INNOVATION FOR GROWTH: EVIDENCE FROM CEE EUROZONE CANDIDATES

This paper analyzes the European innovation framework focusing on four Eurozone candidates: Romania, Poland, Hungary, and Czech Republic. In the last decades, almost two-thirds of Europe’s economic growth has been driven by innovation. This idea is supported by impressive scientific findings concerning the correlation between innovation and economic growth. We believe that better innovation performance stimulates economic convergence and in the long term, facilitates the candidates’ transition towards Euro currency adoption. The countries in the study demonstrate a low innovative performance pattern, as our SWOT analysis will show. First, the gross domestic expenditure on research and development levels are far below the Union average. Secondly, there is a lack of cooperation between the academic and business sector, leading to a decreasing number of skilled personnel in the innovation industries. Lastly, these countries are suffering from an incoherent strategy aimed at reducing the productivity gap between domestic and foreign-owned firms. In order for these CEE Eurozone candidates to improve their European Innovation Score and their competitiveness, we recommend increasing investments in R&D, infrastructure, education, healthcare, clean energy and shifting towards higher value-added activities. We are also suggesting supporting digital innovation hubs, the creation of new companies, and facilitating access to finance for small and medium-sized businesses.