
including
supercomputing
center.
Romania
Priority investment projects proposed by the
Romanian
Committee
for
Research
Infrastructures including 19 positions for 10
domains, including ICT (6 projects), basic
institutional funding to support the
functioning of the research and development
infrastructure, allocated to certified national
R&D institutions and centers.
Slovenia
Addressing societal changes and improve the
quality of life of all individuals in a sustainable
way.
Greece
Romania
Increasing the access to employment, creating
a sustainable, efficient health system,
reducing the levels of poverty and social
exclusion.
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Priority Axis
Relevant
Countries
Specific measures
Austria
Climate protection and renewable energy
Greece29
Romania
Slovenia
4. Creation and
Support of
Partnerships
Creation of partnerships in RDI fields between
national RDI institutes, universities , financial
institutions or else between the public and the
private sector
Greece
Reinforcement of European, Multilateral and
Regional R&D cooperation in RDI projects so
as to promote excellence
Austria
Improving the collaboration between science
and industry and creation of competence
centers
Bulgaria
Establishing national networks to bring
together science and business through the
creation of centers of excellence
Romania
Network of specialized technology transfer
and innovation institutions (technological and
business incubators, technology transfer
centers, technology information centers)
Slovenia
Improving the institutional framework to
facilitate entrepreneurial action and lead to a
more dynamic society
Greece
(Austria)
5. Improvement of
institutional framework
29
Hungary
Addressing failures in terms of legal
infrastructure for RTDI activities through STI
policy support measures
Austria
Improving competition framework and market
access conditions, HSRT, contribute to
demand-side policies and expanding the basic
research sector
Romania
Institutional reform regard the coherence of
government policies through horizontal interministerial, scientific support in RDI
developing policies and strategies, in RDI
coordination, evaluation and funding, in
evaluation and classification of units and
However, Greece has not allocated specific budget on these priorities
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Priority Axis
Relevant
Countries
Specific measures
institutions belonging to the national R&D
system
6. Promotion of
Innovation activities in
enterprises
Bulgaria
Participation in Enterprise Europe Union as
through its assistance the Bulgarian SMEs
Slovenia
Increase investments of the business sector in
R&D
Greece
Increase of the participation of the private
sector in RDI
Austria
Performing measures like innovation checks,
research premiums, support for the
commercialization of results and support of
young enterprises
Hungary
Extending the R&D activities of enterprises
and addressing inadequate private investment
in RTDI activities
Montenegro
Strengthen and develop SMEs that will be
export-oriented and capable to cope on EU
markets in the future. Particular focus on
strengthening export capacities of SMEs,
developing
and
creating
innovative
environment and strengthening innovation
capacities.
Bulgaria
Optimizing the relationships between
participants of the innovation system and
providing conditions for start-up enterprises
Slovenia
Support measures for the growth of patents,
high-tech exports and value added products
and services
Austria
Supporting new exporters
internationalization)
Romania
Income tax exemption for IT specialist
programmers, a more favourable regime of
local taxes for industrial parks
Bulgaria
Establishing and developing centres for
promotion of entrepreneurship in high schools
Slovenia
Higher rates of new high-tech firms and spin-
7. Improvement of the
Business Environment
8. Support of
Innovative
Entrepreneurship and
Competitiveness
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(1st
step
of
Priority Axis
Relevant
Countries
Specific measures
offs from universities stimulating innovation
and entrepreneurship
9. Support ICT use in
every domain
Austria
Technology transfer schemes, encouraging
young talents and venture capital
Greece
Reorientation of the productive base towards
high added value products and personalized
services and at attracting new entrepreneur
investments
Romania
Tax facilities to young entrepreneurs,
improving entrepreneurial abilities of young
engineers
Romania
Support of ICT use as a means of improving
the quality of life and the quality of services.
Emphasis is placed in the use of electronic
public services.
Greece
The columns to the right indicate country-relevant information and how each priority axis is
actually represented in a national context
Supplementary Information on Coordination and Capacity
A short overview of coordination mechanisms and capacity of the system in each country
follows:
In Greece, policies are conceptualized and implemented through Sectoral Operational
Programmes, Regional Operational Programmes and European Territorial Cooperation
Programmes. In addition, the alignment of the national research strategy to the Lisbon
strategy is achieved through the Strategic Development Plan for Research Technology and
Innovation 2007-2013 and the new National Strategic Reference Framework (NSFR). The main
policy documents are the 9 Operational Programmes (OPs) and their basis is on the Regional
Development Plan (NSFR), there are also 5 Regional Operational Programmes (RoPs) that focus
on the needs of Greek regions. Sectoral measures to support innovation (support to
entrepreneurship, ICT) and RTDI programmes (innovation vouchers, cooperation etc) exist as
well. There is no single agency dedicated to innovation. Since 2009, the Greek government and
the Special Permanent Committee on Technological Assessment (SPCTA) are the main actors at
the political level of the governance structure of the Greek innovation policy. The main
authority at operational level for the implementation of the RTD policy is the General
Secretariat for Research and Technology (GSRT) which is under the Ministry of Education, Life
Long Learning and Religious Affairs and the main advisory body on research is the National
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Council for Research and Technology (NCRT) which is attached to GSRT. The main public
organizations developing legal instruments and multi-annual programming for policy
elaboration and implementation are the Ministry of Development, Competitiveness and
Shipping (minDev), the Ministry of Finance (MEF) and the Regional General Secretariats of
each Greek Region. The coordination of funding resources is under an Inter-Ministerial
Committee and priority setting is assisted by the National Agency for Research and
Technology. The orientation though of the main policy documents is highly influenced by the
EU priorities. In Greece, coordination is mostly driven by the demand of the structural funds.
In Bulgaria, the formulation of policies in RDI is based on micro and macro level analysis of the
national economy and it is formed according to a series of legal and policy documents such as
the Law on Promotion of Scientific Research, the National Reform Programme Bulgaria 20112015, the National Strategic Reference Programme, the Programme of Measures for
Operational Programme Competitiveness and the Programme of measures for Human
Resource Development 2007-2013. The policies are implemented through the National
Scientific Research Strategy 2020, the National Roadmap for Research Infrastructures, the
Regional Innovation Strategies for Bulgarian Regions and the Innovation Strategy. The
legislative environment as well as the resource provision for scientific research are of major
importance for the country. The Scientific Research Promotion Act is governing the research
activities in the country and it regulates the principles and mechanisms for the implementation
of policies regarding scientific research. There is a division of labour between science and
education (MEYS) and innovation and market development (MEE) in the political system that
governs RDI. The main policy maker is the Parliamentary Commission for Education and
Science and the Council of Ministries acts as an intermediary between the Ministry of
Education, Youth and Science (MEYS) and the Bulgarian Parliament and other ministries. The
formulation and implementation of the policies is under the MEYS and research policy is
shaped by other ministries as well (Ministry of Economy, Energy and Tourism (MEET), Ministry
of Agriculture and Food (MAF), Ministry of Health (MH), Ministry of Defense). The National
Council for Scientific Research (NCSR) and the National Council for Innovations provide
assistance in the implementation of the government policies; however they lack the required
degree of coordination in their operations. Some progress is made in Bulgaria concerning the
distinguishing between policy formulation and implementation
In Austria, the governance structure of the Austrian NIS consist of three levels; the policy
making level under governmental bodies, the operational level that consists of programmes
under agencies and the RTDI- performance level that involves scientific research-related
organizations. The main governmental actors which are directly responsible for RDI are the
federal ministries of Finance (BMF), of Economic Affairs, Family and Youth (BMWFJ), of
Transportation, Innovation and Technology (BMVIT) which manages the biggest share of public
funding for applied research and of Science and Research (MBWF). The Austrian Science Fund
(FWF) and the Austrian Academy of Sciences are under BMWF. The Austrian Research
Promotion Agency (FFG) is under the BMVIT. The Doppler Research Association (CDG) is under
the BMWFJ. There is no formal mechanism for the coordination of the ministries’ activities.
