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1、iArmeniaAzerbaijanGeorgiaRepublic of MoldovaUkraineInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusGENEVA,2023SUSTAINABLE AND SMART CITIES FOR ALL AGESUNITED NATIONS ECONOMIC COMMISSION FOR EUROPEArmeniaAzerbaijanGeorgiaRepublic of MoldovaUkraineInterim Sub-r
2、egional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusiiInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South Caucasus 2023 United Nations All rights reserved worldwideRequests to reproduce excerpts or to photocopy should be addressed to the Copyright
3、 Clearance Center at:All other queries on rights and licenses,including subsidiary rights,should be addressed to:United Nations Publications 405 East 42nd Street S-09FW001 New York,NY 10017 United States of AmericaEmail:permissionsun.org Website:https:/shop.un.orgThe findings,interpretations and con
4、clusions expressed herein are those of the author(s)and do not necessarily reflect the views of the United Nations or its officials or Member States.The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of
5、 the Secretariat of the United Nations concerning the legal status of any country,territory,city or area,or of its authorities,or concerning the delimitation of its frontiers or boundaries.In particular,the boundaries shown on any maps do not imply official endorsement or acceptance by the United Na
6、tions.This publication is issued in English and Russian only.United Nations publication issued by the United Nations Economic Commission for Europe.The Sub-regional Interim Innovation Policy Outlook project was funded by the Government of Sweden.ECE/CECI/32UNITED NATIONS PUBLICATIONISBN:978-92-1-117
7、326-0 eISBN:978-92-1-002389-4 Sales no.:E.22.II.E.41iiiForeword FOREWORDThe COVID-19 pandemic and the war in Ukraine have negatively affected economic development in UNECE member States,significantly disrupting international trade,investment and cooperation.Because of their geographical location and
8、 development stage,these shocks have hit especially hard in transition economies in Eastern Europe and the South Caucasus(EESC)Armenia,Azerbaijan,Georgia,the Republic of Moldova and Ukraine.Innovation will be central to the EESC countries abilities to address structural challenges to achieve a robus
9、t and resilient recovery and support the sub-region in rebuilding after the war.Innovation can help countries diversify and upgrade their economies,foster sustainable development and find solutions to address social and economic challenges.Economies in the EESC sub-region hold substantial potential
10、for innovation-driven growth.Innovation is also high on the political agenda,but government policies do not yet encourage innovation to happen systematically across the EESC economies.This leaves that substantial potential untapped.Challenges remain in ensuring effective coordination of innovation p
11、olicy to avoid both overlaps and gaps in public support;in facilitating strong linkages between science and industry that foster collaboration,co-creation and commercialization;and in using tools such as public procurement effectively to increase the demand for and spillover effects of innovation.To
12、 foster innovation,EESC countries will need to develop sound,flexible,evidence-based policies that enable and promote broad experimentation across economies and societies.To complement the analysis from UNECEs first full-fledged Sub-regional Innovation Policy Outlook(IPO)assessment for the EESC in 2
13、020,this Interim IPO(IIPO)provides an update on sub-regional developments and outlines actionable policy recommendations based on national and sub-regional priorities indicated by the participating countries.It takes a deep dive into two topics that partner Governments identified as central to susta
14、inable development in the EESC:(i)Strengthening relationships and knowledge linkages between science and businesses for innovation-led growth(ii)Improving the use of innovation-enhancing procurement to create demand for and incentivize innovation for sustainable developmentI hope that EESC policymak
15、ers can draw on this IIPO as a change-management tool to monitor sub-regional changes and challenges for innovation,identify sub-regional strengths and weaknesses in policies and institutions,and keep up the momentum for policy dialogue and learning among EESC countries.The recent crises and the tig
16、htening fiscal space demonstrate the need to ensure resilient and sustainable development.It is thus imperative for EESC economies to maximize the positive impact of public support for innovation.Olga AlgayerovaUnited Nations Under-Secretary-GeneralExecutive Secretary,United Nations Economic Commiss
17、ion for EuropeivInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusPREFACEResearch,analysis and advisory work on innovation and competitiveness policies is part of UNECEs work on economic cooperation and integration that aims to harness innovation as a driver of
18、 sustainable development.This Interim Innovation Policy Outlook(IIPO)was developed under the project“Promoting Innovation Policy Capacities in Eastern Europe and the South Caucasus”,carried out upon the request of member States and funded by the Government of Sweden.It is a UNECE flagship initiative
19、,developed in close collaboration with national authorities and leading international experts,to address national priorities under the United Nations 2030 Agenda for Sustainable Development.Strengthening innovation policy governance to foster innovative activity within the EESC economies is an impor
20、tant element in“Promoting circular economy and sustainable use of natural resources in the UNECE region”as well as encouraging“Green and digital transformations for sustainable development in the UNECE sub-region”the leading themes of the UNECE 69th and 70th Sessions,respectively.The research for th
21、e IIPO began in March 2021 at the Third Sub-regional Meeting of the IPO National Focal Points,where national EESC authorities and other stakeholders reflected on the outcomes of the first IPO(published in 2020)and agreed on the scope for the IIPO.On the basis of this exercise,two sub-regional priori
22、ties were selected for in-depth consideration in the 2022 IIPO:sustainable development of sciencebusiness linkages and innovation-enhancing procurement.The findings and recommendations of these two in-depth chapters are the result of extensive dialogue and consultation among leading subject matter e
23、xperts,government officials,academia,the private sector,UNECE and other innovation stakeholders at dedicated IPO policy dialogue sessions from September 2021 to June 2022.Based on continued engagement with international IPO partners,this IIPO also incorporates outcomes of the European Commissions Jo
24、int Research Centre studies on technology transfer and the World Intellectual Property Organizations(WIPO)Global Innovation Index(GII)2022.During September and October 2022,the draft text was submitted for comments to sub-regional government institutions and to a group of independent international e
25、xperts.The findings and recommendations were endorsed by the EESC Governments at the Seventh Meeting of the IPO National Focal Points and other UNECE member States at the 14th Session of the Team of Specialists on Innovation and Competitiveness Policies in November 2022.The final text reflects the o
26、utcome of bilateral and multilateral discussions over the course of the project as well as other comments and suggestions from various stakeholders.Prepared for publication by the UNECE Secretariat,the IPO(2020)and the IIPO(2022)complement other workstreams undertaken by the UNECE Economic Cooperati
27、on and Trade Division(ECTD)to support countries in harnessing the power of trade,investment and innovation for sustainable development,economic circularity,and the green and digital transformations.UNECE advisory work in this area draws on its longstanding engagement across the EESC sub-region,which
28、 includes conducting and publishing Innovation for Sustainable Development Reviews for Armenia(2014;forthcoming),Georgia(2020),the vPreface Republic of Moldova(2021)and Ukraine(forthcoming)and delivering targeted capacity-building activities.Other complementary ECTD workstreams include studies on re
29、gulatory and procedural barriers to trade,agricultural quality standards,trade facilitation standards and recommendations,and normative guidance for public-private partnerships.In addition to the WIPOs GII,the work complements other international composite indices,such as the SME Policy Index publis
30、hed by the Organisation for Economic Co-operation and Development,by examining how UNECE member States can design,implement,monitor and evaluate innovation policies to ensure that their efforts result in systematic innovative activity across economies.viInterim Sub-regional Innovation Policy Outlook
31、 2022:Eastern Europe and the South CaucasusACKNOWLEDGEMENTSThe Interim Sub-regional Innovation Policy Outlook(2022)was developed under the auspices of the UNECE Committee on Innovation,Competitiveness and Public-Private Partnerships.The project was made possible by generous financial support from th
32、e Swedish Government.UNECE expresses its gratitude to the national focal points in the countries of Eastern Europe and the South Caucasus:Ani Toroyan(Armenia),Rustam Abdullazade and Laman Qanbarova(Azerbaijan),Annie Vashakmadze(Georgia),Olga Tretiacov(Republic of Moldova),and Darya Chayka,Andrii Pet
33、rovskyi and Igor Yegerov(Ukraine).Their dedication and support have been essential.The publication was written under the leadership of Elisabeth Trk,Director of the UNECE Economic Cooperation and Trade Division,and under the supervision and guidance of Anders Jnsson,Chief of the UNECE Innovative Pol
34、icies Development Section.The project was managed by Jakob Fexer,UNECE Economic Affairs Officer.The authors of the chapters are Immanuela Badde(executive summary;chapter 1),Slavo Radosevic(chapter 2)and Jon Mikel Zabala Iturriagagoitia(chapter 3).Immanuela Badde,Ekaterina Guznova and Darya Podgorets
35、kaya provided coordination support throughout the project.Ludmila Boichuk provided technical and administrative assistance.Lise Lingo copyedited the manuscript.The project has greatly benefitted from high-level patronage from all beneficiary countries,and UNECE extends its thanks to all the minister
36、s,deputy ministers and state secretaries who have been involved at various stages.The project was coordinated with the valuable support of the Permanent Missions of Armenia,Azerbaijan,Georgia,the Republic of Moldova and Ukraine to the United Nations Office and other international organizations in Ge
37、neva.The UN Resident Coordinator and UNDP Offices in the sub-region provided useful support at various stages.UNECE extends its sincere thanks and appreciation to all contributors for their engagement in this important project.Special thanks go to Peter Cederblad,Christina Danielsson and Sanna Leino
38、(Sida);Ralph Heinrich,Ariel Ivanier,Jose Palacino and Nadezhda Sporysheva(UNECE);Alessandro Fazio(Joint Research Centre);Francesco Alfonso and Daniel Quadbeck(Organisation for Economic Co-operation and Development);Dimo Calovski and Angel Gonzalez Sanz(United Nations Conference on Trade and Developm
39、ent);and Lorena Rivera Leon and Sacha Wunsch-Vincent(World Intellectual Property Organization)as well as Yulia Aliyeva,Yevhen Anhel,Irina Guruli,Sevak Hovhannisyan and Sergiu Porcescu(local experts).viiAcknowledgements“The sub-regional benchmarking dimension of the IPO enables Armenia to identify ga
40、ps in innovation policy,monitor our performance and the impact of initiatives over time,and learn from the experiences of our peers.We look forward to continuing our strong cooperation on innovation policy governance with UNECE in the sub-region.”Davit SahakyanDeputy Minister of High-Tech Industry o
41、f Armenia“In line with the cross-cutting nature of innovation policy,the IPO supports us in gaining a systems perspective on the strengths and weaknesses of innovation policy governance at both the country and a sub-regional level,connecting relevant actors in research,academia,industry and civil so
42、ciety.Azerbaijan is ready to continue this work together with UNECE and EESC countries to foster innovation-driven growth.”Inara ValiyevaActing Head of the Innovation and Digital Development Agency of Azerbaijan“The UNECE IPO initiative provides an opportunity to create complementarities with other
