GORAN RADMAN Chairman, SenseConsulting Technology and Innovation Competitiveness in Eastern and Southeastern Europe

Competition For Wealth Japan India Argentina Ireland Ukraine Greece

Social and Economic Sustainability

Technology and Innovation Technology readiness Innovation capacity Employability/ Jobs

What is Competitiveness? – Competitiveness is the productivity (value per unit of input) with which a nation, region, or cluster utilizes its human, capital, and natural resources. Productivity sets a nation’s or region’s standard of living (wages, returns on capital, returns on natural resources) – Productivity depends both on the value of products and services (e.g. uniqueness, quality) as well as the efficiency with which they are produced. – It is not what industries a nation or region competes in that matters for prosperity, but how firms compete in those industries – Productivity in a nation or region is a reflection of what both domestic and foreign firms choose to do in that location. The location of ownership is secondary for prosperity. – The productivity of “local” industries is of fundamental importance to competitiveness, not just that of traded industries Nations or regions compete in offering the most productive environment for business

Key for efficiency-driven economies Key for factor-driven economies 1. Institutions 2. Infrastructure 3. Macroeconomic stability 4. Health and primary education 5. Higher education and training 6. Goods market efficiency 7. Labor market efficiency 8. Financial market sophistication 9. Technological Readiness 10. Market size 11. Business sophistication 12. Innovation Key for innovation-driven economies BASIC REQUIREMENTS EFFICIENCY ENHANCERS INNOVATION & SOPHISTICATIONS FACTORS Pillars of Competitiveness

Stages of Development Stage 1 Factor-driven Transition from 1 to 2 Stage 2 Efficiency-driven Transition from 2 to 3 Stage 3 Innovation- drivenMoldovaArmeniaAlbania Azerbaijan Bosnia and Herzegovina Georgia Macedonia, FYR Montenegro Serbia Ukraine

Global Competitiveness Index 2008

Pillars of Global Competitiveness Index 2008Country/Economy Basic requirements Sub-IndexMontenegro InstitutionsMontenegro InfrastructureAzerbaijan Macroeconomic stabilityMacedonia, FYR Health and primary educationMontenegro Efficiency enhancers Sub-IndexUkraine Higher education and trainingUkraine Goods market efficiencyMontenegro Labor market efficiencyGeorgia Financial market sophisticationMontenegro Technological readinessMontenegro Market sizeUkraine Innovation and sophistication factors Sub-IndexAzerbaijan Business sophisticationUkraine InnovationAzerbaijan GCR 2008 Best Performers

Technology and Innovation Competitiveness Productivity Growth Innovation Capacity Competitiveness Prosperity Growth Technology Readiness Competitiveness

Source: USPTO (2008), EIU (2008) Average U.S. patents per 1 million population, Innovative Capacity Innovation Output of Selected Countries Russia Indi a China 50 patents = Estonia Croatia Poland Belarus Greece Portugal Czech Republic Slovenia Hungary Romania

What Can Nations Do? Educate Innovation: –Inventions, new products – R&D – Innovative processes - productivity –Innovative business models - services Promote Innovation: –Knowledge Based Economy –Sustained economic growth and international competitiveness –Global Markets and Value-added Generation Do Innovation: –Radical and Incremental Innovations – R&D –Use of new technologies in traditional sectors –Support new Innovative Sectors – ICT, Biotechnology

The Process of Economic Development Shifting Roles and Responsibilities Old Model Government drives economic development through policy decisions and incentives New Model Economic development is a collaborative process involving the private sector, government at multiple levels, universities, labor, and civil society Competitiveness must become a bottoms-up process in which many individuals, companies, and institutions take responsibilities Every community and cluster can take steps to enhance competitiveness The private sector must become more engaged in competitiveness to improve rapidly

Clusters provide a framework for implementing public policy and organizing public-private collaboration to enhance competitiveness Clusters Physical Infrastructure Natural Resource Protection Environmental Stewardship Science and Technology Investments (e.g., centers, university departments, technology transfer) Education and Workforce Training Business Attraction Export Promotion Standard setting and quality initiatives Market Information and Disclosure Management Training Cluster-Based Policy Implementation

© 2008 Nautar d.o.o. All rights reserved. This presentation is for informational purposes only. Nautar makes no warranties, express or implied, in this summary.