30 September 2014 - European Commission · PDF file30 September 2014 Regional Innovation Monitor Plus ... innovation documents, ... is €4226.3m in period

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30 September 2014

Regional Innovation Monitor Plus

Regional Innovation Report Východné Slovensko Region

To the European Commission

Enterprise and Industry Directorate-General

Directorate B – Sustainable Growth and EU 2020

Regional Innovation Monitor Plus

Regional Innovation Report Východné Slovensko Region

technopolis |group| in co-operation with

Vladimír Baláž, independent expert

Regional Innovation Monitor Plus i

Table of Contents 1. Main Trends and Challenges in the Regional Innovation System 4

1.1 Recent Trends in Economic Performance 4 1.2 Recent Trends in Regional Innovation Performance 6 1.3 Identified Challenges 11

2. Innovation Policy Governance 14 2.1 Degree of Regional Autonomy and Division of Competences 14 2.2 Regional Budgets and Financial Resources for Innovations 15

3. Innovation Policy Instruments and Orientations 22 3.1 The Regional Innovation Policy Mix 22 3.2 Regional Policies and Initiatives in Support of Advanced Manufacturing 27 3.3 Appraisal of Regional Innovation Policies 28 3.4 Good Practice Case 32 3.5 Possible Future Orientations and Opportunities 33

Appendix A Bibliography 36 Appendix B Stakeholders Consulted 38 Appendix C Statistical Data 39

Table of Figures Figure 1 Economic Performance Indicators. .................................................................... 5 Figure 2 Innovation Performance Indicators. ................................................................. 8 Figure 3 R&D Expenditure per Sector of Performance. .................................................. 9 Figure 4 Share of R&D Expenditure per Sector of Performance. .................................. 10 Figure 5 GERD and GDP Trends. ................................................................................... 10 Figure 6 Technological & Non-technological Innovators. .............................................. 11

ii Regional Innovation Monitor Plus

Tables Table 1 Detailed Long-term Trends in RTDI Indicators in the Východné Slovensko Region ................................................................................................................................ 7 Table 2 Innovation Policy Governance ........................................................................... 15 Table 3 Income and Expenditure by Governments in NUTS III in 2014 (€m) ............. 16 Table 4 Innovation Policy Institutional Set-Up and Available Human Resources ....... 19 Table 5 RTDI funding from the Structural Funds in the Východné Slovensko Region.. ........................................................................................................................................ 23 Table 6 Existing Regional Innovation Support Measures ............................................. 26

Regional Innovation Monitor Plus 1

PREFACE

Launched in 2010, the Regional Innovation Monitor1 continues to be one of the flagship initiatives of DG Enterprise and Industry of the European Commission. From the outset, it aimed at supporting sharing of intelligence on innovation policies in some 200 regions across EU20 Member States.

RIM Plus aims to help regions to improve their innovation policies based on better and harmonised policy intelligence. The new contract aims to contribute to the development of more effective regional innovation policies and promote policy learning. Building upon the experience gained and results obtained during the implementation of the RIM in the period 2010-2012, the RIM Plus service evolves towards providing practical guidance to regions on how to use the collected information, establishing a network of regional experts with thematic specialisation, and organising specialised workshops taking into account the relevance and potential interest among the regional innovation policy makers.

RIM Plus covers EU-20 Member States: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom.

This means that RIM will not concentrate on Member States where the Nomenclature of territorial units for statistics NUTS 1 and 2 levels are identical with the entire country (Estonia, Latvia, and Lithuania), Malta which only has NUTS 3 regions, Slovenia which has a national innovation policy or Cyprus and Luxembourg which are countries without NUTS regions.

The main aim of 30 regional reports is to provide a description and analysis of contemporary developments of regional innovation policy, taking into account the specific context of the region as well as general trends. All regional innovation reports are produced in a standardised way using a common methodological and conceptual framework, in order to allow for horizontal analysis, with a view to preparing the Annual EU Regional Innovation Monitor Plus report.

European Commission official responsible for the project is Alberto Licciardello ([email protected]).

The present report was prepared by Vladimír Baláž ([email protected]). The contents and views expressed in this report do not necessarily reflect the opinions or policies of the Regions, Member States or the European Commission.

The Regional Innovation Access Point and Knowledge Hub presenting further details of the regional innovation measures, policy documents and regional organisations in the Východné Slovensko Region is accessible through the RIM Plus online inventory of policy measures here: http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/region/select

Copyright of the document belongs to the European Commission. Neither the European Commission, nor any person acting on its behalf, may be held responsible for the use to which information contained in this document may be put, or for any errors which, despite careful preparation and checking, may appear.

1 http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/

2 Regional Innovation Monitor Plus

Executive Summary 1. Main Trends and Challenges in the Regional Innovation System

For decades the Východné Slovensko Region has been the poorest region in Slovakia in terms of regional GDP, wages and employment. The region attracted only some 7.4% of the total foreign direct investment (FDI) in period 1990-2012 in Slovakia (source: National Bank of Slovakia 2014: Stock of the Foreign Direct Investment). It was the region with lowest intensity of FDI per capita in Slovenia. The region also faced deep decreases in research spending in 1990s. Share of gross expenditure on research and development (GERD) in regional gross domestic product (GDP) increased from 0.61% in 1996 to 0.67% in 2012. Structure of production and exports was reflected in regional structure of research activities. Engineering (49.5% of total GERD) and nature sciences (15.7%) were the most important science fields in the region in 2012. Steel-making, metal processing and machinery dominated regional economy in 1950-2000 (sources: Statistical Office of the Slovak Republic 2014: The RegDat Database). New industries emerged in early 2000s: robotics, and information and communication technologies.

Challenge 1: Weak R&D system disables co-operation between academia and industry

A common denominator for poor innovation performance was low spending on R&D. In the Východné Slovensko Region the share of GERD in GDP was very low, just 0.67% (Slovakia: 0.82%; EU28: 2.07 %) in 2012. The share of business expenditure on R&D in GDP (BERD) was 0.18% in the Východné Slovensko Region (Slovakia: 0.34%; EU28 1.31 %) in the same year (source: Eurostat 2014).

Challenge 2: Underdeveloped system of innovation governance

The Slovak Self-Governing Regions have no powers in research policies and/or governance. Competences in higher education, innovation, and research and development have traditionally been matters of central government in Slovakia. The flagship initiative on regional innovation governance, the Regional Innovation Centres (RICs) project proved too complex to implement and failed in 2011

Challenge 3: Underused potential of human resources

The Východné Slovensko Region has so far been unable to improve inclusion of marginalised group members (Roma) and provide them with middle and tertiary education. The region also had low rates of participation in the life-long learning, and high rates of outmigration by young people.

2. Innovation Policy Governance

Degree of institutional autonomy was set by the 302/2001 Law on Self-Governing Regions. The eight regional governments have no competences in support to regional innovation and research systems. Slovakia has no specific regional research policies and/or policy documents. So far, only regional innovation strategies have been developed and adopted by the regional governments on the NUTS III level. These strategies, however, contain no mandatory plans for implementation of regional policy measures. Almost all measures supporting R&D and innovation are designed, implemented and evaluated by the central government agencies. The central government may consider targets and policy tools suggested by the regional innovation documents, but is not bound to adopt them. Lack of legislative competences and financial resources disabled large-scale policy interventions in RTDI area by regional governments. Regional governments opted for: (i) development of human resources in secondary education; and (ii) administrative and organisational support to building regional innovation networks and systems (clusters in particular).


Tax transfers (45.3%), and grants for targeted allocations (50.1%) were the most important income items of regional governments in the Východné Slovensko Region (see chapter 2 for details). Support to regional secondary schools was major expenditure item in regional budget (39.8% of total budget). The Košice and Prešov regional governments heavily rely on the EU’s massive support to R&D and innovations.

3. Innovation Policy Instruments

Structure of policy mix (in terms of targets and support measure) is generic for all non-Bratislava regions. Majority of funds is allocated to (a) building and modernisation of research infrastructures; (b) co-operation projects between academy and industry, (c) creating knowledge transfer structures between academia and industry; (d) supporting technology transfers; (e) direct funding for applied research; and (f) organisational, process and other non-R&D innovation. Total support by four Operational Programmes (‘Research and Development’, ‘Competitiveness and Economic Growth’, ’Education’ and ‘Informatisation of Society’) is €4226.3m in period 2007-2013/2015. Indicative allocation for the Východné Slovensko Region is 32.88% of the total support, except for the national projects. The region may in theory benefit from assistance to RTDI projects €1390m in the abovementioned period. The actual spending was considerably lower. Some €664m was contracted and €311m spent by end of April 2014.

4. Conclusions: future actions and opportunities for innovation policy

The regional innovation system of the Východné Slovensko Region accounts for low levels of innovation development. The 2014 Regional Innovation Scoreboard (based on the 2010 data) associated the Východné Slovensko Region with the ‘modest innovators’ group. The region made no progress in Regional Innovation Surveys in 2004-2014. Major strengths are related to intensity of non-R&D innovation expenditure and employment in knowledge-intensive services. Major weaknesses are related to low intensity of public and business R&D, low patent activity, low numbers of SMEs innovating in-house and low shares of population with tertiary education.

The Východné Slovensko Region has enjoyed massive influx of European assistance since 2004. The assistance, however, has not been reflected in decreasing economic and social disparities between the Východné Slovensko Region and rest of Slovakia and/or EU28.

1. Developing basic infrastructure

The Východné Slovensko Region copes with underdeveloped transport infrastructure, and low levels of the foreign direct investment. A shift from low-tech/low value added to high-tech/high value added economy is unlikely in next decade in the region. The Slovak policy makers may consider several policy options for improving economic and social conditions in the region: (a) improving basic regional transport infrastructure (roads and railways), and speeding up completion of the Bratislava- Košice motorway; and (b) increasing support to social inclusion of marginalised population groups.

2. Improving regional innovation governance

The central government may consider improving regional innovation governance (e.g. via re-considering the RICs project, and/0r increasing legislative competences and financial resources of regional governments in innovation development). The regional governments may consider (a) establishing a permanent regional innovation council and/or platform for improving innovation management, co-ordination and monitoring; (b) supporting development of networking schemes for industry and academia sectors; and (c) developing and employing impact assessment techniques and procedures for the Structural Fund projects.


1. Main Trends and Challenges in the Regional Innovation System

1.1 Recent Trends in Economic Performance

The Východné Slovensko NUTS II region is located in the east of Slovakia and consists of two NUTS III self-governing regions (‘kraj’): the Košice Region (subdivided to 13 districts, NUTS IV level) and the Prešov Region (9 districts).

The Východné Slovensko Region is the poorest region in Slovakia in terms of regional GDP, wages and employment (Figure 1). Low levels of economic and social development are explained by peripheral location, underdeveloped infrastructure, and changing economic fortunes of the Východné Slovensko Region. The regional economy enjoyed rapid industrialisation and some increases in living standards under centrally planned economy in 1948-1989. The region experienced drastic economic shock in early 1990s during initial phases of economic transition. Many regional companies were unable to compete under market economy, and lost their traditional customers in Central and Eastern Europe. Unemployment rates soared from 1.6% to .20% in period 1990-1994 and peaked with 24% in 2000. Regional economy experienced some revival in period 2004-2008, but collapsed again after 20092. The region had problem to develop new competitive industries, as it lacked good transport connection with rest of Slovakia and attracted only some 7.4% of the total foreign direct investment (FDI) in period 1990-2012 in Slovakia (source: National Bank of Slovakia 2014: Stock of Foreign Direct Investment). Most economic activity concentrates in metropolitan districts of the Košice and Prešov cities. Belt of peripheral districts (Svidník, Medzilaborce, Snina, Trebišov) lacks employment opportunities and has high unemployment rates. Population of poor districts looks for employment either in Bratislava City or abroad.

