THETHE WESTERN BALKANS REGIONAL COMPETITIVENESS INITIATIVE

3RD STEERING COMMITTEE MEETING

PARIS, FRANCE
25 MARCH 2013
-CONCLUSIONSExecutive Summary

The third and final meeting of the Western Balkans Regional Competitiveness Initiative (RCI)
Steering Committee was held on 25 March 2013 in Paris at OECD Headquarters.
The Steering Committee discussed three items:
1. Review of pilot projects in 2011;
2. Review of pilot projects in 2012;
3. Summary of the RCI working group on human capital development;
4. Evolution of the RCI Steering Committee; and
5. Next Generation Competitiveness Initiative (NGCI).

Outcomes and actions:

o

The Steering Committee received updates from all seven beneficiaries implementing pilot
projects on their results and lessons learnt with implementation.

The Steering Committee reviewed the results of the RCI working group on human capital
development.

The Steering Committee discussed the evolution of the RCIs structures. The various
structures should evolve to support the implementation of the SEE 2020 Strategy as
appropriate.

The Steering Committee noted that the follow-up project called the NGCI will support the
SEE 2020 Strategy by developing a monitoring framework for the Strategy and by
strengthening regional value chain development in three sectors.

Detailed Summary
1.

The third meeting of the Western Balkans Regional Competitiveness Initiative (RCI) Steering
Committee was held on 25 March 2013 at OECD headquarters in Paris, France.

2.

In alphabetical order the list of participants included the following: Albania; Austria; Bosnia and
Herzegovina; Croatia; Czech Republic; European Commission (EC); European Training
Founcation (ETF); France; Germany; Italy; Kosovo*; The Former Yugoslav Republic of
Macedonia; Montenegro; Norway; OECD Investment Compact for South East Europe (OECD
Secretariat); Poland; Serbia; Slovak Republic; Sweden; South East Europe Centre for
Entrepreneurial Learning (SEECEL); and the Regional Co-operation Council (RCC). The meeting
was chaired by the OECD Secretariat.

Three items were on the agenda:

Review of pilot projects in 2011;

Review of pilot projects in 2012;

Summary of the RCI working group on human capital development;

Evolution of the RCI Steering Committee; and

Next Generation Competitiveness Initiative.

Item 1: Review of 2011 pilot projects

3.

In the first session the RCI Steering Committee reviewed projects implemented in Bosnia and
Herzegovina, The Former Yugoslav Republic of Macedonia, Montenegro, and Serbia.

4.

The overall object of Bosnia and Herzegovinas project Triple Helix innovation partnership:
research, business and government was to create a basis for a sustained investment in innovation
in one strategic sector. For this purpose a platform was created that brought together 350 partners
from research, business and government of the agri-food sector to launch three concrete
partnerships and innovative projects. These projects were: (1) Processing field pea into ethanol,
animal feed and proteins, (2) Omega 3 enriched products; (3) Ecological Disinfection Product (for
disinfection of facilities and equipment).

5.

Bosnia and Herzegovina identified the following as key success factors for a Triple Helix
Partnership (THP). First, the inclusive approach of the project enabled to link all stakeholders of a
specific sector. Second, the organisation of network events and facilitation of online platforms
stimulated participants to advance their ideas. Third, the triple helix projects were supported by
competent experts with technological know-how and market knowledge that enhanced the
implementation of the project. Finally, intermediaries actively facilitated the organisation of the
triple helix projects and closely coordinated between public institutions and private companies.

6.

As a result of the project, Bosnia and Herzegovina is launching the Institutional Capacity
Development (ICD) project for three innovation centres. The plan is to establish three innovation
partnerships based on the triple- helix approach in the future.

7.

During the discussion the OECD asked the other beneficiary economies, if THPs could also be
considered in other parts of the Western Balkans. The Former Yugoslav Republic of Macedonia
and Kosovo* agreed that THP is a preferred model. Serbia added that it has introduced THP-like
initiatives a few years ago in the IT sector. The EC inquired about the development of the future
ICD project. Bosnia and Herzegovina applied for an IPA project in 2010 with the focus on
capacity building of innovation centre and public administration. Having a THP component for the
innovation centres would be an important step in support the national innovation system.

8.