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BMF is responsible for the allocation of funds to other ministries and for the design and
implementation of the policies.
In Romania, the current RDI policy framework is provided by the Governing Programme 20092012 and the new National Reform Programme 2011-2013. In addition, the National RDI
Strategy 2007-2013 which is implemented by the National Research, Development and
Innovation Plan 2007-2013 and sectoral plans is another means of the planning and
implementation of the RDI policies. The legislative framework, the priorities regarding the
implementation of policies and the issues ensuring inter-ministerial coordination is under the
National Council for Science and Technology Policy which is under the Prime Minister
coordination. The management of programmes of the National Plan II is under the Executive
Agency for Higher Education, Research, Development and Innovation Funding (UEFISCDI)
which is under the Ministry of Education, Research, Youth and Sports. Since 2011, several
consulting bodies without legal personality have been created (National Council for Scientific
Research which coordinates the Human Resources, Ideas and Capacities Programmes, National
Council for Development and Innovation which coordinates the Partnerships and Innovation
Programmes). The Institutional Performance Programme is coordinated by the National
Council for Development and innovation, established in 2011. The domains of electronic
communications, IT, information society and knowledge-based society services are under the
Ministry of Communications and Information Society (MCSI). In addition, the National
Authority for Scientific Research (ANCS) is responsible for the implementation, monitoring and
evaluation of the RDI policies.
In Slovenia, RDI policy is conceptualized by specific legal and policy documents such as the Law
on Research and Development, Slovenia’s Development Strategy 2006-2013 (SDS), Resolution
on the National Research and Development Programme 2006-2010(NRDP), National Reform
Programme for Achieving the Lisbon Strategy Goals 2005-2010 (NRP), Programme of Measures
for Entrepreneurship and Competitiveness 2007-2013, National Development Programme
2007-2013 and National Strategic Reference Framework (NSFR) with three Operational
Programmes. All the policy documents are coherent due to their simultaneous preparation or
hierarchical structure. However, the coordination of the measures and their implementation is
a challenging domain for the country and is considered to be caused by the fragmental
governance of the policies. More specifically, the innovation policy is under the Ministry of
Higher Education, Science and Technology (MVZT), the Ministry of Economy (MG), and the
Office for Development and European Affairs (GODEA) and the Office for Local SelfManagement and Regional Policy (GOSP). MG manages the implementation of policies
through the Public Agency for Technology of the Republic of Slovenia (TIA) and the Public
Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments (JAPTI).
Moreover, there are two advisory bodies, the Science and Technology Council of the Republic
of Slovenia and the Competitiveness Council.
In Hungary, a number of government bodies is engaged in science, technology and innovation
(STI) policy-making and each body has a considerably clear mission. The country is a unitary
state and has a centralised decision-making system. In addition, an adequate number of
policies schemes are in place addressing the variety of RTDI issues that emerge. Policies are
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conceptualised and implemented mainly through the Government’s mid-term STI policy
Strategy (2007-2013) and the OPs of the New Hungary Development Plan (2007-2013). Some
of the most important OPs are: the Economic Development Operational Programme (EDOP),
the Social Infrastructure OP (SIOP), and the Social Renewal OP. Since 2011, there are around
two dozens of STI policy schemes and all of them are aligned to the EU STI policy goals. In the
field of STI policy formation, the central government has a dominant role and the highest-level
political bodies are the Education, Science and Research Committee and the Economic and
Informatics Committee of the Parliament. The co-ordination of the governmental STI policy
decision is under the National Research, Innovation and Science Policy Council, which is
comprised by politicians from the Ministry of National Development, the Ministry for National
Economy and the Ministry of National Resources, chaired by a deputy-prime minister and cochaired by the president of The Hungarian Academy of Sciences. The National Innovation
Office (NIH) deals with the government’s policies for technology and innovation. The National
Development Agency is responsible for the support schemes financed by the OPs of the New
Hungary Development Plan (2007-2013) or by domestic funds.
In Serbia, the governance system is attuned by political authorities, administrative bodies,
funding agencies and research performers (Kutlaca, 2008). Although there is no official
government policy toward restructuring of the R&D system, R&D organizations are in the
process of transformations. The private sector is loosely integrated into the public public R&D
system with no obvious links. The Government is the key player in Serbian ICT RTI as ICT RTD
activities are funded by government and majority of research institutions are state-owned.
Various Ministries are involved, as well as the National Council for Science and Technological
Development and advisory bodies. In addition, there is a fragmentation in terms of a
distinction between innovation and RTD in national bodies.
In Montenegro, several ministries are involved in national innovation policy, and the Council
for Scientific Research Activities represents the leading advisory bodies responsible for RTD.
Additional information to Chapter 5:
Supplementary Information on Educational System performance and Science Base
The distinctive characteristics of the educational system per country is given below:
In Greece, the situation is characterized by low levels of life-long learning participation and
high levels of unemployment in all sectors. The knowledge triangle (research, innovation,
education) policy is underdeveloped and only recently there has been some effort to
implement changes. Although the country presents high levels of secondary education and
tertiary education attainment, the Human Resources in Science and Technology (HRST)
percentages in total employment are relatively low and the average growth indicator for
doctoral degrees is lower than the EU average. Moreover, Greece is considered as one of the
most open countries to outward mobility of researchers and it actually sends out more
researchers than it receives. The update of the skills of the workforce is another important
element that is needed for the upgrade of the RTDI system in the country. In addition, the
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training levels on technological innovation inside companies are considered inadequate and
only recently some action has been taken to address the matter (such as the vocational
training of employees). As for the absorptive capacity of the R&D system, there is a mismatch
between supply and demand for researchers as 500-700 new researchers remain unemployed
each year. Scarcity of talent has been noted on sectors such as professional sales, accounting,
technicians and other but not in RTDI.
The situation in Romania is quite different, as the education sector has a quite active role in
RTDI activities. Universities on the one hand prepare future researchers and on the other hand
participate in applied and fundamental research. In addition, they are allowed to organize
research institutes and laboratories and set up consortia with other research centers of private
companies in collaboration programmes or projects. During the recent years, the country
presents significant growth of graduates in math and engineering, their absorption by the
system is low though and this results to significant brain drain. The most important reasons for
this is the low market demand for researchers, low salaries in RTDI system and insufficient
funding of programmes that stimulate research careers, inadequate research infrastructure
and underestimation of the importance of RTDI for the economic growth of the country.
Another kind of mismatch is noted as well, as the education policies are not efficiently
correlated to the needs that private and public research presents and this leads to losses of
qualified HSRT. Moreover, there seems to be a need for better coordination of education with
initial training and continuing vocational training policies. In fact, the adult population faces
difficulties in obtaining formal accreditation of skills acquired in the labour market and there is
need for the creation of synergies between the existing legal framework, the educational
policies and the lifelong learning policies.
In Austria, the situation is characterized by a low share of graduates in science and technology
and human capital in this area is considered a pressing challenge for the country. Although the
quality of education in engineering, mathematics and natural sciences is rated from fairly good
to top world wide, the country presents a significant shortage of highly skilled labour force in
these domains. In addition, it is striking the fact that only 11.5% (in 2007) of the working
population with tertiary education is actually working in a scientific occupation, a share that is
significantly lower than the EU27 average (17.1%). However, the number of advanced and
generic ICT specialists (such as software developers) is considered high (3.8%) when compared
to the low share of ICT users (17.2) in the country. The attraction of Austrian Diaspora and
foreign research is a means through which the country aims at strengthening its HSRT.