43、national and international innovation policy support initiatives and share best practices and knowledge throughout the evaluation process of the project.Georgia expresses its readiness to be engaged with UNECE,international partners and economies in the sub-region in driving innovative activity for
44、sustainable development.”Annie VashakmadzeHead of International Relations,Georgias Innovation and Technology Agency and Vice-Chairperson of the Bureau of the UNECE Committee on Innovation,Competitiveness and Public-Private Partnerships“To achieve impact in improving the innovation policy framework i
45、n the Republic of Moldova,the IPO allows us to enlarge the evidence base for mutual policy learning with concrete recommendations towards enhancing the productivity and competitiveness of our economy.The Republic of Moldova is proud to be part of such an important sub-regional initiative.”Adriana Ca
46、zacu-TigaieState Secretary,Ministry of Education and Research of the Republic of Moldova“The sub-regional component of the IPO project greatly facilitates the exchange of experiences between the beneficiary countries.The resulting analysis contributes to the formation of the best management practice
47、s in the region towards sustainable development.We highly appreciate the cooperation with UNECE and look forward to monitoring our progress going forward with subsequent iterations.”Oleksii ShkuratovDeputy Minister of Education and Science of UkraineviiiInterim Sub-regional Innovation Policy Outlook
48、 2022:Eastern Europe and the South Caucasus“Creating opportunities for innovation needs cooperation and exchange,for which well-functioning innovation systems are key as they bind together policy and regulatory frameworks,financing models,social norms and behaviour,skills,capabilities and business m
49、odels.Sweden is proud to have funded and further supported the UNECE with the IPO,the first sub-regional policy assessment of its kind that focuses on lasting change,national ownership,international and multilateral collaboration,dedication and investment by all project partners.The conversations an
50、d networks appearing around the IPO could well become the incubator to harness the great innovation potential in the sub-region.”Anna JardfeltAmbassador Extraordinary and Plenipotentiary at the Permanent Mission of Sweden to the United Nations Office and Other International Organizations in Geneva“T
51、he IPO marks another milestone in our cooperation with UNECE,which has intensified over the last years and sees our two organizations working together on a range of topics,from high-growth enterprises to the review of innovation ecosystems.”Andreas SchaalDirector,Global Relations and Co-operation,Or
52、ganisation for Economic Co-operation and Development“To achieve policy objectives for sustainable and resilient recovery,we must not work in silos.JRCs technology transfer studies and UNECEs IPO have many complementarities.Both projects benefit from each others research and analysis,and this enriche
53、s the support we can provide to the Eastern Europe and the South Caucasus sub-region.We are delighted to collaborate with UNECE and look forward to further areas of cooperation to come.”Bernard MagenhannDeputy Director General at the Joint Research Centre of the European Commission“We are grateful t
54、o see the use of WIPOs Global Innovation Index in the IPO,and look forward to further pursuing our joint objective to assist policymakers in the EESC sub-region in benchmarking their national innovation eco-systems and in designing effective innovation policies.”Lorena Rivera-Leon and Sacha Wunsch-V
55、incentEditors of the Global Innovation Index,World Intellectual Property OrganizationixContents CONTENTSForeword.iiiPreface.ivAcknowledgements.viAbbreviations.xivExecutive Summary .xvChapter 1 Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the
56、South Caucasus.1EESC economies have made significant progress over the past decades,but,as recent crises show,more needs to be done to ensure resilient,green and sustainable development.2Remaining structural weaknesses in EESC economies,such as low levels of diversification and productivity,inhibit
57、both resilience and further growth.6Strengthening innovation-led growth lies at the centre of navigating recent crises and sustainability challenges in the sub-region.12Systematically increasing innovative activity in the EESC will require effective innovation policy governance within the broader na
58、tional innovation systems.24Chapter 2 Building Relationships and Knowledge LinkagesBetween Science and Business in the EESC.28Supporting effective SBL is essential to foster innovation-led growth in the EESC.29Diverging from the triple helix framework,strengthening SBL in the EESC requires a more co
59、ntext-specific approach.32SBL in the EESC require reorienting from focusing solely on commercialization to facilitating interaction between domestic and foreign firms and improving R&D capacity.36Significant efforts to enhance SBL entail strengthening the capacities and role of PROs as knowledge and
60、 service providers,enhancing absorptive capacity and R&D activity in businesses,and solidifying FDI links.46Despite existing challenges to SBL,the EESC has several success cases and good practices in promoting linkages.58Policy messages and recommendations.59xInterim Sub-regional Innovation Policy O
61、utlook 2022:Eastern Europe and the South CaucasusChapter 3 Using the Large Potential of Public Procurement to Create Demand for and Incentivize Innovation.64Innovation-enhancing procurement is emerging as a powerful policy tool to spur economic and sustainable growth.65IEP policy frameworks are emer
62、ging across Europe,though they are not yet used to their full potential.67EESC countries could significantly benefit from IEP to spur innovation demand by reducing barriers and establishing frameworks.71EESC Governments can benefit greatly from the IEP Road Map to guide efforts to create comprehensi
63、ve IEP policy.79EESC economies must fulfil certain initial requirements and build public sector capacity to develop a comprehensive IEP strategy.87Policy messages and recommendations.95Bibliography .100 xiContents LIST OF TABLESTable 1 Overview of recommendations:Interim Sub-regional Innovation Poli
64、cy Outlook 2022.xixBox table GII rankings overall and by pillar,EESC economies,1.6.1 2022 and 2021 .15Table 1.1 Main structural characteristics of the EESC countries,GII 2022.17Table 1.2 E-Government Index and E-Participation Index performance in the EESC,2020 and 2022 .21Table 1.3 Expenditure on ed
65、ucation and share of tertiary enrolment in the EESC sub-region,2022.22Table 1.4 Summary of achievements in economic and innovation performance of the EESC countries and challenges ahead .25Table 2.1 A taxonomy of PRO-and university-driven linkages ranked on the basis of their relevance .37Table 2.2
66、GII indicators of R&D potential for PRO-and university-driven linkages in the EESC countries and Poland.38Table 2.3 GII indicators of absorptive capacity in the EESC countries and Poland(Per cent and values).41Table 2.4 GII indicators of technology and knowledge exchange in the EESC countries and Po
67、land .42Table 2.5 GII indicators of knowledge inflows into the EESC countries and Poland(Per cent and values).44Table 2.6 Summary of key features of the R&D capabilities of PROs and universities.49Table 2.7 Summary of the key features of firms absorptive capacities .52Table 2.8 Summary of the key fe
68、atures of intermediary institutions for SBL .55Table 2.9 Success cases and good practices in promoting SBL in the EESC countries .59Table 2.10 Summary of sub-regional policy recommendations for improving SBL in the EESC countries.60Table 3.1 Ways to overcome the barriers to implementing IEP .90Table
69、 3.2 Key lessons from the Georgian experience with IEP policy.94Table 3.3 Summary of sub-regional policy recommendations for supporting IEP in EES .95xiiInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusLIST OF FIGURESFigure 1.1 Average GDP growth of EESC count
70、ries,20182022(Per cent).4Figure 1.2 Value added of sectors as share of GDP,2021(Per cent).7Figure 1.3 Exports of goods and services as share of GDP,20202021(Per cent).9Figure 1.4 EESC average FDI inflow as share of GDP,20182021(Per cent).10Figure 1.5 EESC average total factor productivity,20182022(P
71、er cent change).11Box figure Challenges to the circular transition in the UNECE region,1.5.1 examples perceived(Number of survey respondents).13Figure 1.6 SDG progress overview.23Figure 2.1 Indicators of R&D potential in the EESC,Poland=100%.39Figure 2.2 Indicators of absorptive capacity in the EESC
72、,Poland=100%.41Figure 2.3 Indicators of technology and knowledge exchange in the EESC,Poland=1 .44Figure 2.4 Indicators of knowledge inflows in the EESC,Poland=1.45Figure 2.5 Factors that determine sciencebusiness linkages.46Figure 3.1 National IEP policy frameworks ranked and clustered by performan
73、ce(Per cent).68Figure 3.2 European average performance by indicator in the benchmarking policy framework(Per cent).69Figure 3.3 National investment in IEP,share of total public procurement,excluding defence(Per cent).70Figure 3.4 Main barriers to IEP,procurers perceptions(Per cent of survey responde
74、nts).77Figure 3.5 Main barriers to IEP,suppliers experience(Percent of survey respondents).78Figure 3.6 Main barriers to IEP,suppliers perceptions,United Kingdom(Per cent of survey respondents).79Figure 3.7 The IEP Road Map .80Figure 3.8 Coordinated unbundling in PCP and commercial public procuremen
75、t .82Figure 3.9 Impact of barriers to IEP as share of firms experiencing that barrier(Per cent).91xiiiContents LIST OF BOXESBox 1.1 UNECE Sub-regional Innovation Policy Outlook:Eastern Europe and the South Caucasus .3Box 1.2 UNECE Sub-regional Innovation Policy Outlook:Eastern Europe and the South C
76、aucasus .5Box 1.3 ICT services export sector in Armenia .8Box 1.4 Importance of FDI for innovation-led growth .10Box 1.5 Fostering the transition to a circular economy and strengthening the green and digital transformations in the EESC .12Box 1.6 The findings of the 2022 Global Innovation Index for
77、the EESC .15Box 1.7 Supporting innovative high-growth enterprises in the EESC .18Box 2.1 SBL in the national innovation system .29Box 2.2 Findings and recommendations on SBL from the UNECE Sub-regional Innovation Policy Outlook:Eastern Europe and the South Caucasus .31Box 2.3 The case of Silicon Val
78、ley and the Bayh-Dole Act 1980 .33Box 2.4 The Chinese path to strengthening SBL .34Box 2.5 Diagnostic and benchmarking study on technology transfer in the European Union Eastern and Southern Neighbourhood,20192020 .47Box 3.1 Innovation-enhancing public procurement.65Box 3.2 The UNECE Innovation for
79、Sustainable Development Reviewof Georgia 73xivInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusABBREVIATIONSDUI doing,using or interactingEBRD European Bank for Reconstruction and DevelopmentEC European CommissionEESC Eastern Europe and the South CaucasusEU Eu
80、ropean UnionFDI foreign direct investmentGDP gross domestic productGERD gross expenditure on research and developmentGII Global Innovation IndexI4SDR Innovation for Sustainable Development ReviewICT information and communication technologyIEP innovation-enhancing procurementIERPC Institute for Econo
81、mic Research and Policy ConsultingIHGE innovative high-growth enterpriseIPO Sub-regional Innovation Policy OutlookIIPO Interim Sub-regional Innovation Policy OutlookIMF International Monetary FundIPR intellectual property rightsJRC Joint Research CentreMEAT most economically advantageous tenderMNC m
82、ultinational corporationMSMEs micro,small and medium enterprisesOECD Organisation for Economic Co-operation and DevelopmentPCP pre-commercial procurementPRO public research organizationQS Quacquarelli SymondsR&D research and developmentSBL sciencebusiness linkagesSDGs Sustainable Development GoalsS&
83、T science and technologySMEs small and medium enterprisesSTI science,technology and innovationTFP total factor productivityTTO technology transfer officeUN United NationsUNHCR United Nations High Commissioner for RefugeesUNECE United Nations Economic Commission for EuropeWIPO World Intellectual Prop