The region has the youngest population in Slovakia. Average age of inhabitants was 37.4 years in the region, while 39.3 years in Slovakia in 2013 (source: Statistical Office of the Slovak Republic 2014: the RegDat Database). The Východné Slovensko Region used to account for the highest birth rates. The regional economy was unable to absorb all available labour force. The region accounted for high emigration rates in Slovakia since 1980s. The emigration rates increased after 1989. Many regional industries did not survive difficult economic and social transition in early 1990s (Baláž 2007). The region has been typical with the highest unemployment rates in last 25 years. The unemployment rate was 18.3% for the Východné Slovensko Region, while 13.5% for Slovakia and 6.2% for the Bratislava Region in 2013 (source: Statistical Office of the Slovak Republic 2014: the RegDat Database). The Východné Slovensko Region generated high outmigration flows to the Western Slovakia and the Bratislava Region, and abroad (the Czech Republic, UK, Ireland). The Východné Slovensko Region had net outmigration rate -0.90 persons per 1000 inhabitants, while the Bratislava net immigration rate 7.2 persons per 1000 inhabitants in 2013. The high outmigration partially was offset by high birth rates. The Východné Slovensko Region had natural increase 2.5 persons per 1000 inhabitants in 2013 (Slovakia: 0.6 persons). The region concentrated about 60 percent of the total Roma population in Slovakia (about 420,000 persons in 2012). The Roma population was much younger than rest of population. Children in age group 0-14 years accounted for 39.4% of total Roma population. The Roma population, unfortunately, had difficult access to education and employment. The 2011 Census, for example, found unemployment rate 68% for Roma men and 53% for women. Low education standards were main barrier for entering labour marker by Roma population. The 2011 Census established that 85% Roma men and 88% Roma women had only basic education.

2 The Slovak GDP grew by 6.4% in 2008, but dropped by 4.7% in 2009 (Source: Eurostat 2014: National Accounts)


Figure 1 Economic Performance Indicators.

Source: Eurostat.

Manufacturing in general and metal processing of particular was the main driver of economic development in terms of employment, turnover and exports in Východné Slovensko Region. Economy of the region relied on the high and medium-high technology manufacturing sector. Share of this sector in total employment was 7.8% (Slovak average 10.2%) in 2012. The services sector accounted for some 58.9% of the region’s total employment (Slovak average: 59.2%). The knowledge-intensive services accounted for some 31.2% of total employment (Slovak average: 31.9%). Combined shares of the high-tech sectors in total employment (high-tech manufacturing and knowledge-intensive high-technology services), however, were relatively low in the region, some 2.6% in 2012 (Slovak average: 4.0%). The U.S. Steel (manufacture of metals) was the main pillar of the regional economy. The Východné Slovensko Region accounted for low density of businesses and lacked investments. There were some 21 firms per 1000 inhabitants in the Východné Slovensko Region in 2013 (Slovak average: 34 firms). The region also had a lower share of foreign-owned firms (7.8%) compared to Slovak average (14.6%).

The Košice Region had higher per capita gross domestic product (€14,643 in purchasing power parity) than the Prešov Region (€11,051) in 2011. The Košice Region had average wage €758 and unemployment rate 18.7%, while the Prešov Region had wage €636 and unemployment rate 18.2% in 2013.

0 20 40 60 80 100 120 140 160 180 200

It is important to think new ideas and being crea:ve

Business sophis:ca:on

Market size

Labour market efficiency

Higher educa:on/ Training and Lifelong Learning

Infrastructure

Macroeconomic stability

Ins:tu:ons

WIDER FRAMEWORK CONDITIONS

Employment in 2 and 3 star clusters

Specialisa:on in number of local units by NACE

Employment in Science & Technology (%)

Employment in public sector (%)

Employment in business sector (%)

Employment in industry (%)

Employment in agriculture (%)

Regional Compe::veness Index 2013

Labour produc:vity growth

Long term unemployment rate

GDP per capita

ECONOMIC INDICATORS

SK04 Východné Slovensko

Performance rela:ve to SK Performance rela:ve to EU


1.2 Recent Trends in Regional Innovation Performance

The Východné Slovensko Region faced deep decreases in research spending in 1990s. Share of gross expenditure on research and development (GERD) in regional gross domestic product (GDP) decreased from 0.61% in 1996 to 0.27% in 2008. The EU assistance boosted regional spending on R&D in late 2000s (Figure 5). Share of GERD in regional GDP increased to 0.67% by 2012. Intensity of research and development (R&D) was considerably higher in the Košice Region (GERD = 0.97% GDP) than in the Prešov Region (0.28% GDP) in 2012. The business sector accounted for some 28.6% of total GERD in the Východné Slovensko Region in the same year.

Revival in R&D was related to economic boom in 2001-2008 and Slovakia’s accession to the EU in 2004. Total regional GERD increased from €15.9m to €96.1m in period 2000-2012. Most of this increase related to the Structural Fund projects implemented in planning periods 2004-2006 and 2007-2013. The higher education institutions (HEIs) were main beneficiaries of the Structural Fund projects via the ‘Building infrastructure of higher education institutions and modernisation of their interior equipment in the Eastern Slovakia Region’, ‘Modernisation and building of technical infrastructure for research and development for the Eastern Slovakia Region’, and the ‘Support of networks of excellence in research and development as the pillars of regional development and support to international co-operation for the Eastern Slovakia Region’ support measures. Shift from the private to public financial resources impacted structure of research activities in the region:

• Combined shares of applied research and experimental development in total GERD decreased from 65.4% to 41.3% in period 2000-2012.

• Business enterprise research decreased in importance. The HEIs and public research bodies, on the other hand, benefited from increases in funding (Figures 3 and 4), and high numbers of enrolled graduate and postgraduate students.

• Most Structural Fund projects targeted infrastructure building. Capital expenditure accounted for mere 5% of total GERD in 1990s and early 2000s, but increased to 32% of total GERD by 2012 (Table 1).

• Most undergraduates and postgraduates opted for social science and humanities. Universities changed their research activities accordingly. Social science and humanities accounted for some 5.3% of total GERD in 2000, but 18.7% of total GERD in 2012 (Table 1). Share of social science and humanities in total R&D workers (in full-time equivalent) increased from 9.4% to 22.8% in the same period.

• Engineering and technology somewhat decreased in importance, but were able to attract about half of total R&D spending in 2012 in the Východné Slovensko Region.

There were four HEIs in the Východné Slovensko Region. The University of Technology in Košice and the Pavol Jozef Šafárik University in Prešov scored the best in the Webometrics ranking (no. 1199 and 1584 respectively out of 11,992 World Universities in 2014). The Slovak Academy of Sciences managed several institutes in the Košice city.

Data on private research institutions are quite scarce in Slovakia. The Košice-based U.S. Steel (manufacture of metal research) and the ZTS VVU (machinery, automation and robotics research), the Spinea Prešov (machinery research), the VUKOV Prešov (automation and robotics research), and the VUCHV Svit (chemical fibres research) likely accounted for the most important private research performers in the region.

Export-oriented manufacture of metals and metal products, manufacture of car components, machinery, chemicals and chemical fibres were the most important industries, and accounted for significant share of value added and employment in the region. Structure of production and exports was reflected in regional structure of research activities. Engineering (49.5% of total GERD) and natural sciences (15.7%)


were the most important science fields in the region in 2012. Steel-making, metal processing and machinery dominated regional economy in 1950-2000. New industries emerged in early 2000s: robotics, and information and communication technologies. The regional governments and municipalities joined with the University of Technology in Košice and the Prešov University, and founded the IT valley cluster in 2007. The IT valley cluster encompassed high numbers of fast-growing IT businesses and multinational companies (Siemens, T-Systems, RWE, CISCO, Microsoft, etc.).

Details on co-operation by HEIs, private research institutes and private firms, unfortunately, were scarce.

Table 1 Detailed Long-term Trends in RTDI Indicators in the Východné Slovensko Region

1996 2000 2005 2010 2011 2012

GERD total, €m of which capital expenditure, €m

22,0 1,4

22,5 1,0

28,4 2,4

64,1 19,4

75,6 25,0

96,1 30,4

GERD by type of research, % Basic research Applied research Development

27,3 36,3 36,4

33,3 32,3 34,4

50,4 22,9 26,7

57,8 16,7 25,6

59,4 14,6 26,0

58,7 14,3 27,0

GERD by field of science, % Natural science Engineering and technology Medical and pharmaceutical Agricultural Social science Humanities

X X X X X X

X X X X X X

19,9 58,8

6,1 9,9 4,9 0,4

19,6 52,3

5,6 10,1 10,7

1,6

17,7 47,5 9,4 7,6

12,5 5,3

15,7 49,5 8,0 8,0 11,5 7,2

R&D workers (in 000 FTE) Of which researchers

X X

X X

2 416 1 959

2 771 2 401

2 815 2 409

2 930 2 619

R&D workers, in FTE, by field of science, % Natural science Engineering and technology Medical and pharmaceutical Agricultural Social science Humanities

X X X X X X

X X X X X X

27,7 43,8 12,3 6,8 7,6 1,8

20,8 43,4 10,7 6,5 7,0

11,6

19,7 42,7 10,8

6,1 8,9

11,9

21,5 39,7 11,6 5,5

10,0 11,8

EPO patent applications per 1 mil. inhabitants

1,63 1,29 3,14 3,10 X X

Sources: The Statistical Office of the Slovak Republic (1985-2014): Statistical Yearbooks, and the REGDAT database; Eurostat; author’s own computations.


Figure 2 Innovation Performance Indicators.

Source: Eurostat.

0 50 100 150 200 250 300 350

Turnover of innova:ons new to the firm (%)

Turnover of innova:ons new to the market (%)

SMEs innova:ng in-‐house (%)

Innova:ve SMEs collabora:ng with others (%)

Marke:ng or organisa:onal innovators (%)

Product or process innovators (%)

BUSINESS INNOVATION INDICATORS

Share of innovators receiving public financial support

Change in Employment in MH-‐HT (%-‐point)

Structural funds on core RTDI (per mln pop)

Structural funds on business innova:ons (per mln

Total R&D personnel (%)

Employment in knowledge-‐intensive services (%)

Empl. in medium-‐high/high-‐tech manufacturing (%)

EPO patent applica:ons (per mln pop)

Higher Educa:on R&D (% GDP)

Government R&D (% GDP)

Business R&D (% GDP)

Employees with ISCED 5-‐6 (%)

RESEARCH & TECHNOLOGY INDICATORS

SK04 Východné Slovensko

Performance rela:ve to SK Performance rela:ve to EU


Figure 3 R&D Expenditure per Sector of Performance.

Source: Eurostat.

0.00%

0.50%

1.00%

1.50%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Business R&D (% GDP)

SK04 SK EU27

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Government R&D (% GDP)

SK04 SK EU27

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Higher Education R&D (% GDP)

SK04 SK EU27


Figure 4 Share of R&D Expenditure per Sector of Performance.

Source: Eurostat.

Figure 5 GERD and GDP Trends.

Source: Eurostat.

0.00%$

0.10%$

0.20%$

0.30%$

0.40%$

0.50%$

0.60%$

2000$ 2001$ 2002$ 2003$ 2004$ 2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$

Share of R&D expenditures (% GDP) - SK04 Východné Slovensko

Business$R&D$ Government$R&D$ Higher$EducaDon$R&D$

-‐0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

percen

tage change on

previou

s year

GERD (% change) - SK04 Východné Slovensko

SK04 SK EU27

-‐10%

00%

10%

20%

30%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 percen

tage change on

previou

s year

GDP (nominal) - SK04 Východné Slovensko

SK04 SK EU27


Figure 6 Technological & Non-technological Innovators.

Source: Eurostat.

1.3 Identified Challenges

Challenges for development of R&D and innovation in the Východné Slovensko Region are typical for the whole Slovakia. They relate to (1) weak R&D system; (2) underdeveloped system of innovation governance; and (3) underused potential of human resources.

Challenge 1: Weak R&D system disables co-operation between academia and industry

A common denominator for poor innovation performance was low spending on R&D (Figure 2). In the Východné Slovensko Region the share of GERD in GDP was very low, just 0.67% (Slovakia: 0.82%; EU28: 2.07 %) in 2012. The share of business expenditure of BERD in GDP was 0.18% in the Východné Slovensko Region (Slovakia: 0.34%; EU28 1.31 %) in the same year.

