Abhatoo - Centre Nationale de Documentation

To continue the process of economic convergence and to maintain competitiveness, CESEE countries need to revisit their growth models and move towards a more innovation and knowledge-based framework.

• A new growth model for the region needs to focus on :
1) home-grown innovation,
2) digitalisation,
3) strengthening the skill base and social inclusion, as well as
4) fostering the transition towards a greener economy.
• The COVID-19 shock amplifies the structural challenges CESEE economies are facing. The experience of the lockdowns demonstrated the critical importance of digitalisation for competitiveness and economic resilience. While the pandemic shock offers a “make-or-break” moment for the climate transition, it could widen inequalities and societal fault lines in the region.
• Home-grown innovation needs to gradually take over the role of technology import in CESEE, yet most countries in the region are still regarded as modest or moderate innovators compared to their EU peers. Limited availability of finance and people with the right skillsets are holding back innovative firms. To overcome bottlenecks, it is necessary to nurture the available skilled labour force and to increase the access to finance, in particular risk capital and venture debt.
• Digitalisation is an opportunity for CESEE and its firms. Businesses can access distant markets easier, and benefit from cost reduction or product and process improvements through digital technologies. While most countries in the region still need to catch up with the rest of the continent on digitalisation, many firms in CESEE are on par with EU peers in adopting certain key digital technologies. Digitalisation, however, may lead to polarisation, could adversely impact the labour market and could deepen inequalities in the region through job automation. We argue that to leverage on digitalisation it is necessary to strengthen the skill base to advance the digitalisation transformation in the region, and to mitigate at the same time individuals’ risks of being left behind.
• Despite progress in the area, the countries of the region continue to be more energy intensive than the rest of the EU. They could achieve further significant carbon reduction through lowering the energy use of the building stock, through renewable electricity generation and through the greening of transport systems. Strong policy action is necessary to drive the transition itself, but also to mitigate of the possible adverse social impacts of the low carbon transformation.
• Addressing skill shortages by investment in human capital is a key element of a successful transition to the new growth model. Skill shortages remain a major bottleneck for long-term growth. Countries of the region need to step up efforts to boost adult learning. They also need to apply a wide range of active labour market policies to improve job matching and to bring parts of the inactive population to the labour market.