84、erty OrganizationxvExecutive Summary EXECUTIVE SUMMARYMain messagesChapter 1 Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South Caucasus Countries in Eastern European and the South Caucasus(EESC)are not on track to reach the targets outli
85、ned in the United Nations 2030 Agenda and need to reinforce their efforts towards achieving innovation-led,sustainable development.Recent crises have added significant complexity to grand challenges because the need to mitigate short-term economic shocks limits capacities to invest in long-term grow
86、th.Remaining structural weaknesses in EESC economies constrain innovative activities in the private sector;these weaknesses include low levels of diversification and productivity across sectors.Chapter 2 Building relationships and knowledge linkages between science and business Sciencebusiness linka
87、ges(SBL),which represent critical interactions for innovation-led growth,are underdeveloped in the EESC sub-region,in part because of a mismatch between the needs and capacities of public research sector and the business sector.SBL currently prioritize the commercialization of public research and de
88、velopment(R&D),missing out on opportunities available from adapting R&D to the needs of domestic firms.Public research organizations(PROs)do not yet fully facilitate the interactions between domestic and foreign companies that have the potential to spur technology and knowledge transfer and capacity
89、-building.Chapter 3 Using the large potential of procurement to create demand for and incentivize innovation Innovation-enhancing procurement(IEP)has immense potential as a policy tool to spur innovative activity towards long-term sustainable development in EESC economies.Several barriers to using I
90、EP in the sub-region remain,such as the lack of legal IEP frameworks;insufficient coordination between academia,research and industry;and the lack of institutional capacities for IEP.Most EESC countries do not yet have a comprehensive strategy to effectively define,implement and evaluate IEP for sus
91、tainable development and the transition to a circular economy.xviInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusGiven the recent crises,EESC countries need to reinforce efforts to diversify and upgrade their economies through innovation to ensure long-term,s
92、ustainable growth and resilienceOver the past decades,countries in Eastern Europe and the South Caucasus(EESC)have made significant efforts towards strengthening sustainable growth in line with the United Nations Agenda 2030.These efforts have led to increased integration of trade and investment and
93、 have improved economic competitiveness.However,many countries in the sub-region are not on track to reach the targets outlined in the Sustainable Development Goals(SDGs).In addition,recent crises are adding to the complexity of challenges faced:the COVID-19 pandemic and the war in Ukraine have seri
94、ous implications for economic development,health and security.In addition to the loss of life and displacement of millions of Ukrainians,these crises have exposed EESC countries vulnerability to external shocks,highlighting remaining structural weaknesses of their economies:many of the EESC countrie
95、s remain reliant on commodity exports,have low levels of productivity and diversification,and lack competitiveness in more knowledge-intensive sectors.Strengthening innovation,the systematic experimentation with new ways to create value,will be crucial to face the challenges and ensure an inclusive
96、recovery,as well as long-term,sustainable development.Fortunately,EESC countries have a strong foundation for innovation-led growth that they can build on.This foundation includes a strong research legacy,a well-educated workforce and pockets of innovation excellence,such as the nascent but growing
97、ICT services exports sector.However,much of the existing potential is not yet fully exploited,as innovation does not happen systematically across the economies.Much of the private sector,and its many small and medium enterprises(SMEs),lacks absorptive capacity such as organizational and managerial c
98、apacities,and therefore faces challenges in identifying and adapting external knowledge to innovate.Fostering innovation will require effective innovation policymaking,governance and coordination.Innovation policies and support mechanisms within national innovation systems need to create a conducive
99、 environment for business and innovation activity,which offsets market failures and provides the right incentives to collaborate and co-create with national and international innovation stakeholders.This publication aims to provide a road map on how to achieve this in EESC innovation policy.xviiExec
100、utive Summary This Interim Sub-regional Innovation Policy Outlook(IIPO),following the first UNECE Sub-regional Innovation Policy Outlook(IPO)published in 2020,1 provides an update on recent trends and developments in innovation policy in the EESC.This publication focuses on two topics in particular
101、that were chosen by the beneficiary countries as priority areas for innovation-led sustainable growth:how to strengthen knowledge linkages and relationships between the public research sectors and business sectors and how to improve the use of innovation-enhancing procurement(IEP)to create demand fo
102、r and incentivize innovation for sustainable development.The analysis in this IIPO is based on extensive desk research of both national and supranational resources,and discussions and exchanges at dedicated IPO policy dialogues attended by more than 100 public and private stakeholders as well as lea
103、ding international experts and partners in the sub-region.Additional information was gathered through follow-up bilateral interviews with EESC policymakers.Findings and recommendations can be used to monitor sub-regional developments as well as emerging challenges and opportunities for innovation-le
104、d growth.EESC governments will need to facilitate effective knowledge linkages between science and businesses to leverage the potential for experimentation and com-mercializationSciencebusiness linkages(SBL),one of the most important interactions between actors of national innovation systems,are sti
105、ll underdeveloped in the EESC sub-region.Despite its rich research heritage,public research and development(R&D)leads only to marginal technology-based growth,and demand for innovation and technologies in the private sector is weak.Public R&D is not in line with the needs of the private sector and t
106、he private sector lacks the skills needed to integrate and transfer knowledge.Furthermore,the lack of international partnerships and linkages between domestic and foreign firms leave the potential for leveraging skills and technology through SBL untapped.This IIPO finds that the focus of SBL needs t
107、o shift from prioritizing the com-mercialization of public R&D results towards also emphasizing the opportunities that emerge in adapting public research to the needs of local innovators.This would ensure that SBL facilitate continued technological upgrading and innovation in the sub-region.To achie
108、ve this,the capacities of public research to adapt to industry needs will need to be strengthened,the absorptive capacity of the private sector will need to be enhanced and policy mechanisms that foster innovation demand will need to be introduced.To foster international cooperation and integrate fo
109、reign technologies and skills,the capacities of intermediary institutions to build capacity and transfer technology and knowledge need bolstering.xviiiInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusImplementing innovation-enhancing public procurement practic
110、es can increase innovation activity and spur its diffusion in the private sectorPublic procurement makes up more than 10per cent of gross domestic product across EESC countries.Introducing IEP mechanisms would provide a sizeable opportunity to effectively drive innovation in the private sector.Given
111、 governments large purchasing power and the important role of governments in addressing socioeconomic challenges,IEP,if conducted effectively,has the potential to mobilize significant amounts of resources for innovation,green and digital transformation,and the transition towards a circular economy a
112、nd sustainable development.This study shows that although some efforts are being made,innovation is not yet fully integrated into public procurement practices in the sub-region.Existing barriers to IEP include the lack of legal frameworks for IEP;insufficient coordination between academia,research a
113、nd industry;and lack of capacity to identify and translate innovation needs into procurement tenders.Recommendations developed in this publication explain that strengthening IEP will require EESC countries to monitor and evaluate results,mitigate risks and ensure the right capacities and skills are
114、in place to effectively manage collaboration between relevant actors.Countries need to implement a comprehensive IEP policy based on a holistic understanding of various challenges and ambitions that IEP can address,including green and sustainable development and the transition to economic circularit
115、y.To do so,governments need to identify key strategic industries that could benefit from IEP as well as the challenges within these industries that it could address.Recommendations and complementarities with other UNECE support for innovation policyTable 1 lists actionable recommendations for EESC p
116、olicymakers on ways to strengthen SBL and support the implementation of IEP practices.Adapted to the specific national contexts,these findings can help guide EESC governments in further shaping innovation policy governance and coordination.xixExecutive Summary Building relationships and knowledge li
117、nkages between science and businessRecommendation 2.1:Enhance the R&D capabilities of domestic PROs and universities to meet needs for upgrading technology in the local economy.Recommendation 2.2:Promote direct collaboration between academia and business through dedicated partnerships,beyond the foc
118、us on licensing and ownership of R&D results.Recommendation 2.3:Enhance the absorptive capacities of firms for SBL and linkages with FDI,for example by introducing innovation vouchers and providing private firms with access to public funding.Recommendation 2.4:Integrate and further upgrade FDI throu
119、gh SBL.Recommendation 2.5:Establish and promote intermediary institutions to support facilitation technology transfer.Using the large potential of procurement to create demand for and incentivize innovationRecommendation 3.1:Establish IEP at a strategic level in national policymaking.Recommendation
120、3.2:Use regular procurement to encourage the diffusion of best-in-class solutions.Recommendation 3.3:Introduce PCP to facilitate the participation of SMEs in IEP.Recommendation 3.4:Introduce IEP to boost market demand for innovation and increase competition.Recommendation 3.5:Establish functional pr
121、ocurement,a procurement practice that selects products or services that fulfil a certain function,i.e.a solution to a problem,rather than on specific(technical)requirements.Source:UNECE.Note:CoE=centre of excellence,FDI=foreign direct investment,IEP=innovation-enhancing procurement,MEAT=most economi
122、cally advantageous tender,PCP=pre-commercial procurement,PRO=public research organization,R&D=research and development,SBL=sciencebusiness linkages,SMEs=small and medium enterprises,TTO=technology transfer office.Table 1Overview of recommendations:Interim Sub-regional Innovation Policy Outlook 2022x
123、xInterim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusThe analysis and discussions emerging from this publication will feed into the second full-fledged IPO of the sub-region,planned for 2024.It will enable EESC countries to evaluate and monitor their progress sin
124、ce the first IPO,providing an opportunity to learn from what worked and what did not so as to set priorities for forthcoming strategies and initiatives,and to continue to strengthen the exchange of best practices and experience in achieving the SDG targets.This IIPO complements other UNECE assistanc
125、e on innovation policy in the EESC sub-region,including national Innovation for Sustainable Development Reviews(I4SDRs);2 the Handbook on Supporting Innovative High-Growth Enterprises;3 the Handbook on Business Incubators for Sustainable Development;4 and capacity-building activities.5 UNECE is also