In Slovenia, the high quality of the education system and the high levels of education and
motivation of the workforce as well as the high levels of computer literacy and of foreign
languages knowledge are considered as some of the main competitive advantages of the
country. Both the levels of enrolled population in tertiary education and of expenditures on
education as % of GDP have increased during the last decade. In fact, the ratio of expenditure
on education as % of GDP of the country has always been higher that the EU average during
the same decade (SI: 5.9%, EU: 5% in 2001, SI: 5.22%, EU: 5.01% in 2008). In addition, the ratio
between teaching staff and students is high and the increase in tertiary education has a
positive effect on the innovation capacity of the country. However, the increase of tertiary
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graduates results in the creation of unemployment for young graduates. Another education
issue that affects the innovation capacity of the country is the relevantly low levels of
graduates in math, Science and Technology fields, leading to a shortage of personnel in these
areas. Therefore, the education system aims at addressing this mismatch –despite its timeconsuming nature- by offering scholarships in these fields and by limiting the enrollment in
other programmes such as social sciences, law and business, tourism and other services in
which the country has more graduates than the EU average.
Bulgaria is characterized by various conflicting elements. The amount of PhD students has
increased twice from 2000 to 2006, however, during the past two years, there has not been
noted an increase in the demand for doctoral degrees. A worth mentioning fact is the 46%
increase of the number of positions for PhD students in higher education from 2007/2008 to
2008/2009. Moreover, although the OP “Development of Human Resources” provides financial
support to young scientists, post graduate students and PhD students and even though the
number of PhD scholarships has increased, the expected positive effect of an increase of the
population with tertiary education has not led to the improved innovation capacity of the
country as the actual number of students that defend their theses successfully and on time
remains low. In addition, the amount of PhD students and PhD graduates in technical sciences
varies and the amount of PhD graduates in Informatics studies is very low. However, the
interest for ICT PhD studies seems to be increasing.
In Hungary, the situation is characterized by increasing but insufficient levels (in international
comparison) of Science and Engineering graduates and PhD degree holders and brain drain is a
significant issue as it causes shortages of qualified S&E personnel. The main reasons for this
are the unfavorable working conditions for researchers and the unattractive nature of this type
of career in the country. Although there are several policy efforts to further increase graduates
in scientific fields, there is the need for a more coordinated and effective way of addressing
the issue in the long-term and businesses in particular need to be motivated to invest and
create more positions for this kind of graduates. As for international mobility issues, the
country presents low inward mobility (3% of researchers are foreign researchers in 2010) due
to unattractive salaries and working conditions and stable outward mobility and for this reason
there are several policy measures in place to support native and foreign researchers moving in
and out of the country. The responsiveness of the education system is characterized by a lack
of understanding of the actual industry needs and there is the need for better communication
of the changing industry demands. Last but not least, the participation in lifelong learning is
viewed as weak in international comparison and certain private training companies or some
universities offer courses in entrepreneurship and innovation management.
Note: no relevant analysis has been made for Serbia and Montenegro except for SWOT.
Supplementary Information on Science-industry collaboration
On a country level, the information on collaboration is given in the list below. The scarcity of
sources and information on national reports however has rendered the analysis more difficult.
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In Greece, the most characteristic feature regarding the links between science and industry is
the lack of a dynamic type of relationship between the relevant actors. In addition, the
intermediary units are considered inadequate. The reason for this lies in the traditional
orientation of the productive sector and in the fact that research priorities are driven by
funding opportunities and not by demand leading to the lack of a dynamic market that could
receive and exploit the research output of research centers and universities. There is limited
knowledge circulation and exploitation, even though there have been some efforts by
intermediary mechanisms to reinforce these types of collaboration. A small progress has been
noted regarding the collaboration of innovative firms with universities during the years 20042006 (6% increase) due to the participation of the country in EU FPs for research. Most of the
current measures that aim at improving the situation are under the Operational Programmes
and are still under design. Indicatively, these measures aim at the creation of new knowledge
intensive clusters in areas with competitive advantage and of regional innovation poles, the
mobility of researchers from university to market, collaboration of SMEs with RTDI performers
in high technology fields, collaboration of private companies with research centers in strategic
fields and other.
In Slovenia, the situation regarding the cooperation between science and industry is
characterized by small progress (for the years 2002-2006), however, only a particular number
of successful firms has managed to create strong connections with public research centers and
benefit from this cooperation; the dominant aspect is that the output from the side of science
and academia is rather irrelevant to the industry’s needs. In addition, the 3 types of
collaborative tri-sector participation that exist in the country (Centres of Excellence,
Technology Platforms, Clusters) have the aim to enhance the concentration of knowledge at
key technological areas as well as to support strategic partnerships between academia and the
private sector. Moreover, the 8 Centres of Excellence of the country have been created with
the view of supporting inter-disciplinarity among different research fields, providing an equal
basis for industry and academia and promoting joint sharing of the research equipment for
public research units, industry and young researchers or postgraduate students.
In Austria, there has been an increase of institutions of public/private partnerships during the
last decade. More specifically, the Competence Centers play the role of the intermediary
between science and industry and have different objectives, some of them related to ICT. The
Competence Centers under K-plus have the objective of creating long-term initiatives for the
collaboration of public and private research at an advanced level, K-ind Competence Centres
support the creation of R&D centres which are run both by companies and research
institutions, K-net Competence Centres support the co-operation of geographically dispersed
facilities related to research of common issues. Moreover, according to a new naming scheme,
K2 and K1 Competence Centres have been recently established. Other public/private
partnerships that involve the industry are the Christian Doppler Laboratories (CD labs). In
addition, the country’s research organizations participate in two EU Joint Technology
Initiatives, the ARTEMIS and the ENIAC (European Nanoelectronics Initiative).
Regarding university/industry collaboration, Bulgaria ranks 110th among 139 countries in the
Global Competitiveness Rank. The OP Competitiveness and the primary priority axis support
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the creation and upgrade of technology transfer centres, technology incubators, technology
platforms and technology parks. In addition, another objective is to reinforce the synergetic
attitude of all the relevant actors in the innovation system via the implementation of a series
of related operations such as the creation of a “national innovation network”.
In Romania, the companies are below the EU average regarding strategic relationships with
research institutes (EU average: 15%, Romania: 11%) and equal regarding strategic
relationships with educational institutes (EU average: 24%, Romania: 24%). The Sectoral OP
“Increase of Economic Competitiveness” (SOP-IEC) sets among the priorities the support of
partnerships between universities or research centres and enterprises for the production of
output directly applicable to the economy. The state supports the development of innovation
and technology transfer infrastructure through the creation of centres and specialized services
for the dissemination and use of research output, areas and infrastructure with special
facilities such as industry liaison offices, business incubators, technological parks, technology
transfer centres and branch entities with a specialization in technology transfer, responsible
for tripartite contracts.
In Hungary, companies report higher frequency of cooperation in terms of innovation than
most EU countries (6th in CIS 2008, with 41.6%) and there are long-established partnerships
between businesses and higher education institutions.. There are several policy support
measures in place to reinforce the collaboration between the private and the public sector
organizations, knowledge circulation and the exploitation of research results. In addition, joint
university-industry research centers located inside universities are supported through
financing. The impact of these measures is contradictory as native experts support their
efficiency and foreign experts support that science-industry links remain weak due to a lack of
understanding of the actual industry needs by the academic side and due to the mismatching
nature of the incentive structures that are offered to these actors. Moreover, the country
reinforces the exploitation of knowledge by supporting IPR activities inside publicly financed
research centers and technology transfer offices in many of these centers have been
established to facilitate these activities. However, there is a rather significant lack of
cooperation between domestic universities/public research centers and the ICT R&D field
(namely electronic firms which mainly deal with manufacturing).
