Working Together to Boost Innovation in Central Europe and the Baltics

November 10, 2014


  • Innovation is a critical driver of long-term economic growth and the right public policies are crucial to boost innovation.
  • Through lending projects and advisory services, the Bank is assisting new European Union member states and candidate countries to unlock their innovation potential.
  • Experts and policymakers from around the region are working together to identify best practice examples to enhance innovation policy.

Innovation is a critical driver of long-term economic growth in any country. This is particularly true for relatively new entrants into the European Union (EU), including Bulgaria, Croatia, Poland, and Romania.

Stimulating innovation can stimulate growth and competitiveness while simultaneously helping countries advance their potential at the technology frontier. This feat, however, requires both a policy environment and investments that are multi-pronged – allowing for replication of successes from around the globe, as well as adaptation to specific country contexts.

The World Bank has been engaged with Central European countries to help them unlock their potential on the innovation front. One example is Poland, a high income country with substantial innovation potential.  Poland has been hampered in reaching its potential due to inefficient use of financial resources to spur innovation, insufficient involvement of the private sector, and weak monitoring and evaluation of impact of investments in the innovation sphere. 

With nearly €10 billion in EU structural funds earmarked specifically for improving Poland’s innovation outcomes over the 2014-2020 financing period, the government is developing new strategies to help ensure the overall efficacy of new and ongoing innovation initiatives by deploying multiple financial instruments, upgrading its research infrastructure, and building strategic international partnerships. 

As part of this, Poland’s Ministry of Regional Development also engaged the World Bank through Reimbursable Advisory Services to develop a review of strategic and operational documents that can guide the country’s national and regional innovation policy until 2020, based on the European Commission’s new smart specialization concept. The government of Poland is using insights from the World Bank’s Review of National and Regional Research and Innovation Strategies for Smart Specialization in Poland to strengthen its system of support for innovation.

In Croatia, through a series of Science and Technology Projects, the World Bank has been assisting the government to absorb EU funds for research and innovation more effectively by working with selected public sector organizations to strengthen their capacity and stimulate demand from the business and scientific communities for available funds.

The first Science and Technology Project was designed to strengthen Croatia’s innovation potential and increase its competitiveness by supporting research and development programs managed by the Business Innovation Croatian Agency (BICRO) and the Unity through Knowledge FundThe Bank also assisted public research organizations to commercialize their research and improve collaboration with the business sector.

The second Science and Technology Project is helping those involved in research and innovation, including public research institutions, scientific communities, high performing scientists, and young researchers, to benefit fully from EU accession by increasing their capacity to apply for and implement EU-funded projects.

The project fosters the collaboration with the scientific diaspora in order to raise the quality of scientific research in Croatia, to contribute to the creation of new values in the Croatian economy, and to raise the scientific infrastructure in Croatia. In addition to promoting research excellence and integration into the European Research Area, the project provides grants and loans to early stage research and development activities.

In addition to supporting Poland and Croatia’s efforts, the World Bank recently joined innovation experts from the region at the Technology Agency of the Czech Republic in Prague to share achievements and best practices, as well as to look into different experiences from specific countries.  For example, in Bulgaria the Bank is involved in innovation work through Strategy for Smart Specialization; in Romania, the Bank helped flesh out Competitiveness Enhancement and Smart Specialization Policies in the West Region; and in Serbia, the Bank is supporting the Serbia Innovation Project.  

Among the key recommendations identified at the workshop were a need to shift the focus from inputs to outputs, improve the business environment in these countries, and ensure adequate and effective monitoring and evaluation. Suggestions for achieving these goals included reducing the public sector’s aversion to risk, linking public funding with results, switching to demand-driven support, importing skills from abroad when necessary, using independent evaluators to avoid conflict of interest, and increasing feedback from policymakers.

By incorporating best practices from other countries and designing specific recommendations from lessons learned, policymakers can better design specific interventions to boost innovation. Building on broader experience in Europe can help countries create sustainable policies that take a multifaceted approach toward innovation – ensuring that when investment for innovation takes place, it is done as efficiently and effectively as possible.