The Warsaw Institute Review | Central Eastern Europe Innovators Summit
20 July 2017
The Polish economy, destroyed by communism, for years did not have suitable conditions to function on the basis of its own technology. Today, thanks to the fourth industrial revolution, Poland has a historical opportunity to build its own new brand in the world markets
This article was originally published in The Warsaw Institute Review by Paweł Szefernaker
After the ages of steam, electricity and automation, we are now living in the age of the fourth industrial revolution. Universal computerisation, digitisation and Internet access are changing our lives completely and are an opportunity for those who think innovatively. Central and Eastern Europe is a huge reservoir of people who are in their element in this reality. For years, Poland was dependent on technologies brought in from other countries and in many cases it will be difficult for us to compete with highly-developed economies in this field today. However, we can successfully compete in the sphere of digital and information technologies, by putting excellent engineers and programmers on the market.
German occupation and then Soviet domination both left a deep mark on the economy of the largest country in Central and Eastern Europe. Poland’s unwieldy industry failed to compete in terms of quality on world markets, which led to the collapse of its centrally-steered economy. Problems then deepened in the 1990s. The economic transformation conducted at the liberals’ bidding, with the participation of communist notables who took part in the process of changes, led to the selling-off of those national assets which could be of any value. As a consequence, Polish brands did not develop their own know-how, and our country specialised in assembling devices invented in foreign research centres.
At the same time, the free market released huge potential and energy of millions of ordinary Poles. Trade, services and then industries which did not require complicated engineering continued to develop faster. Poles became more and more aware of the free market economy; they had lots of ideas and a great desire for personal development, but our country did not offer such opportunities. Many outstanding professionals, after completing their education, and sometimes even before they undertook studies, went abroad, thus contributing to the prosperity of Western economies. It was only the digital age – which reduced distances and equalised opportunities in nearly all parts of the globe – that enabled Poles to use their creativity also in Poland. This is how corporate powers such as CD Projekt, the publisher of the cult game “The Witcher”, were built. Today, every discovery made by a Polish engineer can gain publicity; while they can find business partners, or acquire financing thanks to the Internet.
Central and Eastern European Innovators Summit
From the beginning of the 1990s, the late Lech Kaczyński – President of Poland in 2005-2010 and his brother Jarosław Kaczyński – Prime Minister in 2006-2007, and the current leader of the Law and Justice political party which has a majority in the Parliament and has formed the government, talked about the need to rebuild a strong and modern state. As a result of the implementation of the policy of a state which is stable, self-confident and invests in modern technologies, the Law and Justice’s conservative government has a plan today to act even faster and more efficiently in the sphere of innovations. At the end of March, the CEE Innovators Summit was held in Warsaw, attended by the Prime Ministers of the Visegrad Group (V4). This is Prime Minister Beata Szydło’s idea for Polish presidency in V4. Poland, Hungary, Slovakia and the Czech Republic jointly have the potential which would enable them to compete with highly developed countries. As a region, we truly have unique human capital. This is illustrated by statistics showing for instance the number of engineering studies graduates who can help us compete with the most innovative economies worldwide. Based on the OECD data (2012), V4 countries have nearly 150,000 graduates from these types of studies in total, whereas South Korea, today’s leader in world innovativeness rankings – around 160,000. More importantly, as part of the Visegrad Group we are in the lead in terms of the number of IT specialists. In 2012, there were around 26,500 graduates of such studies in our region, and only half that number in South Korea. The Warsaw Summit created scope for cooperation and exchange of experiences among start-ups, entrepreneurs, scientists, innovators and national administrations of our region of Europe.
The largest economies of the European continent channel their activities towards competitiveness built on technological innovations. Central and Eastern European states which – for historic and geopolitical reasons – could not participate in the implementation of previous industrial revolutions, and only benefited from their effects, have a historic opportunity of actively coming to the fore of countries which are leading the fourth industrial revolution. We realise that it all depends on whether – thanks to this increasing innovativeness – we seize the opportunity to achieve fast economic development.
Increasing the innovativeness of the Polish economy is one of the most important priorities of the current Polish government. An innovative knowledge-based economy should be a foundation for the growth of the national income and for raising the level of prosperity in Poland. Therefore, all actions undertaken by the Law and Justice’s government in the area of entrepreneurship are on the one hand intended to build good conditions for conducting business activity, and on the other hand to encourage businesses to boldly invest in the latest technologies. It is an important task for the Polish administration to ensure an appropriate framework for innovators through friendly regulations, among other things with regard to supporting innovativeness and the constant removal of any barriers that might appear. The Polish government’s goal is to create an effective ecosystem for developing innovations. Already during the first year of its activity, a cohesive system of various instruments awarding benefits and encouraging innovative activity was introduced, including a more business-friendly tax system (tax reliefs), a stable method of financing the commercialisation of scientific research and development work results, as well as a package of procedural facilitations. The new regulations address the most urgent needs of Polish innovators and scientists. Meanwhile, further initiatives in this area will be presented before the end of this year.