126、 exploring opportunities to conduct an IPO for the Western Balkans,the Republic of Trkiye and Central Asia.This work is part of UNECEs overall support to countries in harnessing the power of trade,investment and innovation for sustainable development,economic circularity,and the green and digital tr
127、ansformations and draws on UNECEs longstanding engagement across the EESC sub-region.xxiExecutive Summary NOTES1 The IPO 2020 is a full-fledged,detailed benchmarking assessment of the quality and scope of national innovation policies,institutions and processes.Both the IPO(2020)and the IIPO(2022)wer
128、e carried out upon the request of member States under the project“Promoting Innovation Policy Capacities in Eastern Europe and the Caucasus”,funded by the Government of Sweden.More information is available here:https:/unece.org/innovation-policy-outlook-ipo.2 Conducted for Belarus(2011;2017);Kazakhs
129、tan(2012);Ukraine(2013;forthcoming);Armenia(2014;forthcoming);Tajikistan(2015);Kyrgyzstan(2019);Georgia(2020);Republic of Moldova(2021);Uzbekistan(2022).Between 2011 and 2015,these were called Innovation Performance Reviews.After a change in methodology in 2015 reinforcing the discussion on sustaina
130、ble development based on Agenda 2030,the name was changed to I4SDR.Since 2020,the I4SDRs have elective chapters,topics of which are chosen by each beneficiary country based on its national strategic priorities for innovation-led growth.3 Conducted for the Eastern Europe and the South Caucasus sub-re
131、gion(2021)and the Special Programme for Economies in Central Asia(SPECA)sub-region(forthcoming).4 Conducted for the SPECA sub-region(2021).5 Conducted on innovation for sustainable development in the SPECA sub-region,focusing on IEP in Georgia(20212022),technology transfer and commercialization in t
132、he Republic of Moldova(ongoing)and strengthening linkages and networks for innovation in Uzbekistan(forthcoming).SUB-REGIONAL ANALYSIS1Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusChapter 1STRENGTHENING INNOVATION A
133、S A DRIVING FORCE FOR ECONOMIC RECOVERY AND RESILIENCE IN EASTERN EUROPE AND THE SOUTH CAUCASUSMain messages UNECE member States are not on track to reach the targets and ambitions outlined by the United Nations 2030 Agenda,underscoring the need to accelerate the pace of innovation for sustainable g
134、rowth.Recent crises,such as the COVID-19 pandemic and the ongoing war in Ukraine,have added significant complexity to the sustainability and growth challenges faced by economies in Eastern Europe and the South Caucasus(EESC).As the sub-region was slowly recovering from the negative impacts of the pa
135、ndemic,including on health,investment and trade,the outbreak of war in Ukraine in 2022 halted developmental progress,further deepening growth challenges.The external shocks and volatilities in the past two years have unveiled structural weaknesses in EESC economies,such as low levels of diversificat
136、ion and productivity across sectors,albeit with some pockets of excellence emerging.Enhancing innovation-led growth to navigate recent crises and sustainability challenges will require strengthening absorptive capacity,one of the main challenges to improving productive capacity,upgrading for innovat
137、ion and enhancing innovative activities in the private sector.Shaping effective innovation policy governance will be important to increase innovation capacity in the sub-region,including providing a conducive business and regulatory environment,creating an efficient infrastructure for businesses to
138、innovate and strengthening research and education.2Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusEESC economies have made significant progress over the past decades,but,as recent crises show,more needs to be done to ensure resilient,green and sustainable de
139、velopmentSeven years after the introduction of the 2030 United Nations(UN)Agenda for Sustainable Development almost halfway to the target date it has become evident that UNECE member States are not on track to reach the targets set out in the Sustainable Development Goals(SDGs).In addition,recent cr
140、ises,such as the COVID-19 pandemic and the war in Ukraine,have drastically changed global health,trade and security conditions,threatening to deepen inequalities(UNECE,2022a).6 To get back on track and further accelerate progress,innovation the introduction of products,services and processes as well
141、 as business and marketing models that are new to the world,a country,a sector or even a firm plays a crucial role.Innovation will be essential in finding and implementing solutions to the current challenges,not only for achieving SDG 9(Industry,innovation and infrastructure),but as a cross-cutting
142、theme and important element across all SDGs.For the lower-middle-and upper-middle-income countries of Eastern Europe and the South Caucasus(EESC)Armenia,Azerbaijan,Georgia,the Republic of Moldova and Ukraine which have been hit particularly hard by recent crises,innovation is especially important.It
143、 will be important for Armenia to be able to address its challenges as a landlocked country,for Azerbaijan to leverage its position as a regional supplier of oil and gas,for Georgia to use its geographical position and infrastructure to facilitate trade between Central Asia and the European Union(EU
144、),and for the Republic of Moldova and Ukraine to exploit opportunities presented by their proximity to EU markets.As outlined in the first iteration of the Sub-regional Innovation Policy Outlook(IPO)in 2020(box1.1),traditional drivers of growth of EESC economies are becoming exhausted and increasing
145、ly ineffective in maintaining stable growth.Common challenges across the sub-region include high reliance on commodity exports,lack of diversification into knowledge-intensive activities and low productivity levels.Furthermore,most EESC economies are involved to varying extents in regional conflicts
146、,which,besides the threat to security,have an underlying impact on their general development,such as their attractiveness to foreign direct investment(FDI).Going forward,it will be vital for countries to address these structural weaknesses to ensure inclusive and sustainable development,resilience,a
147、nd the transition towards economic circularity and the green and digital transformations.Innovation must be at the heart of these efforts.3Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusThe current context is especial
148、ly challenging for innovation policy(and its governance)as the crises,particularly the war,have intensified the competition with other policy priorities for resources.In other words,it may create a difficult choice between addressing immediate needs and investing in future,long-term growth.Globally,
149、inflation rates are rising,resources are scarce and fiscal space is tightening in response to stagnating and even falling revenues and difficulties in raising finance.In addition,a greater need for current spending on social support measures and,especially in Ukraine,on rebuilding infrastructure,hig
150、hlights the significant role of innovation in that countrys recovery and reconstruction from the war.Overall,EESC countries need to ensure that investments in innovation yield positive and scalable results,focusing on how to do more with less.The Sub-regional IPO is a UN flagship publication that gu
151、ides member States of the United Nations Economic Commission for Europe(UNECE)in assessing,reforming and strengthening efforts to enable and promote innovation for sustainable development in line with the 2030 Agenda for Sustainable Development and the Sustainable Development Goals(SDGs).It provides
152、 a comprehensive assessment of the scope,quality and effectiveness of innovation policies,institutions and processes across as many as six countries within a region with shared economic,structural and institutional features.The IPO complements international composite indices measuring innovation inp
153、uts,outputs and performance,such as the Global Innovation Index developed by the World Intellectual Property Organization(WIPO),by looking more closely at the role that policies and institutions play in promoting innovation.The first iteration of the IPO for the EESC,funded by the Swedish Government
154、,appeared in 2020.a The IPO analysis highlighted the need for public support to enable and catalyse innovation more effectively,including by creating opportunities to address increasingly complex socioeconomic challenges,not least those caused by the pandemic.To this end,robust and flexible regulati
155、ons,strong institutions and evidence-based policies are central to respond to the changing environment,emerging constraints and new opportunities,and to foster sustainable economic resilience.Findings and recommendations have fed into national strategies,programmes and initiatives in the EESC sub-re
156、gion and created synergies and complementarities with other UNECE workstreams on innovation for sustainable development.On 30 March 2021,at the Third Meeting of the National IPO Focal Points,UNECE presented and invited feedback on the revised assessment framework,based on the lessons learned from th
157、e first iteration of the IPO,and discussed which topics and challenges emerging from the analysis should be examined in this Interim IPO.Source:UNECE.a On 25 November 2020,the first IPO iteration was launched at a high-level virtual event,joined by UNECE Executive Secretary Olga Algayerova,WIPO Dire
158、ctor General Daren Tang,OECD Director of the Global Relations Secretariat Andreas Schaal,Deputy Director General of the European Commissions Joint Research Centre Bernard Magenhann and deputy ministers from all six participating countries.See:https:/unece.org/economic-cooperation-and-integration/eve
159、nts/high-level-webinar-unece-ipo-publication-launch-2020.The publication was also launched at high-level national events in each of the EESC countries.Box 1.1UNECE Sub-regional Innovation Policy Outlook:Eastern Europe and the South Caucasus4Interim Sub-regional Innovation Policy Outlook 2022:Eastern
160、 Europe and the South CaucasusThe pandemic has not only had serious health implications but also has greatly affected investment and trade in the sub-regionThe pandemic triggered a range of restrictions that caused the contraction of most economies around the world.In 2020,the economies in the EESC
161、sub-region contracted by between 4 and 7.4per cent of gross domestic product(GDP)(figure1.1).7 This was caused primarily by the disruption of supply chains and the decline in private consumption,international exports,trade and investment,significantly affecting micro,small and medium enterprises,whi
162、ch make up most of the EESC economies.For example,higher transport costs and challenging transit conditions hampered trade for landlocked Armenia.Azerbaijan and Ukraine suffered from the slump in prices of commodities,which make up most of those countries exports.In Georgia,the decline in tourism de
163、creased sectoral revenue by 83per cent,leading to an overall decline of 38per cent in the countrys exports of services.In the Republic of Moldova,the agriculture sector shrank by almost 30per cent(UNECE 2020a;2020b;EBRD,2021).Given the sub-regions high levels of informality and unemployment,8 vulner
164、able groups were significantly affected by the lower income and loss of work caused by the pandemic lockdowns.Nevertheless,towards the end of 2021,as governments deployed support measures(UNECE,2021)and trade began to resume,many economies managed to rebound.Source:World Bank(2022)for 20182020,IMF(2
165、022a)for 2021 and IMF(2022b)for 20222023.Note:Data for 2022 and 2023 are estimates.Estimates for Ukraine for 2023 are not available.20100-10-20-30-402002120222023EESC averageGeorgiaArmeniaRepublic of MoldovaAzerbaijanUkraineFigure 1.1 Average GDP growth of EESC countries,20182022(Per cent
166、)5Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusBy mid-2021,exports and remittances gradually bounced back,household consumption and investments recovered slightly,and countries regained growth across various sectors
167、.Infection rates decreased,lockdowns gradually lifted and global demand increased,joined by rebounding commodity prices.External financing made available through international support helped maintain macroeconomic stability,for example financing from the Asian Development Bank,the Asian Infrastructu
