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Interim Sub-regional Innovation Policy Outlook 2022: Eastern Europe and the South Caucasus

Interim Sub-regional Innovation Policy Outlook 2022: Eastern Europe and the South Caucasus

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The COVID-19 pandemic and the war in Ukraine have negatively affected economic development in UNECE member States, significantly disrupting international trade, investment and cooperation. Because of their geographical location and development stage, these shocks have hit especially hard in transition economies in Eastern Europe and the South Caucasus (EESC) – Armenia, Azerbaijan, Georgia, the Republic of Moldova and Ukraine. The increasing complexity of the challenges faced by the region poses significant barriers to sustainable development and making progress towards the SDGs.

Innovation – exploring new ways of creating value – is crucial to tackling these challenges. It can help economies diversify, reduce poverty, strengthen competitiveness, to reduce and ensure the sustainable use of finite natural resources, as well as achieving a robust and resilient recovery after the war in Ukraine. UNECE has been working to increase the capacity of the EESC countries strengthen their innovative capacities, including to plan, implement, and monitor innovation policies, as well as to promote sub-regional cooperation on innovation for sustainable development. 

Economies in the EESC sub-region hold substantial potential for innovation-driven growth. Recognizing its importance for sustainable development, innovation is high on the political agenda across EESC countries. In addition, the sub-region possesses strong research legacies, highly educated workforce, resourceful diasporas and many efforts towards improving the business environment. Over the past years, national innovation ecosystems have been emerging and growing, including the expansion of various innovation support instruments and infrastructure, such as accelerators, business incubators and techno parks. This has, in part, also led to the emergence of the rapidly growing ICT services exports sector – a pocket of excellence for most EESC economies.

While past years have shown impressive improvements, innovation policy does not fully support innovation systematically across the economy. Current innovation policy challenges remain in ensuring effective coordination of innovation policy to avoid both overlaps and gaps in public support; in facilitating strong linkages between science and industry that foster collaboration, co-creation and commercialization; and in using tools such as public procurement effectively to increase the demand for and spillover effects of innovation. To foster innovation, EESC countries will need to develop sound, flexible, evidence-based policies that enable and promote broad experimentation across economies and societies.

In the framework of achieving these goals and to complement the analysis from UNECE’s first full-fledged Sub-regional Innovation Policy Outlook (IPO) assessment for the EESC in 2020, this Interim IPO (IIPO) provides an update on sub-regional developments and outlines actionable policy recommendations based on national and sub-regional priorities indicated by the participating countries. Made possible by the generous funding of Sweden, it takes a deep dive into two topics that partner Governments identified as central to sustainable development in the EESC:

  1. Strengthening relationships and knowledge linkages between science and businesses for innovation-led growth;
  2. Improving the use of innovation-enhancing procurement to create demand for and incentivize innovation for sustainable development.