Total numbers of R&D personnel in full-time equivalent stagnated between 2464 and 2528 in the period from 2001 to 2006. Influx of the European assistance helped to increase numbers of R&D personnel from 2770 to 2930 in period 2007-2012. There is a question of sustainability of workplaces, once the European assistance expires. The pool of potential innovators shrank and ties between the industry and academia sector are currently quite weak.

The weak system of applied research disabled co-operation between the industry and academia. Underdeveloped ties between two sectors were reflected in poor commercial outputs of the R&D base in terms of EPO patents, Community trademarks and industrial design. The Východné Slovensko Region, for example, generated mere 3.1 EPO patent applications per million population in 2010 (Slovakia: 5.0; Belgium: 71.2, Ireland: 28.9; Denmark: 105.3 in the same year).


Slovakia used to be a strongly centralised country. Slovak regions lack functional systems of innovation governance. This is given by the fact that (a) no self-governing regions were established at the NUTS II level (except for Bratislava, which is both NUTS II and NUTS III Region) and (b) legislative and financial powers of the NUTS III Regions related to RTDI are fairly limited.

Regional governments in the eight self-governing regions (SGR, NUTS III level) were established as late as in 2002. All Slovak NUTS III regions have the same powers in regional planning and development, regional transport, secondary-level education, healthcare and social welfare, culture and cross-border co-operation. The Law 302/2001 on Self-Governing Regions made no special reference to research policies and/or governance. Competences in higher education, innovation, and research and development have traditionally been matters of central government in Slovakia.

0%#

5%#

10%#

15%#

20%#

25%#

30%#

35%#

40%#

45%#

SK04# SK# EU27#

SMEs innovation data - regional estimates 2010 Technological#innovators#(%#of#SMEs)#

NonAtechnological#innovators##(%#of#SMEs)#

InnovaCve#SMEs#collaboraCng#with#others##(%#of#SMEs)#

SMEs#innovaCng#inAhouse#(%#of#SMEs)#

Turnover#of#innovaCons#new#to#the#market#(%)#

Turnover#of#innovaCons#new#to#the#firm#(%)#


The 2007 Innovation Strategy planned solving problem of weak regional innovation governance systems via establishment of the Regional Innovation Centres (RICs). The measure should invest approximately €150m in the period from 2008 to 2013 and generate capacity for development of innovations in SMEs. The measure was expected to improve links between the business sector, applied industry research organisations and higher education institutions. The RICs should create platforms for cooperation in the field of innovations on regional, national and international levels. The RICs project should be implemented by three ministries: (a) the Ministry of Economy and Construction (MEC), the Ministry of Education, Science, Research and Sports (MESRS) and the Ministry of Labour, Social Affairs and Family (MLSAF). The MEC and MESRS should provide finance for building RICs tangible and intangible infrastructure, and administrative capacities. The MLSAF should pay for training RICs managers. The measure proved to be more complex than expected. The central, regional and local governments discussed details on numbers of the potential RICs, their legal form and activities. Regional governments, for example, should play a significant role in establishing and running RICs. These governments, however, have limited legal powers in the field of innovations and low financial resources. It was originally understood that the ERDF and the state budget would provide approximately 90% - 95% and the founding members (regional and local governments, universities and companies) the remaining 5%-10% of the total budget. The MEC, however, was unsure how to implement Article 55 of Council Regulation (EC) No 1083/2006. Should the RICs generate revenues, they would have to be established as limited liability companies. Founding members would have to reimburse approximately 50 % of the costs. The regional and local governments, universities and companies refused to become the RICs founding members under such conditions. The MEC asked the MESRS to introduce the RICs project under different legal framework (allowing 95% support by the ERDF) and provide the necessary finance. The MESRS did not agree with the proposal and the RICs project effectively stopped (the MEC and MESRS are run by different parties of the government coalition). The MLSAF launched a call for training RICs managers in 2o10, but the call was abolished and the Slovak Government abandoned the whole idea of RICs in 2011.

Limited legislative powers and financial resources were reflected in limited activities of regional governments in support to their regional innovation systems. The support was most visible in (a) preparation of regional innovation strategies at the NUTS III levels, (b) management of human resources in secondary education, and (c) organisational support to creation of clusters.


The Východné Slovensko Ragion accounted for a relatively good stock of human resources. Some 90.1% of population aged 25-64 completed upper secondary and/or tertiary education (Slovakia: 91.9%; EU28: 75.2%) in 2013 (source: Eurostat, Population aged 25-64 with upper secondary and/or tertiary education attainment by sex and NUTS 2 regions). The region, however, had rather low shares of population with tertiary education in total population aged 30-34; 23.3% (Slovakia: 26.9%, EU28: 41.0%) in 2013.

Access to higher education widened during transition to a market economy in the 1990s. Several new universities were established and, despite an uneven quality, partly satisfied increasing demand for higher education. Rapid growth in student population and numbers of higher education institutions, however, has not been matched by adequate financial support. Slovak universities had very limited resources for R&D activities. Consequently, the quality of research was mostly poor. None of the Slovak universities ranked in the world’s top 1000 universities. Low participation in the life-long learning (LLL) was another problem of the regional education system. By 2013 approximately 1.9% inhabitants of the Východné Slovensko Region aged 25 to 64 participated in the LLL (Slovakia: 2.9%; EU28: 10.4%),

The Východné Slovensko Region had an opportunity to take advantage of its reasonable stocks of an educated labour force and generate a good environment for


developing and implementing innovations in manufacturing industries in particular. The threat is that this advantage would not be exploited and the region remains a low-wage, low value-added economy.

The Východné Slovensko Region has so far been unable to achieve increases in numbers of Roma with middle and tertiary education. Low education standards contribute to marginalisation and exclusion of the Roma community. The Roma problem accounts for high complexity and no Slovak government has been able to address it so far.


2. Innovation Policy Governance

2.1 Degree of Regional Autonomy and Division of Competences

Degree of institutional autonomy by Slovak regions is quite low (Table 2). Regional governments in the eight self-governing regions (SGR) (NUTS III level, ‘Vyšší územný celok’, VÚC in Slovak) were established as late as in 2002. Parliaments and presidents of the SGR are elected by permanent residents of the SGR. Each SGR president appoints a regional government, and has executive authority at the regional level. The regional parliament is authorised to decide upon the principal issues of the SGR. The 302/2001 Law on Self-Governing Regions provided eight regional governments with considerable responsibilities related to the ‘design and implementation of programmes for the social, economic and cultural development of the regions’. Indent 4 of the 302/2001 explicitly specifies areas of policy intervention for the SGR:

• social, economic and culture development of the region;

• regional planning and development;

• regional transport;

• regional secondary education;

• regional healthcare and social welfare;

• regional culture and culture monuments;

• regional tourism and sports;

• co-operation with municipalities;

• cross-border co-operation with self-governing regions in other countries.

The 302/2001 Law makes no references to competences in support to regional innovation and research systems. If a region wants to support research and innovation, the usual way is to include these items into ‘support to regional planning and development’. Support to human resources (secondary education in particular) is the most importance competence Slovak NUTS have in field of innovation development. Regional governments have considerable powers in setting quantitative targets and quality standards in secondary education.


Table 2 Innovation Policy Governance

Description Comment

Degree of general regional autonomy

Low. Regional governments can intervene only in areas set in the 302/2001 Law on Self-governing Regions.

Low financial resources. Total budget of eight regional governments accounted for 1.51% of estimated 2014 GDP.

Degree of autonomy with regard to innovation policy

Innovation and R&D are not mentioned in the 302/2001 Law on Self-governing Regions. Higher education is matter of central government. Self-governing regions sometimes use their powers in regional planning to implement innovation policies.

Support to innovation from regional polices seldom excess several thousand euros. Support from the Structural Funds accounts for hundred million euros.

Set-up of regional governance system (centralised/de-centralised/fragmented)

R&D and innovation policies are developed and implemented by the central government.

The Bratislava Region is the only region with its own Operational Programme in Slovakia.

Nature of the process of strategy development (top-down/bottom-up/participatory

R&D and innovation policies are designed on central level and almost exclusively supported from the Structural Funds. Regional governments may comment on these policies, but the central government is not bound to accept the comments.

Some Operational Programmes contain indicative allocations for NUTS II regions.

Intra- and inter-regional co-operation

Some regional governments participate in cross-border inter-regional co-operation programmes (e.g. Interreg IVc). Some regional governments also co-ordinate their development plans with local governments.

Governments of the Košice and Prešov regions joined with municipalities, universities and companies and established several clusters supporting advanced manufacturing and IT business.

2.2 Regional Budgets and Financial Resources for Innovations

The real powers of the SGR are limited by their low financial resources. The Slovak regional governments have four sources of income: (1) tax revenue; (2) non-tax revenue; (3) targeted allocations; and (4) financial operations (see Table 3 for national and regional summary). Total revenue of regional governments was €1,146.89m (1.51% of GDP estimated for 2014) and total expenditure €1,090.44m (1.41% of GDP estimated for 2014). Total revenue of regional governments was considerably lower than that of the central government (€14,308.31m = 18.88% GDP), public social security and health insurance (€11,666.74m = 15.40% GDP), and municipalities (€3.962.37m = 5.23% GDP) in 2014. Moreover, one half of total income by regional governments originated in transfers of personal income tax and grants for targeted allocations:

• In 2014 the main source of income for Slovak regional governments was personal income tax (€425.46m) and motor vehicle tax (€145.54m). The personal income tax is collected by the central government and transferred to regional governments. The motor vehicle tax is collected by the regional governments. Each regional government may set its own tax rate for motor vehicles. The regional government may spend the tax income for non-targeted allocations.

• The non-tax revenue (€84.00m) is another type of non-targeted allocations and derives from fees for public services, sales of assets, capital income and business activities.

• Grants for the targeted allocations (€416.89m) were provided by the central government as to cover expenditure on regional secondary education (€414.43m), and health and social care (€2.45m). The targeted allocations include infrastructure grants from the Structural Funds.


• Financial operations include carry-overs from previous years (€42.00m) and loans (€35.00m).

The non-targeted allocations (coming from tax revenue, non-tax revenue and financial operations) cover expenditure items related to regional road maintenance, regional culture, and regional planning and development. The latest category may include (loosely defined) support to innovations. Some governments provide rather symbolic support to innovations. Government of the Žilina NUTS III Region (part of the Stredné Slovensko NUTS II Region), for example, envisaged €3,800 for Regional Innovation Prize in 2014. The Nitra NUTS III Region (part of the Západné Slovensko NUTS II Region) allocated €5,500 to drafting new Regional Innovation Strategy in 2014. These sums, however, hardly compare to generous support of R&D and innovation from the Structural Funds. Four Operational Programmes (‘Research and Development’, ‘Competitiveness and Economic Growth’, ’Education’ and ‘Informatisation of Society’) invest €4226.3m to R&D and innovation in period 2007-2013/2015. Regional governments therefore point to availability of finance from the EU resources and have little incentive to spend their own means for R&D and innovation.

Table 3 Income and Expenditure by Governments in NUTS III in 2014 (€m)

Slovak Republic Východné Slovensko

Košice Prešov

Total income, of which 1146.89 338.96 182.65 156.31

tax transfers 569.00 153.64 71.44 82.20

non-tax revenue 84.00 15.88 9.91 5.97

grants for targeted allocations 416.89 169.43 101.30 68.13

financial operations 77.00 0.00 0.00 0.00

Total expenditure, of which 1090.44 346.31 186.30 160.00

secondary education 446.12 134.94 66.01 68.93

Sources: Ministry of Finance of the Slovak Republic (2014): Budget of public administration for 2014-2016; Government of the Košice Region (2014): Programme budget of the Košice Region for 2014-2016; Government of the Prešov Region (2014): Programme budget of the Prešov region for 2014-2016.

