National innovation system-Montenegro Innovation dialogue, Becici 2010

1. National innovation system-MontenegroInnovation dialogue, Becici 2010 Prof. dr Mira Vukcevic

2. The main characteristics of the research and innovation system • Size of the research system in relation to the economy Fig.1: Personnel (public/private RTD) Source: MONSTAT (Statistics Office of Montenego) . The research of the MONSTAT includes mostly higher education institutions. The participation of research and developmment units is inconsequential. Fig.2: Number of graduates by sectors which correspond to the number of researchers by sectors Source: MONSTAT (Statistics Office of Montenegro); these data include information on graduate students from high schools and academies.

3. The main characteristics of the research and innovation system Fig. 3 Gross domestic expenditure on RTD – ratio to gross domestic product (GDP) The data are expressed in EUR million. Source: MONSTAT (Statistical Office of Montenegro – Yearbook). Note: These data do not comprise the expenditures of companies (business sector). Fig. 4 Gross government expenditure on RTD – ratio to GDP The data are expressed in EUR million. Source: Ministry of Education and Science, University of Montenegro, Montenegrin Academy of Sciences and Arts, Office for International Scientific, Educational, Cultural and Technical Cooperation.

4. GDP % 1.4 1.2 0.6 0.3 1 0.2 0.8 0.2 0.6 0.9 0.8 0.8 0.4 0.1 0.6 0.2 0.3 0.01 0.03 0 2006 2009 2010 2011 2012 2013 State’s investment Investment of industry The main characteristics of the research and innovation system Fig. 5 Overview of the allocation of funds of the Ministry of Education and Science for the period 2005-2008 The data are expressed in EUR million. Source: Ministry of Education and Science of Montenegro. Fig. 6 Fig. 7 Graph: Proposal of increase of investment in SRA (Scientific and Research Activities) by 2013

5. The main structure and governance of the national innovation system Government Ministry of economy MOES SMEDA UoM RSC Technological parks Spin-offs Incubators Sstart-ups TTO

6. Education-research system-overview • (Education)-Research performers: • 3 universities: UoM (19 faculties and 3 research institutes); University Mediterranean (6 faculties) and University `Donja Gorica` (5 faculties) • Independent private faculties (6-7) • 4 non-university laboratories, involved in scientific projects; still not licensed; mainly monitoring activities • Private foundations and research centres of public industry: NONE • Former industrial development centres • Research funders: • MoES: project financing: applied research (up to 70%), fundamental/basic (up to 100%)

7. Enterprise and industrial system • State-of-the-art: • Big companies: Aluminium plant, Steel factory, Electrical supply, T-com, communications • SMEs: share and role negligible • Key governmental players in innovation policy: • Ministry of Economic Development • Ministry of Education and Science • SMEDA (Directorate for Development of SMEs) • Policies, legislation and strategies: • Laws (business organisations, insolvencies, fiduciary transfer of PR, VAT, accounting, foreign trade, customs, free zone, competition protection) • Strategy for development of SMEs • Introduction of statistical Business register • Specific programmes and instruments: • Development funds (state support to enterpreneurship) • Diaspora fund • Credit lines for enterpreneurship in rural areas • Credit lines for energy efficiency • International donors: EU (IPA and EBRD), USAID…

8. Intermediaries and science-industry cooperation • No TT agencies • At the level of academia: R&D Service centres, core of future TTOs • Meat processing: only sector where activities in the direction of development of a cluster programme have been carried out • No technology/innovation centres operating in the country • No technology and science parks • First business incubator (2007), under the Development fund (Business Start-Up Centre in Bar; Business Incubator in Podgorica) • No international activities • 4 regional business centres • 7 local sub-centres • 1 European Information and Innovation Centre (EIICM) – SMEDA, Chamber of Economy, Faculty of Mechanical Engineering and Business Start-Up Center • Other related organisations: • MIPA: Montenegrin Investment Promotion Agency • CEED: Center for Enterpreneurship and Economic Development • MBA: Montenegro Business Alliance • Montenegrin Employers` Fund

