This is how the Western Balkans will become more innovative

  • The Western Balkans is one of the areas in Europe with the best growth prospects for the future.
  • Innovation funds have been successful but they are still too fragmented to have the necessary scale.
  • The region needs dedicated research funds providing patient capital for targeted research missions that can create new and more sustainable pathways for growth.

Key private and public sector leaders from the Western Balkans met this month to identify a set of key initiatives that help spread innovative technologies and business models throughout the region and direct innovation ecosystems towards more inclusive and sustainable pathways to growth.

The Leadership Group is composed of 15 Ministers, CEOs and key partners of the Western Balkan economies and will champion the implementation of a targeted set of activities in the region, in collaboration with the EU and other international institutions.

This is one of several Closing the Innovation Gap Accelerators facilitated by the World Economic Forum’s Platform for Shaping the Future of the New Economy and Society. It fulfils the mandate received by the Presidents and Prime Ministers of the Western Balkan economies during the 2018 meeting of the Strategic Dialogue for the Western Balkans, hosted by the World Economic Forum, and is implemented in collaboration with the Regional Cooperation Council.

The World Economic Forum Accelerator model

Image: World Economic Forum

Data from the Global Competitiveness Report show that the region has progressed and reduced the gap with the European Union on many of the drivers of productivity and – with a projected GDP growth rate of 3.8% in 2020 – the Western Balkans remain one of the areas of Europe with the best growth prospects for the future. However, average income levels are still only a quarter of those of Germany and, at this pace, it will take more than six decades to catch-up with the European Union.

With a growing number of people leaving the region in search of better job prospects in Northern Europe, catching up might not be enough. The Leadership Group of the Competitiveness and Innovation Accelerator has discussed seven key action areas to drive systemic change in the region and lead its innovation ecosystem towards new and more sustainable technological innovations and socio-economic institutions.

1. Scale up existing success models piloted by national innovation funds and create a coordinated regional fund. With the support of the World Bank, innovation funds have been created in North Macedonia and Serbia, and one will soon be created in Montenegro. They have piloted and implemented successful programmes but they are still too fragmented to have the necessary scale that can crowd in additional investment, particularly from outside the region.

2. Co-design innovative forms of incentives to attract successful incubator and accelerator programmes from neighbouring countries and the rest of Europe. The Western Balkans have experienced a steady rise in the number of support programmes for start-ups, but there is a need to bring additional quality into the system. One potential solution would be to attract some of the successful players from abroad.

3. Transform the Western Balkans Digital Summit into the flagship event on innovation in the region with a truly connecting role for the ecosystem. Interaction and exchange play a key role in bringing the innovation ecosystem together to foster creativity and new business ventures. The Western Balkans Digital Summit has been a successful experience of collaboration among the six economies. It could focus more on this collaboration, or be expanded to other sectors of common specialization in the region, such as sustainable food production and agro-technologies.

4. Establish coalitions of businesses, governments and the financial sector to co-design innovative governance models for small and medium-sized enterprises (SMEs), promote modern business practices, foster collaboration and support networks among different stakeholders. A large proportion of the SMEs and companies in the region remain fully “family-run”, potentially reflecting a lack of trust in society and the lower quality of contractual institutions and rule of law. This has implications for the capacity of companies to innovate and scale, and their propensity to increase their employee base. There are innovative approaches that can be taken to nudge these companies towards adopting modern and more sustainable practices, for example with the support of other segments of the private sector.

5. Facilitate cooperation and exchange of information with leading research institutions in the world in targeted research sectors. With the support of the Joint Research Centre of the European Union, most Western Balkan economies have identified priority areas for investment in research and innovation. In addition to investment, they will benefit from increased collaboration with international universities and research centres in these areas.

6. Establish a Western Balkans science and research fund tailored to the missions of the region. The mandate would be different from the innovation fund – more focused on immediate business applications – as it would focus on providing long-term, patient capital for targeted research missions that can create new and more sustainable pathways for growth.

7. Set-up dedicated programmes and co-design regular foresight exercises involving governments, the business sector, universities and research centres. The region faces intractable long-term challenges such as a rapidly ageing population, brain drain and adverse demographic trends. Governments and businesses can benefit from increased research, dialogue and exchange on the long-term scenarios for the region, scanning opportunities, threats and hypotheses of intervention.

Based on the discussion of the Leadership Group, the Regional Cooperation Council will prioritize a subset of these activities and create dedicated working groups with additional public and private sector stakeholders, as well as international partners and financing institutions. All the members of the Leadership Group expressed a strong commitment to this initiative and to the potential of the region and they are ready to champion one or more working groups. We invite readers to join this initiative if you want to shape a more innovative future for the Western Balkans.

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