Notes: ‘grants for targeted allocations’ include capital expenditure for infrastructure building from the Structural Funds.

The Východné Slovensko Region consists of two NUTS III regions - the Košice and the Prešov regions. Regional governments have their own governments and budgets. Combined budget of two regional governments was €338.96m, some 2.25% of the regional gross domestic product estimated for 2014 (Table 3). Estimated shares of budget revenues in the regional GDP in the Košice and the Prešov regions (2.16% and 2.38% respectively) were above Slovak average (1.51%). Slovak government reallocated centrally collected taxes and favoured less developed regions as to reduce regional disparities.

Tax transfers (45.3%), and grants for targeted allocations (50.1%) were the most important income items of regional governments. Key expenditure items related to regional secondary schools (39.8%). As for the NUTS III regions, the Prešov Region Government had more inhabitants (814,706) and benefited from higher tax transfers than the Košice Region (791,914 inhabitants). The Košice Region Government, on the other hand, benefited more from the Structural Fund grants. The total grants was €47.12m, of which €29.79m was allocated to reconstruction of regional roads, €4.24m to reconstruction of regional culture monuments; €11.45m to reconstruction of social care facilities, and €0.64m to regional e-government services.

Neither the Košice nor the Prešov regional governments explicitly mentioned support to innovation in their 2014 budgets. Expenditure items closest to innovation


development related to the ‘Košice - European Capital of Culture’ project (€0.25m), and introduction of e-government in Košice (€0.64m) in 2014.

Regional firms and public institutions of the Košice and Prešov regions rely on the EU’s massive support to R&D and innovations. The four Operational Programmes contracted RTDI projects worth €578.18m by April 2014 in the Východné Slovensko Region (see Chapter 3.1 for more details).

Innovation policy institutional set-up

Table 4 summarises human resources and innovation policy institutional set-up in Slovakia. The table refers to three key ministries and two agencies drafting, implementing, monitoring and evaluating Structural Fund projects:

• The Ministry of Economy contains the Industry and Innovation Unit. The unit provides for drafting innovation policy materials. The ministry manages several agencies, of which the Slovak Innovation and Energy Agency (SIEA) implements, monitors and evaluates the Operational Programme Competitiveness and Economic Growth. The programme is major source for national and regional support measures on innovations and applied research.

• The Ministry of Education, Science, Research and Sports contains the Science and Technology Department. The Department is inter alia responsible for drafting research policy documents. The ministry manages several agencies, of which the Agency for Structural Funds of the EU (ASFEU) implements, monitors and evaluates the Operational Programme Education, and the Operational Programme Research and Development. The two programmes are major sources for national and regional support measures on education, and basic and applied research.

• The Government Office contains the Central Co-Ordination Body and the Department for the Operational Programmes. These bodies are responsible for drafting the National Strategic Reference Programme and co-ordination of operational programme implementation. The Government Office implements, monitors and evaluates the Operational Programme Information Society (OPIS). The programme is major source for the e-government projects on national level, level of regional (NUTS III) governments, and level of local (municipality) governments in Slovakia.

Research and innovation policies are designed and implemented by ministries and their agencies, and funded from the state budget. Preparation of strategic policy documents is a multilateral affair and involves dozens of participants from public and private sectors. The abovementioned units and departments of the central government ministries provide for initial drafting and co-ordination of key stakeholders. Draft materials are discussed on workshops attended by rectors of most important Slovak Universities, the Slovak Academy of Sciences, directors and/or representatives of large industrial enterprises, and industry and employer associations. Key innovation and research policies are developed on the national base, and seldom contain regional details (except for the Bratislava Region in period 2007-2013). Regional governments sometimes comment on draft documents, but the central government is not bound to incorporate regional views into national strategies.

There are no regional Operational Programmes for the NUTS II and NUTS III regions in Slovakia (except for the Bratislava Region). Each region is free to compete for innovation policy schemes launched by the central government and supported by the Structural Funds. Each non-Bratislava region may benefit from four major Operational Programmes aimed at R&D, technology and human resources. Typical average annual allocation is €200m per NUTS II region in period 2007-2013/15 (if average regional success rate is considered).

Some national planning documents contain indicative financial allocations for NUTS II levels. The Operational Programme Research and Development, for example, is designed for the non-Bratislava regions, and suggests indicative allocations 34.24% for the Západné Slovensko Region, 32.88% for the Stredné Slovensko Region and 32.88%


for the Východné Slovensko Region in period 2007-2013/2015. In case of limited absorption capacity financial allocations are shifted among NUTS II regions or to national-wide projects.

Slovakia also has no specific regional research policies and/or policy documents. So far, only regional innovation strategies have been developed and adopted by the regional governments on the NUTS III level. These strategies, however, contain no mandatory plans for implementation of regional policy measures. Almost all measures supporting R&D and innovation are designed, implemented and evaluated by the central government agencies (SIEA and ASFEU in particular). The central government may consider targets and policy tools suggested by the regional innovation documents, but is not bound to adopt them. Regional innovation strategies, in fact, are more ‘wish lists’ than real planning documents in Slovakia.


Table 4 Innovation Policy Institutional Set-Up and Available Human Resources

Policy stage Primary organisation Number of personnel directly in charge

Total number of employees

Change in the number of personnel directly in charge over the last five years

Summary assessment

Strategy development

Ministry of Education, Science, Research and Sports

6 (2013) 1386 (2014) n.a. Total number of employees increased from 11807 in 2009 to 1386 in 2014.

Ministry of Economy 5 539 (2014) n.a. Total number of employees decreased from 549 in 2009 to 539 in 2014.

Government Office 50 786 (2014) n.a. Total number of employees decreased from 1065 in 2009 to 786 in 2014.

Programming as above as above as above as above as above

Implementation Slovak Innovation and Energy Agency n.a. 159 (2013) n.a. Total number of employees increased from 88 in 2008 to 159 in 2013.

Agency for Structural Funds n.a. 218 (2013) n.a. Total number of employees increased from 147 in 2008 to 218 in 2013.

Monitoring and evaluation

as above as above as above as above

Sources: Annual Reports by the SIEA; Annual Reports by the ASFEU.


Regional policy bodies and documents

Lack of legislative competences and financial resources disabled large-scale policy interventions in RTDI area by regional governments. Regional governments opted for:

1. development of human resources in secondary education;

2. administrative and organisational support to building regional innovation networks and systems (clusters in particular).

The Košice region supports development of innovation via management of human resources in secondary education, and strategic activities in territorial planning:

• The region manages several types of secondary schools: (a) ‘gymnasium’ providing general secondary education in humanities and natural science, (b) professional secondary schools providing education in economics, technical sciences and vocational training, (c) musical schools, and (d) language schools. Most programmes aimed at development of human resources supported building informatics and language classrooms, implementing quality management systems, supporting gifted students, etc. The Košice Region had total income €182.65m, of which €66.01m was spent for the secondary education in 2014. The region set an overall goal ‘High-quality and efficient education system’ and specific goals ‘Attractive curricula’ for gymnasiums, ‘Better co-operation of schools and employers in curricula development’ for professional schools and ‘Identifying gifted students’ for musical schools. Performance indicators include shares of curricula aimed at languages, informatics and science & engineering in total curricula, and numbers of new and modernised classrooms.

• The regional government assisted establishment of three clusters in robotics, and information and communication technologies.

The Prešov region also supported development of innovation via management of human resources in secondary education, and strategic activities in territorial planning:

• The region managed several types of secondary schools: (a) ‘gymnasium’ providing general secondary education in humanities and natural science, (b) professional secondary schools providing education in economics, technical sciences and vocational training, (c) musical schools, and (d) language schools. The Prešov Region had total income €156.31m, of which €68.93m was spent for the secondary education in 2014. The region managed network of 16 gymnasiums, 56 professional schools and two language schools. The region set an overall goal ‘Education system for knowledge-based economy’ and specific goals ‘Improved preparation for tertiary education’ for gymnasiums, and ‘Quality secondary education for labour market needs’ for professional schools. Performance indicators include shares of students enrolled to tertiary education and students finding jobs after graduation.

• The regional government assisted establishment of the IT valley cluster, and plans to establish regional innovation centre and a catalogue of investment opportunities in the region. The region also manages its representative office in Brussels and seeks opportunities to tap European networks of innovation.

Support to clusters

Governments of the Košice and Prešov regions were active in establishing regional partnerships by industry and academia sectors. They co-founded three clusters in information technology (IT) and machinery industries:

• The Košice IT valley Cluster was founded by the Košice Region and Košice City governments, Universities of Košice and Prešov, and 19 business and non-profit partners from the IT sector in 2007. By 2014 the cluster had 31 members and aimed at ‘creating regional partnership of IT firms, Universities, and regional and local governments’.


• The BITERAP cluster was founded by group of IT firms, non-profit organisations, and the University of Economics (Bratislava) and the Trenčín University in 2008. By 2014 the cluster associated two Universities and 10 business partners. It aimed at IT solutions for municipalities and state administration.

• The AT+R Cluster was founded in 2010. In 2014 the cluster associated governments of the Košice and Prešov Region, Universities of Košice and Žilina, and seven private research companies. It aimed at development of automation and robotics industries.

For more details on clusters in the Východné Slovensko Region see Chapter 3.4.


3. Innovation Policy Instruments and Orientations

The Východné Slovensko Region accounts for low levels of social and economic development and ranks to the poorest innovation performers in the EU. Governments of the Košice and the Prešov NUTS III Regions designed regional innovation strategies (RIS) in 2008. Implementation of the RIS projects was constrained by limited legislative and financial powers of the regional governments in policy areas of innovation and research. Regional governments concentrated their policy efforts on areas, where they had real competences (secondary education and cluster building in particular). The Východné Slovensko Region also benefited from substantial support from the Structural Funds. The regional innovation system, however, coped with limited absorption capacity. In planning period 2007—2013/2015 less than half of total available R&D and innovation funding by four major Operational Programmes was spent by April 2014.

3.1 The Regional Innovation Policy Mix

Origin of policy mix

Structure of competences and limited availability of own financial resources de facto disabled design and implementation of R&D and innovation policies on regional levels. The situation changed when Slovakia entered the EU in 2004. Since 2004 Slovak regional policy mixes have relied on assistance provided by European funds. The innovation policy mixes, envisaged in the regional innovation strategies, may have been only as far successful as far the regions obtained and absorbed Structural Funds (Baláž 2006), The four sectoral and two regional programmes allocated some €1,887.5m to support Slovakia’s economic and social cohesion with developed EU members in planning period 2004-2006. Policies aimed at support of human resources, innovations, R&D and technology transfers accounted for some 15% of total support. Regional governments tried to incorporate innovation policies into the regional operational plans (ROPs) and to link them to the National Development Plan (NDP). The government dropped the idea of ROPs and adopted sectoral operational programmes managed by the central government ministries. Some topics of ROPs were reflected in the Sectoral Operational Programmes, but there were no specific regional innovation programmes. Each region was free to compete for innovation policy schemes launched by the central government and supported by the Structural Funds (except for the Bratislava Region).

The top-down approach design with no regional variations (again with notable exception of the Bratislava Region) continued in planning period 2007-2013/15 and is envisaged for period 2014-2020 as well.

Development of policy mix

Structure of policy mix (in terms of targets and support measure) is generic for all non-Bratislava regions. The central government agencies implement the same policy measures in the Západné Slovensko, Stredné Slovensko and Východné Slovensko NUTS II regions. There were no major shifts in overall policy directions, but total amount of support to innovations, research, and technology increased about five times between planning periods 2004-2006 and 2007-2013 in the non-Bratislava regions. Total support by four Operational Programmes (‘Research and Development’, ‘Competitiveness and Economic Growth’, ’Education’ and ‘Informatisation of Society’) is €4226.3m, of which €3592.3m from the European resources and €633.9m from the national resources in period 2007-2013/15. The exact volume of assistance to the development of knowledge-based economy is difficult to compute. Assistance levels are indicative and set for priority axes, but not policy measures levels. Some priority axes contain policy measures with diverse targets and final allocation of resources among measures may change over time.

