Periodic Reporting for period 1 - SEEGROW (Southeast Europe’s emerging growth advocates: Domestic firms, technology and economic governance in institutionally weak states)
Reporting period: 2020-09-01 to 2022-08-31
SEEGROW engaged with political economy, institutional economics, management, collective action and governance literatures. It was interested in economic governance of small and medium enterprises (SMEs) in the era of information and communication technology (ICT) and knowledge driven growth. It was empirically grounded in Serbia and Bosnia & Herzegovina with an aim to improve our understanding of this phenomenon in semi-peripheral countries with weak and captured formal institutions, such as those in Southeast Europe (SEE). The project’s starting premise was that the rise of ICT has opened up international opportunities for SMEs with industrial skills but little capital. This then reduces the negative impact of weak formal governance structures on the countries’ overall innovation and growth.
The project had three key main objectives: (1) To understand in which ways the interaction of SMEs with ICT empowers them to offset some undesirable institutional influences in SEE; (2) To promote the value of contextualised fieldwork in enhancing our understanding of the political economy of economic development in captured states with weak institutions; and (3) To support economic development efforts in SEE and beyond, by providing an alternative account on governance of the new ICT-driven growth frontier.
Most economic and political economy analyses of the SEE region have focused on institutional reforms and the strengthening of state capacities as key preconditions to growth, while sociological efforts have been directed towards problematising the ideology of neoliberalism as a key macrostructural explanation for SEE’s lagged development. SEEGROW uses interdisciplinarity to bring into these debates the question of individual agency in the ICT era and how humans influence the rules that structure their lives instead of being captured by the status quo.
SEEGROW is of high political and policy relevance because it changes the way that the international development assistance community (including EU enlargement efforts) looks at the problem of development in institutionally weak states. Instead of worrying about the captured state’s inability to reform, and looking for ways to overturn this predicament, the project turns their attention towards bottom-up sources of change which, under the influence of exogenous factors such as ICT could perhaps become empowered to change the rules of the game. SEEGROW unpacks the traditional policy paradigm that formal rules of the game must change first and gives agency to bottom-up agents. This question is extremely important for the EU and its role in SEE and its other neighbourhoods.
The project had three key main objectives: (1) To understand in which ways the interaction of SMEs with ICT empowers them to offset some undesirable institutional influences in SEE; (2) To promote the value of contextualised fieldwork in enhancing our understanding of the political economy of economic development in captured states with weak institutions; and (3) To support economic development efforts in SEE and beyond, by providing an alternative account on governance of the new ICT-driven growth frontier.
Most economic and political economy analyses of the SEE region have focused on institutional reforms and the strengthening of state capacities as key preconditions to growth, while sociological efforts have been directed towards problematising the ideology of neoliberalism as a key macrostructural explanation for SEE’s lagged development. SEEGROW uses interdisciplinarity to bring into these debates the question of individual agency in the ICT era and how humans influence the rules that structure their lives instead of being captured by the status quo.
SEEGROW is of high political and policy relevance because it changes the way that the international development assistance community (including EU enlargement efforts) looks at the problem of development in institutionally weak states. Instead of worrying about the captured state’s inability to reform, and looking for ways to overturn this predicament, the project turns their attention towards bottom-up sources of change which, under the influence of exogenous factors such as ICT could perhaps become empowered to change the rules of the game. SEEGROW unpacks the traditional policy paradigm that formal rules of the game must change first and gives agency to bottom-up agents. This question is extremely important for the EU and its role in SEE and its other neighbourhoods.
The main results of the SEEGROW project can be summarised into three groups of new academic knowledge, tools and methods.
The first group of novel insights examines the nature of peripheral capitalism in SEE, with reflections on the middle-income trap and constraints and opportunities that come from a position of peripherality in the global economy. By mapping the dynamism of Serbia’s growth model over the past 15 years, SEEGROW argues that with the aid of ICT, drivers of growth have gone beyond the model that is based on the attraction of foreign direct investment (FDI) and multinational companies (MNCs). Identifying exporting SMEs as important contributors to exports, value added and innovation, the project argues that political economy literature needs to acknowledge the role of diverse firms in the development process, rather than focus on one ideal type of firm. Moreover, inclusion of SMEs in the process of economic upgrading and innovation in the periphery can have important political implications because such economic dynamics can reconfigure domestic growth coalitions.
The second group of novel insights addresses the issue of regional and spatial inequalities in SEE and examines whether exporting SMEs could contribute to a more spatially inclusive form of development. From the policy perspective, the question ties into the already existing institutional framework of CEFTA – the regional free trade agreement, whose mandate is to promote inclusive regional integration. SEEGROW shows that smaller firms are immensely interdependent with the environments within which they operate and that their international competitiveness also stems from their ability to successfully leverage on their communal resources and local public goods. Finding ways to preserve and enhance this collective infrastructure is often more of a priority for them than market expansion and technological progress. The conclusion is that designing supranational, national and sub-national institutions which can support such efforts by facilitating local and translocal cooperation among competitive exporting SMEs would lead to a more inclusive form of regional economic integration.
