1. Towards a profile of the NIS in Croatia Domagoj Račić Knowledge Network domagoj.racic@mrezaznanja.hr

2. Overview Overview of the NIS Education / Research System Enterprise / Industrial System Framework conditions

3. Overview of the National Innovation System The composition of GERD: Business 40.7%, HEI 33.7%, Government 25.5% Less than 10.000 FTE researchers R&D activities heterogeneity & lack of funds Slow restructuring of the public institutions Secondary role of innovation in business strategies (less than 0.2% business employees engaged in R&D) Low base of research with a commercial potential Technology transfer procesess and institutions are being developed Solid, but underfunded innovation support measures

4. The National Science and Research System – Key Institutions

5. Education / Research System (1) 7 universities + public research institutes + polytechnics / colleges (public & private) Fragmentation of university departments – effects on quotas, labour market outcomes, research, technology transfer, entrepreneurship The education / research system is currently in a flux Reliance on government funding coupled with low accountability vs. market-oriented reforms

6. Education / Research System (2) Public debate regarding the new laws related to research, higher education and the organisation of universities The key challenges include: defining strategic priorities redefining institutional setup (accountability) securing sources of funding opening up to ERA increasing mobility of students and researchers opening up to the business sector

7. Enterprise / Industrial System (1) Traditional R&D performers have largely downsized their R&D activities SMEs have not been able to compensate for these losses The lack of greenfield FDI with strong technology capabilities has reduced the role of technology spillovers from abroad Larger companies take advantage of R&D tax incentives, whereas the most innovative SMEs seek subsidies & conditional loans (through BICRO)

8. Enterprise / Industrial System (2) SME policy focused on infrastructure (business zones) and small subsidies Challenges for companies: Economic crisis, lack of liquidity and access to credit Industrial policy is limited in scope Innovation policy is underfunded and is not integrated into the mainstream of regional development Public administration and business climate Workforce education / lifelong learning

9. Framework conditions Generic infrastructure for SMEs: 50 entrepreneurship centres, 30 incubators, 280 business zones Technology infrastructure is being developed (incubators, R&D/competence centres, technology parks) Limited availability of financial instruments (credit, guarantees, VC funding) The lack of industrial policy at the national and regional levels is likely to slow down the development of NTBF and attraction of technology-based FDI

10. Concluding remarks The collapse of the traditional industrial sectors has not been adequately compensated by new domestic enterprises and foreign investments R&D activities are predominantly performed in the public sector, whereas innovation mostly depends on market incentives The lack of industrial policy and weak business climate cannot be compensated by innovation policy measures which are well-designed, but insufficient