168、re Investment Bank,the European Union and the International Monetary Fund.9 Nevertheless,higher international prices for food and energy and the depreciation of most of the EESC currencies produced higher inflation across economies,between 6.6 and 12.3 per cent,10 prompting national central banks to
169、 raise interest rates significantly across the sub-region.11The war in Ukraine has brought a devastating halt to developmental progress,further exacerbating challenges that countries faceDespite the general post-pandemic recovery towards the end of 2021,the war in Ukraine has led to both a serious h
170、umanitarian crisis and significantly negative economic implications in the sub-region,causing contractions in the economies of the Republic of Moldova and Ukraine(see figure 1.1).In addition to the large number of lives lost,the considerable internal displacement of people and inflow of refugees to
171、other EESC countries(box1.2),disruptions in production and trade of commodities from the Russian Federation and Ukraine such as food,energy and minerals have caused widespread economic shocks in these markets and led to steep increases in prices of gas,oil and wheat.12Although the full extent of the
172、 negative impact of the war in Ukraine on the sub-region is unclear,the conflict has already had a significant negative humanitarian impact.In September 2022,the United Nations reported more than 14,000 casualtiesa in Ukraine,about 7.2 million refugees in neighbouring European countries(UNHCR,2022),
173、and a total of 14 million people displaced.b The inflow of refugees to the Republic of Moldova has risen to more than 15per cent of the countrys population(World Bank,2022c).Although increased poverty levels caused by the COVID-19 crisis were beginning to stabilize,they took a sharp increase in 2022
174、 because of the conflict,especially in poorer income groups.cSource:UNECE.a United Nations,“Ukraine:More than 14,000 casualties to date but actual numbers are likely considerably higher”,9 September 2022,https:/news.un.org/en/story/2022/09/1126391.b World Bank,“Russian invasion of Ukraine impedes po
175、st-pandemic economic recovery in Emerging Europe and Central Asia”,4 October 2022,https:/www.worldbank.org/en/news/press-release/2022/10/04/russian-invasion-of-ukraine-impedes-post-pandemic-economic-recovery-in-emerging-europe-and-central-asia.c World Bank,Poverty overview,last updated 14 September
176、2022.https:/www.worldbank.org/en/topic/poverty/overview.Box 1.2UNECE Sub-regional Innovation Policy Outlook:Eastern Europe and the South Caucasus6Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusIn Ukraine,the economy and infrastructure have taken devastating
177、hits,with an estimated contraction of 35per cent in GDP in 2022(World Bank,2022).According to a recent survey conducted in the country,the biggest challenges perceived in the business sector include the increase in commodity prices,difficulties in the transport of goods,the lack of working capital,t
178、he decrease in demand and dangerous working conditions(IERPC,2022).On a sub-regional level,the consequences of the conflict have created financial and commodity shocks,keeping inflation rates high and straining public debt.both the Republic of Moldova and Ukraine were awarded EU candidate status in
179、June 2022.These countries will thus face additional challenges in the reform process,as both will set forth to align their legislation to the EU acquis communautaire.13In the short term,the prospects for growth seem more positive for the South Caucasus,as high energy and commodity prices could boost
180、 export revenue for goods and services again(IMF,2022b).Higher oil and gas prices drive economic growth in Azerbaijan,which will cushion the negative impact of the war on the economy.In Armenia and Georgia,positive growth was mainly driven by the growth of services,such as tourism and IT.Overall,the
181、 significant volatility of the sub-regions growth highlights the importance of stepping up efforts to support and promote systematic innovation across sectors,as diversifying and upgrading in the sub-region are vital to regaining and maintaining sustainable growth and economic resilience.Remaining s
182、tructural weaknesses in EESC economies,such as low levels of diversification and productivity,inhibit both resilience and further growthEESC countries will need to further diversify their economic structures,focused largely on commodities and natural resources,to facilitate the expansion to more val
183、ue added and knowledge-intensive activities,which are resilient to external fluctuations.In 2021,the services sector contributed approximately half of the value added of GDP and industry contributed roughly a quarter,across all EESC economies except Azerbaijan(figure1.2).Of the amount contributed by
184、 industry,between 6.8per cent(in Azerbaijan)and 11.3per cent(in Armenia)came from manufacturing.7Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusActivities within sectors in most of the economies are largely undiversif
185、ied and focused on a narrow set of commodities,reflected also in the negative values of the Economic Complexity Index across almost all countries(OEC,2022).14 According to 2021 UNCTAD data,the revealed comparative advantages of EESC countries are in crude materials other than fuels and metals(Armeni
186、a,Georgia,Ukraine);beverages and tobacco(Armenia,Georgia,Republic of Moldova);textiles(Armenia,Republic of Moldova);cotton(Azerbaijan);natural gas and petroleum oils(Azerbaijan);food and live animals(Georgia,Republic of Moldova,Ukraine);oil seeds(Republic of Moldova);equipment for transporting elect
187、ricity(Republic of Moldova);and fixed vegetable and fat oils(Republic of Moldova,Ukraine)(UNCTADstat,2022).Figure 1.2 Value added of sectors as share of GDP,2021(Per cent)Source:UNECE,based on data from World Bank(2022).A growing pocket of excellence in the sub-region is the nascent but rapidly grow
188、ing exports of information and communication technology(ICT)services,most prominently in Armenia(box1.3),the Republic of Moldova and Ukraine.Driven by the global rise of digital services trade,which was accelerated by restrictions imposed during pandemic lockdowns,15 exports of ICT services in 2021
189、accounted for 38per cent of services exports in Ukraine,24per cent in the Republic of Moldova and almost 23per cent in Armenia,higher than the averages in Europe and Central Asia(14per cent)and the world(almost 16per cent)(World Bank,2022).16 In 2022,this translated to 8.5per cent of total trade in
190、Ukraine(ranked 7/132),7.5per cent in Armenia(9),6.7per cent in the Republic of Moldova(13),1.5per cent in Georgia(77)and 0.4per cent in Azerbaijan(106)(WIPO,2022).50403020100ArmeniaAzerbaijanGeorgiaRepublic of MoldovaUkraine911.126.952.77.15.948.437.659.421.86.18.654.920.610.415.251.823.5
191、10.614.4OtherAgriculture,forestry and fshingServicesIndustry(including energy,mining,manufacturing and construction)8Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusArmenia stands out among EESC countries with its rapidly growing and internationally linked IC
192、T services exports,which have grown substantially in the past decades.As a result,the country has become a regional hub for technology and software development,with a growing number of companies in software and fintech.This growth evolved mainly from a strong heritage of research and government supp
193、ort,as well as international investment in the sector,spurred to a significant extent by the countrys large diaspora.Furthermore,the sector enjoys a vibrant innovation ecosystem,with various support mechanisms such as incubators and accelerators.Although the ICT services sector is a significant cont
194、ributor to the countrys development and growth,its success does not yet systematically create spillover effects on other parts of the economy,leaving substantial potential untapped.To exploit this potential,the Government needs to implement policies,support mechanisms and tools,that help develop the
195、 right skills and obtain necessary resources to identify and adapt external ideas to existing products,processes and business models.This and other opportunities for the countrys innovation-led growth will be addressed in the forthcoming UNECE Innovation for Sustainable Development Review(I4SDR)of A
196、rmenia.The I4SDR is a UNECE flagship series that examines the innovation policy governance,tools and processes of a single country.The analysis provides a solid understanding of national and regional innovation systems through a calibrated assessment and recommendations for policy and structural ref
197、orm,based on international good practices and focused specifically on national innovation priorities.UNECE also supports subsequent reform efforts through policy dialogue and capacity-building tied to the recommendations and priorities of the report.The I4SDR of Armenia will take a closer look at th
198、e effectiveness of the countrys innovation infrastructure as well as how the diaspora plays an important role in fostering innovation activity,specifically in the agriculture sector.Source:UNECE.Beyond the ICT services export sector,however,EESC countries lack competitiveness in knowledge-intensive
199、products and services.Ensuring expansion into more knowledge-intensive sectors and activities will require a holistic perspective and support for innovation.Rather than focusing solely on research and high-technology start-ups,in order to achieve sustainable growth innovation policy should foster in
200、novative activities through broader and systematic experimentation and introduction of improved production capabilities,models and processes.This will require a solid understanding of how to put available but finite resources to use and identify which kind of support works best and which does not an
201、d encourage cross-sectoral knowledge transfer and spillover effects to effectively build a solid,resilient foundation for sustainable development and the transition to a circular economy.iInnovation for Sustainable Development Review of MoldovaBox 1.3ICT services export sector in Armenia9Chapter 1St
202、rengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusThe lack of diversification is reflected in patterns of sub-regional trade and FDI.Trade in EESC countries accounted for an average of 86per cent of GDP in 2021.The main trading par
203、tners included China,the European Union,the Russian Federation and the Republic of Trkiye.Although the share of exports dropped in 2020 because of trade disruptions caused by the pandemic,it picked up again in 2021,reaching levels in most of the EESC countries that were higher than the average for E
204、urope and Central Asia(figure1.3).Nevertheless,shares of high-tech exports are still less than 1per cent of total trade across the sub-region,ranging from 0.2per cent in Azerbaijan(ranked 106/132)to 0.7per cent in Armenia(84),0.8per cent in the Republic of Moldova(81)and 0.9per cent in Georgia(78)(W
205、IPO,2022).The exception is Ukraine with 1.9per cent(ranked 64/132).Figure 1.3 Exports of goods and services as share of GDP,20202021(Per cent)Source:UNECE,based on data from World Bank(2022).5045403530252020202021FDI inflows are one of many important tools that can help develop productive capacities
206、 and knowledge transfer for innovation to build skills,create spillovers and ultimately also diversify exports(box1.4).Levels of inflows are still quite moderate across most of the countries in the sub-region,largely because of both internal and external challenges and weaknesses.Though the share of
207、 FDI in GDP bounced back in 2021 and 2022 for most countries after the decline in the previous year,it has not yet reached pre-pandemic levels(figure1.4).In a global comparison,Georgia(ranked 14/132)is the sub-regional leader,followed by the Republic of Moldova(53),Ukraine(56),Azerbaijan(61)and Arme
208、nia(100/132)(WIPO,2022).10Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusAttracting FDI is an effective way to build economic competitiveness in global markets and support the integration of domestic firms into global value chains.Along with the transfer of
209、resources,skills and tacit knowledge to local firms,FDI can more broadly support the diffusion of innovation through various linkages and interactions.In addition to improving domestic capabilities such as skills,research and development(R&D)capacity,and ICT infrastructure,targeted FDI policies prov