Majority of funds is allocated to (a) building and modernisation of research infrastructures; (b) co-operation projects between academy and industry, (c) creating


knowledge transfer structures between academia and industry; (d) supporting technology transfers; (e) direct funding for applied research; and (f) organisational, process and other non-R&D innovation (Tables 5 and 6).

Indicative allocation for the Východné Slovensko Region is 32.88% of the total support, except for the national projects. The region may in theory benefit from assistance to RTDI projects €1390m in the abovementioned period. The actual spending was considerably lower. Some €664m was contracted and €311m spent by end of April 2014 (Table 5). The Operational Programmes ’Informatisation of Society’ and ‘Education’ accounted for quite slow spending. The Prešov Region in particular accounted for the lowest levels of living standards, limited human resources, and underdeveloped transport, communication and research infrastructures in Slovakia. The Structural Fund projects coped with low absorption capacity in the Prešov Region. By April 2014 the Východné Slovensko Region was able to contract only about half of total indicative allocations by four Operational Programmes supporting RTDI. The Východné Slovensko Region, however, was not much different from other Slovak regions. The average contracting rates by all operational programmes were about 53% by April 2014 in Slovakia.

Table 5 RTDI funding from the Structural Funds in the Východné Slovensko Region. Contracted assistance and spending by four operational programmes, as of 30 April 2014 (€m).

Contracted assistance Funding spent

Region EU funding

National funding

Total EU funding

National funding

Total spending rate, %

Košice NUTS III Region

OPIS 9.60 1.29 10.88 3.32 0.39 3.71 34.05

OPCEG 97.12 15.84 112.96 35.85 5.94 41.79 36.99

OPRD 142.77 18.78 161.56 88.07 11.90 99.97 61.88

OPE 50.81 6.69 57.51 21.70 2.79 24.48 42.57

Total 300.30 42.60 342.91 148.94 21.01 169.95 49.56

Prešov NUTS III Region

OPIS 11.72 1.84 13.56 3.73 0.55 4.28 31.55

OPCEG 162.12 27.00 189.12 79.68 12.89 92.57 48.95

OPRD 54.27 7.98 62.25 19.79 2.40 22.20 35.66

OPE 49.76 6.45 56.20 19.37 2.41 21.78 38.76

Total 277.88 43.27 321.14 122.57 18.25 140.83 43.85

Východné Slovensko NUTS II Region

OPIS 21.32 3.13 24.45 7.04 0.94 7.99 32.67

OPCEG 259.24 42.84 302.08 115.53 18.82 134.35 44.48

OPRD 197.05 26.76 223.81 107.87 14.30 122.17 54.59

OPE 100.57 13.14 113.71 41.07 5.20 46.27 40.69

Total 578.18 85.87 664.05 271.51 39.27 310.78 46.80

Source: The Government of the Slovak Republic, Central Co-ordination Body (2014): Spending by the Structural Funds by Regions; available at: http://www.nsrr.sk/cerpanie/

Notes: OPRD – Operational Programme Research and Development; OPCEG - Operational Programme Competitiveness and Economic Growth; OPE - Operational Programme Education; OPIS - Operational Programme Informatisation of Society.

Public-, social-, and demand-side policies

There are no distinct initiatives supporting public-, social-, and demand-side policies in the policy mix for the Východné Slovensko Region. Some types of demand-type policies (support to industrial policy regulation, standardisation, tax incentives, see EC 2008, FORA-OECD 2009. EC 2010) are out of powers by regional governments. The regional government use public procurement for introduction of e-government


services, but financial allocation is rather low (see chapter 2 for more details). Consumers may perceive information gap between novelty and security of a product (Edler 2007). The gap may be bridged via the awareness raising actions.

The policy measure Support of innovation activities in enterprises in the Eastern Slovakia Region inter alia aims at awareness on organisational innovations and intellectual property rights. It supports ‘preparation of technical feasibility studies, application of metrological procedures, introduction of quality management systems, and production and protection of the intellectual property rights’. Exact amount of financial support to awareness raising is difficult to ascertain, as the measure supports multiple targets.

Regional policy documents

Slovak regional governments have no powers in drafting and implementing Operational Programmes. Nevertheless, the regional governments support drafting regional development documents and/or innovation strategies.

Targets and policy measures suggested by the regional innovation policies may resemble to ‘wish lists’, but at least provide for general understanding of development of innovations in the region. Moreover, regional governments are able to provide administrative and organisational support to establishing regional networks and platforms for innovations. Regional governments use European assistance to hire specialist firms (e.g. Business and Innovation Centre in Bratislava) to draft regional innovation strategies.

Government of the Košice Region used its (limited) legislative powers and financial resources in field of regional planning when supporting (a) preparation of regional innovation strategies and other analytical materials on development of innovations; and (b) creation of regional clusters. The Košice Region passed its regional innovation strategy (RIS) in 2008. The RIS was backed by surveys of innovation needs by small and medium enterprises, and technology capacities of regional Universities and research organisations. Governments of the Košice Region and Košice City, the Košice University of Technology, and regional branches of central government agencies were main stakeholders of the strategy. The SWOT analysis, and analysis of institutional, financial and technical infrastructure for innovations were also taken into account when establishing major areas of innovation policy intervention and suggesting innovation policy tools. The RIS targeted ‘enterprises with marketable products’. The RIS defined six innovation policy priorities:

1. development of public capacity for innovation policies;

2. creation of business environment, support to knowledge diffusion and technology transfer;

3. support to knowledge diffusion and technology transfer;

4. innovation growth poles and clusters;

5. support to innovative businesses;

6. support to applied research.

The strategy listed several ‘strategic project activities’, including support to establishment of regional innovation centre (RIC), and business and technology incubators. The RICs project was key element of the RIS, but failed (see Challenge 2 in Chapter 2).

New RIS-type strategy was under preparation in 2012-2014. Government of the Košice Region prepared an analytical input document for the new regional innovation strategy in 2012. The input document summarised strengths and weaknesses of national and regional innovation systems, listed major national RTDI policies and mapped innovative activities of the regional small and medium enterprises. The regional government also co-operated with the IT valley Cluster and prepared the ICT Profile of the Košice Region. The profile, inter alia, mapped potential of regional


secondary education institutions for generating supply of human resources in ICT business and electrical engineering. The regional government obtained €63,175 from the Regional Operational Programme and launched call for elaboration of the 2013-2020 Regional Innovation Strategy for the Košice Region in April 2014.

Government of the Prešov Region used its competences in regional planning when supporting (a) preparation of regional innovation strategies; (b) creation of the Innovation Partnership Centre, and (c) creation of regional clusters. The Prešov Region passed its regional innovation strategy (RIS) in 2008. Key stakeholders of the RIS project included government of the region, governments of the cities of Prešov, Poprad and Humenné, the Prešov University, regional chamber of commerce and regional branches of central government agencies. Target group of the RIS was ’technology-based small and medium enterprises’. The analytical part of the RIS aimed at technological capacities, human resources, R&D organisations, and quality of innovation infrastructure in the region. The Vision Part of the RIS defined overall goal of the RIS ‘acceleration of economic growth of an underdeveloped region and its gradual transformation into a well-developed region on the basis of technology investments acquisition and knowledge based economy development’. Major areas and measures of innovation policy intervention included:

1. development of knowledge-based economy (measures: supporting innovation infrastructure; co-operation by R&D and business sectors; and innovation finance);

2. skilled jobs (measures: supporting domestic and foreign direct investment; creating financial resources for skilled jobs);

3. development of human resources (measures: enhancing quality of education on all levels; supporting life-long learning, mobility and flexibility of labour force; e-learning a creativity development );

4. innovations and technology transfers (measures: support to technology transfers and innovations in prospective manufacturing and service industries).

The strategy set four innovation policy priorities:

• development of knowledge based economy;

• creation of skilled jobs;

• development of human resources;

• support to innovations and technology transfers in traditional manufacturing and service sectors.

Regional government hoped to implement the strategy via organisational and financial support to establishment of regional innovation centre (RIC), technology transfer centre, and innovation and advisory centre. The RIC project (key initiative for regional innovations), however, failed (see Challenge 2 in chapter 2). The strategy also supported establishment of clusters in machinery and robotics, tourism, health care and wood processing sectors.

New RIS-type strategy was under preparation in 2014. The regional government obtained support from the Norwegian Financial Mechanism and established the Innovation Partnership Centre in 2010. The centre associates the Government of the Prešov Region, the Regional Development Agency of the Prešov Region, the University of Prešov, the AT+R Cluster and a law firm (LEGALasistent, s.r.o.). The centre focusses its activities on networking, partnership building, training programmes, and preparation of projects on co-operation in RTDI by public and private sectors.


Table 6 Existing Regional Innovation Support Measures

Title Duration Policy priorities Budget (€m)

Organisation responsible

More information

Building infrastructure of higher education institutions and modernisation of their interior equipment in the Eastern Slovakia Region

2007-2015 1.3. Research infrastructures 2.1. R&D co-operation projects between academy and industry 2.3. Knowledge transfer structures between academia and industry

72.01 The Ministry of Education, Research and Development, and Sport of the Slovak Republic

http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/building-infrastructure-higher-education-institutions-and-modernisation-their-2

Modernisation and building of technical infrastructure for research and development for the Eastern Slovakia Region

2007-2015 1.3. Research infrastructures 2.1. R&D co-operation projects between academy and industry 2.3. Knowledge transfer structures between academia and industry


http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/modernisation-and-building-technical-infrastructure-research-and-development-eastern

Support of innovation activities in enterprises in the Eastern Slovakia Region

2007-2015 4.1. Direct funding to business R&D and innovation 4.2. Organisational, process and other non-R&D innovation 5.3. Innovation awareness-raising

13.43 The Ministry of Economy of the Slovak Republic

http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/support-innovation-activities-enterprises-eastern-slova111kia-region

Innovation and technology transfers for the Eastern Slovakia Region

2007-2015 4.5. Knowledge transfer and co-operation between firms (incl. technology acquisition) 4.2. Organisational, process and other non-R&D innovation 4.1. Direct funding to business R&D and innovation

85.890.000

The Ministry of Economy of the Slovak Republic

http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/innovation-and-technology-transfers-eastern-slovakia-region

Transfer of knowledge and technology from research and development into practice for the Eastern Slovakia Region

2007-2015 2.1. R&D co-operation projects between academy and industry 2.3. Knowledge transfer structures between academia and industry 4.1. Direct funding to business R&D and innovation


http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/transfer-knowledge-and-technology-research-and-development-practice-eastern-slovakia

Support of networks of excellence in research and development as the pillars of regional development and support to international co-operation for the Eastern Slovakia Region

2007-2015 2.3. Knowledge transfer structures between academia and industry 2.1. R&D co-operation projects between academy and industry 1.2. Competitive funding of research


http://ec.europa.eu/enterprise/policies/innovation/policy/regional-innovation/monitor/support-measure/support-networks-excellence-research-and-development-pillars-regional-development-0

Source: RIM Plus repository (Východné Slovensko /Slovak Republic). Policy priorities ranked by their importance.


3.2 Regional Policies and Initiatives in Support of Advanced Manufacturing

Structure of competences provides regional governments with limited opportunities to support advanced manufacturing. Governments of the Košice and Prešov Regions use their powers in secondary education. The governments communicate with main employers in the region (including manufacturing firms) and try to adjust curricula and set targets for regional secondary schools according to the labour market needs. Other channel of policy intervention in advanced manufacturing relates to development of public-private partnerships and support to cluster creation (see chapter 3.4 for more details). The clusters also co-operate with some leading European initiatives in advanced manufacturing (EFRA and MANUFUTURE). Major support to advanced manufacturing in the region is provided via the Structural Fund projects. The Operational Programmes, however, are designed and implemented by the central government, and the regional governments have no powers to modify them.

The national and regional governments developed several initiatives supporting advanced manufacturing in the Východné Slovensko. The initiatives did not represent a coherent policy framework with clear thematic targets, support measures and/or purpose-set organisations. The initiatives supporting advanced manufacturing used to be incorporated in more general innovation development policies and were implemented by existing policy bodies and research institutions.