Supplementary Information on Partnerships
As above, the information on partnerships is given in the list below. The scarcity of sources and
information on national reports however has rendered the analysis more difficult. The level of
sophistication of analysis for each country significantly deviates.
In Greece, one of the most representative characteristics related to the knowledge triangle
links is the fact that although the country performs well in innovation inputs (such as
education, investment in innovation), it does not perform well in output measuring indicators
(such as patents, firm turnover form new products etc) and this seems to be caused by the lack
of strong links and interactions in the knowledge sharing system. Although there has been
noted some increase of collaboration between universities and innovative firms during 2004-
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2006 and although the participation of Greece in the EU FPs has improved partially the
situation, there is the need for more dynamic action. The distribution of knowledge to
investors and SMEs is being supported by the relevantly recent creation of the Centres of
Entrepreneurial and Technology Development but still there are few incentives for the
creation of more intermediaries. Moreover, the country presents a low average for business
funding public R&D). As far as the innovation policies set by the EU are concerned, in the
country, Public Private Partnerships (PPPs) deal merely with the construction of public
infrastructure. In addition, despite the importance of the public procurement policy for the
improvement and rejuvenation of the innovation system, Greece seems incapable of exploiting
this properly as it has neither set any clear-cut goal regarding it, nor formulated any policy to
support it. However, new regulations combining public procurement and the health system
are expected and there seems to be space for the improvement of the pre-commercial
procurement market. Moreover, concerning the Lead Market Initiative (LMI) which is another
innovation policy set by the EU for industrial innovation, Greece reports only a small
participation in such projects and the reason for this appears to be the mistrust of the business
sector towards the country’s market as well as the lack of a massive grant position. Another
issue that characterizes the situation is the fact that the country needs to focus on innovation
creation instead of innovation absorption. In fact, the tendency that the country presents
towards adopting new technology instead of creating it, is proved by the number of patents
which diverges significantly from the EU average. However, the country scores 82% of EU
average in scientific publications per million inhabitants and half as much as the leading
countries in terms of citations. As for the commercialization of public research, there are
limited actions mainly due to the lack of interest and lack of capabilities and there are only few
institutions that deal with this issue (FORTH, CERTH, ISI/ATHENA). Last but not least, the
participation levels of Greek research teams in EU research is considerable and the most active
FP7 research priority areas are ICT, Marie-Curie Actions, Research Potential, Transport,
Nanosciences and Nanotechnologies and Health.
In Slovenia, as already mentioned, collaborative participation appears in the form of
technology platforms, centers of excellence and clusters. Regarding public sector innovation,
Slovenia reports that the public sector motivates employees to submit suggestions and
recommendations for the improvement of the delivery of public services. In addition, the
public sector evaluates the education system, suggests preventive measures and forwards to
ministries regulations for needed changes. As for public procurement strategies, there are two
laws in the country; the Public Procurement Act and the Act in Public Procurement in Water,
Energy, Transport and Postal Services. Concerning the commercialization of public research,
the channels are: networking, continuous professional development, contracted research,
licensing, spin-offs etc. Moreover, the Slovenian research policy, the instruments and the
processes have been significantly influenced by the development of EU policies and
documents. The issue of RTDI and the target of increasing R&D investment are included in
national policy documents and thus the country aligns with the Lisbon and Barcelona targets.
Generally, the country presents high indicators in knowledge internationalization aspects. As
far as scientific co-publications are concerned, the country presents very good performance. In
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terms of patent applications, Slovenia presents an increase from 2000 to 2008 (in 2000: 49
patent applications and 0.501 in ICT patent applications to the European Patent Office, in
2008: 60 patent applications and 0.995 in ICT patent applications to the European Patent
Office), although the EU27 average has fallen.
In Austria, Public Private Partnerships (PPPs) are considered as a means of reducing the
intervention of the government and have become a deliberate policy goal. In addition, the
commercialization of public research is supported at various stages, from early translation of
the results to production of innovative products and services.
In Romania, the creation of centres and specialized services, of areas and infrastructure with
special facilities and branch entities are supported by the government at a national, regional
and local level. The country has in place certain measures that align its policy with the
Industrial Innovation policies of EU such as a law for approving the creation and functioning of
S&T technology parks (2003), a government decision (2004) for the improvement of the
coordination and management of innovation programmes and projects (PPPs with research
institutes, Joint Projects, contract research, licensing etc) and other. In addition, in 2010 there
were 32 technological platforms and in 2011 the Inno-voucher was launched with the aim to
support and exploit the innovation potential of SMEs and the consulting potential of research
institutes as a service, leading to the development of new products, implementation and
testing of patents, technology transfer, evaluation and technological audit, transfer of research
results to SMEs, IPR, certification of products and more. As for scientific publications per
million populations, table … provides certain information for the county. In addition, in 2010,
PCT patent applications per billion GDP were far lower than the EU27 average and license and
patent revenues from abroad as % of GDP was 0.12% for Romania and 0.21% for EU27.
In Bulgaria, the infrastructure for the support of the commercialization of research output and
technology transfer in the ICT sector is reported to be adequate (it includes a network of
Technology Transfer Offices-TTO, and Centres-TTC and High Tech Business Parks-HTBP). In
addition, inside universities there are innovation offices, High-Tech Parks and R&D sectors and
there are several technology transfer centers members of the Enterprise Europe Network
which provide support to innovative SMEs and which are further supported by 3 high tech
business incubators. As far as the patenting activity in ICT is concerned, Bulgaria presents very
low performance with 10-20 patent applications for 2004-2008 at EPO/WIPO. In 2007-2008
there seems to be an increase of interest in IPR protection for the country’s ICT inventions,
most of the new applications derive from SAP researchers with Bulgarian affiliation, though. In
the Bulgarian Patent Office (BPO) the activity is seen as higher, more diverse and stable.
In Hungary, there are measures and laws in place to support the commercialization of HEI’s
research outputs through the creation of spin-offs and favorable IPR regulations. One of the
priorities of the country is the introduction of pre-commercial procurement as a policy tool
with the aim of strengthening the development of the ICT sector. There are no Lead Market
Initiatives (LMIs) in the country and the capacity of ICT firms to absorb and exploit knowledge
appears to be sufficient. In addition, the country participates in Joint Technology Initiatives
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(JTIs) and Joint programmes, however, the country’s cooperation with other countries did not
have the aim of joint policy design and STI policies are designed via joint initiatives only to a
limited extent. Currently (2011-2012), the country holds the EUREKA chairmanship and
Hungarian participants participate actively in its projects and contribute to 5 strategic cluster
projects
Supplementary Information on Infrastructure and Funding
It is equally important to conceptualize the funding mechanisms used for RTDI and innovation
in each country, as at the regional level, the funding models of RTDI policies present significant
differences.
In specific, in Greece, most of funding for RTDI activities derives from the European
Community Funds with the R&D Framework Programmes and the Structural Funds and from
direct government funding. There is no indirect public support via tax incentives. The
contribution of the private sector is insignificant (0.58% of GERD, 2007) due to poor demand
for research based knowledge that derives from the low absorptive capacity of the business
sector and from bureaucratic obstacles whereas Structural Funds represent approximately
10% of GERD. The contribution of the public sector exceeds 2/3 of GERD and is half the EU
average. Half of the public funding is university funding. All in all, the innovation policy in the
country is heavily dependent on external sources of finance.