210、ide significant opportunities for facilitating the technological transfer and upgrading necessary for systematic innovation(UNCTAD,2003).Source:UNECE.Figure 1.4 EESC average FDI inflow as share of GDP,20182021(Per cent)200212022EESC averageGeorgiaArmeniaRepublic of MoldovaAzerbaijanUkrain
211、e86420-2-43.83.91.32.23.0Source:UNECE,based on World Bank(2022),IMF(2022),UNCTAD(2022)and WIPO(2022).Furthermore,most FDI tends to be resource-or market-seeking rather than efficiency-seeking,flowing mainly into the extractive sector in Azerbaijan and into finance,trade and construction in the other
212、 EESC countries.Notable exceptions,for example,are the automotive sector in the Republic of Moldova and the ICT services sector in Armenia.These exceptions show the potential of FDI to strengthen competitiveness,spurring the expansion of existing industries and markets as well as the creation of new
213、 ones,but are mostly one-off successes rather than the result of systematic support for innovation across the economy.To address this,innovation policies need to support the channelling and effective use of FDI to fully exploit its potential for provoking innovation-led growth.Box 1.4Importance of F
214、DI for innovation-led growth11Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusInnovation plays an increasingly crucial role in addressing low productivity levelsA significant issue throughout the sub-region is the low
215、level of productivity.In the 2000s,growth in total factor productivity(TFP)was strong,but this growth began to subside following the global financial crisis of 2009 as a result of weaker capital accumulation,reflecting weaker public and private investment and FDI as well as lower commodity prices.Mo
216、re recently,in 2020 growth in sub-regional TFP slowed(figure1.5).During the pandemic,mandated lockdowns and lower private and foreign investment inflows further weakened within-sector productivity growth.Despite this,all countries posted positive TFP growth in 2021,an indication of the sub-regions p
217、ost-pandemic recovery.In 2022,however,productivity declined sharply in the Republic of Moldova and Ukraine,with the destruction of infrastructure,the disruption of economic activities and trade,and,especially in Ukraine,the redirection of investment and other efforts into humanitarian aid.Figure 1.5
218、 EESC average total factor productivity,20182022(Per cent change)Source:Conference Board(2022).Note:The steep decline in 2022 is slightly skewed by the severity of the conflict in Ukraine,as that countrys total factor productivity declined by 10per cent.Armenia and Azerbaijan showed positive growth
219、rates(0.5 and 3.1,respectively)and Georgia and the Republic of Moldova negative ones(-0.2 and-1.7per cent,respectively).EESC averageGeorgiaArmeniaRepublic of MoldovaAzerbaijanUkraine151050-5-10-02020212022-0.50.9-3.94.9-1.712Interim Sub-regional Innovation Policy Outlook 2022:Eastern Euro
220、pe and the South CaucasusStrengthening productivity will rely mostly on targeted reforms that promote the development of skills,improve the business climate and strengthen institutional governance to create a conducive environment for innovation and foster diversification.Differences in productivity
221、 levels between sectors would also benefit from reallocating resources as well as developing financial markets and improving inclusion,especially for SMEs(World Bank,2021).Widespread adoption of digital technologies in public and financial services could further enhance the climate for private compa
222、nies.Innovation will be vital to ensure the efficient use of factors,rather than relying on factor accumulation.Strengthening innovation-led growth lies at the centre of navigating recent crises and sustainability challenges in the sub-regionIn light of the current crises and their socioeconomic imp
223、act on economies in the sub-region,innovation is crucial to driving long-term economic growth as well as diversifying and upgrading economies to exploit new growth drivers for long-term sustainability.Innovation can help reduce inequalities and encourage new value creation through the effective tran
224、sfer of knowledge and technology,supporting the transition to a circular economy as well as green and digital transformations(box1.5).In a circular economy model,value generated through products,materials and resources is maintained within the economy.Regenerative by design,the circular economy exte
225、nds the life of products and services,preserves and enhances natural capital to foster environmental sustainability,and manages stocks and renewable flows to optimize resource use and yields.Moving away from resource-intensive processes to creating new value and revenue streams along the value chain
226、,circularity can drive economic growth by maximizing the use of limited resources.To date,however,only 8.6per cent of the global economy is circular,a decrease from 9.1per cent in 2018,according to the Circularity Gap Reporting Initiative(Circle Economy,2022).This highlights the urgent need to stren
227、gthen support measures and engage countries in spurring progress on the circular economy agenda.Innovation is integral to the transition to a circular economy,as it drives value creation by supporting the development and introduction of new or improved products,services and processes that ensure sus
228、tainable and responsible production and consumption(SDG 12).In this vein,a range of emerging technologies,processes,services and business models are already reshaping all stages of product life cycles,from design through production and usage to disposal and recycling.Following the decision of the 69
229、th UNECE Session in April2021,a UNECE promotes the circular economy as an effective vehicle to achieve higher economic growth that is decoupled from negative environmental impact.Box 1.5Fostering the transition to a circular economy and strengthening the green and digital transformations in the EESC
230、13Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusThe spectrum of UNECE activities in support of the circular economy encompasses core pillars such as conducting normative and analytical work,providing technical assist
231、ance,sharing knowledge and fostering value-creating partnerships for the benefit of all UNECE member States and especially UNECEs 17 programme countries.bThe launch of the UNDA-funded project“Accelerating the Transition to a Circular Economy in the UNECE Region”has given the Economic Cooperation and
232、 Trade Division of UNECE a strategic role in fostering the circular transition and decreasing the circular divide in the UNECE region.Through the project,UNECE supports pilot beneficiary countries in designing and implementing national policies,programmes and strategies for the circular transformati
233、on.These activities are delivered under the auspices of the UNECE circular economy network,called“Circular STEP”(Stakeholder Engagement Platform),which was launched in April 2022.c Among others,the Governments of Armenia,Azerbaijan,Georgia and Ukraine have nominated national focal points to engage i
234、n circular economy activities implemented by UNECE.For example,these Government representatives are learning about the development of standards and normative tools in the circular economy,and are exercising the opportunity to express and reflect on their countrys priorities in thematic UNECE policy
235、research and analysis,as well as leverage their access to the platform for knowledge and experience sharing.Although many of the EESC economies have addressed and integrated green growth and transformation in their national strategies and action plans,efforts to support the transition to a circular
236、economy in the EESC sub-region are still in their infancy.From a policy perspective,a few of the national strategies,concepts and road maps include some measures,for example to facilitate waste management,but do not mention the transition to circular economy in a broader sense.Remaining legislative
237、and regulatory gaps are often compounded by a lack of capacity and resources to implement measures,on the part of both the public and the private sector(boxfigure 1.5.1).UNECE will carefully assess these challenges in pilot countries so as to map out concrete solutions and identify how these solutio
238、ns can be incorporated in national circular economy action plans by 2024.Box figure 1.5.1 Challenges to the circular transition in the UNECE region,examples perceived(Number of survey respondents)Source:UNECE discussions and questionnaire responses from Circular STEP members on main challenges for c
239、ircular economy in UNECE member States received in 2022.Note:Values indicate number of respondents who perceived the relevant indicator as a challenge.Box 1.5Fostering the transition to a circular economy and strengthening the green and digital transformations in the EESC(continued)1117224567Availab
240、ility of technologiesLack ofmethodologyLack ofdataNo defnition of a circular economyLack offnancial instrumentsLow public awarenessabout a circular economyAvailability ofinfrastructureLaw and regulatoryobstaclesAvailability ofcompetencesCulturalobstacles14Interim Sub-regional Innovation Policy Outlo
241、ok 2022:Eastern Europe and the South CaucasusIn addition to strengthening green growth through the transition to circularity,it will also be important to enhance digital transformations across UNECE member States.This entails using digitalization processes to create economic and societal effects on
242、the country,changing the way actors within an economy communicate and interact,transforming firms business models and the way firms create value,and ultimately providing new opportunities for the private and the public sector to innovate(OECD,2021).Digital transformations can also have a positive ef
243、fect on firm productivity,lowering transaction and search costs.For the public sector,digital transformation for example through the expansion of e-governance can improve the services provided to businesses.Given environmental and resource constraints and risks,efforts to accelerate digital transfor
244、mation will need to be inclusive,sustainable and resilient,to avoid deepening inequalities and expanding the digital divide.This will be the focus of the 70th UNECE session on“Digital and green transformations in the UNECE region”,to be held in April 2023.Source:UNECE.a Held on 2021 April 2021 in Ge
245、neva,Switzerland,https:/unece.org/sessions-commission/events/sixty-ninth-session-commission-20-21-april-2021.b They include Albania,Armenia,Azerbaijan,Belarus,Bosnia and Herzegovina,Croatia,Georgia,Kazakhstan,Kyrgyzstan,the Republic of Moldova,Montenegro,North Macedonia,Serbia,Tajikistan,Turkmenista
246、n,Ukraine and Uzbekistan.c Circular Step was launched at the Policy Dialogue on“Institutional arrangements for the circular economy and the sustainable use of natural resources”,held 6 April 2022 during the Regional Forum on Sustainable Development(https:/unece.org/economic-cooperation-and-integrati
247、on/events/institutional-arrangements-circular-economy-and).Innovation performance has struggled in some areas in the EESC but excelled in others an advantage that the public and private sectors need to leverage to reinforce innovation-driven development in the sub-region.An important aspect is the e
248、ffective measurement and translation of innovation inputs into innovation outputs.One of the measurement tools for innovation activity is WIPOs Global Innovation Index(GII),which provides a comprehensive view of countries performance on various input and output indicators for innovation(box1.6).Alth
249、ough in 2022 all EESC economies with the exception of the Republic of Moldova dropped in the overall ranking in the 2021 GII,the indicators for Armenia,the Republic of Moldova and Ukraine show that they are effectively translating innovation inputs into innovative performance,compared to Azerbaijan
250、and Georgia,which produce fewer outputs relative to investment.Box 1.5Fostering the transition to a circular economy and strengthening the green and digital transformations in the EESC(continued)15Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Eu
