Innovation Policy to Solve Convergence Challenge for the Eastern European and Balkan Countries

Iurii Bazhal

A chapter in Business Development and Economic Governance in Southeastern Europe, 2022, pp 195-209 from Springer

Abstract: Abstract This study is aimed to analyze the economic development processes in the Balkan and Eastern European economies concerning convergence problem. It is shown that both during the transitive period and after the global economic crisis these countries failed to substantially improve their economic situation under criterion of GDP per capita in comparison with developed countries. This paper presents analysis that demonstrates importance to engage methodological approaches based on J. Schumpeter’s theory of economic development, where innovations play a crucial role in solving convergence challenges. The main feature of Schumpeter’s theory of innovations in this context is their ability to independently create added value in the economic system of the country, that is, to act as a separate factor of economic growth. Significances of such theoretical vision to build the effective economic policy in the Balkan and Eastern European countries are demonstrated by the main publications on the processes of market transformation of post-socialist countries, when in many cases ignore innovations as separate important factor of successful economic growth. Experts and politicians of these countries mostly oriented on the neoclassical recipes. Focusing on economic policies to modernize productions that operate in traditional competitive markets is ultimately hampering the creation of a new value added. A permanent increase of this one may be only achieved by innovation activities. This methodological vision is important in identifying the current economic problems of the Balkan and Eastern European countries, as well as can propose answers the question how a low and middle-income countries can significantly increase the value of their national product and makes narrow the gap in GDP per capita against developed countries.

Keywords: Schumpeter’s theory of economic development; Convergence problem; Innovation policy; Smart growth; Middle income trap; Catch-up policy; O11; 030; O38 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-05351-1_11

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DOI: 10.1007/978-3-031-05351-1_11

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