In Bulgaria, the issue of funding RTDI is considered to be as one of the two main problems that
the science sector faces. More than 80% of funding derives from the government and is based
on the institutional funding principle. The contribution of the private sector is insignificant. In
general, the country seems to be lagging behind nearly all EU countries in RTDI funding. The
financial crisis which began to be felt in the 4rth quarter of 2008 slowed the GDP growth and
led to negative growth in 2009 led to falling levels of RTDI funding (0,5% of GDP in 2008) and
thus low levels of innovation and technology transfer.
In Austria, the support to RTDI is threefold. It focuses on indirect funding via R&D tax
incentives, basic funding to universities and research institutions and direct project funding to
research institutions and firms. The emphasis is placed on applied research with market
potential and direct and direct funding to business has increased considerably whereas public
institutional funding for basic R&D has decreased. . In addition, there are many thematically
open funding opportunities, ICT research is supported by European programmes, by thematic
programmes and structural programmes. The private sector contributes significantly in ICT
related research funding (84% of the overall research funding which is 0.52% of GDP, 2008)
and the public sector contributes with a 16% of the total funding which is 0.52% of GDP (2008).
The goal is to reach 1% funding of ICT RTD as a share of GDP and from this the 88% to be
private funding and 12% to be public funding by 2020.
In Slovenia, public funding to RTDI has increased (118,359,583 Euros in 2006, 234,241,000
Euros in 2009) due to the use of European Structural and Cohesion Policy Funds. GERD as a
percentage of GDP has increased from 1.45% in 2007 to 1.86% in 2009. Financial incentives
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have a positive effect but still the resources are limited compared to the actual needs. Private
sector funding in RTDI has also increased during the recent years (companies invested
380.884.000 Euros in 2009) and it is approaching the EU average. The country plans to achieve
the Barcelona target goal, part of the Lisbon Strategy, of investing 3% of GDP in science and
development (1/3 public funds, 2/3 national economy) in 2012.
In Romania, GERD as % of GDP has decreased from 0.58% in 2008 to 0.47% in 2010. The main
sources are public funding (70.1% in 2008, 54.9 in 2010), private funding (23.3% in 2008, 32.3%
in 2010) and they are devoted to fundamental research (49.5% in 2008, 42.9% in 2010),
applied research (42.5% in 2008, 50% in 2010) and experimental development (8% in 2008,
7.1% in 2010). Public funding has decreased whereas private funding has increased. The
emphasis appears to be placed on applied research. Public funding is allocated mostly to the
governmental sector (47.3% in 2010), and Higher education (31.4% in 2010), the rest is
allocated to enterprises and the private non-profit sector. State funds are allocated to the
financing of the objectives of the National Plan and of the National Strategy as well as to the
research institutes which participate in international programmes. The National Plan budget
(15b. lei, 2007) focuses on the Partnerships Programme with 36% of the allocated budget and
on the Ideas Programme with 18% of the budget. In addition, 13.5% is allocated to the
Capacities Programme, 13.5% to the Innovation Programme, 10% to institutional performance
and 9% to Human Resources. Another important source of RDI funding is the Sectoral
Operational Programmes “Increase of Economic Competitiveness” (SOP-IEC) with an overall
budget of 3.01 billons Euro (84.8% representing Community funding and 15.2% - National
counterpart covered by National Public funding). Relevant for the RDI is the Priority Axis 2 –
“Research, Technological Development and Innovation for competitiveness”, with 21.5% of the
overall budget, while the Priority Axis 3 – “ICT for private and public sectors”, with 15.6% of
the overall budget is focused on ICT.
In Hungary, GERD has presented an upward tendency from 2001-2008 (0.9-1.0% of the GDP)
to 2009 (1.17%). In 2010, it slightly fell to 1.16% (1,126.1m Euros), when the EU average was
2.0%. Furthermore, in 2010, businesses had the biggest share of GERD (HU: 59.8%, EU:
61.51%), Higher Education Institutions performed 19.9% of GERD (respective EU average:
24.2%) and one of the most important actors in the Hungarian research system, the Hungarian
Academy of Sciences (MTA) performed 11.6% of GERD. Government funding has declined from
41.82% of GERD in 2008 to 39.34% in 2010, and business funding has decreased too, from
48.31% in 2008 to 47.37% in 2010. Industry-financed GERD has increased from 0.48% of GDP
(2008) to 0.55 (2010), and government-financed GERD from 0.42% of GDP (2008) to 0.46%
(2010). Another striking element is that domestic public funds for RTDI activities were
disrupted: 36.6% of the 2010 budget of the Research and Innovation Fund was “frozen” in June
2010.
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Supplementary Information on Internationalisation of knowledge
The following table extrapolates from the main FP7 ICT themes, the main performers on each
theme:
Table A- 10. FP7 participation per country and theme /top 20 performers in the EU
Greece
5.2%
Austria
1.2%
Hungary
0.8%
Slovenia
Romania
4.5%
2.5%
0.4%
1.1%
0.6%
3.4%
6.1%
2.7%
4.6%
2.7%
2.8%
1.1%
1.6%
1%
1.6%
4.2%
5.4%
3.4%
3.6%
1%
Photonics
Organic and large
area electronics
Language
technologies
Intelligent
Information
Management
ICT for Health
ICT and Ageing
ICT for Inclusion
3.2%
1.6%
1%
3%
0.8%
0.1%
4.4%
1.2%
5.2%
8.5%
8%
7.6%
6.5%
3.1%
7.1%
7.1%
0.6%
0.4%
0.7%
ICT for Governance
and Policy
ICT for Energy
Efficiency
ICT for Transport
ICT for the
Enterprise
ICT for Learning
Digital Libraries
8.1%
13.5%
1.2%
1.1%
4.7%
3.9%
3.9%
4%
2.6%
3.1%
2.5%
5%
9.4%
6.7%
0.6%
Future Emerging
1.9%
3.1%
0.8%
Future Networks
and Internet
Software, Services
and interconnected
objects
Trustworthy ICT
Networked Media
Cognitive systems
and robotics
Nanoelectronics
Micro/nanosystems
Embedded Systems
Other
0.4%
0.9%
0.5%
Serbia
0.3%
0.2%
1%
0.6%
0.9%
2.2%
0.5%
Bulgaria
1%
Bulgaria
1.5%
0.6%
Bulgaria
1.7%
0.4%
0.5%
Bulgaria
1%
0.3%
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Technologies
International
Cooperation
Source: (30)
5%
1.3%
It is explicit that Greece and Austria are important players on a pan-European scale. In Austria,
participation in ICT is successful with more than 3.6% of funding and 64 projects coordinated .
Industrial participation remains relatively low and the main strengths are ICT for Learning, ICT
for ageing, Information management and ICT for inclusion. In Bulgaria, participation remained
stable at about 0.2%. Bulgaria has been very strong in SME participation but participation of
research institutions in very low. Areas of relative strength include Intelligent Information
Management, ICT for Learning and ICT for Inclusion. Areas with low participation include some
of the key enabling technologies. Nanoelectronics, Microsystems, Embedded systems and
Photonics are among the key areas where no Bulgarian organisation is present. In Greece,
research participation is very important and research institutions occupy the first ten positions
in recipients ranking. The main strengths are in the areas of ICT for Health, Ageing and
Inclusion but also technology areas such as Future networks and the internet, software and
embedded systems. Greece seems to have potential to develop its companies in design,
software and services as well as networking in the “knowledge triangle”.
Hungary is very strong in SME participation whereas large companies are very weakly
represented. The main areas of strength are Future networks, Networked media, Trustworthy
ICT, Nanoelectronics and Photonics. Future and Emerging Technologies are also rather
common. Romania has a rather strong participation from SME’s. Research participation is very
focused on a few organizations such as several Universities. Areas of strength include
Networked Media, Future networks and internet, ICT for health, for inclusion and for energyefficiency. Some of these areas have particularly high potential and have recently benefited
from an increase in funding level.