251、rope and the South CaucasusIn its 15th edition in 2022,the WIPOs Global Innovation Index(GII)has been a leading reference for measuring an economys innovation performance.Recognizing that innovation is a key driver of economic development,the GII aims to provide an innovation ranking and rich analys
252、is,covering 132 economies.A large number of countries use the GII to assess and improve their innovation ecosystems and as a reference in economic plans and policies.The United Nations General Assembly has recognized the GII as an authoritative benchmark for measuring innovation,in its 2019 and 2021
253、 resolutions on science,technology and innovation for sustainable development.The Index is a ranking of the innovation capabilities and results of world economies.It measures innovation on the basis of criteria that include institutions,human capital and research,infrastructure,credit,investment and
254、 linkages;creation,absorption and diffusion of knowledge;and creative outputs.The GII has two sub-indices,one for inputs and one for outputs,built on seven pillars,each consisting of three sub-pillars.In 2022,only two economies in the sub-region ranked in the top 60 in the GII:the Republic of Moldov
255、a(at 56)and Ukraine(57).Georgia(at 74)and Armenia(80)followed in the top 80,while Azerbaijan ranked in the top 100(93)(boxtable 1.6.1).Relative to the GII 2021,only the Republic of Moldova moved up the rankings,from 64th in 2021.All other economies in the sub-region lost between 8(Ukraine)and 13 pla
256、ces(Azerbaijan).Over the past decade,none have systematically improved in the annual ranking.Box table 1.6.1 GII rankings overall and by pillar,EESC economies,2022 and 2021EconomyOverall GIIInstitutionsHuman capital and researchInfrastructureMarket sophisticationBusiness sophisticationKnowledge and
257、technology outputsCreative outputsArmenia80(69)55(65)91(94)80(80)85(99)84(98)71(64)73(49)Azerbaijan93(80)46(58)87(89)90(88)80(36)77(92)117(115)105(67)Georgia74(63)30(35)70(60)83(85)72(34)64(61)75(75)86(74)Republic of Moldova56(64)98(81)62(77)84(82)58(74)79(87)49(54)43(53)Ukraine57(49)97(91)49(44)82(
258、94)102(88)48(53)36(33)63(48)Source:WIPO,2022.Note:2021 figures in parentheses.Light blue indicates the fourth quartile(best performers,ranked 1 to 33),dark green the third quartile(34 to 66),light green the second quartile(67 to 99),and yellow the first quartile(100 to 132).The Republic of Moldova i
259、s the absolute leader in innovation among EESC economies.It performs above expectations on innovation relative to its level of economic development and shares with only two other countries a record of outperforming its preceding GII ranking for the 12th year in a row.Ukraine has also outperformed on
260、 innovation since 2014 and ranked fourth among the lower-middle-income economies in 2022.Armenia and Georgia met performance expectations for their level of development.Box 1.6The findings of the 2022 Global Innovation Index for the EESC16Interim Sub-regional Innovation Policy Outlook 2022:Eastern E
261、urope and the South CaucasusAll the EESC countries have very diverse and relatively unbalanced innovation ecosystems.For example,Georgia and Azerbaijan have some of the best-performing institutions in the world.The availability of Policies for doing business is a strength for both countries,as they
262、rank in the top 30 worldwide.Ukraine also excels in education metrics,including Government funding per pupil and Pupil-teacher ratio.Armenia and Azerbaijan are among the few middle-income economies that increased their total Gross expenditures on R&D in 2020,albeit at relatively modest levels.In rel
263、ation to the results of innovation,or innovation outputs,the Republic of Moldova and Ukraine are first in the world in Utility models,and together with Armenia,they are also in the top 30 worldwide for Trademarks and industrial designs.ICT and Online creativity are also common strengths.Ukraine(rank
264、ed 7/132)and Armenia(9),rank in the top 10 worldwide for ICT services exports,while Ukraine(ranked 13)and the Republic of Moldova(22)are among the top creators of mobile apps.Among the main challenges for the sub-region remain the integration of the private sector in R&D and innovation,as well as th
265、e availability of credit and investment such as venture capital to support innovative activities of the private sector.The economies in the EESC could also make better use of intangible assets to foster creativity and innovation results.Source:WIPO(2022).The most common strengths of the sub-region o
266、utlined in the GII 2022(table1.1),indicate that the EESC countries are not that experienced in developing technological innovations and that their systems are not oriented towards a science,technology and innovation(STI)mode of innovation,but rather towards other innovation activities more related t
267、o learning by doing,using or interacting the“DUI”innovation mode(Jensen and others,2007).17Box 1.6The findings of the 2022 Global Innovation Index for the EESC(continued)17Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South Caucas
268、usStrengthsOpportunities for improvementArmeniaTrademarks by origin Intellectual property paymentsICT accessGross capital formationEntrepreneurship policies and cultureExpenditure on educationLabour productivity growthICT services importsAzerbaijanPupil-teacher ratio,secondaryIntellectual property p
269、aymentsPolicies for doing businessProduction and export complexityUniversityindustry R&D collaborationIntellectual property receiptsState of cluster development and depthGross capital formationGeorgiaPupil-teacher ratio,secondaryLogistics performanceApplied tariff rateDomestic market scaleLoans from
270、 microfinance institutionsIntellectual property receiptsFDI net inflowsSoftware spendingRepublic of MoldovaUtility models by originDomestic market scaleLoans from microfinance institutionsState of cluster development and depthTrademarks and industrial designs by originLogistics performanceExpenditur
271、e on educationPolicies for doing businessUkraineUtility models by originGross capital formationWomen employed with advanced degreesJoint ventures and strategic alliance dealsICT services exportsPolitical and operational stabilitySoftware spendingGDP per unit of energy useSource:UNECE,based on WIPO(2
272、022).Note:FDI=foreign direct investment,GDP=gross domestic product,ICT=information and communication technology,R&D=research and development.Table 1.1Main structural characteristics of the EESC countries,GII 202218Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South Cauca
273、susInsufficient absorptive capacity in firms is a main challenge to improving productive capacities,upgrading for innovation and enhancing innovative activities in the private sectorAmong the key factors that determine innovation outcomes is the degree of knowledge absorption firms capacity to ident
274、ify,adapt and integrate external knowledge into existing products and business processes and practices.This capacity is determined,in part,by investment in skills;access to finance,research and education;and the capacity to commercialize technologies and knowledge with innovative products,services a
275、nd processes.This is particularly important for potentially high-growth firms that try out new ideas and commercialize and diffuse them across society(box1.7).Innovative,high-growth enterprises(IHGEs),which make up about 2 to 6per cent of the private sector,play a disproportionately large role in sp
276、urring innovation in an economy.As transformational agents of change,they have great potential to support the process of systematically experimenting with new ideas in response to emerging challenges and opportunities a core feature of ensuring innovation-driven growth and sustainable development.In
277、 the recovery from the pandemic and in light of tightening fiscal space and rapid technological advancements,promoting the development of IHGEs through targeted and effective support is especially important for EESC countries.This needs to be done by developing a comprehensive understanding of the c
278、haracteristics,dynamics and needs of IHGEs in each country.To support such efforts and help policymakers design effective policies and institutions,UNECE has published a handbook,“Supporting Innovative High-Growth Enterprises in Eastern Europe and the South Caucasus”,that provides concrete recommend
279、ations.For example,an effective policy mix for innovation should address challenges within the framework conditions as well as provide resources that support IHGEs.There are five main types of such policy interventions:A business environment that promotes experimentation and growth A range of servic
280、es targeted to the needs of IHGEs Financial support throughout each growth stage Sufficient absorptive capacities,including the skills required to manage growth Access to services and networks that support national and international scale-upSource:UNECE(2021).Box 1.7Supporting innovative high-growth
281、 enterprises in the EESCSupporting Innovative High-Growth Enterprises in Eastern Europe and South CaucasusUNECE supports closer cooperation among its 56 member States in the pursuit of the UN Sustainable Development Goals(SDGs)and the 2030 Agenda.Its Economic Cooperation and Trade Division(ECTD)assi
282、sts member States with economic integration and in promoting and enabling a better policy,f nancial and regulatory environment.To foster sustainable development,including progressing towards an increasingly circular economy and building resilience to events such as the COVID-19 pandemic,experimentat
283、ion with ideas and technologies must become systematic across UNECE member States economies and societies.The Innovative Policies Development Section within ECTD focuses on promoting a supportive environment for innovative development and knowledge-based competitiveness.Activities include policy dia
284、logue,recommendations and good practices,analytical reviews,and capacity-building.The project“Promoting innovation policy capacities in Eastern Europe and the Caucasus”is implemented with the f nancial support of the Government of Sweden.This project aims to increase innovation policy capacities for
285、 enhanced competitiveness,inclusive and sustainable economic development in its six benef ciary countries:Armenia,Azerbaijan,Belarus,Georgia,Moldova,and Ukraine.Ms.Elisabeth TuerkDirectorEconomic Cooperation and Trade DivisionFor further information please contact Mrs.Katia Adamo at:katia.adamoun.or
286、g For the latest news on our activities,please visit the following websites:http:/www.unece.org/ceci0.htmlhttps:/www.unece.org/ceci/ic.html Supporting Innovative High-Growth Enterprises in Eastern Europe and South CaucasusUNECE Policy HandbookSupporting Innovative High-Growth Enterprises in Eastern
287、Europe and South Caucasus UNECE Policy HandbookPhoto credits:DepositphotosUNECEUNITED NATIONS19Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusDeveloping the right managerial and organizational skills in the private se
288、ctor to integrate external knowledge and technology is one of the most important elements of strengthening absorptive capacity.These skills include,for example,financial and human resource management.However,in part because of information asymmetries,many entrepreneurs and SMEs in the sub-region do
289、not possess,are unaware of or simply do not see the necessity of upgrading processes and using digital technologies that could significantly increase the efficiency of business activities.In 20192020,between 33 and 43per cent of firms perceived an inadequately educated workforce as a major constrain
290、t,18 much higher than the average in Europe and Central Asia of 25per cent(World Bank,2022b).Yet,only about a third of firms in the EESC offer formal training(World Bank,2022b;WIPO,2022).To ensure individuals and firms possess the right skills to experiment and absorb knowledge policies need to be d
291、esigned to help workers maintain and update technical and managerial skills,making sure that these are adapted to the requirements of the labour market.EESC countries are lagging in ICT skills,another important element of absorptive capacity,as many firms struggle with technology adoption especially
292、 SMEs.Within the sub-region smaller firms show consistently lower adoption rates than larger firms of technologies ranging from big data analytics and artificial intelligence applications to digital tools used for more basic business and administrative processes.Nevertheless,the COVID-19 crisis has