The Slovak national and regional innovation strategies lack distinct thematic focus in period 2007-2013/2015. Thematic priorities (including those for advanced manufacturing) sometimes were identified via envisaged projects and/or support measures in the regional innovation:

• The Regional Innovation Strategy for the Košice Region listed 29 prospective project proposals to be financed from the European, national, regional and private resources. The project list inter alia included the ‘Research and Innovation Centre for Smart Technologies with the University of Technology in Košice’, the ‘Technology and Brokerage Centre for Automation and Robotics with the ZTS VVU, and the ‘Centre for Mechanical Features of Materials ‘with the Institute of Materials Research of the SAS.

• The Regional Innovation Strategy for the Prešov Region considered establishing three ‘regional research centres’. One of the centres should focus on ‘progressive technologies and automation’ and aim at development of advanced producer technologies, experimental development of automated production lines, nanotechnologies, and CAD/CAM technologies.

Some of the abovementioned plans were realised with help of the Structural Fund projects. The main sub-sectors/technology areas/application areas in which the region has a specific competitive advantage include robotics, production of automatic systems for regulation and controls, production of programmable processing machines and centres. Several Universities, research institutions and private firms developed applied research and experimental development projects in areas advanced manufacturing. The main regional organisations involved in supporting advanced manufacturing technology development, education and training and industrial R&D/innovation included:

• regional Universities (the University of Technology in Košice and the Pavol Jozef Šafárik University in Prešov);

• selected institutes of the Slovak Academy of Sciences in Košice (SAS) (the Institute of Experimental Physics, the Institute of Materials Research, Institute of Geotechnics and the Mathematical Institute);

• industry research organisations: the ZTS VVU (machinery, automation and robotics research, the VUKOV Prešov (metal processing research);


• selected private companies: Spinea Prešov (machinery research), the VUKOV Prešov, the PROCONT Prešov (production of automated systems and implementation of robotic workplaces);

• clusters: the Košice IT valley Cluster, the AT+R Cluster and he BITERAP cluster (see chapter 3.4 for more details);

• secondary schools oriented at technical education in the Košice and the Prešov Region.

Public sector was the main beneficiary of the Structural Fund projects. The University of Technology in Košice, for example, was the single largest recipient of the RTDI projects in the Východné Slovensko Region. It obtained 31 projects from the Operational Programme Research and Development (total contracted amount was €93.83m by April 2014). Several projects support research and development for advanced manufacturing (‘Research in Progressive Technologies’ - €0.42m; ‘Research and Development of Smart Actuators’ - €0.94m; ‘Research and Development of Antennae Technologies for Aeronautics’ - €0.89m).

The Institute of Materials Research of the Slovak Academy of Sciences obtained five grants (contracted amount was €5.69m by April 2014). The grants for example supported the Centre of Excellence for Advanced Materials with Nano- and Submicron Structures (€3.98m) and research in Advanced Technologies for Design of Micro-composite Materials. As for the private companies, the Spinea Prešov obtained three projects (€7.55m) in robotics and development of bearing reductors, and the ZTS VVU obtained one project (€2.33m) in research in modules of smart robotics systems. The ZTS VVU is the last surviving part of the former ZTS Martin armament monopoly3. The company was able to survive difficult period of economic transformation in 1990s and re-orientate its activities on robotics and automated workplaces. The company also won several projects on linear motors and robots for the Large Hadron Collider in the CERN institute. For more good practices in support to advanced manufacturing, see chapter 3.4.

Main challenges for advanced manufacturing to contribute to the future of industry in the region relate to underdeveloped innovation culture, weak links between the industry and academia sectors, and underuse of human resources.

3.3 Appraisal of Regional Innovation Policies

Appraisal of regional innovation policies is limited by underdeveloped evaluation culture in Slovakia. There are eight regional innovation strategies (RIS), but none was subject of a complex evaluation in Slovakia. The Košice region prepared several partial evaluation of its RIS. The Prešov Region uses informal annual monitoring of regional innovation policy measures. In absence of formal innovation reports the appraisal of regional innovation policies has to rely on ad-hoc evaluation materials and experts’ opinions4.

The current policy mix has not originated in a special policy document for regional innovation. It rather reflects combination of policy measures (heavily subsidised by the Structural Funds) for which the Východné Slovensko Region was eligible in period 2007-2013 (Tables 5 and 6). There, however, are some synergies between the national and regional innovation support measures. Many targets set in the Regional

3 The former ZTS Martin had over 80,000 employees and specialized in production of tanks and armored vehicles in 1948-1989. The armament monopoly had extensive research base with over 5000 researchers and technicians. The monopoly was dissolved and privatized in early 1990s. Research base of the monopoly disappeared after privatisation, except for two small companies. See Smith (1994) for more details.

4 Six interviews with regional and national innovation policy stakeholders were conducted. See Appendix B for list of experts.


Innovation Strategies for the Košice and Prešov regions overlap with targets set by the four Operational Programmes (‘Research and Development’, ‘Competitiveness and Economic Growth’, ’Education’ and ‘Informatisation of Society’) and seem to fit to address the main challenges for development of innovations in the Východné Slovensko Region:

Challenge 1: Weak R&D system disables co-operation between academia and industry sectors several policy measures.

This challenge was addressed by the highest number of policy measures and accounted by far the highest financial allocations.

• The policy measures Building infrastructure of higher education institutions and modernisation of their interior equipment in the Eastern Slovakia Region and Modernisation and building of technical infrastructure for research and development for the Eastern Slovakia Region aim at establishing good quality infrastructure for higher education and research. Investment under the measure supported (i) modernising and reconstructing interiors and exteriors of regional higher education institutions; (ii) modernising information and communication technologies; (iii) purchasing modern laboratory equipment, (iv) modernising student accommodation facilities, and (v) purchases of research instruments, laboratory equipment, and information and communication technologies for top research facilities in the Slovak Academy of Sciences, Higher Education Institutions and research centres. Total contracted and indicative allocations for these measures were €97.1m by end of 2013. All projects supported from the policy measures must end by 2015. Substantial investments from the Structural Funds so far improved regional research infrastructure in public sector, but had no significant impacts on increases in regional business expenditure on research and development.

• The policy measures Innovation and technology transfers for the Eastern Slovakia Region and Support of innovation activities in enterprises in the Eastern Slovakia Region aimed at support to firm innovations and applied research and. Total contracted and indicative allocations for these measures were €99.3m by end of 2013. The first policy measure mostly supported technology transfers and was heavily oversubscribed. Technology transfer schemes are simple to implement and popular with users and policy makers in Slovakia. They enable for supporting relatively high numbers of businesses. Technology transfers, on the other hand, may distort market completion and treat some businesses in more favourable way than the others. The second policy measure proved more demanding on implementation. It supported applied research and development in companies, development and production of prototypes, preparation of technical feasibility studies, application of metrological procedures, introduction of quality management systems, and production and protection of the intellectual property rights. The 2013 Strategic Evaluation of the Operational Programme Competitiveness and Economic Growth (OPCEG) indicted that the support measure had ‘positive effect on values of the relevant statistical indicators pursuing development in different regions. The regions that use fewer OPCEG financial resources do not achieve as good results as the regions where there are implemented projects financed from OPCEG at higher rate’. The Prešov region, for example, accounted for high numbers of contracted projects and high levels of selected indicators (jobs created, increases in turnover and valued added, numbers of R&D and innovation projects). The measure, nevertheless, coped with considerable problems. Schemes supporting introduction of quality management systems and protection of the intellectual property rights accounted for low allocation per project, but complex bureaucracy and high administrative burden. They attracted low numbers of applicants. Schemes supporting applied research allocated higher support per project and generated higher interest by regional enterprises. Actual budgets awarded, however, were much lower than indicative allocation. Few small and medium enterprises in the Východné Slovensko Region


were able to do applied and experimental research. Numbers of supported companies were very low.

• The policy measures Transfer of knowledge and technology from research and development into practice for the Eastern Slovakia Region and Support of networks of excellence in research and development as the pillars of regional development and support to international cooperation for the Eastern Slovakia Region supported networking, knowledge transfer and co-operation between the industry and academia sectors. Total contracted and indicative allocations for these measures were €250.5m by end of 2013. Projects on Centres of Excellence were very popular with users and oversubscribed, but cannot be considered good practice. Some 67 Centres of Excellence were established in Slovakia, with total support €131.14mt5 – far too many for a small country with underdeveloped research system. Most projects were supported in non-Bratislava regions with poor research infrastructure and limited human resources. Research institutions based in the Východné Slovensko Region obtained 12 projects of centres of Excellence (€33.71m), of which 10 in the Košice Region (€28.42m) and two in the Prešov Region (€5.29m). Projects on knowledge transfer funded high number of applied research, centres of excellence and competence centre projects. The projects obtained generous funding, but co-operation by the business sector, higher education institutions (HEIs) and the Slovak Academy of Science (SAS) in the regional innovation system is weak. Commercial outputs of industry-academia co-operation (measured via numbers of patents, industrial designs and trademarks) are modest. Regional innovation capacities and outputs remain very low in the Východné Slovensko Region (see Figure 6 and Appendix C for more details). The HEIs derive their main income based on the number of students and, by a lesser degree, from research grants. They concentrate on teaching and have low motivation to co-operate with local businesses. Regional SMEs mostly compete with low costs of inputs, and show limited interest in co-operation with the HEIs and SAS.

Government of the Košice Region drafted two analytical documents on the ‘Evaluation of innovation targets and projects in the Košice Region’ in 2010-2011 and 2011-2012 The document covering period 2011-2012 found (i) significant progress in building modern technology and research infrastructure; (ii) partial progress in building stock of human resources for transfer of knowledge from academia to industry sector; and (iii) quite limited progress in building ‘functional, multiple-source system of financial support to R&D’.

Innovation policies had so far limited impact on business innovation in the Východné Slovensko Region. Most EU resources are channelled to building and modernising research infrastructure and supporting centres of excellence in public sector. They expand the types of support provided through the central government’s policy instruments, but links between industry and academia remain underdeveloped. Synergies between the national and regional innovation support measures were limited, given lack of legislative and financial powers by regional governments in field of innovation.


This challenge originally was addressed by the Operational Programme Competitiveness and Economic Growth (OPCEG). The OPCEG included a flagship initiative for system of regional innovation governance, the Regional Innovation Centres (RICs) project. The RICs project failed and was partially replaced by the Competence Centres project. The Competence Centres are set up by the higher education institutions and research institutes. The centres should strengthen links

5 Amount of support refers to total assistance to Centres of Excellence from public resources, as announced in the Central Registry of Projects.


between Slovak higher education institutions (HEIs) and the Slovak Academy of Sciences (SAS), and businesses. The HEIs and SAS are the centres’ founders. Unlike RICs the competence centres do not associate some key stakeholders of regional innovations (regional and local governments, industry and employee associations, etc.). Research institutions located in the Košice Region won two competence centres by 2014 (the University of Technology in Košice – Competence Centre for Knowledge Technologies €5.25m; and the Institute of Animal Physiology of the Slovak Academy of Sciences – PROBIOTECH Competence Centre for Biomodulators and Food Supplements €6.23m)6. Calls for establishing competence centres are supported from the Operational Programme Research and Development. Total budget for the competence centres (€50m, of which €11.5m for the Východné Slovensko Region), however, is three times lower than budget for the RICs.

System of regional innovation governance changed little in the last 10 years in the Východné Slovensko Region. Layout of legislative powers and key players in regional innovation development essentially did not change in the abovementioned period. The central government and its agencies maintain their key roles in designing and implementing innovation policy instruments in the Východné Slovensko Region. Stakeholders interviewed considered regional innovation governance major challenge for development of innovations in the Východné Slovensko Region.