In Slovenia, SME participation has been relatively strong while participation of large industry is
low and very concentrated. Areas of strength include intelligent information management,
Cognitive systems and robotics, ICT for energy efficiency, and Software, services and internet
connected objects.
Supplementary Information on Market Development
Three figures below provide more information on how countries engage in product of service
innovation, by type of innovator and by type of BERD activity
Figure A-20. Product –Service innovation
Source: innobarometer 2009
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Figure A-21. Innovative enterprises by type of innovator, as a percentage of all enterprises
Figure A-22. BERD by sector of activity
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SI
RO
HU
GR
BG
AT
0%
20%
40%
Manufacturing
60%
Services
80%
100%
Other
Supplementary Information on Industrial RTD and Innovation
Some additional information per country is given below:
In Slovenia, enterprises present very good performances in RTDI activities and are ranked
above the EU average in many cases. More particularly, 34% of Slovenian enterprises in hightech sectors are actively innovating. In addition, manufacturing companies are more
innovative than service companies (innovative manufacturing companies: 41.2%, innovative
service companies: 26.8%). Due to the country’s size, the industrial-innovation sector presents
a more extrovert character than other European countries and the percentages of outsourcing
tasks to companies in other countries, of investments in enterprises in other countries, of
other forms of cooperation with other countries and of recruitment of employees from other
countries are higher than the EU average. Moreover, the country outperforms the EU average
in open innovation, in user’s free access to test products/services, in the involvement of
potential users in in-house innovative activities and share and exchange of intellectual
property in support of innovation.
In Greece, the situation is characterized by the lack of dynamic funding for the private R&D
sector. BERD levels are low and the High Potential Entrepreneurship Indicator of the country is
low as well. Moreover, the most representative features of the present situation include the
risk-averse behavior of enterprises, the large number of small and very small firms with lowmedium technological orientation, the heavy reliance on public funding, the low “in-house”
RTDI performance and the dominance of traditional sectors. The domains that attract the
highest share of funding are ICT and biotechnology. Otherwise, the private sector is driven by
the demand of the prominent sectors of the economy (IT services, chemicals, trade and food).
Within enterprises, the high level of non-R&D innovation is another striking element and the
failure to discriminate between non R&D and R&D innovators is a severe consequence that
leads to ineffective public policies for innovation. On the other hand, there are some positive
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elements regarding some of the major trends of Greek innovation enterprises. More
specifically, Greek innovative companies perform better than the EU average in open
innovation (creation/participation in internet-based forums in support of innovation, allow
free access to tests product/services to users, share of intellectual property in support of
innovation). In addition, the country performs quite well in strategic partnerships to support
innovation as well as in cooperation with other countries.
In Austria, there is a fair amount of enterprises that innovate. In addition, the country’s
enterprises perform well in reinforcing employees submitting innovative ideas via internal
mechanisms and cross-functional teams perform well in innovation projects. As far as the
collaboration of the country’s companies with foreign companies and other foreign actors is
concerned, the country presents low levels of collaboration in comparison with the other
participant countries. However, they show higher levels of willingness to share and exchange
intellectual property.
In Romania, although the amount of innovative companies has increased from 17% in 2000/02
to 19% in 2008, the innovation capacity of the country’s industry remains low. The reason for
this lies in the poor competitive environment, the companies’ reluctance to get involved in
financial or commercial risks related to R&D and the lack of services and instruments that can
reduce this risk. A positive element is the fact that private companies present very good levels
of strategic partnerships with other companies which are active in the same field and good
levels of strategic relationships with educational institutions. However, the relationships with
the research institutes, with suppliers and specific customers need to be reinforced. In
addition, the country’s enterprises present satisfactory indicators in all the areas of open
innovation with the exception of sharing and exchanging intellectual property. Regarding the
collaboration with other countries, Romanian enterprises are below the EU average in almost
all the domains. Moreover, they are below the EU average and outperformed by the other
countries in innovation stimulators. The tables at the end of the section provide evidence and
further information for the situation of the country.
In Bulgaria, the private companies present low performance in many innovation-related
trends. First of all, they are below the EU average and outperformed by the rest of the
participant countries in all the kinds of strategic relationships with other actors for the support
of innovation. They perform quite better regarding open innovation; still they remain below
the EU average with the exception of their participation in internet-based forums in support of
innovation where they score better than Slovenian and Austrian enterprises. In addition,
Bulgarian companies do not present an outward nature as far as collaboration with foreign
countries is concerned and they invest in enterprises located in foreign countries the least of
all the rest of the countries. Last but not least, Bulgarian companies present a rather
satisfactory picture concerning innovation stimulators. The following table presents evidence
and further information.
In Hungary, firms report high frequency of innovation cooperation. However, only 6.5% of
Hungarian enterprises reports cooperation with public research centers (16th among EU
countries) and a decreasing pace has been noted since 1999-2001 (8.6%). R&D performed by
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business enterprises present an increase from 52.57% of GERD in 2008 to 59.81% of GERD in
2010 (EU average in 2010: 61.51%). In addition, 7.1% of SMEs are engaged in innovation
cooperation with other partners (2006-2008), a percentage lower than that of the EU average.
One of the challenges that the country faces derives from the dual economy issues emerging
from the existence and performance of large foreign-owned enterprises and the performance
of small innovative firms, medium-sized innovative firms and large innovative companies
regarding cooperation with clients and suppliers of equipment, materials and components of
software. The factors hindering innovation activities are financial constraints and market
conditions. More specifically, in 2004-2006, enterprises with technological innovation reported
the lack of funds inside the enterprise (28.8%), lack of funds from external sources (19.9%), the
high cost of innovation (27.3%), the lack of qualified personnel (14%), the domination of
market by established enterprises (15.4%) and uncertain demand (14%) or lack of demand
(4%) for innovative products and services as factors that hamper their innovation activities.
Additional information to Chapter 6:
As part of the Digital Agenda, the figure below isolates the indicator of the percentage of
population interacting with public authorities to illustrate aspects of the discussion above in
government services take-up and provision.
Figure A-23. % of population interacting with public authorities online
(Source: Digital Agenda Scoreboard, European Commission, 2012)
Additional information to Chapter 7:
Additional information is given on two issues: Regional issues and new trends in innovation:
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Regional issues
Some further analysis is performed in order to detect whether there is connectivity or regional
actors in global networks and whether mechanisms behind diversifications can generate smart
specialisation. According to (42) smartly specialised regions will be more innovative, resilient
to economic downturns and competitive. Although all-embracing indicators cannot be
analysed on the deliverable level, as comparative evaluations would have to include labour
mobility, network formation, knowledge spill-overs and policy factors, some background
perceptions can be formed upon existing findings. Technopolis (2011) also confirms that there
is a large diversity regarding patterns of innovation performance where the countries in the
region are characterised as follows :


Regional typology in innovation performance
o Half of the region under review belongs to the “knowledge-absorbing
regions”, namely the entire country of Bulgaria, Romania and most of
Hungary. Such regions are characteristics in South Eastern Europe , where
innovation performance are below the average but innovative
entrepreneurship is lower. In addition, the share of innovators is small and the
most of R&D expenditure is non-R&D indicating absorption patterns.
o Austria and Slovenia belong to the “ Balanced innovation regions”,
characterised by innovative entrepreneurship and high R&D expenditures.
o The capital regions in Bulgaria and Hungary are “Public knowledge regions”
with a
very high score on ‘public knowledge’ while the average R&D
expenditures in government research organisations are also high and good
shares of tertiary educated work force.
o Most of Greece and a part of Eastern Romania belong to “knowledgeabsorbing innovative regions”, having a higher average score on innovative
entrepreneurship and non-R&D innovation expenditures but low scores on
technological innovation and patenting. In these regions, innovation mainly
results from absorbing existing knowledge.
o Two regions in Greece (Thrace and Western Macedonia) as well a region in
lowest Hungary are labelled “industrialised innovating regions”, where the
scores on technological innovation is above average but innovative
entrepreneurship is below average, in turn resulting from industrialisation
patterns.
