A major new survey from Oracle, conducted across 12 countries reveals that the CEE is underperforming in terms of innovation. As a result the region could compromise five years of economic growth as its status as a low-cost labour base begins to erode, says the IT giant.
The survey, conducted by the Economist Intelligence Unit (EIU) on behalf of Oracle, examines current and future innovation performance and the overall ‘innovation environment’ in 12 countries: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovakia, Slovenia and Ukraine.
The report found that, while the CEE area has benefited economically from innovation over the past five years from foreign multinational investment, there have been insufficient ‘spillovers’ of technology and know-how, meaning that these innovations have largely failed to permeate the domestic business environment.
The research also determined that innovation and the development of new products, services, business models and management techniques will be vital to the continued economic success of the CEE area as its status as a low-cost labour base begins to erode. This follows regular commentary about the changing role of India as costs continue to rise.
Alfonso Di Ianni, Senior Vice President, Oracle Eastern Europe and CIS Region, commented: “The advantage of low-cost labour, initially a short-term catalyst for economic growth in the region, is being eroded and must be replaced with a more sustainable and long-term strategy for success. A structured approach to fostering innovation is what differentiates the successful economies, and collectively governments, educational institutions and businesses can create a dynamic environment which allows the untapped wealth of domestic talent to flourish. Information Technology today forms the foundation for a high percentage of the world’s most innovative solutions and can have a transformational effect on economic development – ideas, innovation and IT, an unbeatable combination.”
The report found that Slovenia showed the highest levels of innovation performance in the region, while the Czech Republic was the most favourable environment for innovation. Romania had the least favourable performance, while the most challenging environment was to be found in Ukraine.
The region possesses many talented home-grown entrepreneurs and innovative companies that are being held back due to less than optimum innovation environments. Several of these companies are profiled in the study.
Paul Lewis, Managing Editor, Executive Briefing, Economist Intelligence Unit, added: “The post-communist economic transition of the CEE countries has been remarkable, but it has relied on investment from foreign companies. Governments need to be aware that it is no longer enough to imitate and assimilate innovation from abroad – they must encourage a favourable environment for home-grown innovation, or the long-term growth potential of the region will suffer.”
The report provided some recommendations for turning the dearth of innovation around. ‘Governments, businesses and academia can work together to improve the environment for innovation in their respective countries. The report offers specific recommendations including investing in skills, research and IT infrastructure, and relaxing bureaucracy, taxation and labour laws.’
The report can be seen in full here: A Time For New Ideas