The government of The Former Yugoslav Republic of Macedonia developed an Innovation

Strategy 2012-20 and Action Plan 2013-15 in the framework of its RCI pilot project. The aim of
the project was to conduct a comprehensive assessment its innovation system and clarify
institutional responsibilities while improving the coordination between ministries and government
agencies. The government is confident that the project helped to strengthen the competitiveness of
businesses and strengthen co-operation between academia and industry. Key lessons learnt for
FYR Macedonia included the following: (1) designing innovation measures requires cooperation
between all relevant stakeholders (i.e., business community, the universities and research
institutions, and government bodies); (2) implementation requires extensive inter-institutional
coordination; and, (3) financial support by the government must be secured. The project led to the
introduction of four elements that will help to sustain the innovation framework in FYR
Macedonia: (1) an institutional structure (e.g. Committee for Innovation and Entrepreneurship), (2)
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government commitment to implementation through monitoring), (3) a regulatory framework (e. g.

Law on innovation activity) and (4) financial support through the Fund for Innovation and
Technological Development and funds for developing infrastructural capacities and research in
academia.
9.

In the discussion the OECD asked about the advantages of a broad versus a targeted approach
towards innovation policy. FYR Macedonia responded by noting that there will be an emphasis on
first building innovation capacity (horizontal action) followed by the establishment of a fund for
innovation to support firms (vertical). Croatia asked how cooperation between government,
industry, and research would be sustained. FYR Macedonia responded that the action plan with 70
measures is a comprehensive document that requires a clear structure and responsibilities.
Ultimately a dedicated government is key to successful implementation of innovation policy.

