Searching for Exits from the Great Recession: Coordination of Fiscal Consolidation and Growth Enhancing Innovation Policies in Central and Eastern Europe

Abstract

To overcome the Great Recession that started in 2008, the European Union (EU) has opted for a strategy that combines austerity-driven fiscal and experimental ‘growth-enhancing’ research, development, and innovation (RDI) policies supported by different coordination mechanisms. We analyse the experiences of four Central and Eastern European economies—the Czech Republic, Estonia, Poland, Slovenia—in implementing this strategy. Given the weak policy capacities both in the EU institutions and CEE economies to draft and coordinate such novel RDI policies, we find that the implementation of this strategy is more challenging under the current EU fiscal and economic policy coordination system than assumed by the EU.

Research for this article was partially supported by Estonian Research Council’s grants IUT19-13, ETAG13160, PUT1142, ETF9404, and JSPS KAKENHI Grant Number 15F15760. We thank Rauno Mäekivi and Aleksandrs Cepilovs for research assistance.

Notes

¹ See also Pula (2014).

² Our analysis is based on the study of secondary literature (national and regional strategies and EU level documents, such as Partnership Agreements, Country Specific Recommendations of the European Semester) and interviews with policymakers and local experts. From the Czech Republic, we interviewed four policy experts: an expert on RDI of the Government Office (14 April 2016); an expert from the Ministry of Education (11 April 2016); an innovation policy expert from Prague Institute of Planning and Development (29 February 2016); and a director of a regional innovation centre (1 March 2016). In Poland, we interviewed five policy experts: a policy expert from the Entrepreneurship and Innovation Department of Polish Agency for Enterprise Development (29 April 2016); two policy experts from the Marshal Office of the Pomeranian Voivodship (25 May 2016); an innovation expert from the department of Economy and Innovation of the Lubelskie Region (9 May 2016); and an independent consultant and expert of Polish smart specialisation strategies (29 April 2016). In Slovenia, in addition to document analysis and our prior research (see Karo & Looga 2016), we interviewed two more policy experts: a smart specialisation expert of the Government Office (10 December 2015); and a foreign expert advising and evaluating government smart specialisation strategy processes (15 October 2015). In the case of Estonia, we rely on our participant observations carried out as part of the Research and Innovation Policy Monitoring Programme, which allowed us to participate in Estonian RDI policy discussions between 2011 and 2015 where experts from all key ministries and government agencies for supporting RDI participated. The interviews are further discussed in Karo et al. (2017).

³ For more information on this growth and jobs agenda of the EU, see ‘Europe 2020 Strategy’, available at: https://ec.europa.eu/info/strategy/european-semester/framework/europe-2020-strategy_en, accessed 29 August 2017.

⁴ See the ‘Smart Specialisation Platform: RIS3 Platform’, available at: http://s3platform.jrc.ec.europa.eu/s3pguide, accessed 1 May 2016.

⁵ See also Stanojević (2014).

⁶ Slovenian Exit Strategy (2010–2013), available at: http://www.vlada.si/fileadmin/dokumenti/si/projekti/Protikrizni_ukrepi/izhod_iz_krize/SI_exit_strategy.pdf, accessed 1 September 2015.

⁷ ‘Czech Govt Presses for Higher Taxes, Stronger State’, Aktualne.cz, 13 April 2011, available at: http://zpravy.aktualne.cz/czech-govt-presses-for-higher-taxes-stronger-state/r~i:article:697120/, accessed 1 September 2015.

⁸ ‘2013: The Year that Shook Czech Politics’, Aktualne.cz, 26 December 2013, available at: http://zpravy.aktualne.cz/2013-the-year-that-shook-czech-politics/r~i:article:798454/, accessed 1 September 2015; ‘New Coalition Kicks the Can Down the Road on Taxes’, Aktualne.cz, 13 December 2013b, available at: http://zpravy.aktualne.cz/new-coalition-kicks-the-can-down-the-road-on-taxes/r~i:article:796964/, accessed 1 September 2015.

⁹ See also EC (2016b).

¹⁰ Slovenian Exit Strategy (2010–2013), available at: http://www.vlada.si/fileadmin/dokumenti/si/projekti/Protikrizni_ukrepi/izhod_iz_krize/SI_exit_strategy.pdf, accessed 1 September 2015.

¹¹ See Eye@RIS3 database managed by the EU that covers the latest information on selected smart specialisation areas by member states and regions, available at: http://s3platform.jrc.ec.europa.eu/eye-ris3, accessed 1 May 2016.

¹² The Country Specific Recommendations are available at: http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm, accessed 29 August 2017.