Commission can help candidate countries to become more innovative, report recommends
A report commissioned by the European Commission's Enterprise DG has recommended that the Commission and six candidate countries work together on a series of policies to improve these countries' innovation progress. With the enlargement process expected to start during 2003, the extent to which candidate countries have succeeded in developing and implementing many policies, including innovation policy is increasingly important. For this reason the Enterprise DG commissioned a study on innovation policy in six candidate countries in May 2000. The six countries covered by the study are Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia, and the aim of the study was to 'examine and analyse the current framework conditions for selected innovation issues in these countries. The policy options proposed by the report writers (two economic research institutes, a school of Slavonic and East European studies and a network of national experts) are intended to promote a culture open to innovation and creativity, place innovation at the heart of further reforms to the legal and regulatory environment. They are also designed to increase the number of smaller innovative enterprises, strengthen diffusion of knowledge and technology in the economy and establish a policymaking process conducive to creating an innovation policy. The report pinpoints a number of factors which the writers believe are responsible for hindering innovation, including financial barriers to risk taking, a lack of spillover from foreign direct investment (FDI) to local firms, education and training systems which do not encourage creativity or flexibility, a weak demand for research and development (R&D) by business sectors, insufficient coordination between funding and policy agencies and a lack of consultation between the government and business. In order to promote a culture open to innovation and creativity, the report recommends the candidate countries develop programmes to disseminate innovation management techniques, promote innovative behaviour by presenting awards and develop forums where enterprises and training bodies can liaise. For its part, the European Commission is invited to ensure that the Innobarometer survey covers the candidate countries with a view to stimulating public debate, launch a series of in-depth studies and promote a special innovation award for firms from candidate countries at a major media event. Innovation should be placed at the hearth of further reforms to the legal and regulatory environment by establishing a review procedure to assess the impact of legislation on business innovation in the candidate countries, drawing on European best practice, investigating the extent to which intellectual property rights (IPR) deter industrial research and examining the introduction of tax incentives for enterprises undertaking R&D or hiring research staff. These measures should be matched by the Commission, through support for candidate countries in establishing funded action programmes to tackle key obstacles to business innovation. The report notes the lack of small innovative enterprises in the candidate countries studied, and recommends therefore the strengthening or creation of both seed and venture capital funds, a reduction of financial risks, possibly through the introduction of guarantee funds and an increase in funding for innovation management courses. It is also proposed that the Commission investigate the possibility of developing a specific initiative in favour of high technology start-ups in candidate countries. Strengthening knowledge and technology diffusion should be tackled through granting small firms greater access to publicly funded research organisations, states the report. It also recommends that pre-competitive research grants are modified in order to place greater stress on the exploitation of results and that initiatives to encourage industrial clusters are introduced. The Commission can help this process by supporting preparatory actions enabling the constitution of centres of excellence and the identification of specific research projects in key manufacturing technologies, recommends the report. The final challenge identified by the report writers is to establish a policy making process conducive to creating an innovation policy. This can be done in the candidate countries through conducting an innovation survey, which should be compared with the Community Innovation Scoreboard, the report advises. The Commission should provide technical assistance to the candidate countries and create a task force bringing together representatives of Eurostat and national statistical offices in order to facilitate the coordination of such an activity. Innovation policy units should also be established in order to monitor and evaluate current instruments and structures promoting innovation or technological development. The Commission can also help by providing pre-accession funding for pilot actions arising from regional innovation strategy initiatives implemented in the candidate countries. Although the report states that 'broadly speaking, the findings of this study indicate that none of the six candidate countries can be considered to have developed a fully fledged innovation policy', and that 'appraising the effectiveness of innovation support structures does not appear to be a priority for the governments of the [six candidate countries]', each country receives recognition for the efforts it has made. Hungary is identified as being 'somewhat ahead of the other countries', on account of its range of instruments which have been funded over a number of years. Estonia, it is emphasised, has a relatively high awareness of innovation priorities and a well established implementation agency. Since 1999, a number of new initiatives have also been introduced to promote innovation and the information society. Both Poland and Slovenia have carried out innovation surveys in the enterprise sector and the Czech Republic has recently reoriented its research policy in order to give more support to relations between research and industry. Initiatives in Cyprus have until now been on a relatively small scale. The candidate countries have also been successful in terms of International standards organisation (ISO) certification penetration, with Hungary, Slovenia and the Czech Republic achieving a high rate and the average growth rate in all countries exceeding that of the EU in the second half of the 1990s.