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Serbia’s Innovation Capacities From The Perspective Of Serbian Regions

Where Should Start-ups Reside?

The approach taken to date in encouraging innovation in Serbia could deepen the gap between Belgrade, as the undisputed centre, and the country’s less developed regions. Is it time to re-examine the existing model of smart specialisation and provide more wind to the sails of Novi Sad, Niš and Kragujevac?

The adoption of the Smart Specialisation Strategy of the Republic of Serbia for the 2020 to 2027 period created a platform to integrate scientific, economic and technological capacities with the aim of advancing the innovation and research ecosystem in Serbia and increasing its regional and global competitiveness. However, the current Action Plan for implementing the Smart Specialisation Strategy for the 2021 to 2022 period strives to maximise overall national potential, while side-lining concerns over their development at the regional level.

In the absence of a targeted policy to encourage the development of innovation capacities from the perspective of the country’s regions, a question arises over the actual level of innovation activity by region, as well as the degree to which a dichotomy exists between the development of innovation capacities and balanced regional development. Through an overview of the regional allocating of various instruments of the Innovation Fund of the Republic of Serbia from 2016 to 2022, the latest study of the Public Policy Research Centre maps the key differential points in the development of innovation among regions in Serbia.

With an initial overview of the regional allocation of support, we can already observe serious disparities in the level of development of regional innovation ecosystems. The analysis conducted showed that economic and scientific capacities from the Belgrade region are undeniably positioned as the most productive part of Serbia’s innovation ecosystem. Testifying to how important these capacities really are is the fact that every other project of the Innovation Fund was awarded to applicants hailing from this region. Activities around the sharing of knowhow and creating of innovations are represented to a much lesser degree in the remaining three regions, though there are also differences among them.

Specifically, every fifth project financed by the Innovation Fund, on average, is awarded to applicants from Vojvodina, while only one in every ten approved projects is implemented by someone from the Šumadija and Western Serbia region or the region of Southern and Eastern Serbia. A higher number of approved projects equates to a greater inflow of investments. According to the data analysed, approximately 62% of total funding approved by the Innovation Fund has been allocated to applicants from the Belgrade region. The remaining funding was allocated to the other three regions: 19% of funds to Vojvodina and 11% of funds to Šumadija and Western Serbia, while the smallest percentage of funding – a mere 8% approximately – was allocated to applicants from the Southern and Eastern Serbia region.

THE BELGRADE REGION’S SCIENTIFIC RESOURCES REPRESENT A PILLAR OF SUPPORT FOR THE ENTIRE NATIONAL INNOVATION ECOSYSTEM

The commercialisation of knowledge, which is realised through collaborations between science and business, is most commonplace in the Belgrade region: this region’s private sector relies on intraregional scientific resources to the greatest extent. Furthermore, the scientific capacities of the Belgrade region represent an important pillar of support for the development of the innovation potential of other parts of Serbia. The knowledge created in the scientific and research framework of the Belgrade region is of particular importance to the economic sector of the Šumadija and Western Serbia region. Findings show that, in more than 66% of the projects that urge cooperation between business and science, enterprises from the Šumadija and Western Serbia region networked with scientific and research organisations from the Belgrade region. On the other hand, 42% of projects led by companies from Vojvodina had key science domain partners from the Belgrade region, while cooperation with Belgrade scientific and research organisations was realised in approximately 36% of projects led by companies from the region of Southern and Eastern Serbia. This ubiquitous presence across other regions serves to confirm that Belgrade’s scientific capacities extend beyond regional frameworks and represent a lever that encourages the development of the entire national ecosystem by connecting regional innovation capacities.

On average, every fifth project financed by the Innovation Fund is awarded to applicants from Vojvodina, while only one in every ten approved projects is implemented by someone from the Šumadija and Western Serbia region or the region of Southern and Eastern Serbia

START-UP ECOSYSTEMS AS URBAN “OASES” OF INNOVATION

Findings show that, over previous years, participants who were ready to establish a start-up came mostly from the Belgrade region. The second region in terms of the number of startups launched is Vojvodina, which lags behind Belgrade significantly, with almost three times fewer newly founded companies in this province during the period from 2016 to today. Of course, establishing start-ups is linked to urban centres, and given that the majority of them are established in Belgrade, followed by Novi Sad, this type of innovation activity is almost negligible in the remaining two administrative centres of Kragujevac and Niš.

This is also confirmed by data showing that, during the analysed period, only around 15% of the total number of startups supported by the Innovation Fund were in Šumadija and Western Serbia and in Southern and Eastern Serbia. Regardless of the fact that the Innovation Fund continues to incentivise the establishment of start-ups, by providing conditions for their growth via financing, networking and mentoring support, it doesn’t appear likely that the disparity between the number of new technology start-ups in these cities will be overcome quite so easily. Numerous local factors – such as a higher number of organisations that provide support to start-ups, more technological corporations present in the city and the higher concentration of young people and technological experts (Start-up Genome, 2021) – continue to provide a great advantage to Belgrade over other urban centres.

SUPPORTING SMART SPECIALISATION PRIORITY AREAS AND THE REGIONAL ASPECT

Although the Innovation Fund doesn’t take the regional allocation of support into account when supporting the development of the 4S priority areas, the analysis indicates that incentives provided to date have fallen somewhat into line with the pre-existing comparative advantages within the regions. The two areas that were the most dominant, or at least highly represented, in all regions are information and communication technologies and the development of innovations in the fields of mechanical engineering and production processes. In the region with the largest number of projects – Belgrade – it is most commonplace for innovations to be developed within the scope of these two areas. Innovation in Vojvodina mostly occurs in the domain of agriculture and the food industry, while ICT is also the second most represented area in this region. In the remaining two regions of Šumadija and Western Serbia and Southern and Eastern Serbia, innovative activities are most commonplace in the area of mechanical engineering and associated activities. Such a distribution of areas by region is to be expected to a certain extent, and serves to prove that the concentration of resources and participants within certain areas by region acts as a self-regulating mechanism that impacts on innovations being generated specifically in those areas and furthering regional comparative advantages.

Successfully combining innovation and regional development policies depends on the dual challenge of differentiating and specialising regional capacities. Differences – in terms of history, socioeconomic conditions, geographical, demographic and other specificities – determine regional differences in capacities, possibilities and limitations on research and innovation, as goals that cannot be met fully within the framework of undifferentiated policies, which are limited to providing aggregated and generic prerequisites (education, public research infrastructure and financing). As such, developing the innovation of each region requires the special determining of the relationship between opportunities and limitations for each region. Once such combinations are identified, the need for a further process of “specialisation” becomes clear, which actually means attempting to concentrate resources, cluster actors, incentivise related projects and provide specific new public goods and institutional support in order to advance knowledge and encourage innovation in selected domains.

Although the process of developing the Smart Specialisation Strategy actually identified regional comparative advantages (and limitations), the existing mechanism for achieving the goals of the Strategy does not recognise the regional aspect. Approaching the support of innovation by viewing Serbia as a single entity raises the question of how optimal the existing development model actually is, given the possibility of it further deepening the divide between the parts of the country that have developed scientific, economic and other capacities and those that don’t, and the possible need to harmonise the different parts of Serbia’s European integration process in a coherent way.

This article is authored by Ljubivoje Radonjić, research associate at the Public Policy Research Centre

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