Introduction

This chapter introduces the central argument of the book: that in the digital era, economic catch-up and structural transformation depend less on access to technology and more on the ability of societies to learn, coordinate, and adapt. Drawing on experiences from latecomer economies in Southeastern Europe, the chapter argues that governance functions as the key ‘operating system’ of development, an enabling framework that connects diverse actors, fosters learning, and supports experimentation. It highlights how traditional strategies of industrialization, imitation, and donor-driven reforms have produced limited results, leaving many firms and institutions at the lower end of global value chains. In this context, catching up requires the development of four interdependent capabilities: technological, organizational, institutional, and transformational. These capabilities allow societies to innovate, collaborate, and respond to uncertainty. The chapter also outlines how the book integrates conceptual discussion with empirical case studies from Kosovo, Albania, and North Macedonia to illustrate adaptive governance in practice. By framing progress as a cumulative, learning-based process rather than a linear path, the introduction positions the capability approach as a more realistic and inclusive framework for understanding development under twenty-first-century constraints.