The Slovak Government and governments of Košice and Prešov regions addressed the challenge with several policy measures and organisation support. These policy interventions accounted for mixed success:

• The Východné Slovenssko Region significantly benefited from policy measures Building infrastructure of higher education institutions and modernisation of their interior equipment in the Eastern Slovakia Region, the Modernisation and building of technical infrastructure for research and development for the Eastern Slovakia Region, the Transfer of knowledge and technology from research and development into practice for the Eastern Slovakia Region and the Support of networks of excellence in research and development as the pillars of regional development and support to international cooperation for the Eastern Slovakia Region. Regional Universities built new campuses and/or improved their existing facilities.

• The Východné Slovensko Region enjoyed high increases in participation in tertiary education. Share of population aged 30-34 with tertiary education attainment in total education increased from 7.8% to 23.3% in period 2000-2013 (EU28: from 22.4% to 36.8% in the same period). Massive influx of the European assistance has not been matched by increases in quality of teaching and research. None of regional Universities was able to get to list of top 1000 World Universities by the Webometrics ranking. The Východné Slovensko Region coped with high rates of brain drain to other Slovak regions (Western Slovakia, Bratislava Region) and other EU Member Countries (the Czech Republic, UK, Ireland). Regional city and regional governments tried to offset outflows of young and educated people and supported establishment of new industries in the Východné Slovensko. The IT valley cluster project in particular can be considered example of good practice in developing innovative industries.

• There was almost no improvement in the life-long learning. Share of inhabitants aged 25 to 64 participating in the life-long learning increased from 1.8% to 1.9% in period 2005-2013. The respective shares the EU28 increased from 9.5% to 10.4% in the same period.

6 Amount of support refers to total assistance to Competence Centres from public resources, as announced in the Central Registry of Projects.


• The Východné Slovensko Region accounted for above-average shares of population at risk of poverty or social exclusion - 22.7% in 2012 (Slovakia: 20.5%). The Roma population in particular coped with low levels of education attainment, marginalisation and social exclusion.

3.4 Good Practice Case

The Slovak Republic ranks to the poorest R&D and innovation performers in the. The Východné Slovensko Region, in turn, is the poorest economic and innovation performer in Slovakia. Good practices are not easy to find in the Východné Slovensko Region. There nevertheless are some positive lessons that can be learned from the regional innovation policies. Good practice case selected in this chapter does not reflect top-of-the-range innovation policy, but provides an example of pragmatic solutions addressing existing needs in all regions of small and less developed Member State (including the Východné Slovensko Region).

All innovation policy measures are designed by the central government bodies and implemented by the central government agencies. Structure of competences and financial powers do not provide regional governments with much manoeuvring space in innovation policies. Governments of the Košice and Prešov Regions analysed ways, how to use their limited competences and resources in optimal way, as to foster fledgling economic activities in advanced manufacturing and ICT business. Choice of activities related to (a) presence of few good companies in advanced manufacturing, and (b) good quality of technical education by the Slovak University of Technology in the Košice City. The regional governments used their competences in regional planning and assisted founding three clusters (the AT+R Cluster, the IT Valley Cluster and the BITERAP Cluster):

• The AT+R Cluster was founded in 2010 and focuses on development of automation and robotics industries. The cluster operates as an association of legal entities. The regional governments in the Košice and Prešov regions provide organisation, administrative and financial assistance to cluster’s activities. Cluster members include Universities of Košice and Žilina and seven private companies. Some of these engage in high-quality production in advanced manufacturing. The SPINEA for example specialises in mechatronic rotary actuator and positioning modules, precise positioning devices for machining, assembly and welding. The ZTS VVU ranks to the top European producers of service and security robots, and automation of operation and inter-operation control mechanisms. The PROCONT engages in production of automated systems and implementation of robotic workplaces. The AT+R Cluster mission is to help to cluster’s participants ‘to do their own activities more effectively and more dynamically’. The clusters’ management provides its members with the networking, project management, lobbying, and marketing and communication services. It also represents the members’ interests in the Slovak and international bodies for innovation support and governance. The AT+R Cluster, for example, joined the CluStrat project. The project is co-financed by the ERDF and aims at ‘maintaining and improving the competitiveness of clusters in the Central Europe’. The strategic project convenes partners from Austria, the Czech Republic, Germany, Hungary, Italy, Poland, Slovenia, Slovakia and Ukraine. The AT+R Cluster also co-operates with some leading European initiatives in advanced manufacturing, such as the European Factories of the Future Research Association (EFRA) and the Future Manufacturing Technologies platform (MANUFUTURE). The cluster also co-operates with key Slovak bodies for innovation governance (the Slovak Innovation and Energy Agency, the Ministry of Economy and the Ministry of Education, Science, Research and Sports). The Ministry of Education, Science, Research and Sports (MESRS) launched the ‘Support to Industry Clusters scheme’ in 2012. Total financial resources allocated to the scheme €200,000. The AT+R Cluster obtained €60,000 as to ‘promote transfer of R&D results to praxis and increase quality of co-operation by academia sector with business bodies and European institutions of applied research and development’.


• The Košice IT Valley Cluster was founded by the Košice Region and Košice City governments, Universities of Košice and Prešov, and 19 business and non-profit partners from the IT sector in 2007. The cluster stated its mission ‘to create suitable conditions for the creation and development of ICT centre of excellence in the territory of Eastern Slovakia and make socio economic environment in the region attractive especially for young people’. This target should be accomplished via ‘creating regional partnership of IT firms, Universities, and regional and local governments’. By 2014 the cluster had 31 members, including national and regional branches of multinational companies (T-Systems Slovakia, CISCO Systems Slovakia, NESS Slovakia, Microsoft Slovakia). The cluster also co-operated with several regional secondary schools and aimed at development human resources. It prepared lectures and seminars for young talented people interested in IT business. The Košice IT Valley Cluster focused its activities into three main areas: education, innovation and investment. It, for example, co-operated with the Slovak Investment and Trade Development Agency (SARIO) and helped to introduce new IT firms to the Východné Slovensko Region. The IT Valley Cluster provided its members with networking, partnership building and international co-operation activities, educational activities and seminars, project management and lobbying. The cluster, for example, was member of the American Chamber of Commerce and the Union of Slovak Clusters.

• The BITERAP cluster was founded by group of IT firms, non-profit organisations, and the University of Economics (Bratislava) and the Trenčín University in 2008. The cluster members specialised in the IT solutions for municipalities and state administration. By 2014 the cluster associated two Universities and 10 business partners, including the KPMG and Microsoft Slovakia. Unlike the AT+R Cluster and the IT Valley Cluster, the BITERAP Cluster has provided little information on its activities since 2008. It is rather difficult to assess impact of the BITERAP cluster on development of regional innovations.

Regional governments acted as catalysts of cluster development in the Východné Slovensko Region. They were able to bring together diverse stakeholders (companies, municipalities, Universities, secondary schools, non-profit associations) and co-ordinate their activities in development of innovations. Activities of the AT+R Cluster and the IT Valley Cluster help to cope with challenges for development of innovation and knowledge-based economy in the Východné Slovensko Region. The cluster organisations cannot offset missing regional system of innovation governance, but provide for basic networking, partnership building and international co-operation. The clusters help developing advanced manufacturing and ICT sectors, and diminish brain drain, and outflow by young and talented people.

3.5 Possible Future Orientations and Opportunities

Evidence by the statistical and scoreboard data

Considerations and options for possible future orientations are limited by underdeveloped evaluation culture in Slovakia. None of the eight Regional Innovation Strategies has been formally evaluated in Slovakia. The Operational Programmes are evaluated on annual basis, but lack distinct regional dimensions. Moreover evaluations the Structural Fund policy measures tend to be formal. The evaluations used to concentrate on numbers of applicants and projects submitted/awarded, and compliance with laws and regulations. Impact assessment techniques rarely are employed in evaluation reports. In absence of formal innovation reports the appraisal of regional innovation policies has to rely on (a) the EUROSTAT data and set of regional innovation indicators provided by the EU authorities; (b) analytical documents by the regional governments, and (c) opinions by experts and key stakeholders in regional innovation systems.

The Východné Slovensko Region ranks to the poorest innovation performers in the EU. The 2014 Regional Innovation Scoreboard (based on the 2010 data) associated the Východné Slovensko Region with the ‘modest innovators’ group. Position of the region


did not change in Regional Innovation Surveys in 2004-2014. Strengths and weaknesses of the region remained unchanged in the abovementioned period. The region benefited from reasonable intensity of non-R&D innovation expenditure and employment in knowledge-intensive services. The Východné Slovensko Region, however, accounted for low intensity of public and business R&D, low patent activity, low numbers of SMEs innovating in-house and low shares of population with tertiary education.

The Východné Slovensko Region has enjoyed massive influx of European assistance since 2004. The assistance, however, has not been reflected in decreasing economic and social disparities between the Východné Slovensko Region and rest of Slovakia and/or EU28.

• The per capita gross domestic product (in purchasing power parity) increased from 38% to 51% of the EU average in the Východné Slovensko Region, but from 50% t0 75% in Slovakia and from 109% t0 186% in the Bratislava Region in 2000-2011. The income gap between the Východné Slovensko Region and rest of Slovakia increased in the abovementioned period.

• The annual per capita net income increased from the €2200 to €6200 in the Východné Slovensko Region, but from €2400 t0 €7400 in Slovakia and from €3600 to €11600 in the Bratislava Region in period 2000-2011.

• The youth employment rates (population aged 15-29) decreased by faster pace in the Východné Slovensko Region (from 40.5% to 34.7%) than in Slovakia (from 42.6% to 38.0%) and the Bratislava Region (from 50.0% to 47.5%) in period 2000-2013.

• Employment in the high-technology sectors (high-technology manufacturing and knowledge-intensive high-technology services), as percent of total employment, decreased from 2.8% to 2.6% in the Východné Slovensko Region, but increased from 3.6% to 4.0% in Slovakia and from 5.7% to 8.6% in the Bratislava Region in period 2008-2012.

Data and indicators on economic, social and RTDI convergence raise questions about efficiency of the EU assistance. The European regional policies under the Convergence Objective are aimed at regions with GDP of 75% of the EU average (former Objective 1 regions). All Slovak NUTS II regions are eligible for the assistance under the Convergence Objective, except for the Bratislava Region. In Slovakia, the Convergence Objective favours regions with poor RTDI infrastructure and capacities, and excludes Bratislava Region with the best RTDI infrastructure and capacities. The Bratislava region paradoxically was able to thrive with limited amount of the EU assistance. The non-Bratislava Regions in general and the Východné Slovensko Region in particular clearly cope with poor absorption capacity for RTDI policy measures. The Slovak Government tried to use flexibilities in allocations of the Structural Funds. It reallocated as much of the RTDI policy measure to the Bratislava Region as possible. The flexibilities, however, had their limits and most assistance for the RTDI policies ends in regions with low potential for absorption of sophisticated RTDI policies. Significant shares of the EU assistance for RTDI measures are spent for (a) building of new campuses in low-quality regional Universities, and/or (b) the technology transfer schemes, which distort market completion.

Opinions by regional stakeholders and experts

The economy of the Východné Slovensko Region has depended on the steel making and metal processing. The single largest company the U.S. Steel Košice employed over 11 thousand employees, and dominated economic and social life of the region. There were some islands of excellences in the regional business base (the SPINEA, PROCONT and the ZTS VVU in automation and robotics) and the member firms of the IT Valley Cluster. These few excellent companies, however, could offset lack of broader business base for development of knowledge-based economy in the region. The Východné Slovensko Region copes with underdeveloped transport infrastructure, lack


of job opportunities, high unemployment rates and significant outflows of young and talented people. A shift from low-tech/low value added to high-tech/high value added economy is unlikely in next decade in the Východné Slovensko Region. The Slovak policy makers may consider several policy options for improving economic and social conditions in the region:

• improving basic regional transport infrastructure (roads and railways), speeding up completion of the Bratislava- Košice motorway7 and increase number of flights from the Košice Airport;

• increasing support to social inclusion of marginalised population group;

• improving regional innovation governance (e.g. via re-considering the RICs project, and/0r increasing legislative competences and financial resources of regional governments in innovation development);

• establishing branches of Bratislava RTDI in Východné Slovensko Region.