The third group of novel insights advances our theoretical understanding of how firms can act as developmental agents in semi-peripheral areas which are often trapped by both government and market failures. Such an approach advances our knowledge about development agency in the semi-periphery. The aim of this theoretical contribution is also to support the process of non-hegemonic knowledge between different areas of the world, cutting across the traditional global North and South divide in the political economy and international development literatures. There is currently little appreciation that “left behind” areas falling out of development in core countries can learn from the experiences of semi-peripheral places in post-socialist Central Eastern and Southeast Europe, post-2008 crisis Southern Europe, and beyond.
In parallel to research activities, the Individual Fellow participated in targeted training activities aimed at boosting their excellence and developing new transferable skills. A wide range of dissemination, communication and exploitation activities were also carried out to maximise the impact of SEEGROW.
The first group of novel insights examines the nature of peripheral capitalism in SEE, with reflections on the middle-income trap and constraints and opportunities that come from a position of peripherality in the global economy. By mapping the dynamism of Serbia’s growth model over the past 15 years, SEEGROW argues that with the aid of ICT, drivers of growth have gone beyond the model that is based on the attraction of foreign direct investment (FDI) and multinational companies (MNCs). Identifying exporting SMEs as important contributors to exports, value added and innovation, the project argues that political economy literature needs to acknowledge the role of diverse firms in the development process, rather than focus on one ideal type of firm. Moreover, inclusion of SMEs in the process of economic upgrading and innovation in the periphery can have important political implications because such economic dynamics can reconfigure domestic growth coalitions.
The second group of novel insights addresses the issue of regional and spatial inequalities in SEE and examines whether exporting SMEs could contribute to a more spatially inclusive form of development. From the policy perspective, the question ties into the already existing institutional framework of CEFTA – the regional free trade agreement, whose mandate is to promote inclusive regional integration. SEEGROW shows that smaller firms are immensely interdependent with the environments within which they operate and that their international competitiveness also stems from their ability to successfully leverage on their communal resources and local public goods. Finding ways to preserve and enhance this collective infrastructure is often more of a priority for them than market expansion and technological progress. The conclusion is that designing supranational, national and sub-national institutions which can support such efforts by facilitating local and translocal cooperation among competitive exporting SMEs would lead to a more inclusive form of regional economic integration.
The third group of novel insights advances our theoretical understanding of how firms can act as developmental agents in semi-peripheral areas which are often trapped by both government and market failures. Such an approach advances our knowledge about development agency in the semi-periphery. The aim of this theoretical contribution is also to support the process of non-hegemonic knowledge between different areas of the world, cutting across the traditional global North and South divide in the political economy and international development literatures. There is currently little appreciation that “left behind” areas falling out of development in core countries can learn from the experiences of semi-peripheral places in post-socialist Central Eastern and Southeast Europe, post-2008 crisis Southern Europe, and beyond.
In parallel to research activities, the Individual Fellow participated in targeted training activities aimed at boosting their excellence and developing new transferable skills. A wide range of dissemination, communication and exploitation activities were also carried out to maximise the impact of SEEGROW.
SEEGROW project has contributed to a better understanding of agency of SMEs in SEE and other semi-peripheral areas around the globe. By recognising their changing position, due to the rise of ICT and knowledge driven growth, as well as other global processes such as delocalisation and fragmentation of production, the project underlines that institutional change at the state level may not be the only prerequisite to socio-economic progress. To that end, it also emphasises the importance of supranational and subnational institutions when it comes to taking advantage of these opportunities.
The results also offer practical policy guidance on how these emerging developmental opportunities can be better monitored and acknowledged by policy makers. It also offers novel information to industry, because it shows to smaller economic agents that they have more agency than they initially believed. The results of the project are also aligned with and contribute to both national, regional and European-level priorities and policies such as those targeting regional cohesion, inclusive growth and SMEs. The project also had an indirect impact on gender, since the Individual Fellow, who declares as female, has conducted several activities that promote female participation in academia.
The project has also been disseminated via its website, social media profiles, policy briefs, press articles and TV interviews, reaching a wide audience.
The results also offer practical policy guidance on how these emerging developmental opportunities can be better monitored and acknowledged by policy makers. It also offers novel information to industry, because it shows to smaller economic agents that they have more agency than they initially believed. The results of the project are also aligned with and contribute to both national, regional and European-level priorities and policies such as those targeting regional cohesion, inclusive growth and SMEs. The project also had an indirect impact on gender, since the Individual Fellow, who declares as female, has conducted several activities that promote female participation in academia.
The project has also been disseminated via its website, social media profiles, policy briefs, press articles and TV interviews, reaching a wide audience.