Innovation’s New Home: Local Economy

Central Europe needs a system of mobility between peripheries and innovation hubs

Daria Tataj
26 November 2015

Dr. Daria Tataj, Founder and CEO at Tataj Innovation, is an expert to the World Economic Forum and former founding Board member of the European Institute of Innovation and Technology (EIT). She has recently published Innovation and Entrepreneurship. A Growth Model for Europe beyond the Crisis with a preface of Manuel Castells.

Anna Wójcik: Can innovation help Central Europe escape from geographical determinism?

Daria Tataj: To answer this question, we need to look first at the mechanism of inducing innovation. When we look at how innovation is induced globally, we realize that there is a certain architecture to the global innovation network, and certain universal mechanisms characteristic to the network’s economy, the network’s society, which lead to the accumulation of knowledge, talent, and capital in certain innovation hubs or nods of this network. It so happens that it is difficult to change this dynamic, to change the status of small or unimportant node into an emerging node or into an emerging leader in this network.

When we look at Central Europe, we see it is growing as an important region in innovation, especially hubs such as Warsaw, Wroclaw, and Cracow in Poland, Prague or Moravia region in the Czech Republic and Budapest metropolitan area in Hungary. If we look at a very simple parameter, such as number of graduates in STEM subjects, we realize that there has been over 1.3 million jobs created in Poland alone over the last 10 years. The question is how did it happen? Can other cities in Central Europe replicate this success? I believe this is possible. What is needed is the convergence of top-down and bottom-up approaches. Certain policies taken by central governments, regions, and municipalities need to comply, encourage, and facilitate bottom-up initiatives at companies, universities, and NGOs.

Is innovation tied to cities? To what extent could it benefit non-urbanized zones?

Usually, we think of innovation as technology or knowledge-driven innovation introduced by industry. This is not true. Innovation is a much broader phenomenon; it is a process of learning and this process should lead to the creation of jobs. What you really witness is that indeed we need universities with strong technological capacities, which can educate a knowledgeable workforce for the industry. On a smaller scale, let’s call them peripheries of innovation networks, major areas may evolve, and the jobs and growth may happen if there is an interconnectedness between hubs and these peripheries of innovation. This happens when the networks overlap, and when there is “a switching capacity”, that is ability to caputalize on knowledge, talent and funding flowing between different types of networks because we need to realize that innovation requires an ecosystem. We need networks of universities, companies, investors, networks of large industrial organizations, which can buy products and services from SMEs, as this is the case in the Silicon Valley. The question is how to facilitate the mobility between peripheries and innovation hubs.

Now there is also a question of brain drain, and this is a major question policymakers ask. The logic of global networks shows that when talent is mobile, people tend to go for better opportunities. The challenge is to create local environments of opportunity which will offer people chances to stay where they are rather than go and become employees in major cities elsewhere. They should be motivated to stay and take a chance to start they own profit or nonprofit ventures.

Innovation policies are carried out on national level. Would it be more beneficial if there were more subsidiarity?

The national innovation system really impacts the long-term efficiency of the innovative capacity of a nation. They can either enhance it, or they can impair it. The quality of institutions in the innovation system is extremely important. Let me focus on one type of these institutions: universities. There is no possibility for the economy to grow if the talent that gets on the job market is not well prepared. By well-prepared I mean that people understand that knowledge is not their only asset. I believe that people in Central Europe are very knowledgeable. What would help to change the education landscape would be to put more focus on a different type of education. Rather than learning ‘about’, learning ‘how to become’. The economy today requires such a dramatic flexibility and adaptability to all the discontinuities of the process, to the disruptive innovation, in different aspects of our life and work. The national education system plays a really crucial role, and I believe there is good evidence that the educational institutions in the region are making efforts to move on, to embrace innovation, to help entrepreneurial students. At the same time, we are still lagging behind in promoting a risk-taking culture and what we incentivize, what we reward is not a type of employee or entrepreneur that would truly become a radical innovator.

Quite often in the national system, when there is redistribution of income, innovation and entrepreneurship are separated. This is extremely important from the very beginning, starting with legal and bureaucratic frameworks, along with market opportunity incentives for early adopters of innovation and technologies. This environment is embraced and will always be embraced on the national level because of the redistribution policies. The European Union has a very aggressive scheme for innovation and is experimenting with new approaches. The issue is how we can, in Central Europe, get better exposure, more collaborative partnerships that not only enhance one aspect of partnership innovations, for example research output, but they also make a leap from the knowledge-driven economy to the innovation-driven economy. This results not only in a better quality of science, but for better opportunities on the job market: either for self-employment, for professionals, or for creating small companies that will think about the market in a more global sense from day one, or by supplying innovation for big industry, to help them innovate better and faster.

What can Visegrad Group do to improve its coordination of innovation policies?

It would be extremely beneficial if more bottom-up initiatives – driven by citizens, investors, or companies –which meets with a political willingness to integrate them better regionally. Why is not done this way now? People do not embrace this network character of innovation. To succeed, we need to be closely knit at the local level and loosely coupled at the regional and global levels. This may come from organizations such as the Visegrad Fund or social leaders. In my opinion, New Europe 100 is a great project that puts the spotlight on regional game-changing agents. But this at the same time should come with wider instruments that embrace a more collaborative innovation model. After all, today all defensive innovation strategies, think this is 0-1 game, me or you, which does not really play in the midterm. We need more trust to understand different environments, new interests, and we need more courage to carry out joint projects.

The interview will appear in print in Visegrad Insight “Border Anxiety” issue 2 (8) 2015, out in December 2015.