The manifestation of these priorities is the Strategy for Sustainable Development adopted by the Polish government.
Appreciating the importance of innovations, the Polish government appointed the Innovation Council whose tasks include the coordination of activities connected with increasing the innovativeness of Polish science and economics. The systemic proposals developed by the Council will be evaluated in consultations with representatives of non-governmental organisations and organisations of employers.
Admittedly, innovativeness is not a phenomenon reserved for the digital area; nevertheless it is in the digital world that it emerges the most. During the Innovators Summit, heads of the Visegrad Group states expressed their support for the establishment of a fully functional European single digital market. The purpose is the removal of barriers to the digital development of the EU and creating possibilities for European companies to get benefits of scale resulting from the existence of a large European market. Only through this way can we quickly build a competitive industry based on modern technologies. There is a large and unused potential for cooperation in the Visegrad Group countries in the area of digital economy. It is in our countries’ interests to present a uniform position which will constitute a counterweight to protectionist threats often appearing in the European discussion, or concepts aimed at deepening developmental differences between the EU regions. We should unambiguously support the elimination of all barriers for which there is no justification in the Treaty provisions. Only equal and non-discriminatory conditions for conducting activity on the EU market will enable our companies to compete with entrepreneurs from Western states, who are much stronger in terms of capital.
As a result of globalisation, competition in world markets has increased significantly in recent decades. Our region, if it wishes to be competitive, must invest in such capital which will give us an opportunity to compete against other – very often larger – players. Poland, although it does not top the innovativeness rankings as yet, has the greatest asset which should be strengthened and nurtured – high competences of Poles, their enterprising spirit, and a growing social awareness that innovativeness is a path to further development. This is the very capital – human capital – composed of creative, enterprising people, that breaks through all barriers, and that determines our strength. For years, this capital was often invested abroad, which increased the prosperity of other countries. Many of those who went abroad have succeeded in the largest innovative companies of the world. The CEE Innovators Summit is a strong accent of Poland’s presidency in the Visegrad Group. This is a signal not just for Hungarians, Czechs, Slovaks and Poles, but also for the rest of the world that governments appreciate this huge potential, which is dormant in the residents of our region.
Basis of cooperation among the Visegrad Group states
Thus, the basis for effective cooperation is the intellectual potential of the Visegrad Group countries’ citizens, their cultural similarities and common historic links. We are facing similar challenges and problems related to the implementation of an effective innovativeness policy. Common problems concern the establishment of a cohesive environment for start-ups, supporting research and development activity, as well as the jump from the absorption of ready-made technologies to the stimulation of innovations based on results of our own domestic research. Research and development cooperation with the “old EU” countries and building the society of “early users” and “early adapters”, willing to test and purchase innovative products, constitute a challenge.
It should be noted, that the V4 countries are implementing intelligent specialisation strategies on similar topics. This refers in particular to the automotive, telecommunications, electronic, and transport industries, as well as to the environment, and health foods. There is a large potential for the implementation of joint projects in the area of research and development, which could constitute the basis for competing with the “old EU” countries and allow the creation of realistic regional specialisations within the V4.
There are symptoms showing that other regions of the world see not only political but also economic potential in the Group. One of the examples is Japan, which together with the International Visegrad Fund is financing the V4-Japan Joint Research Programme that may be used by private or public research organisations or small- and medium-size businesses.
Often, particularly at European Union forums, arguments are used that the Visegrad Group is not cohesive, and that it presents different opinions and views. However, our strength is determined by the ability to cooperate despite differing outlooks. We are strengthened by the fact that we tighten our cooperation in those areas which we believe to be of key importance for the economic future of our region and of the EU. Crises affecting the European Union recently show that it is the duty of the Visegrad Group’s states to build institutions resistant both to political and economic unrest. For this purpose, the Prime Ministers of the V4 states signed the so-called Warsaw Declaration during the Innovators Summit. The main assumption of the Declaration is the reinforcement of cooperation with regard to research, innovations and digitalisation. Special objectives include the strengthened and extended regional cooperation of clusters and start-ups. Moreover, we would like to promote states from the Visegrad Group as research and innovation centres.
An important statement of this declaration is the separation of a dedicated budgetary line within the International Visegrad Fund, focused on the implementation of joint research and development projects.
First and foremost, we want the Warsaw Declaration to be the starting point for tighter cooperation among the countries of the region, which will increase the number of supranational research and development projects implemented by science and research institutions and enterprises from Central and Eastern Europe. It is important to establish good conditions for cooperation between entrepreneurs and scientists: only this way can our local businesses stand up to global competition in Western European and Asian markets.
The cooperation initiated thanks to the Innovators Summit constitutes a clear signal that both Poland and other states from our region are prepared to become fully involved in the challenges which our economies face in the 21st century, the age of innovations.
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