RTDI policies and funding
o The same report reveals that the importance of policy level in RTDI in policy
making is important at a national level for Bulgaria, Greece, Slovenia and
Romania, while the regional element is important for Austria and Hungary.
o RTDI policy is most pronounced in regions where the implementation of
policies as such does not have an established tradition (e.g. Bulgaria, Greece)
o The relevance of structural funding for regional innovation policies is
significantly different across regions with no prounounced similiarities, but in
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general they have a strategic role to pilot innovative measures in regions with
no relevant capacities.
Some regional disparities are discussed for Greece and Romania, as it would be insufficient to
isolate factors relevant to innovation growth. Regional disparities are inherent in both
countries, having received community assistance for regional development. In Romania,
regional differences have increased over the last years, in particular between the capital and
the rest of the country.. The South and capital regions concentrate most of the innovation
activities in terms of BERD, personnel, patents etc. The South and capital regions concentrate
most of the innovation activities in terms of BERD, personnel, patents etc. The other regions
face numerous challenges as regards specific aspects on innovation development, insufficient
financing, limited awareness and cooperation among actors and obsolete infrastructure. In
Greece, the economic performance of the regions appears loosely coupled with the country’s
innovation activity and there is limited correlation between the country’s overall economic
performance with the respective performance on knowledge creation and innovation. Some
regions appear to be wavering far away from the country’s average, due to some structural
characteristics of the local economy (unemployment , dominance of traditional sectors, low
share of GDP etc) and deficiencies in terms of infrastructure and linkages with Universities .
The Region of Attiki concentrates the bulk of public and private R&D actors and expenditure in
the country, absorbing 60% of the national GERD and 41% of national BERD, although, there is
still a gap to the EU 27 average due to limited demands from industry. The region of Kriti also
demonstrates high potential, but one of the obstacles these regions face is the slow rate of
restructuring of the local economy and the weak alignment of technological demand by firms
with the supply by the public sector. 30 In general, the common denominator of the
deficiencies of Greek regions to convert themselves into growth dynamos are a combination of
limited demand from the industry, reflecting the low-to-medium technology structure and low
level of extroversion. At the same time the limited formal linkages between the research and
business sector, the low level of public funding and the fragmentation of the research efforts
across numerous disciplines constitute important barriers to further increasing R&D
expenditure in most of the regions.
The following figures illustrate regional performances (best and worst performing regions at at
NUTS 2 level)) of the countries (excluding Serbia) with regard to R&D expenditure, R&D
personnel and employment in high-tech sectors3132. Regions in the countries reviews
apparently suffer from limited funding in R&D expenditure, lagging behind the EU average
with Austria being the notable exception, thus with a robust gap between the best and worst
performing region. Slovenia also approaches the EU average, nevertheless Romania Bulgaria
30
http://www.rim-europa.eu/index.cfm?q=p.regionalProfile&r=GR43&fj=true#economy
31
(source .Eurostat (2011, Science ,technology and innovation in Europe
http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-31-11-118/EN/KS-31-11-118-EN.PDF)
32
Red vertical line denotes EU average, black vertical bold line denotes national average. Blue dots
denote best performing regions and orange dots the worst-performing regions.
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and Greece in overall face low performances with the worst performing regions approaching 00.5%
Figure A-24.Regional disparities in R&D expenditure as a % of GDP, 2007
(Source: Eurostat, 2011 Science, technology and innnovation in Europe)
Interestingly, the situation in personnel is quite different from R&D spending, revealing a
mismatch innovation and R&D structures, expenditure and employment. Most of the best
performing regions in this case, apart from Bulgaria surpass the EU average in R&D personnel
and employment in high-tech sectors, nevertheless differences persist in Bulgaria, Greece and
Romania.
Figure A-25. Regional disparities in R&D personnel as a % of GDP, 2007
(Source: Eurostat, 2011 Science, technology and innnovation in Europe)
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Figure A-26. Regional disparities in employment in high-tech sectors as a % of total
employment, 2007
(Source: Eurostat, 2011 Science, technology and innnovation in Europe)
Additional EU trends
This section revises most of the information provided against the backdrop of emerging
patterns of innovation and emerging themes as a tool to better anticipate changes that the
region is likely to face within the next years.
According to the 2010 report on R&D in the, there are certain drivers and barriers to these
processes for example:
New service opportunities, created by technological change and stimulated by demand
for new types of knowledge
ICT growth allow firms to develop new services and produce existing services more
efficiently and increases the tradability of services
Technological change, growing stock of information and knowledge available increases
knowledge intensity
Open innovation patterns in user industries
Barriers mostly consist of different rules and regulation s across countries, diversity of
qualification, entry requirements and language differences.
The creative industries have large growth potential in supporting innovative activities,
encouraging economic growth and creating jobs Some new member states have very
high annual employoment growth rates in the creative industries
Knowledge-intensive services (KIS), including knowledge-intensive business services
(KIBS), are among the most dynamic industries in the economy
Trends:
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There are three trends with potential in the future in; the quality of life: accelerated
digital transformations, mass collaborations and a new paradigm of sustainability 33
The key sectors for investing in the future are low carbon economy, infrastructure and
energy buildings, environmentally-friendly transport-modes, high-speed ICT networks,
energy interconnections, and pan-European research infrastructures as well as clean
technologies for cars and construction. 34 High-speed Internet connections promote
rapid technology diffusion, which in turn creates demand for innovative products and
services.
The creative industries have large growth potential in supporting innovative activities ,
encouraging economic growth and creating jobs (crossroads between arts, business
and technology). Some new member states have very high annual employoment
growth rates in the creative industries (ibid)
Knowledge-intensive services (KIS), including knowledge-intensive business services
(KIBS), are among the most dynamic industries in the economy. The growth of KIBS has
been fuelled by the application of new technologies, new service concepts as well as
changes in demand. (innova sectroral report on KIBS) (KIBS are mainly computer
services, R&D and other business services) KIBS can create strong linkages to a number
of activities inside and outside servie sectors and create new services with
neighbouring services.
Social enterprises are another emerging aspect in the EI as they are active in launcihg
new services or products and an important source for sustainable and socially engage
innovation (43). Social entrepreneurs are much more likely to have introduced new-tothe-market innovations in goods, services or processes. Social enteriprises are a source
for innovation generating towards the ambitions of the EU 2020 strategies (health,
social work education etc) (Romania and Hungary are have high shares)
Open innovation has emerged as a pattern and source of growth during the last years.
Open innovation relies on networking with individuals to exploit knowledge and ideas,
collaboration among partners, universities, users and compteititos and alternative
methods of commercialisation. This trend is particularly significant in the evolution of
the service industry for creating spill-over effects from a socio-economic perspective
Public sector innovation and pre-market procurement: The single most important
driver of innovation in the public sector was the introduction of new laws and
regulations as well as new policy priorities 35. Public administration organisations most
frequently developed new solutions on their own.
R&D investments in the field of energy have been growing rapidly in the past years.
This regards in particular, the development of new energy technologies driven by
security of energy supply and environmental concerns.
Living labs and cross –border cooperation can create eRegion between Austria,
Hungary and Slovenia. Slovenia is more mature in living labs.