Each non-Bratislava region may benefit from four major operational programmes aimed at R&D, technology and human resources and average annual allocation of €200m in period 2007-2013/15 (if average regional success rate is considered). The Východné Slovensko Region may cope with low absorption capacity, given underdeveloped innovation and R&D infrastructure. The region, however, may benefit from good quality of technical education in machinery, robotics and information technology (IT) industries. Co-operation by Universities, regional SMEs and multinational companies may advance over time and help establishing foundations of the knowledge-based economy in the region. As for the emerging regional technological specialisation in high-tech products, IT services and robotics were considered the most promising fields.

Underdeveloped innovation governance is a considerable weakness of the Východné Slovensko Region. The stakeholders suggested that governments of the Košice and Prešov Regions may consider following recommendations for improving governance of innovations:

• ensuring that the RTDI initiatives supported by the Structural Funds primarily aim at projects with a high innovation potential;

• establishing a permanent regional innovation council and/or platform for improving innovation management, co-ordination and monitoring; these bodies should include representatives of business, and central, regional and local governments;

• supporting development of networking schemes for industry and academia sectors;

• developing and employing impact assessment techniques and procedures for the Structural Fund projects;

• promoting awareness on innovations, and innovation culture in enterprises.

• improving availability of experts for evaluation procedures.

7 The National Motorway Company many times shifted its goal completing the Bratislava- Košice motorway. The latest term is 2019.


Appendix A Bibliography

1. Baláž V. (2006): Structural Funds and Building Knowledge-based Economy in Slovakia: Experience, Major Challenges and Implications for Innovation Policies, Ekonomický časopis, 54(8): 755-770.

2. Baláž, V. (2007): Regional Polarisation under Transition: Case of Slovakia, European Planning Studies, 15(5): 587-602.

3. EC, European Commission (2008): Towards an increased contribution from standardisation to innovation in Europe, Brussels, 11.3.2008, COM(2008) 133 final.

Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0133:FIN:en:PDF.

4. EC, European Commission (2010): An Integrated Industrial Policy for the Globalisation Era. Putting Competitiveness and Sustainability at Centre Stage. SEC(2010) 1272.

Available at: http://ec.europa.eu/enterprise/policies/industrial-competitiveness/industrial-policy/files/communication_on_industrial_policy_en.pdf.

5. Edler (2007) Demand-based Innovation Policy. Manchester Business School Working Paper, Number 529.

6. FORA-OECD (2009): New Nature of Innovation, OECD Committee for Industry, Innovation, and Entrepreneurship.

Available at: http://www.tem.fi/files/24835/New_Nature_of_Innovation.pdf.

7. The Košice Self-governing Region (2014): Programový rozpočet Košického samosprávneho kraja na roky 2014-2016 (Programme budget of the Košice Region for 2014-2016),

Available at: http://web.vucke.sk/files/dokumenty/pub/financie/rozpocet/navrh_rozpoctu_2014_2016.pdf.

8. The Košice Self-governing Region (2013): Vyhodnotenie inovačných zámerov a inovačných projektov v Košickom samosprávnom kraji za roky 2011-2012 (Evaluation of the innovation objectives and innovation projects in the Košice Region in 2011-2012).

Available at: http://zastupitelstvo.vucke.sk/Dokumenty/2013/21-2013/dokument2360%20vo3zast21bod12-4main.pdf.

9. The Košice Self-governing Region (2012): Regionálna inovačná stratégia Košického samosprávneho kraja – analytická časť, vstupná analýza (Regional Innovation Strategy for the Košice Region. Analytical Part – Imput Analysis).

Available at: http://web.vucke.sk/files/dokumenty/pub/regionalny_rozvoj/phsr/ris_ksk_vstupna_analyza_2012.pdf

10. The Košice Self-governing Region (2012): IKT profil Košického samosprávneho kraja (ICT Profile of the Košice Region).

Available at: http://web.vucke.sk/files/dokumenty/pub/regionalny_rozvoj/investicne_prostredie/ikt_profil_ksk_2012.pdf


11. The Košice Self-governing Region (2012): Vyhodnotenie inovačných zámerov a inovačných projektov v Košickom samosprávnom kraji za roky 2010-2011 (Evaluation of the innovation objectives and innovation projects in the Košice Region in 2010-2011).

Available at: http://zastupitelstvo.vucke.sk/Dokumenty/2012/15-2012/dokument2162%20vo3zast15bod13-3dov.pdf.

12. The Košice Self-governing Region (2008): Regionálna inovačná stratégia Košického samosprávneho kraja (Regional Innovation Strategy for the Košice Region).

Available at: http://web.vucke.sk/files/dokumenty/pub/regionalny_rozvoj/investicne_prostredie/ris.pdf.

13. The Ministry of Finance of the Slovak Republic (2014): Rozpočet verejnej správy na roky 2014-2016, (Budget of public administration for 2014-2016). Available at: https://www.finance.gov.sk/Default.aspx?CatID=9521

14. The Prešov Self-governing Region (2008): Regionálna inovačná stratégia Prešovského samosprávneho kraja (The Regional Innovation Strategy for the Prešov Region)

Available at: http://www.po-kraj.sk/files/dokumenty-odborov/O_RR/ris-presov/RIS-Presov.pdf

15. The Prešov Self-governing Region (2014): Programový rozpočet Prešovského samosprávneho kraja na roky 2014-2016 (Programme budget of the Prešov region for 2014-2016),

Available at: http://www.po-kraj.sk/files/samosprava/pripomienkovanie-materialov/rozpocet_psk_2014-2016/pripomienkovanie_navrh_rozpoctu_psk_2014-2016_prilohy01-10.pdf

16. Smith, A. (1994): Uneven Development and the Restructuring of the Armaments Industry in Slovakia, Transactions of the Institute of British Geographers, 19(4): 404-424.


Appendix B Stakeholders Consulted

The stakeholders include: (i) managers of the regional development departments of self-governing regions; (ii) managers of key regional clusters; (iii) representative of innovative enterprises in advanced manufacturing sector; (iv) representative of the Slovak Innovation and Energy Agency (the SIEA implements most RTDI policy measures in the Východné Slovensko Region):

1. Ing. Peter Ťapák, Manager of the Regional Development Department of the Košice Self-governing Region, Námestie Maratónu mieru 1, 042 66 Košice, Slovak Republic (date of interview: 28.05.2014).

2. Ing. Július Takáč Regional Development Department of the Prešov Self-governing Region, and manager of the Innovation Partner Centre, Hlavná 139, 08001 Prešov, Slovak Republic (date of interview: 28.05.2014).

3. Dr. Vladimír Benč Manager, AT+R Cluster, Južná trieda 95, 040 01 Košice (date of interview: 28.05.2014).

4. Ing. Miriam Brašková, PhD, Co-ordinator of Activities, The IT Valley Cluster, Organisation, Košice IT Valley z.p.o., B. Němcovej 32, 040 01 Košice, Slovak Republic (date of interview: 28.05.2014).

5. Ing. Jaromír Jezný, PhD, Director/Owner of the ZTS VVU (leading Slovak firm in robotics and automation), Južná trieda 95, Košice 041 24, Slovak Republic (date of interview: 09.06.2014).

6. Ing. Miroslav Balog, PhD, Manager of the Innovation Management Department, Slovak Innovation and Energy Agency, Bajkalská 27, 827 99 Bratislava, Slovak Republic (date of interview: 09.06.2014).


Appendix C Statistical Data

SK04 Východné Slovensko Country EU27 Year Source Performance relative to

Performance relative to

SK04 SK EU27 EU27 SK ECONOMIC INDICATORS GDP per capita (Euros) 8,700.00 12,800.00 25,200.00 2011 Eurostat 34.52 67.97 Long term unemployment rate 13.80 10.00 5.10 2013 Eurostat 36.96 72.46 Labour productivity growth (%) 4.15 5.14 2.19 2001-2011 Eurostat 189.13 80.62 RCI 2013 -0.45 0.00 2013 JRC 100.00 100.00 Share of employment in agriculture 0.03 0.03 0.05 2011 Eurostat 69.24 112.42 Share of employment in industry (including construction) 0.38 0.37 0.25 2011 Eurostat 150.31 100.65 Share of employment in business 0.29 0.30 2011 Eurostat 100.00 100.00 Share of employment in public sector 0.23 0.22 0.25 2011 Eurostat 91.68 103.81 Share of employment in S&T 0.05 0.06 0.09 2011 Eurostat 54.38 82.22 Specialisation in number of local units by NACE 0.46 0.41 0.36 2012 ISI-Eurostat 129.30 112.05 Employment in 2 and 3 star clusters (strong clusters) 30.80 38.23 31.39 2010 MERIT-CO 98.12 80.56 WIDER FRAMEWORK CONDITIONS Institutions 29.00 29.00 43.55 2010 RCI 66.60 100.00 Macroeconomic stability 53.00 53.00 58.20 2010 RCI 91.07 100.00 Infrastructure 65.00 75.75 74.64 2010 RCI 87.09 85.81 Higher education/ Training and Lifelong Learning 62.00 74.50 70.07 2010 RCI 88.48 83.22 Labour market efficiency 19.00 40.00 55.03 2010 RCI 34.53 47.50 Market size 33.00 41.75 50.27 2010 RCI 65.64 79.04 Business sophistication 16.00 30.25 43.16 2010 RCI 37.07 52.89 It is important to think new ideas and being creative 0.50 0.48 0.54 2010 MERIT-ESS 93.98 103.97


SK04 Východné Slovensko Country EU27 Year Source Performance relative to

Performance relative to

RESEARCH & TECHNOLOGY INDICATORS Employees with ISCED 5-8 (% all employees, ISCED 2011) 20.43 23.02 33.52 2013 Eurostat 60.95 88.76 Business R&D (% GDP) 0.16 0.25 1.29 2011 Eurostat 12.40 64.00 Government R&D (% GDP) 0.14 0.19 0.25 2011 Eurostat 56.00 73.68 Higher Education R&D (% GDP) 0.24 0.24 0.48 2011 Eurostat 50.00 100.00 EPO patent applications (per mln population) 4.65 5.33 110.48 2009 Eurostat 4.21 87.15 Employment in medium-high & high-tech manufacturing (% total employment) 7.80 10.20 5.60 2012 Eurostat 139.29 76.47 Employment in knowledge-intensive services (% total employment) 31.20 31.90 39.00 2012 Eurostat 80.00 97.81 Total R&D personnel (% active population) - all sectors 0.66 1.07 1.66 2011 Eurostat 39.76 61.68 Structural funds on business innovations (Euros per mln population) 55.24 50.42 77.74 2007-2013 Eurostat 71.07 109.57 Structural funds on core RTDI (Euros per mln population) 167.69 222.78 63.01 2007-2013 Eurostat 266.12 75.27 Change in Employment in medium-high & high-tech manufacturing (%-point) -0.19 -0.38 2008-2012 Eurostat 104.46 #HODNOTA! Share of innovators receiving public financial support (SMEs, CIS 2010) 4.15 4.24 9.95 2010 MERIT-CIS 41.66 97.71 BUSINESS INNOVATION INDICATORS Technological (product or process) innovators (% of all SMEs) 24.93 26.01 37.85 2010 MERIT-CIS 65.86 95.83 Non-technological (marketing or organisational) innovators (% of all SMEs) 26.11 27.25 39.83 2010 MERIT-CIS 65.56 95.83 Innovative SMEs collaborating with others (% of all SMEs) 7.94 8.29 8.89 2010 MERIT-CIS 89.33 95.83 SMEs innovating in-house (% of all SMEs) 22.63 2010 MERIT-CIS 100.00 100.00 Share of turnover of newly introduced innovations new to the market 13.64 13.58 4.67 2010 MERIT-CIS 291.71 100.38 Share of turnover of newly introduced innovations new to the firm 9.02 9.77 8.71 2010 MERIT-CIS 103.61 92.38

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