Igniting Innovation, opening remarks by Gerardo Corrochano

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Igniting Innovation: Rethinking the Role of Government in Emerging Europe and Central Asia

Speaker

Gerardo Corrochano
World Bank Sector Director, Europe and Central Asia, Private Sector Development

Innovation and Technology:

• Innovation and technology absorption are recognized as critical elements for economic growth in both emerging and advanced economies alike. As such, innovation is seen as a catalyst for revitalizing post-transition economies in the Europe and Central Asia Region hit hard by the recent crisis.
• Countries in the region have a tradition of excellence in education and basic research which can provide the base for future commercial innovation. However, going from a strong research foundation to economically productive commercial applications remains a critical missing link.
• Active government intervention to support innovation is being weighed as a tool to transform failing industries and develop new industries. While indeed government intervention can ignite innovation, badly designed or badly implemented interventions can further hamper the development of an innovative and entrepreneurial culture among businesses and research communities.
• Past experiences in the region show that pitfalls are often incurred when governments imitate models of interventions from “innovative” countries without having adequate systemic governance and institutional reforms.

World Bank Work on Innovation in the Region

• The World Bank has played an active role in the innovation area in Europe and Central Asia. The Bank’s work in this area will be further strengthened and deepened through the recent launch of the Global Practice on Innovation, Technology and Entrepreneurship.
• The practice recognizes that the formulation of adequate policy formulations in Innovation has become a central element of our clients’ development agenda and will support client countries to achieve their innovative potential through a holistic approach which encompasses interventions at both the public and private sector level. 
• In Russia, particularly, the World Bank has been actively assisting in the development of innovation policies and support systems at both the regional and federal level, with its work last year in the Republic of Tatarstan to develop a regional innovation strategy, the creation of a “Guidebook for the Development of Regional Innovations Strategies and Action Plans in the Russian Federation” and a study of new networked approaches to supporting innovation with the Russian Venture Company.    
• Currently, the World Bank, Federal stakeholders and  the Association of Innovative Regions of Russia  are exploring opportunities  to develop a national pilot program for regional innovation. This pilot program would improve the economic impact of national and regional innovation programs thanks to customized, monitorable and impactful regional innovation action plans that are aligned with regional endowments and capabilities and based on stakeholder consensus.
• In addition, the World Bank is launching new activities in the regions of Tomsk and Novosibirsk to support these regions efforts to develop impactful innovation measures.

Let me now turn to the publications you have in front of you today.

Last year we published our first comprehensive sectoral report in innovation, titled:

Harnessing Quality for Global Competitiveness in Eastern Europe and Central Asia

• The book offers recommendations for how countries in the region can improve their national quality infrastructures by revising mandatory standards, streamlining technical regulations, and harmonizing their national quality infrastructure with those of regional and international trade partners.Today, we are here to present to you our latest sectoral report, titled:

Igniting Innovation: Rethinking the Role of Government in Emerging Europe and Central Asia

• The book is meant to help governments avoid pitfalls by applying lessons learned from public institutions and programs for innovation, both successful and failed, from emerging Europe and Central Asia as well as China, Finland, Israel, and the United States.
• It is a culmination of 10 years of analytic and operational work led by the Europe and Central Asia region of the World Bank, including several regional reports and country policy notes, and flagship events – most recently the 2010 Berlin Knowledge Economy Forum hosted by the Fraunhofer Center for Central and Eastern Europe.
• This book analyzes four aspects of the innovation system: international collaboration, research and development institutions, government financial support instruments, and the investment climate.
• It identifies policies that have an adverse affect on innovation as well as policy gaps, that, if filled, could have a catalytic effect on private sector innovation. 
• One of main the contributions of this book is to point out potential strategies to restructure public R&D institutes with the aim of effectively aligning their activities with private efforts.
• The results and recommendations offered by this book are intended to contribute to the discussion about the role of government in innovation support policy, and how to make innovation and technology adoption a central part of the development and growth strategies of post-transition countries.

In its most succinct way, the book recommends to re-orient the formulations of innovation policies in four main areas:

• First, it highlights the importance of supporting the collaboration of local researchers and foreign inventors, for example through co-invention —and attracting foreign R&D investment.
• Second, it states the necessity to restructure research and development institutes to better focus R&D and commercialize its outputs.
• Third, it emphasizes the need to rethink financial support instruments such as matching grants, loans and venture capital to promote risk-taking and stimulate markets for private risk capital.
• And last, it brings back to the forefront the imperative of developing an adequate investment climate – with a special emphasis on those aspects that are vital for FDI, start-ups and spinoffs.