Summary of the findings from R&I strategies’ assessment in WB-5 countries

The S3 approach in the context of enlargement and deepening cooperation with the EU offers a unique opportunity to kick-start and promote structural change and growth. However, if designed and implemented in an imitative way by blind copying of good practices developed for other contexts it can fail miserably. The key is to adapt it to the nature of innovation processes in the WB-5 countries and to address country and region specific obstacles to improved productivity, technology upgrading and improved framework conditions to foster innovation. In that respect, the S3 assessment tools such as the RIS3 Assessment Wheel would need to be adjusted to this context as well as the overall S3 approach would need to be much more differentiated to capture the regional specific technology and upgrading challenges.

Our analysis has shown the major gaps and obstacles that may impede the development of the S3 strategy in the WB-5 region. They are summarised in the Table 8 below.

Table 8: Main features and gaps of WB-5 countries’ R&I strategies with regard to S3 model

RIS3 Guide Steps Western Balkan – 5 countries

ANALYSIS OF REGIONAL / NATIONAL CONTEXT

National assets and framework conditions

- Industrial tradition in some WB-5 countries (Serbia and B&H) but very much deindustrialised region

- Flexible labour market

- Limited room for manoeuvre for autonomous macroeconomic and industrial innovation policy limits promotion of structural change

- Lacking investment in energy, transport infrastructure and vocational training

- Complex and unstable political situation, especially in B&H, Macedonia FYR and Kosovo

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- Strong outmigration, high unemployment and unused human potential - Positive developments in each of the WB-5 in establishing R&I policy as

factor of promotion of structural change though from very different departing levels

Evidence based analysis in R&I strategies

- Quite limited analytical background in R&I documents - The existing analysis is entirely R&D focused (Serbia) - The analysis does not include international benchmarking

- The analysis does not reflect the entrepreneurial environment, situation of local innovative firms

GOVERNANCE - Public R&D focused governance established to very different degrees (Serbia/the most developed, FYROM and Montenegro at intermediate position, Albania and B&H/rudimentary)

- Poor social conditions for generation of innovative enterprises (confrontational labour relations)

- There are missing institutional preconditions for broad participation in S3 process

- Re-organisation or establishment of new bodies in R&I governance like innovation funds in FYROM and Albania

SHARED VISION - Too narrow view of innovation confined on R&D based growth - Social and grand challenges are addressed to a very limited extent and

largely through international funding schemes

- Unable to respond to global challenges without radically new approaches and international links which will stimulate local experimentation IDENTIFICATION

OF PRIORITIES

- Identification of priorities is confined to research area with some exceptions which also prioritise thematic areas (Serbia and Montenegro)

- FYROM does not have precisely defined sectoral priorities

- There is not clear picture of the analytical consistency between priorities and local context

POLICY MIX - A very narrow and overly R&D skewed mix confined on public sector R&D and commercialisation of R&D results from public sector

- None of the WB-5 countries envision possibility for pilot projects or tool for policy experimentation

- Framework conditions are quite unfavourable especially in B&H, Macedonia, FYR and Kosovo

- A country specific balance between targeted and horizontal measures is yet to be developed

- FYROM has developed mainly horizontal measures MONITORING &

EVALUATION

- There are no evaluation standards as well as institutions responsible for the assessment in the area of RDI.

- When present evaluations are formal and not easily publicly available - The introduction of S3 approach would require a major overhaul of the M&E

systems which given the small size of local R&D and innovation communities should also be internationally supported.

A very preliminary assessment of each of five WB countries based on RIS3 Assessment Wheel has been provided in Annex II. This should be considered as potential useful basis for constructive dialogue about the nature and progress of their R&I policies.

In the portfolio of measures that can promote growth, structural change and employment generation of middle-income economies like WBC, investment in R&D are usually seen as costly measures with uncertain effects. For example, the WIIW study on Western Balkans (see Gabrisch et al., 2016, p 80) explicitly states that whose benefits cannot be foreseen or will likely be very low in the current environment are to be avoided. Thus the authors advise that countries, where only a few research institutions or larger companies implementing those research results exist, should refrain from costly public investments in research and development. Non costly measures like FDI tax credits if implemented well can generate solid basis for future growth. Some WBC have adopted FDI oriented measures relatively quickly for example through business taxation aimed at attracting companies or tailored infrastructure investments. This is a policy that Serbia and Macedonia FYR pursue and which gives effects regarding regional employment though its effects on technology transfer are still difficult to discern. Like in many other CEECs, their FDI policies are not related to their innovation policies which reduce possible technology transfer effects.

It is important to engage in this debate as RDI policies are conventionally not seen as an immediate priority in the WB-5 country context. Our conclusion is that indeed if conventionally designed and implemented RDI policy makers will have a difficult time to put RDI policy on the top of government’s policy agenda. However, if conceived in a way that they go beyond a sole focus on R&D and address the issue of sectoral technology upgrading, demand-led innovation, non-RD drivers of growth related to quality, productivity, engineering and software they have much better chances to generate medium-term results. Moreover, in comparative terms, they can be less expensive than alternatives.