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The paper explores the determinants of productivity gap within the European Union in four industrial manufacturing sectors (computers, chemicals, basic metals and food) of strong macroeconomic significance and varied "Research and Development" (R&D) intensity. Our analysis reveals that some of the most important factors determining productivity gap across the EU are related to technology gap variables - R&D intensity and R&D embedded in purchased equipment and machinery - and how they interact. While the signs for both R&D and embedded R&D are as expected and our results emphasise the relevance of technology for closing the productivity gap, this is not the case with the interaction between these two variables. The estimates for the interaction terms are indeed very significant and consistently negative in three out of four sectors. This negative relationship suggests that there is no complementarity between these two modes of technology acquisition - R&D and embedded R&D investments - which are however each separately crucial for catching up. In policy terms, this situation suggests that there is a lack of coordination between R&D policy and technology transfer (FDI, trade and industrial policy). Given that, our results also show a widening productivity gap between the countries of the EU periphery (South and East) and the rest of the sample.

The Western Balkan region has significantly improved in terms of innovation performance in the last ten years. However, in catching up with other European regions, the focus of innovation efforts should be enhanced. Exports are still far more focused on medium- and low-technology products. Innovative efforts mostly accommodate traditionally strong sectors, which do not necessarily reflect the ideal competitiveness paths for economies in the region. Although some Western Balkan economies record increases in patent activity, patent intensity in the region is still low, while, on the other hand, scientific publication production displays a stable growth trend. While Western Balkan economies are at different stages in the formation of research and innovation (R&I) policy governance systems, national research and innovation policy frameworks are continuously being improved. The enhancement of governance in the area of R&I came as the result of increased capacity building activities in the region, as well as of the real needs emerging as a result of social and economic transformation. On the other hand, R&I systems in the Western Balkan economies need to continue shifting their focus towards businesses to provide better balance between public and private sector orientation. The Joint Research Centre of the European Commission is committed to supporting the shift in innovation policies and improvement of R&I efforts and governance in the Western Balkan economies through a number of tools and activities, allowing policy instruments to be matched with the specific needs of the economy. This approach seeks efficient governance mechanisms for R&I policy by reaching out to the business sector and other important actors of the innovation ecosystem. It determines sustainable development directions for economies and ensures the continuity of policy monitoring and evaluation cycles. This ambitious challenge is translated into four specific lines of activity: (i) the application of the smart specialisation methodology to design and implement innovation strategies; (ii) capacity-building activities for technology transfer, in particular through specialised workshops, tools and instruments specifically designed to assist the academic institutions in the regional economies; (iii) support to transnational collaboration and linkages in the context of EU macro-regional strategies; and (iv) data quality enhancement. The analysis of the development potential of the Western Balkan region in terms of economic, innovative and scientific capabilities in this report is supported with the good practices addressing specific challenges in the region., JRC.B.3-Territorial Development

The report presents the results of the online survey about research and policy support needs for innovation in the South-East Europe. The questionnaire was distributed to 360 participants in Croatia as well as the other six selected South East European countries (SEE): Albania, Bosnia and Herzegovina, Croatia, Kosovo, Montenegro and Serbia. 127 participants completed the questionnaires. Among respondents, 20% come from private sector (10% private profit organizations, and 10% private non-profit organizations). 29% of the participants come from the public sector (19% government ministries, 10% public agencies), 29% of the representatives are university staff, and finally, 22% belong to the research institutes. In this brief report, we present the most interesting results, including similarities and differences among the countries, as well as among the sectors: public sector, science or university sector, as well as private sector. A half of the respondents were responsible for the implementation of the programmes related to the development of innovation policy and R&D policy, and these results reflect the knowledge and views of the ‘insiders’ of R&D and innovation policy. The objective of the survey was two-fold: to get the views of the stakeholders on current R&D and innovation policies, and to understand research and policy support needs of innovation stakeholders.

This paper focuses on knowledge-based entrepreneurship, or new firm creation in industries which are considered to be science-based or to use research and development intensively, in the East Central European (ECE) context. On the basis of case studies of thirteen knowledge-based firms in six ECE countries, we suggest that KBE firms in these countries may differ in some important ways from the conventional picture of new technology based firms. In general, we see the ECE knowledge-intensive firm as a knowledge-localiser or customiser, adapting global knowledge to local needs on the domestic market, rather than a knowledge-creator generating new solutions for global markets. The entrepreneurs who start and run these businesses are skilled at spotting trends early and bringing them to their countries. Based in countries that generally have poor reputations as sources of innovative, high-technology products, but having established strong brands for themselves in their home markets, they are struggling with the challenge of entering export markets with products and services that can achieve global, or at least regional, recognition. The studies of the companies discussed here suggest that ECE firms are still in the early stages of this strategic shift.