A drive to increase innovation by companies is a key element in the response of emerging economies to boost their productivity and to help them catch up with their more advanced neighbours, EBRD Chief Economist Erik Berglof said on Friday.
His remarks came during a presentation at a conference in Warsaw at the headquarters of the National Bank of Poland: “Building Market Economies in Europe: - Lessons and Challenges after 25 Years of Transition”.
The focus on innovation anticipates the publication on 18 November of the EBRD’s Transition Report 2014: Innovation in Transition.
In his presentation in Warsaw, Mr Berglof noted that the convergence process had slowed down particularly in central and south-eastern Europe and that foreign direct investment had dried up at the same time as Western bank retrenchment had led to deleveraging.
The transition region could only dig its way out of this stagnation with a renewed focus on macroeconomic stability and financial sector re-developmen and a banking model with a Banking and Capital Market Union.
Structural reforms had to be reignited, aimed at improving the business environment and corporate governance stimulating infrastructure investment. The presentation placed particular emphasis on innovation, which Mr Berglof said was key to improved productivity.
He noted innovative firms were especially sensitive to the business environment and called for policies that helped remove the impediments to innovation.