The Innova national specialisation report (44) contrasts patent growth rate with technological
specialisation form employment data and finds that the most promising innovative fields in the
EU in terms of patents are information technology, pharma, biotechnology, medical
engineering and semiconductors, whilst specialisation patterns exist in civil engineering,
maching tools, space and wapons, agriculture and foods as well as environmental and nuclear
33
34
service innovation yearbook 2010-2011
A European Economic Recovery Plan, European Commission COM(2008) 800 final
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sciences. A relative advantage appears in the European Union in technology fields such as
environmental technologies (climate change, sustainable development etc).
Small countries cannot efficiently diversify into a large range of industries. Therefore, they
tend to specialise in a limited number of economic activities, chosen on the basis of domestic
comparative advantages, the availability of specific resources, advantages related to location
etc. According to the same source technological specialisation indicated by the HirshmanHerfindahl Index (HHI) has been steadily incrasing from 1978 to 2005 for Austria and Greece .
In Slovenia in has declined until 1988 and then was stabilised with slight increasing trends. In
Bulgaria, Hungary and Romania it has been flunctuating aroung 0.10-0.20 for the last decades
with no clear trends. The Krugman Specialisation Index (KSI) measures national specialision
based on the degree of similarity of the technology portfolios. This index has been stable in
Greece for the last decades (after falling sharply between 1978 and 1993) and relative stable
for Austria. The rest of the countries have continuously decreased their degree of sepcialistion
Additional references of the Annex:
1. Commission, European. Innovation Input and Output. http://www.proinnoeurope.eu/page/innovation-input-and-output-0. [Online]
2. European Commission. Foresight blueprint for upgrade regions: the Upgrade Blueprint
Foresight strategy and actions to assist regions of traditional industry towards a more
knowledge-based community,. 2004.
3. Metcalfe, S. Technology systems and technology policy in an evolutionary framework.
Cambridge : Cambride University Press, 1997.
4. Sectoral systems of innovation: a framework for linking innovation to the knwoledge base,
structure and dynamic of sectors. Malerba, Franco. 1, 2005, Economics of Innovation and New
Technology, Vol. 14, pp. 63-82.
5. Golden, W., Eoin Higgins, Soo Hee Lee. National Innovation Systems and Entrepreneurship.
s.l. : CISC Working Paper No.8, 2003.
6. OECD. The measurement of Scientific and Technological Activities, Proposed Guidelines For
Collecting and Interpreting Innovation Data. 2005.
7. —. The Contribution of Multinational Enterprises to the Upgrading of NIS in the EU new
Member States: policy implications. Paris : OECD Global Forum, 2009.
8. OECD . The Oslo Manual" The measurement of scientific and techological activities:
proposed guidelines for collecting and interpreting technological innovation data. 2005.
9. Science&Technology Policy Institute. Measuring Innovation and Intangibles: A Business
Perspectives. s.l. : IDA, 2008.
10. Lundvall, B. National Systems of Innovation . London : Pinter, 1992.
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11. Advisory Committee on Measuring Innovation in the 21ct Century Economy. Innovation
Measurement: Tracking the State of. s.l. : US Department of Commerce (DOC), 2008.
12. Arundel, A. Innovation Survey Indicators: What Impact On Innovation Policy? Science,
Technology, and Innovation Indicators in a Changing World: Responding to Policy Needs .
Ottawa : OECD Blue Sky II Forum, 2006.
13. Rose, A, etc. Frameworks for Measuring Innovation: Initital Approaches. s.l. : Science and
Technology Policy Insitute, 2009.
14. European Foundation for the Improvement of Living and Working Conditions. Handbook
of knowldge Society Foresight . Dublin : s.n., 2003.
15. Europe Innova . Prospective Innovation Challenges in the ICT sector . 2008.
16. Augusto Lopez-Carlos and Mata, Yasmina. Policies and Institutions underpinning country
innovation: Results from the ICI. . s.l. : The innovation for Development Report 2010-2011,
2011.
17. World Bank. Doing Business . [Online] http://www.doingbusiness.org/.
18. Transparency International . Transparency International. Corruption Index. [Online]
http://www.transparency.org/.
19. European Commission . Europe 2020 Strategy . [Online]
http://ec.europa.eu/europe2020/index_en.htm.
20. European Commission. Reviewing Community innovation policy in a changing world.
Brussels : s.n., 2009. COM(2009) 442 final.
21. —. Service Innovation Yearbook 2009-2010. Brussels : European Commission , 2010.
22. Edler, Kincsö Izsak & Jakob. Trends and Challenges in DemandSide Innovation Policies in
Europe. s.l. : Thematic Report 2011 , 2011.
23. European Commission . Innovation Union Competitiveness Report 2011. Brussels : s.n.,
2012.
24. OECD. National Innovation Systmes . Paris : s.n., 1997.
25. —. Innovative cluster: drivfers of national innovation systems. Paris : s.n., 2001.
26. Role of home and host country innovation systems in R&D internationalisation: a patent
citation analysis. Criscuolo, P, Rajneesh Narula & Bart Verspagen. 2005, Economics of
Innovation and New Technology, pp. 417-433.
27. Internationalization of innovationsystems: A survey of the literature. Carlsson, Bo. 2005,
Research policy , pp. 56-67.
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28. Eurobarometer. Innobarometer 2010. 2011.
29. Technopolis . Participation of SEE countries in competitive funding programmes in the
European Commssion . s.l. : UNESCO-BRESCE, 2010.
30. European Commission. ICT Statistical Report for Annual Monitoring 2011. s.l. : Working
Document 29 February 2012, 2011.
31. Ortega, J. L., Aguillo, I. F. Network collaboration in the 6th Framework Programmes:
country participation. s.l. : Scientometrics , 2010.
32. European Commission . European Innovation Scoreboards (2009, 2010). Brussels : s.n.,
2011.
33. European Commission. A Digital Agenda for Europe. s.l. : COM/2010/0245, 2010.
34. —. Information Society Digital Agenda Scoreboard. [Online] 2012.
http://ec.europa.eu/information society/digital-agneda/scoreboard/countries/index en.htm.
35. —. 2010 Report on R&D in the EU . Brussels : European Commission , 2011.
36. Technopolis Group. Regional Innovation Monitor -2010 Annual Report. s.l. : European
Commission, Enterprise and Industry Directorate-General, 2011.
37. OECD . The impact of the crisis on ICTs and their role in the recovery . Paris : OECD, 2009.
38. European Commission. A European Economic Recovery Plan. 2008. COM (2008) 800 final .
39. Pro Inno Europe . European Innovation Scoreboard. s.l. : European Commission , 2009.
40. IW Istitut der deutschen Wirtschaft Koln Consult GmbH. Innovation Policy and the
Business Cycle: Innovation Policy's Role in Adressing Economic Downturn . s.l. : INNO-Gips
Policy Brief no.1, 2011.
41. European Commission. 2010 EU Survey on R&D Investment Business Trends. Brussels :
JRC,DG Research, 2011.
42. Technopolis Group Belgium. Regional Innovation Monitor Policies and Processes of Smart
Specialisation: Realising New Opportunities. 2011. http://www.rimeuropa.eu/index.cfm?q=p.file&r=aa27a00bcbc7feda69a4deb9b05fdb91.
43. European Commission. Social entrepreneurs as lead users for service innovation, March
2011 policy brief. 2011.
44. Europe Innova Sectoral Innovation Watch. National Specialisation Report. 2010.
45. ePractice . eGovernment Factsheet, National Infrastructure (Greece). 2011.
http://www.epractice.eu/en/document/288255.
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46. The system of innovation in Greece: Structural asymmetries. A, Komninos N. and Tsamis. 1,
s.l. : International Journal of Innovation and Regional Development, 2007.
47. European Commission Regional Innovation Monitor . http://www.rimeuropa.eu/index.cfm?q=p.baseline&r=GR30. [Online]
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