Most of CEE is falling further behind on innovation

Every year since 2007, the Global Innovation Index (GII) has come out at around this time of year, and it provides a useful benchmark of how countries are progressing in a large number of different areas related to innovation. It’s always worth a read, and is particularly important for countries in Central & Eastern Europe given that it is a priority almost everywhere in this region to transition away from manufacturing to more knowledge-based economies.

The 2022 edition of the GII has just been published, and it provides a useful snapshot of what has happened through the pandemic period. As well as providing each country with an overall ranking (and evaluating lots of other metrics), it assesses them based on “innovation inputs” (i.e. the elements of the national economy that enable innovative activities) and “innovation outputs” (i.e. the results of innovative activities within the economy).

In the table below, the CEE countries up to the EU’s eastern border are listed based on their overall GII ranking, and are coloured green, yellow or red based on whether their ranking improved between 2020 and 2022 (green), stayed the same (yellow), or declined (red):

It might not look too bad at first glance because, of the top seven countries on the list, four improved their ranking: Estonia (the long-time innovation leader within this region, which moved from 25th to 18th place globally), Hungary (up one place to 34th), Bulgaria (up two spots to 35th) and Lithuania (up one place to 39th). Poland remained stable in 38th place.

However, the picture overall is worrying. On average, these 16 CEE countries fell very nearly two places down the GII ranking between 2020 and 2022.

Importantly, the fall was much more marked for “innovation outputs” (the results of innovative activities within the economy) than “innovation inputs” (elements of the national economy that enable innovative activities), which will be a concern for policy-makers because it suggests that the policy environment isn’t the fundamental problem. And if the policy environment isn’t the issue, what can they do about it?