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The State As An Innovator

For emerging economies, building a digital economy presents a challenging task in which governments play an important role in fostering innovation and the adoption of new waves of digital technologies. Indeed, the Serbian government has embraced all of these tasks in close cooperation with businesses, academia and the civil sector

Governments have played a dual role in shaping innovation systems throughout history, both through their policymaking and as strategic investors in technology applications, as means of supporting the transformation of society. The state’s role in this endeavour is even more pronounced today, when it is of outmost importance for the economies to catch up with accelerated digital transformation.

Although opposing views exist, such as that the state should step aside and leave everything to the private sector, the pandemic clearly showed that innovation and technological transformation are indeed important areas of state influence. In Serbia, e-government services represented the backbone of the societal response to COVID-19 by providing smooth online services covering everything from vaccination, via tax payments, to enrolling children in nursery school.

There is increasing demand for an entrepreneurial state that will play a variety of roles in creating the digital economy. If there had been no state strategy, countries like Singapore, South Korea, Finland, Sweden, Israel, Estonia and China wouldn’t stand as the leaders in that area today. These examples clearly suggest that the state has a role to play in nurturing national digital ecosystems, but also in building innovative and inclusive digital economies.

Examples of prosperous countries show that governments have played key roles in promoting a dynamic innovation ecosystem, in partnership with businesses, academia and the civil sector

Of course, we aren’t talking about the old-fashioned state, which creates rules and expects everybody to dance to their tune; we’re talking about a state that’s ready for partnerships with a variety of actors – from academia, to business, start-ups and the civil sector – and keen to evolve in harmony with the needs of the economy and society.

By its very nature, innovation is both driven by and a driver of digital transformation. Under such circumstances, the state doesn’t only have a role to play in enabling digital transformation, but rather also in making targeted investments. Some domestic examples are the state Innovation Fund and the Science Fund, which both play a role in enhancing innovation and pushing certain sectors, identified as being the most promising, through the process known as the Smart Specialisation Strategy. This methodology is used throughout the EU to identify innovative potentials in each of the economies of EU member states and membership candidate countries.

For emerging economies, introducing a digital economy represents a shifting task in which the governments don many hats in order to foster innovation and the adoption of new waves of digital technologies, as well as to support the assimilation and dissemination of these technologies across the economy as a whole.

If one inspects closely which role the Serbian government is playing in this process, it will soon be discovered that its tasks include the creation of enabling policies, boosting production of human resources, creating new institutions and implementing targeted infrastructure and platform investments, in order to secure the promised digital dividends.

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