Like other countries of Eastern Europe and the South Caucasus (EESC), Belarus has undergone a transition from a centrally planned to a market economy over the past three decades. This transition has stagnated, as current growth drivers wane. Systematic institutional constraints and low levels of productivity, compounded by the economic and social effects of the COVID-19 pandemic, leave Belarus exposed to external shocks impeding further opportunities for growth of the economy.
The new Innovation Policy Outlook (IPO) of the United Nations Economic Commission for Europe (UNECE) reviews and compares innovation performance and governance across the EESC sub-region. Complementing quantitative composite indices, the IPO compares innovation ecosystems in six countries with similar economic, structural and institutional features, challenges, and opportunities: Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine. It is an essential part of UNECE support for trade and economic cooperation among its member States.
Belarus retained much of its diversified production structure and the strong role of the state in the economy. The modest role of the underdeveloped private sector, coupled with lacking investor protection, regulatory burdens and restrictions, underdeveloped markets, and ambitious but often ineffective support mechanisms hold back sustainable development as existing growth drivers wane.
Boosting broader experimentation with ideas to create value and increase productivity will be essential for Belarus to exploit the significant potential for innovation and innovation-driven economic development. It has a highly educated population and a skilled workforce, a strong tradition of fundamental and applied research in several important fields, and an expanding, export-oriented information and communication technology (ICT) services sector. These are remarkable achievements, given a large range of challenges in the business environment. Findings of the IPO indicate, that, to sustain growth in the medium-term, Belarus must take further steps to improve the business climate and reorient innovation and private sector support mechanisms towards enabling and defraying the risk of innovation.
Recognizing this need for innovation, Belarus has taken several important steps to reform innovation governance over the past years. These include:
- A long history of well-structured and systematic approaches to innovation policy. The State Programme on Innovation Development 2016–2020 and the National Strategy of Sustainable Socioeconomic Development 2030 have detailed action plans and clear mandates. Policy mechanisms for ex-ante and interim assessment help to make strategic initiatives more effective and enable policy learning.
- Policy support for the growing ICT sector and technology start-ups. Belarus shows an overall drive to align public inputs with market needs, including expanding innovation infrastructure, reforming and aligning higher education, fiscal incentives and exemptions for innovative products and technology investment, and supporting the private sector.
- Strong political commitment to supporting innovation, creating momentum to further improve measures for State Scientific and Technical Programmes (SSTPs). Some technology foresight informs the SSTPs and other innovation policy documents, while the Law on Regulatory Acts (2018) introduced regulatory impact assessment (RIA) in the policy process.
To sustain this momentum and build on its strong potential, the IPO points to three important areas to address:
- The quality and capacity of innovation governance is insufficient. Coordination of regional science and innovation policy initiatives is inefficient. Evaluations of policy initiatives occur sporadically and are not fully implemented. Policy coordination between national and subnational authorities occurs sporadically and needs to be further developed.
- Low access to early-stage finance, a scarcity of entrepreneurial experience and weak industry-science linkages impede commercialisation of research. Policy tools in these areas are often insufficiently targeted to address the objective of defraying part of the risk of innovation, which leads to unintended consequences such as entrenched interests.
- Monitoring and evaluation practices do not systematically inform policy design. Foresight practices occur ad hoc and guidelines for RIA and systematic application of RIA are both lacking. Objectives of the State Programme on Innovative Development and the implementation of the SSTPs lack consistency.
In this spirit, recommendations of the IPO for Belarus include:
- Build capacity in designing, formulating and implementing innovation policy initiatives in government agencies. Foster public sector innovations to increase the effectiveness and efficiency of policymaking. Implement measures to increase innovation activities in state-owned enterprises, enable higher levels of competition in the domestic market and provide targeted support to innovative enterprises through direct and indirect support measures.
- Policy tools should create a viable system that enables and promotes experimentation, harnessing the potential of Belarus’s pool of highly skilled human capital to drive innovative development. Expand the policy support for early-stage finance, for example with start-up grants, and introduce direct financial support for R&D, such as credit guarantees to foster innovation activity at all development stages and enable the commercialization of innovations. Foster cooperation between representatives of the scientific community and industry by developing effective interaction mechanisms, for example through industrial PhD programmes, sabbatical leaves, industry-funded research chairs.
- Establish a more systemic linkage of monitoring and evaluation to policy design, including in government bodies responsible for science, innovation and technology policy. Integrate technology foresight practices into the policy processes in relevant line ministries and State committees to capture future trends and perspectives for research activities. Re-focus foresight on financing innovation rather than modernizing or developing technology. Establish consistent but light-touch guidelines for RIA and concretely define how RIA is applied during policymaking. Align the SSTPs more closely with the objectives of the State Programme for Innovative Development, including the allocation of public funds. The joint Inter-agency Funding Committee could perform coordination functions in this regard.