293、reinforced the need for businesses to accelerate digitalization processes as digital business models and activities have become a necessary factor for stronger resilience in the long term(OECD,2021).In addition to supporting the inflow of efficiency-seeking FDI to transfer technologies effectively a
294、nd offering access to the right types of training,policies will need to be designed to raise awareness about available training and skill development opportunities within the national innovation systems.Sectoral and national data on innovation activity and outcomes in the private sector in the sub-r
295、egion are quite limited.Data are not collected regularly,which constrains the adequacy of assessment and,in turn,creates gaps in policy support processes.Yet,available data suggest that innovation activity in the private sector has further room for improvement.According to the latest national statis
296、tics databases across the sub-region,no more than 10per cent of firms in the private sector conduct innovative or R&D activity.This is significantly lower,for example,than the European Union average in 2020 of approximately 52per cent of firms(Eurostat,2020).Consistent,accurate and internationally c
297、omparable data are a crucial element not only for measuring the impact of policy support,but also for informing,designing and implementing,as well as monitoring and evaluating subsequent innovation policy efforts.20Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South Cauc
298、asusThe share of R&D activities in the private sector is low,in terms of both performance and financing.The share of gross expenditure on R&D(GERD)performed by businesses is less than 1per cent of GDP for Azerbaijan(ranked 88/132),the Republic of Moldova(74)and Ukraine(50).19 The share of R&D financ
299、ed by the business sector ranges from 1.7per cent of GERD in Georgia(ranked 90/132)to 15.5per cent in the Republic of Moldova(71),16.7per cent in Armenia(70),30.5per cent in Ukraine(60)and 30.8per cent in Azerbaijan(59)(WIPO,2022).The private sector plays an important role in creating and diffusing
300、knowledge across the economy;therefore,it is important for the private sector to systematically engage and invest in R&D for innovation.Important for the public sector is to provide a conducive business and regulatory environment and infrastructure for businesses to innovateEESC economies have put s
301、ignificant efforts into strengthening the business environment for the private sector,especially in the rapidly expanding ICT sector,whereas regulatory conditions are less developed.On Policies for doing business Azerbaijan ranks highest(at 21/132),followed by Georgia(28),and Armenia(54),with weaker
302、 performance in the Republic of Moldova(107)and Ukraine(108)(WIPO,2022).According to the World Governance Indicators,however,in 2021 regulatory performance in all these economies showed areas for improvement.When it comes to Government effectiveness,Armenia,the Republic of Moldova and Ukraine rank a
303、t or below the 41st percentile.20 On Regulatory quality,all except Georgia rank at or below the 60th percentile.The percentile rank of Rule of law is highest in Georgia at 56,ranging down to 26 in Ukraine.On Control of corruption,Armenia,the Republic of Moldova and Ukraine rank at or below the 35th
304、percentile.Governments in the EESC sub-region are also making significant progress in digitalizing public services,an important part of infrastructure for inclusive business development.According to data provided by the United Nations,between 2020 and 2022 all EESC countries except Azerbaijan improv
305、ed with regard to the E-Government Development Index(table1.2).Georgia,for example,made significant strides in developing its e-procurement platform(chapter 3).Nevertheless,the values for the index have declined,indicating remaining weaknesses in the use of digital public services,possibly deriving
306、in part from the lack of awareness or capacities to do so,as suggested earlier.Reinforcing the provision of e-governance,and especially ensuring its accessibility and use,will allow recent public efforts in digitalization to bear fruit,further facilitating the business environment,and will spur the
307、digitization of economies overall.21Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the South CaucasusArmeniaAzerbaijanGeorgiaRepublic of MoldovaUkraineYear2020202220202022202020222020202220202022E-Government Development Index,value(ran
308、k)0.71(68/193)0.74(64/193)0.71(70/193)0.69(83/193)0.72(65/193)0.75(60/193)0.69(79/193)0.73(72/193)0.71(69/193)0.80(46/193)E-participation Index,value(rank)0.75(57/193)0.58(64/193)0.69(73/193)0.39(98/193)0.64(80/192)0.53(72/193)0.76(55/193)0.68(47/193)0.81(46/193)0.60(57/193)Source:UNECE,based on Uni
309、ted Nations(2022).Note:Orange indicates a decline in value;that is,a move down in rank between 2020 and 2022.Green indicates an increase in value;that is,a move up in rank between 2020 and 2022.Table 1.2E-Government Index and E-Participation Index performance in the EESC,2020 and 2022Continued effor
310、ts to strengthen research and education form a cornerstone for spurring innovation and will help build a solid foundation for economic growthPublic GERD across EESC countries remains quite low,which further inhibits innovative activities in the countries.In 2022,GERD in Armenia,21 Azerbaijan and the
311、 Republic of Moldova was about 0.2per cent of GDP,Georgia about 0.3per cent and Ukraine 0.4per cent,ranking the countries between 68 and 88 in the 132 countries measured in the GII 2022.In addition to increasing R&D expenditure,countries will need to ensure that R&D funding structures in the nationa
312、l innovation system allow such investments to flow into the right,most productive types of R&D across areas and types of funding so as to achieve the desired increase in R&D activity.Some EESC countries perform better when it comes to expenditure on education and tertiary enrolment.In 2022,the Repub
313、lic of Moldova and Ukraine spent the highest share of GDP on education in the sub-region,ranking 13/132 and 27/132 in the GII(table1.3).In the same year,the share of tertiary school enrolment was the largest in Ukraine,in Georgia,and the Republic of Moldova.In 2021,an average of 52per cent of studen
314、ts enrolled in tertiary education were female(UNESCO,2022).In 2022,between 13.5per cent of women in Azerbaijan(ranked 57/132)and 30.2per cent in Ukraine(27)had advanced degrees.22Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusExpenditure on education,share o
315、f GDPShares of tertiary enrolment,gross aPer centRank,out of 132Per cent Rank,out of 132Armenia 2.711350.864Azerbaijan2.711435.280Georgia3.98666.741Republic of Moldova 6.4135854Ukraine5.42782.719EESC average4.227158.6852Source:UNECE,based on WIPO(2022).a This is the ratio of total tertiary enrolment
316、(regardless of age)to the population of the age group that officially corresponds to the tertiary level of education.A significant challenge to commercialization and innovation in the EESC are the underdeveloped linkages between science and businesses.According to the GII 2022,universityindustry R&D
317、 collaboration is weakest in Armenia(ranked 100/132)and in the Republic of Moldova(101),followed by Ukraine(73),Georgia(57)and Azerbaijan(23)(WIPO,2022).The public research sector does not yet fully meet the needs of the private sector,and the lack of support mechanisms for collaboration between the
318、 science and business community leaves potential for technology-and innovation-based growth untapped(chapter 2).Innovation is vital for EESC countries to find new ways to address grand challenges and get back on track towards achieving the SDG goalsAs recent crises have created significant systemic
319、risks to health,economy and climate,EESC economies will need to increase efforts put into reaching the ambitions set forth in the UN Agenda 2030.EESC countries developed Voluntary National Reviews in 2020(2021 in the case of Azerbaijan),outlining efforts to integrate the SDGs into national documents
320、 and strategic objectives.According to the latest Sustainable Development Report,Ukraine ranks highest among EESC countries in the SDG index(37/163),followed by the Republic of Moldova(46),Azerbaijan(50),Georgia(51),and Armenia(66)(Sachs and others,2022).All countries in the sub-region en-counter si
321、gnificant,in some cases major,challenges to reaching most of the 17 SDGs (figure1.6).Table 1.3Expenditure on education and share of tertiary enrolment in the EESC sub-region,202223Chapter 1Strengthening innovation as a driving force for economic recovery and resilience in Eastern Europe and the Sout
322、h CaucasusFigure 1.6 SDG progress overviewSDGArmeniaAzerbaijanGeorgiaRepublic of Moldova UkraineSource:UNECE,based on Sachs and others(2022).One major challenge faced by all EESC countries is achieving SDG 15(Life on land).The challenge largely arises from the lack of protection of terrestrial and f
323、reshwater sites that are important for biodiversity.22 In the past decade,countries have made greater efforts to protect biodiversity,for example by working on implementing the Programme of Work on Protected Areas of the Convention on Biological Diversity with the European Union and creating protect
324、ed areas.Yet,issues seem to remain with regard to managing and monitoring the support in place.23 These issues are compounded by new pressures on the environment emerging in recent years,such as damage caused by the war in Ukraine,including military waste.24 For Ukraine,the war has had a significant
325、 impact on the progress of efforts towards green and sustainable development,creating challenges for both health and ecosystems.In the long term,it will be important for the country to support substantial trans-formations to ensure green growth in its post-conflict recovery and reconstruction (OECD,
326、2022b).The sub-region also faces challenges with regard to efforts to transition towards renewable energy(SDG 7)with the exception of Georgia,which has reached its targets for this SDG.The main problems lie in the indicators for carbon dioxide emissions from fuel combustion(per total electricity out
327、put)and the low share of renewable energy in the countries primary sources of energy supply.Armenia and the Republic of Moldova previously relied heavily on imports of fuel,gas and electricity from the Russian Federation.Georgia imports its natural gas from Azerbaijan.In Azerbaijan gas and oil make
328、up most of the countrys exports and more than half of its GDP,depending on price variations.Although in the short term this spurs Azerbaijans growth through higher energy prices,this may change in the long term.As importing countries work to strengthen efforts to transition to renewables,it will als
329、o be important for Azerbaijan to diversify and enhance productivity,to reduce the economys vulnerability to price volatility and ensure long-term and green development.Ukraine has large gas and coal reserves,but it also has great untapped potential for renewable energy,including from biomass and was
330、te management.Although EESC countries have made some efforts to diversify energy supply sources,especially in the current context,they will need to further ensure energy security as well as strengthen efforts to move towards renewables(IEA,2022).Legend SDG achieved Challenges to achieving SDG remain
331、 Significant challenges to achieving SDG remain Major challenges to achieving SDG remain24Interim Sub-regional Innovation Policy Outlook 2022:Eastern Europe and the South CaucasusSystematically increasing innovative activity in the EESC will require effective innovation policy governance within the
332、broader national innovation systemsEnsuring effective innovation policy governance and coordination to spur innovation-led growth will be essential to accelerate the EESC economies progress towards the UN Agenda 2030 as well as to navigate through the recent global crises.EESC countries show great p
333、otential for innovation,with a strong research legacy,highly educated workforce,growing ICT services exports and socio-political commitment.Challenges that remain to be addressed(table1.4)include missing absorptive capacity and skills in the private sector as well as low levels of R&D investment.These challenges currently impede actors in innovating and diffusing innovation throughout the economie