10. In Montenegro a voucher scheme project was implemented with the objective to develop
managerial capabilities, competitiveness and innovation potential of exporting SMEs. In this
context a feasibility study was conducted in 2011 that recommended launching of a pilot voucher
scheme in Montenegro. The government launched the scheme in June 2012 and 16 SMEs met the
criteria and received a voucher. The total budget for the pilot phase was EUR 20.000 with an
average voucher volume of EUR 1.500. The project facilitated the transfer of knowledge and
management training to SMEs. The pilot scheme contributed to enhancing SMEs engagement
with external service providers, overcoming uncertainties related to risk and to stimulating the
local consultancy market. A review of the pilot scheme is currently being conducted.
11. In terms of key lessons learnt the project helped the government to understand some of the
important behavioural failures of Montenegrin SMEs. Further, it highlighted the necessity to
introduce quality criteria for eligible service providers to ensure a meaningful outcome. The pilot
scheme generated important procedural, technical, and administrative knowledge for the SME
Directorate that will enhance the design, implementation and impact of a potential future voucher
scheme.
12. In the ensuing discussion, Bosnia and Herzegovina asked which promotional activities were
undertaken by the government to make SMEs aware of the voucher scheme. The pilot scheme has
been mainly promoted through business associations that informed their members. ETF asked how
the beneficiaries were selected. Montenegro noted that a lottery would have been the more
desirable method for selecting applicants, however, as the number of applications was manageable
all proposals were reviewed by the SME Directorate. Serbia added that the size of the voucher was
very small and may have not been attractive to all SMEs. SEECEL asked if the project helped to
improve Montenegros SBA performance. Montenegro replied positively and noted that the SBA
encourages providing targeted financial support services to SMEs.
13. In Serbia the project assessed whether to establish a Competence Technology Centre in the
biomedicine or agri-food sector. The resulting feasibility study identified the biomedicine sector as
a more suitable candidate than agri-food. The projects results helped to define new services to
support firms in an emerging biomedicine cluster. The project had a large capacity building effect
on the public administration by: (1) clarifying different concepts of innovation support entities
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(e.g., competence centres, centres of excellence, and technology institutes); (2) revealing strengths
and weaknesses of agri-food and biomedicine sectors in Serbia by demystifying myths; and (3)
closing gaps between the Serbian business and R&D community in terms of dialogue.
14. The key lessons learnt by the Serbian government during the implementation of the project are:
(1) the need for high level political support; (2) closer inter-governmental co-ordination; (3) a
dedicated project team that stays throughout implementation; (4) high quality external consultants
that understand the context in which Serbia operates; and, (5) the need for realistic and fundable
project ideas.
15. The Serbian ministry of finance and economy is considering how to use financial and human
resources to advance the impacts of the project. Further work in the biomedicine sector will be
concentrated around the Herbal Pharma Net Cluster supported by IPA funds. A Technology
Brokers programme and an Innovation Voucher scheme are being designed taking into account the
findings from the project.
16. In the discussion Bosnia and Herzegovina asked about the financial sustainability of the
competence centre. Serbia replied that the feasibility study is a solid basis for establishing the
competence centre but more time is needed for additional fine-tuning. The OECD added to
Serbias response that the aim of the technological centre should be to solve business problems
using knowledge in the research sector. The centres administrative structure should be light and
the manager must be someone with experience in both industry and research; someone who can
establish trust between researchers and businesses in order for them to implement joint projects. A
total of EUR 800.000 is foreseen for a period of 5 years to fund the centre, with 80% of the costs
covered by public sources at the outset. The governments contribution would be phased-out over a
certain period of time to encourage long-term sustainability.
Item 2: Review of 2012 pilot projects
17. In the second session, each beneficiary economy which worked on the implementation of a pilot
project in 2012 was asked to provide an update on their project. These updates were followed by
an open discussion.
18. Albania provided an update on the business plan competition. The main objective of the project
was to promote entrepreneurship. The project was officially launched in April. A call for
applications was published and about 20 proposals were received by the end of June. Each
applicant was matched with a voluntary mentor to help with the development of their business
plan. In September, a workshop on business plan development was held in Tirana. In October, the
top eight business plans were selected. The final competition was held in November. The members
of the Jury included representatives from METE, AIDA, the OECD, the EC and an Albanian
entrepreneur. The top three teams that were selected (Handmade Albania, ABC consulting and
Handcrafts Albania) are now working with the OECD Investment Compact to improve their
business plans.
19. Albania identified key lessons from the project. First, new businesses are still perceived as very
risky by the banking sector. The project also showed that it is difficult to find a sponsor willing to
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offer a cash prize for these types of competitions. Finally, the interest in the project suggests that
there is a need for new government programmes specifically targeting start-ups.
20. Albania emphasised the longer term impacts of the project. First, Albania explained that the
objective is to hold a similar business competition every year with the continued involvement of all
stakeholders. To ensure greater participation and interest from start-ups, efforts will be made to
more actively promote the competition and to find a sponsor willing to grant cash prizes. More
general efforts will also be made by the government to support start-ups. Indeed, start-up support
will be integrated in the Business and Investment Development Strategy for 2013-2020 and new
schemes specifically targeting start-ups will be set up.
21. In the discussion, the EC suggested that establishing greater links with the Diaspora may be an
interesting development for the future. ETF agreed with Albania that the business plan competition
should not be a one-off effort but should become a repeated exercise. Finally, participants stressed
that links with higher education institutions should be strengthened.
22. Croatia presented the main activities and outcomes of its pilot project. The goal of the project
