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Unleashing the vast potential of public procurement to foster demand for innovation in support of sustainable development in Eastern Europe and the South Caucasus


Countries of the Eastern Europe and the South Caucasus (EESC) sub-region (Armenia, Azerbaijan, Georgia, the Republic of Moldova, and Ukraine) have a lot of potential to continue the transition to a more sustainable economic growth model that is less vulnerable to external shocks. Innovation, or experimentation with new ideas, is crucial to making the most of this potential and must take central stage on their policy agendas.

Innovation-Enhancing Procurement (IEP) involves a public agency tendering for a good, service or technology that does not yet exist, to address newly arising public sector needs or societal challenges. It can become a key tool to drive demand for innovation at national and sub-national levels while achieving policy goals for sustainable development and green growth. Benefits of innovation-enhancing procurement are numerous as it might also help to reduce public sector risk aversion, increase innovation-related capabilities in the public and private sectors, create incentives for public entities to promote experimentation, modernize the public sector, and improve communication between government departments and private organizations.

To support ambitions of EESC transition economies, UNECE held its third Innovation Policy Outlook (IPO) policy dialogue on innovation-enhancing procurement on 14 June, to examine how policymakers in the EESC sub-region can effectively address social, economic, and environmental challenges by using public procurement as a means to generate demand for and strengthen innovative activities. The topic of the event builds on the recommendations of the first Sub-regional Innovation Policy Outlook (IPO) and on Innovation for Sustainable Development Reviews, which EESC countries have started to implement in recent years, including through UNECE capacity building programmes.

The third IPO policy dialogue on IEP provided an inspiring takeaway: public procurement budgets in the sub-region frequently exceed 10% of GDP. Thus, there is ample potential that governments could already use to create a predictable and sustained demand for innovative solutions. To not only discuss the theoretical background on the use of IEP, but also explore the practical implications for EESC countries, UNECE invited Swedish experts to present and analyze case studies, which were followed by an intervention from a representative of Georgia's State Procurement Agency, who elaborated on how Georgia became a sub-regional leader in e-procurement.

The outcomes of the IPO policy dialogue on IEP be featured in the next IPO iteration, an Interim Innovation Policy Outlook that will focus on sub-regional trends, challenges, developments, and opportunities on relevant topics that were selected by IPO national focal points.

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