9. Government policy making and coordination of innovation • No national action plan on investment in research • Strategy for scientific research activities (SRA) (2008-2016) - the Action plan within, sets up the aim of increasing the investment in scientific and research activities up to 1,4% of GDP in 2013. • Calls for proposals (Law on Scientific-Research Activities) – industry can apply • Compulsory co-financing of applied research • No measures to facilitate venture capital • Financial incentives for RTD investment by the state: remissions of VAT and import duties on research equipment. Tax and customs duties are laid down in laws on: scientific-research activity, Value Added Tax, customs and Instruction of the Ministry of finance on the manner of carrying out the rights on remission of VAT

10. Infrastructure related to enterpreneurship and innovation • There are around 12 000 active companies in Montenegro. The official records of sales of internet business packages is around 6000. this implies that more than 50% of them use internet. Here, it should also be added that many of them use `regular` home packages.

11. Involvement of the country in regional research, innovation and business development initiatives • FP6 and 7 SEE-ERA.NET, SEE-ERA.NET+, WBC-INCO.NET and ENHANCED; EVOLUNIMONT – evaluation of research capacities; IDEALIST2011; SEERA-EI ; WINS ICT • NATO SPS • CIP – EIP • TEMPUS programme with the complementary subject “Education-research-innovation, triangle” (RTD Service Center at the UoM established within one initiative) • COST – initiatives to join the ongoing actions have emerged • IPA (participation in the EVAL INNO - Fostering Evaluation Competencies in Research, Technology and Innovation in the SEE Region; proposal still under evaluation)

12. Main structural deficiencies of research and innovation system • Lack of interdisciplinarity in research • Lack of infrastructure • Lack of incentives • Lack of information on possible funding initiatives Concerning public support, there are several needs that can be considered as deficiencies: • Governance structures in terms of national committees or councils that coordinate innovation policies, involvement of public agencies and policy makers in innovative policy design, key strategy documents or relevant laws, • Monitoring system in terms of institutions that monitor innovation activities, indicators used to monitor innovation, • Business to business and University to business linkages, in terms of mechanisms to support networking, mechanism to support cooperation between the interdisciplinary research groups and business • Infrastructure and support services favoring the emergence of new clusters, in terms of business and technology incubators, science parks, • Government source for financial support in terms of publicly funded schemes to support technological innovation like credits, vouchers, organizational design or marketing • Access to finance, in terms of policies or agencies aimed at fostering seed financing, start-up financing • Incentive frameworks for innovation in terms of policies for providing the right incentives, policies aimed at lowering the risks for entrepreneurial ventures

13. Main challenges for governance of innovation • Government of Montenegro should: • …accelerate transition of researchers from academic sphere to enterprises through a greater emphasis on the mobility aspects of the best young researchers. • …also introduce tax incentives for projects which involve knowledge transfer from universities to enterprises in order to encourage innovation in SMEs. • …encourage establishment of the Science and Technology Parks with activities to promote networking between their tenants. • Industry: • Industrial clusters should be encouraged to move to internationalization so that they develop an outward exporting orientation and link up with international systems of innovation. • Universities should: • …boost their incubation centers to provide more support to researchers to commercialize their application oriented research results though the creation of new spin-off enterprises. • …establish Technology Transfer Centers to handle property rights issues and the licensing of inventions and innovations created in university laboratories and to encourage patenting and licensing of technologies to enterprises. • …focus on applied research activities. A record of collaboration with enterprises and participation in joint research projects should be included in academic staff promotion criteria.

14. Main challenges for governance of innovation To improve innovative capacity in Montenegro in particular, more resources for science and R&D will not be enough. The focus needs to shift to: • The microeconomic capacity of WB region; • Quality and specialization of factor conditions; • Sophistication of demand; • Quality of enterprise strategies and entrepreneurship; • Presence and depth of clusters. • These are the qualities of the business environment that enable the transformation of scientific knowledge into new products, services and competitive firms. • Universities in Montenegro should be important elements of their local systems of innovation: • Driver of regional technology-based development and the source of a major proportion of local innovations and local companies; • A good contributor to local knowledge and to the development of local technology clusters; • A major source of knowledge in emerging and established clusters.

15. Open questions, recommendations