o-ordinated innovation policy is going to be critical for these economies, if they are to compete effectively in the single market," says Alasdair Reid of Aide à la Decision Economique (ADE), the Belgium-based consultancy which is leading the study. "Since the collapse of communism in the early 1990s, the restructuring of large, state-run industries has been led by investment from major European Union companies. The resulting gains in productivity and profitability have been dramatic. But the countries themselves have benefited little from the value added, or from opportunities to develop their own capacity to run modern enterprises."
The Czech Republic is one of the central and eastern European accession countries that will increasingly benefit from technology transfer links with the EU.
Now, they need to move out of this phase, capitalising on the strength of their high-tech R&D skills to build new companies, and to develop home-grown technologies with real international sales potential. Subcontracts secured on the strength of low wages do not form a sustainable basis for a modern economy.
ADE's 18-month study is one of a new series of Innovation Studies(1) launched in May by the Innovation Directorate of the European Commission's Directorate-General for Enterprise. It will identify the key policy actors in six applicant countries - the Czech Republic, Estonia, Hungary, Poland and Slovenia, as well as Cyprus - and assess the current status of entrepreneurship and innovation management, co-operation and mobility between public research and industry, and the fiscal and administrative environment.
The Commission hopes that the study will also highlight examples of good practice in stimulating the development of technology-based firms oriented towards export markets. "We will not just be looking for infrastructure projects," Reid says. "Business parks are important, but their impact is determined by the people who use them. We want to find concrete examples of successful business innovation, and to show how it can transform the prospects of regions and sectors."
Innovation is primarily driven not by technology but by market demand and competitive pressure. One of the study's key messages is likely to be that escape from dependence on foreign investment and foreign contracts requires exposure to foreign competition - and as rapidly as possible.
Closing the gap
"What the central and eastern European countries have, in many cases to a much greater extent than some EU Member States, is a large, skilled research community," Reid explains. "But as public funding for research has dwindled, these skills have not so far been exploited to their fullest advantage." Throughout the 1990s, many scientific personnel migrated abroad.
As in the EU, the challenge for policy-makers is to mobilise these resources by offering real opportunities for qualified people to apply their scientific or research skills in new ways - creating or working within new companies. "The main issues are similar to those faced in the rest of Europe," Reid says. "First, access to appropriate forms of capital and adequate management skills. And second, the right mix of incentives and safeguards to persuade academics to take the risk of leaving relatively secure positions and starting their own companies."
A further legacy of the communist era is the widespread lack of a 'whole company' ethos. In the past many business functions, including R&D, were commonly performed by the public sector. Today, enterprises need to integrate a wider range of functions or find new sources of specialised technologies and skills from new service organisations. As they do so, inter-company activity is increasing rapidly, and needs to be supported.
Innovation Policy Unit Launches Call for Network Proposals
Enterprise DG's Innovation Policy Unit has merged two calls for proposals previously planned for publication on 15 June ('Access to private innovation financing') and 15 September, respectively ('Patent Academia'), into a single call of potentially high interest to the innovation community - 'Access to private innovation financing and tools for better knowledge exploitation', due to be published on 17 July. The call is for four thematic networks - I-TEC venture capital network; incubator forum; university industrial liaison offices; and expertise in entrepreneurship and innovation finance - supported by three accompanying measures. Call documents are available on http://cordis.europa.eu Expressions of interest to become a member in any of these networks may be
e-mailed to: firstname.lastname@example.org
Manfred Schmiemann and
Marc Verlinden, Enterprise DG, Innovation Directorate Innovation policy
Fax. +352 4301 34129
In the telecoms sector, the technology gap was too great, and national operators were quickly wiped out by major foreign players with the resources to replace the outdated infrastructure. But in sectors such as food processing, the gap is smaller, less investment is needed, and the diversity of these countries' products gives them an advantage. "They can apply incremental innovation to introduce the improvements in quality control and packaging necessary to sell into international markets," says Reid.
Reid does not expect the lessons in innovation policy to flow entirely from west to east. "Unlike agriculture and some of the other policy areas in which the EU has been assisting the accession countries, innovation policy is still largely experimental even in the EU," he points out. "In this area, learning will probably not be solely one-way. When the Mediterranean countries first took part in transnational research and innovation projects, people tended to assume that there would be an exclusively north-to-south transfer of knowledge. Very quickly we found that Sweden could also learn from Greece. Similarly, I am confident that we will learn from Slovenia and Poland in certain sectors and in certain areas of innovation policy."
(1) The Innovation Studies series continues the former European Innovation Monitoring System (EIMS) reports. A list of available reports, which can also be ordered on-line, is at /eims/src/stud.htm