Igniting Innovation (Rethinking the Role of Government in Emerging Europe and Central Asia)

Innovation and technology absorption are now firmly recognized as one of the main sources of economic growth for emerging and advanced economies alike. That is why innovation is seen as a possible catalyst for revitalizing post-transition economies hit hard by the recent financial and economic crisis. Is government intervention needed to foster innovation in post-transition economies? This is the central question to which this book responds. The answer is yes, but a qualified yes. Innovation activities are rife with market failures that tend to hold back private investment. And badly designed or badly implemented interventions can further hamper the development of an innovative and entrepreneurial culture among businesses and research communities. This book builds on the lessons from public institutions and programs to support innovation, both successful and failed, from Eastern Europe and Central Asia as well as China, Finland, Israel, and the United States. The lessons highlight the pitfalls of imitating models of government interventions from 'innovative' countries without having adequate systemic governance and institutional reforms. They underscore the need for intensified international R and D collaboration and foreign R and D investment to better integrate post-transition economies in the global R and D community. They spotlight further opening to FDI to encourage knowledge absorption. And they point to the importance of overhauling government support programs--especially financial ones--to address key pressures points along the innovation and commercialization continuum. We hope that the results and recommendations offered by this book will contribute to the discussion about how to relaunch innovation and technology adoption as a central part of the development and growth strategies of post-transition countries.