Growth and competitiveness in Central, Eastern and South-Eastern Europe: The role of innovation

Matteo Ferrazzi, Jochen Schanz and Marcin Wolski

No 2025/01, EIB Working Papers from European Investment Bank (EIB)

Abstract: This paper examines the state of innovation in Central, Eastern, and South-Eastern EU countries. Despite increased innovation capacity, the region faces significant challenges threatening its growth and competitiveness, including severe skills shortages, uneven productivity, and barriers to commercialising innovation. The paper highlights the role of foreign direct investment in driving innovation, noting that firms established through greenfield investments exhibit higher productivity than their domestic counterparts. Contributing to the skills shortage are low public R&D spending, insufficient corporate investment in continuing education, and emigration. Limited collaboration between universities and businesses and a shortage of risk capital are key obstacles to bringing innovative ideas to market. To address these challenges, the paper recommends various measures to improve the availability of skilled labour, secure risk capital, foster collaboration between academia and industry, and enhance the overall business environment. Dashboards illustrate how innovation capacity and outcomes vary between CESEE countries, combining data from the EIB's Investment Survey with a range of firm-level public and private datasets.

Keywords: Innovation; competitiveness; EU-CESEE; CESEE; central; eastern and south-eastern Europe; economic growth; EU accession (search for similar items in EconPapers)
JEL-codes: O11 O52 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-cse, nep-eec, nep-ino, nep-knm, nep-sbm and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:eibwps:308812

DOI: 10.2867/4566543

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