Innovation Capacity in the SEE Region

A majority of the countries of SEE are so-called ‘catching-up’ economies.1 This basically means that their enterprises operate largely behind the technological frontier, by using the best available foreign technologies and by competing on the basis of production capability. However, catching up is not a process of mere imitation; it requires adaptation and innovation (Fagerberg and Verspagen, 2003; Fagerberg and Godhino, 2005). The capability to innovate remains essential, as no nation can ‘free-ride’ on the world scientific system (Salter and Martin, 2001). Economic catch-up in the twenty-first century places greater demands on the knowledge-related capabilities of the catchingup economies (Mowery, 2005, p. 30). The changing conditions surrounding the catching-up process make ‘the role of indigenous public research more important today than it was in the 20th century’ (Nelson, 2005, p. 19). Accordingly, assessing the innovation capacity of South East Europe is not an exercise in studying the future, but a quite important element for our understanding of the growth potential of this region in the medium and long term.