How does the Fund support the innovation ecosystem and in particular SMEs to be innovative?

Boosting innovation in SMEs is a complex task, especially in emerging innovation ecosystems such as the Western Balkans. Not only that there is a lack of resources, opportunities, and support for innovation, but a growth-oriented mindset and an entrepreneurial spirit need encouragement. In addition, barriers for doing business and internationalization are serious inhibiting factors in developing economies.

It is very difficult to tackle all the issues at once. The development of the innovation ecosystem relies on a complex institutional network. Institutions such as the Fund for Innovation and Technological Development usually have a narrow-oriented mission. Ten years ago, when the Fund was established, our primary aim was to boost innovation is SMEs, which is why, we started by providing direct grants to start-ups and SMEs for innovative projects. With time however, we came to realize that access to finance is one of the key factors but certainly not the only key factor for innovation. It is why, over the years, we extended our support measures and now, although our primary focus remains on providing financial incentives, we pay much attention to enabling collaboration between the ecosystem actors, providing capacity building activities to SMEs and supporting young talent.

Why are vouchers so important in your opinion?

There are various types of vouchers. Green vouchers, digitalization vouchers, vouchers for business services, etc. The voucher is a policy tool for providing targeted support to SMEs with an aim of achieving desired transformation such as green transformation, digitalization of processes or increasing competitiveness. “Innovation Vouchers”, in specific, are intended for contractual research by academic institutions for the purposes of introducing innovation in SMEs. This is of essential value for triggering academia-industry collaboration in fragmented innovation ecosystems and fostering R&D in SMEs not accustomed to innovation. The Innovation Vouchers compensate the lack of specific RDI expertise in SMEs and incentivize R&D in the private sector. The result, among other, is increased investment readiness in SMEs, but also exchange of supply & demand information among the SMEs and the academia and establishment of cooperation structures.

What are the successful schemes in the Western Balkans so far, in your perspective?

One must keep in mind that although the six economies are being addressed as a collective, especially in the context of the EU accession process, each of the six innovation ecosystems in the Western Balkans has its specifics and its own pace of growth. The international benchmarking reports note accelerated ecosystem development directly resulting from the targeted activities of the innovation funds established in the region. In comparison to the three economies (Serbia, North Macedonia and Montenegro) where the innovation funds are the main transformative force in their respective innovation ecosystems, there are substantial positive trends resulting from civil society and donor initiatives in other Western Balkan economies. We should also not undermine the role of the chambers of commerce and the universities. Enabling access to finance for innovation and increasing the investment readiness I think is the common denominator for all the above-mentioned actors.

In my opinion, the Innovation Vouchers may be considered as a successful support scheme at least in some countries. The Innovation Fund Serbia was the pioneer in introducing the innovation vouchers in the region. Due to the low administrative burden and small scale of funding, this is one of their most used support instruments. The colleagues from IFS even increased the amount of the conditional co-funding by SMEs due to the high demand for the Innovation Vouchers. In North Macedonia, we piloted the Innovation Vouchers in 2020. The support prompted significant interest especially among the academic community due to the lack of public funding for applied research. Recently we conducted an assessment of the pilot call which showed excellent results. The assessment report will soon be published on our web-site. The report shows that parallel to the financial incentive, the Innovation Vouchers also facilitate matchmaking, collaboration and transfer of know-how which is crucial for building cohesive innovation ecosystems.

From your understanding, what is further needed?

The challenges of the innovation ecosystem actors are many… from attracting investment, to attracting and retaining talent, enabling cooperation, enabling access to R&D infrastructure, etc. We need to address these challenges jointly, with all the ecosystem actors. Innovation is not something which can be state controlled. Its main ruling forces are the rapidly developing technology and the open market. One cannot get to a breakthrough innovation only by means of public finance. It takes a serious engagement of the mind, a wide set of skills, experience, dedication, passion and even luck to get to innovation. Sometimes simply connecting people can lead to great results and sometimes other, objectively facilitating factors are crucial. This is why I strongly believe that, when it comes to developing the innovation ecosystem, the public institutions must take on the role of enablers, prioritize and rationalize the scarce public resources.

The Western Balkans have a lot of untapped potential which we need to reach, explore, and grow. In order to do this, we need to establish a support system inclusive of all the innovation actors. We need to provide financial and expert support which will validate, value and nurture talent and innovative endeavors in a manner that generates trust among the innovation actors and the wide society. Eventually, innovation, at least publicly financed innovation, should offer solutions to our common social problems. This is the bottom line when designing innovation policy. In some areas, we have achieved significant advancement, but we still have a lot of work to do until our region steps up among the innovation leaders.

How does POLICY ANSWERS contribute to this?

POLICY ANSWERS fosters policy dialogue among Western Balkans and the European Union, but also a policy dialogue between the Western Balkan economies. It offers a platform for collaboration and communication among policy makers in the region involved in enacting and implementing RDI policy, as well as, among professionals and practitioners. In Western Balkans, as in any developing region, donors often propose models of development by providing expertise external to the ecosystems, without substantially engaging in inclusive policy making processes with local actors. We often find ourselves copying each other’s success stories through external intermediaries. POLICY ANSWERS provides a platform for the practitioners directly involved in these processes to meet and exchange know-how; it builds on the on-the-ground expertise, only complementing it by expertise from the EU Member States.

In addition, POLICY ANSWERS not only supports policy dialogue, analysis, monitoring, and agenda setting but also supports piloting a set of measures on regional level to achieve tangible results. By creating regional support measures, we are striving to bring the actors from the region together and integrate them into a common regional ecosystem. We can learn a lot from each other’s experiences, lift each other up and strengthen the capacities of the local stakeholders to increase participation in the common European innovation area.

With the Regional Innovation Vouchers for example, which we plan to launch by the end of 2023, we are trying to link service providers from one Western Balkans economy to SMEs from another Western Balkans economy. By doing this, we are also exploring the RDI demand and supply on regional level, thus generating valuable data for further regional policy making.

What are the main challenges to set up programmes on a regional level?

Unfortunately, there are only few regional RDI initiatives to identify the main challenges for setting up programmes on a regional level. This makes our effort even more valuable. We have five pilot schemes in progress. Some of the challenges may be anticipated but we expect to face additional issues during the implementation of the regional pilot schemes. The main challenges stem from the disparities among the economies and the lack of market integration. To name only few: different legal frameworks which govern RDI on national level, cross-border financial transactions, differences in financial and non-financial incentives at national level, different experience and capacity of stakeholders in the different economies, etc. To address six separate innovation ecosystems with a single support measure is an exciting endeavor. Besides the Innovation Vouchers we will also have measures to support regional mobility of researchers, promotion of research infrastructures by outstanding local professionals, a youth campaign showcasing the achievements of the Western Balkans young talent and a Regional Innovation Academy providing open access to educational material. Each of these initiatives requires specific expertise and faces context specific challenges. Many questions are being opened during the design process of all the regional pilots. We try to engage the expertise from our consortium partners to address all the open issues. In this sense, the diversity among the consortium partners brings a significant added value.