was to develop a National Innovation Strategy and Action Plan for the period 2013-2020. This
Strategy is to provide a coherent framework and set of objectives for Croatias future innovation
policy.
23. The first activity that was carried out was an overall assessment of the national innovation
system. This assessment aimed at identifying the key strengths, weaknesses, opportunities and
threats in the Croatian innovation system. A forum involving a broad range of stakeholders was
held in October to present the main findings of the assessment as well as to discuss the policies to
be prioritised in the Strategy. Proposals of specific policy measures were then submitted by the
different ministries involved in the project including the Ministry of Economy, the Ministry of
Entrepreneurship and Crafts, the Ministry of Science, Education and Sports and the Ministry of
Regional Development and EU Funds.
24. With regard to next steps, the detailed proposal of measures will be officially announced after a
final review by the Executive Team and Advisory Board which is expected to take place in April
2013. The last step will consist in determining the budget for the policy measures. Each of the
responsible ministries will take part in this process.
25. A key lesson from the project is the importance of involving a wide range of stakeholders from
government, industry and research. In terms of sustainability, the project is expected to have longterm effects. Indeed, once the Strategy is adopted, it will guide the Croatian governments
innovation policy efforts until 2020.
26. In the discussion, a question was raised about the members of the Executive Team of the project.
Croatia responded that the Executive Team is composed of people from all the relevant ministries,
governmental agencies, representatives of the private sector and academia.
27. The objective of the Kosovo* pilot project was to develop an Innovation Strategy. As part of the
project, an assessment of the innovation system was carried out based on desk research,
stakeholder meetings, focus group discussions and a survey. A draft report presenting the
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assessment was circulated in 2012. Based on this assessment, consultations with stakeholders were
held to identify the strategic priorities and policy measures to be included in the Strategy. A
template for the Innovation Strategy was prepared in December 2012.
28. Regarding next steps, the first draft of the Strategy will be discussed in a stakeholder meeting in
April 2013. An official launch event will be organised in the second half of 2013.
29. Important lessons were drawn from the project. First, the use of a consultative approach aiming
to involve a wide range of stakeholders is essential. Second, inter-ministerial communication and
cooperation is necessary to ensure common responsibility and accountability. Finally, innovation
should be addressed by the government as a specific activity rather than supported indirectly
through actions in other policy areas.
30. To guarantee the projects sustainability, further actions will be undertaken by the government.
After the finalisation of the National Innovation Strategy, a new Law on Innovation and
Technology Development will be developed, an agency will be established and an Innovation
Fund will be created. In addition, efforts will be made to further develop consultations with the
stakeholders involved in the project and to enhance the human capacities to implement innovation
policies.
31. A question was raised in the follow-up discussion on the appropriate balance between having a
targeted or ambitious strategy (i.e. covering a wide range of policy areas through many policy
measures). Kosovo responded that it is currently facing the challenge of ensuring on the one hand
that innovation is part of the broader economic development strategy and on the other hand that
policy actions are sufficiently targeted to be successfully implemented. Similarities were found
with the RCI project in The Former Yugoslav Republic of Macedonia where the Innovation
Strategy was aimed at anchoring innovation within the broad economic policy agenda but also at
assigning clear implementation responsibilities to specific institutions.
32. After providing a brief overview of the OECD Reviews of Innovation Policy, Mr. Gernot
Hutschenreiter from the OECDs Directorate for Science, Technology, and Industry (DSTI)
presented a diagnosis of the Croatian National Innovation System. According to this diagnosis, the
Croatian innovation system is characterised by a number of strengths including pockets of
excellence in public research, some relatively strong industrial R&D performance and an increase
in scientific publications. However, a number of structural weaknesses continue to constrain
innovation performance such as the wide productivity gap compared with European/OECD
averages, imperfect framework conditions related to innovation, a skills profile that is
unfavourable to innovation in the business sector and a lack of sustained political commitment to
innovation.
33. Mr. Hutschenreiter explained that EU accession provides a unique window of opportunity that
should not be missed. Indeed, EU accession will bring about increased financial resources for
innovation, increased access to EU markets and potentially steadier and more predictable
investment in R&D and innovation. But these benefits will not automatically materialise. Seizing
the opportunities from EU accession will require strong political commitment and effective
governance.
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34. The last part of the presentation outlined a number of possible policy directions to strengthen
Croatias innovation capabilities and performance. Future efforts will have to focus on setting the
right framework conditions for innovation, strengthening the human resource base for innovation,
improving the governance of the overall innovation system, enhancing the governance of
universities and public research institutions, making the evaluation of programmes more
systematic, increasing government support for business R&D and taking into account the needs of
different types of companies, fostering closer cooperation between the various actors in the
innovation system and supporting the internationalisation of both research and business.
35. In the discussion, it was highlighted that a large number of these guiding principles and policy
directions had already been taken into account in the draft of the National Innovation Strategy.
Item 3. Summary of the RCI Working Group on Human Capital
36. The OECD provided steering committee members with a summary of the deliberations of the
three meetings of the RCI working group on human capital organised between June 2011 and
October 2012. The OECD recalled that the Western Balkan economies suffer from a growing gap
between the skills of its labour force and the needs of a fast-evolving market. Skilling up the
workforce is critical if the region is to create higher value and more globally competitive products
and services. To support the region in bridging the skills gap, the RCI created a Working Group on
Human Capital comprising policymakers, business representatives and members of the research
community. Over its three meetings the Working Group sought to:

