Report: Firms Need to Introduce Innovations Frequently
Aiming to help companies to better absorb foreign technologies and improve management techniques, the Adopt, Adapt, Advance: Innovating for the Future panel at EBRD’s Annual Meeting was held last week in Tbilisi, which brought together representatives of business, academia and experts to explore various options.
According to the Transition Report 2014, Innovation in Transition, individual companies’ innovations can help to establish new growth drivers and recuperate transition in the EBRD region. “Returns to innovation are sizeable in all industries – including in low-tech sectors, where firms tend to innovate less. In addition, many firms can boost their productivity by simply improving the way they are managed,” the report explained, adding that a 40% average increase in productivity is associated with improved management practices in Eastern Europe and the Caucasus, while a 43% average increase in productivity is linked with introducing a new product.
The report also shows that firms innovate more in countries with better core economic institutions where there is low corruption, a strong rule of law, openness to trade and investment and a highly skilled workforce. Furthermore, ease of access to credit conditions by banks was named an important factor in innovation.
Beata Javorcik, Professor of Economics at the University of Oxford, stated that there is not a straight-cut recipe for economic growth, but there are some widespread issues - the least progressive countries need to follow sustainable growth via leaning from the experiences of more innovative economies.
On the other hand, Albert Bravo-Biosca, Senior Economist at Nesta, says that carefulness is a crucial attribute while introducing any innovation and suggests trying different innovation designs and efficient solutions to ascertain whether they work or not.
The panelists also acknowledged foreign direct investments (FDI) to be of vital importance for innovative drive. George Chirakadze, the President of UGT and member of the Business Association of Georgia, noted that in transition economies such as Georgia, the challenges are much more complex. The shortage of skilled workers makes FDI riskier and less attractive, however developing educational policies might be very helpful if the economy is to flourish.