Incorporate human capital building activities into the seven pilot projects
Strengthening the Human Capital Component in National Pilot Projects
Raise awareness of various methods and tools to measure skills gaps; e.g. the skills sector
approach, foresight techniques, and skills gap measurement methodologies developed by
CEDEFOP and O*Net
Build policy maker capacity on how to conduct skills gap analyses
Transfer good international practices

37. The OECD also noted that each pilot project had human capital development components to it.
To illustrate, the Albania business plan competition transferred investment readiness skills to
young entrepreneurs; in Bosnia and Herzegovina the THP project focussed on training of
university staff and transferring know-how in the implementation of projects with businesses; in
the three innovation strategy projects in Croatia, Kosovo*, and FYR Macedonia significant time
was devoted to assessing the education systems contribution to innovation; in Montenegro the
SME voucher scheme focussed on building capacity in organisational management & marketing in
SMEs; and in Serbia the competence technology centre had as one of its goals of transferring of
know-how from researchers to business.
Item 4. Evolution of the RCI Steering Committee
38. The OECD recalled that the 2nd meeting of the RCI Steering Committee opened the discussion on
the evolution of the Steering Committee. The OECD explained that the RCI Steering Committee is
composed of members who sit on the South East Europe Investment Committee (SEEIC),
however, over time the members of the SEEIC have delegated participants to sit on the RCI
Steering Committee in their place. The OECD proposed that the members of the RCI Steering
Committee evolve into structures to support the monitoring of the SEE 2020 Strategy and the
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sector component of the follow-up project to the RCI called the Next Generation Competitiveness
Initiative (NGCI). The participants to the RCI working groups on human capital development and
innovation could be delegated to the regional structures designed to support the various pillars of
SEE 2020 such as smart and sustainable growth.
39. The RCC explained that under SEE 2020, and specifically the sustainable growth pillar, a
separate working group with a specific mandate may be established to address competitivenessrelated issues.
40. The EC noted that the SEE 2020 Strategy is an important development for the Western Balkans
as a region. It can be used as a cornerstone to organise assessments on the regional level. The
NGCI project is designed to support the SEE 2020 Agenda. The EC stressed the importance of coordination between country and regional level. Decisions on the country level need to be linked to
regional level developments. At the time, regional policy making needs to be translated at the
country level.
41. The RCC expressed its view that the RCI Steering Committee will not exist per se in the next
phase, however, new bodies and structures will be created to satisfy the needs of the SEE 2020
strategy. In the framework of the NGCI, the SEE IC will provide guidance regarding the
monitoring and sector contact points.
42. The OECD added that the current RCI structures will help advance the SEE 2020 Strategy
agenda. Bosnia and Herzegovina emphasized the importance of maintaining the RCI structures,
but perhaps under a different name. For a successful evolution, some of the previous activities
should be continued. The experience of current delegates would be beneficial for future work. The
OECD closed the discussion by noting that the RCIs structures need to be used for the purposes of
the next project.
Item 5. Next Generation Competitiveness Initiative (NGCI)
43. The OECD introduced the follow-up project to the RCI called the Next Generation
Competitiveness Initiative - NGCI. The NGCI will have two work streams: one focussed on
regional value chain development and a second one on monitoring the SEE 2020 Strategy on the
basis of the Investment Reform Index (IRI). The value chain stream will at the outset identify
three sectors with the potential for regional cooperation. Several factors will be taken into account
such as trade and investment flows, labour productivity, product space and supply chain analysis.
The SEE 2020 monitoring will use the IRI framework which was endorsed by the SEEIC in 2006
as part of the Regional Framework on Investment (RFI). The monitoring system will have mix of
quantitative and qualitative indicators. The qualitative indicators will use the tripartite approach of
government self-assessment, private sector assessment, and independent expert assessment.
44. The RCC noted that the in the framework of the NGCI, the sectors need to be identified in a
transparent manner based on a clear methodology. It is important that all stakeholders have the
same understanding of the sector selection. The OECD added that a regional approach is the
determining factor for the sector selection. The strategy of each economy will not necessarily be
the primary focus. The RCC stressed the importance of the monitoring component. The IRI
approach is already a well-suited monitoring tool but there should be more quantifiable measures
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included. The OECD agreed that the quantitative indicators are very important, but the relevance
of qualitative measures should not be minimised. To answer a question on the timeline of the
NGCI, the OECD noted that the sectors should be identified in 2013 and depending on the
operational capacity, one sector-specific project could start in 2013. SEECEL suggested exploring
ways to align the scope of its work with that of the NGCI. Serbia and Bosnia and Herzegovina
both emphasized the importance of a regional approach in the sector selection process. The EC
added that as part of the SEE 2020 Strategy process the RCC will be coordinating its development,
however, the decision making lies within each Western Balkan economy.

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