Focus on Innovation in preventing brain drain in the Western Balkans

The event titled “Innovation in the Western Balkans as a key factor for reducing brain drain and boosting local/regional development”, organized by CeSPI-Centro Studi di Politica Internazionale and Osservatorio Balcani e Caucaso Transeuropa, was held at the Institute of Italian Culture in Belgrade today.

“My mission here and Italy’s objective in Serbia are to renew the economic relationship between Serbia and Italy, and to have an economic partnership much more focused on innovation, on new sectors, where the technological segment is much more important”, stated the Italian ambassador to Serbia, Luca Gori, and added that economical relationship should be mainly focused on digitalization, artificial intelligence, with education as the key element.

The findings of the research The mobility of human capital within and from the Western Balkans: when Innovation can stop the brain drain”  , which were also presented, have shown that the employment rate in the Western Balkan is 27%, while the EU average is 31,4%, and additionally, that the highest brain drain in the Western Balkans is recorded in Bosnia and Herzegovina and Albania. On the other hand, also based on the results, three main factors that are considered determinants for the innovation ecosystems are the presence of clusters, strong university-industry collaboration and dynamic innovation culture. As the biggest obstacles in R&D in the Western Balkans, researchers have determined lack of R&D funding, limited domestic funds, lack of venture capital funds, outdated existing RI facilities and poorly developed innovation infrastructure and the innovation ecosystem, while the greatest obstacles in digital innovation hubs.

The Head of Operations II of the European Union to Serbia, Martin Klaucke, stated that there is a strong relationship between brain drain and innovation considering that innovation and competitiveness are crucial factors which make people stay in their country. Klaucke highlighted that 15 % of the population lives outside Serbia which strongly affects the economy and future development of the country. Both Klaucke and Andrea Cascone, the Head of the Adriatic and the Balkans Unit at Italian Ministery of Foreign Affairs, agreed on the fact that brain drain is a challenge for all Western Balkan countries.

Yet, according to Klaucke and Cascone, the Serbian government provides incentives, such as the workgroup created by the Government, which goal is to deal with this issue. As the main challenges for the Serbian Government in regard to preventing brain drain, they highlighted, first and foremost, the lack of structure, procedures and equipment in R&D Funding, followed by the very limited funding for science which stands at below 1% of GDP.

Klaucke underlined that the EU will continue to support technological development and innovation of the private sector, and among others, mentioned the Katapult Programme intended for startups that are in the early stages of development and which can get between EUR 20,000 and EUR 50,000 for the acceleration programme.

The importance of stakeholders and the “reshaped” economic environment 

Senior expert of Regional Cooperation Council, Siniša Marčić, and Regional Coordinator of the Star Venture Programme from the European Bank for Reconstruction and Development Dejan Tonić highlighted the importance of successful innovation funds. In other words, collaboration between programmes, partners and funds is necessary in order to turn an innovative idea into action. Teresa Albano from Organization for Security and Co-operation in Europe (OSCE)  highlighted that reconciliation within the region is the way to attract different stakeholders, and added that innovation is the means and objective. As an Economic Affairs Officer at the project Young Developers and Entrepreneurs to Advance Start-ups (OSCE), Albano highlighted that the service sector is the key sector for attracting young talents, educating and later maintaining and involving other stakeholders.

Marčić and Tonić agreed on the fact that when it comes to human capital and expertise, Serbia is above average, but still, overall regional innovation is at the very beginning.

That the economic environment is changing due to innovation and new ideas is best demonstrated by the fact that “in 2021, the export of ICT sector has reached four hundred and twenty million dollars”, stated founder and director of eastCOM Consulting, Biagio Carrano, who added that that figure, even if still far from the results of Bulgaria and Romania, will significantly increase, having in mind the arrival of around 10,000 Russian ICT professionals in Serbia, from March 2022 to date, together with the establishment of around 2,000 enterprises owned by Russian or Ukrainian citizens of which around 60% are involved in ICT services. Remarking that the average salary in the ICT sector is today three times bigger than the average national salary of around 76,000 dinars, Carrano added that also the minimum wage has increased from 21,000 dinars in 2016 to 40,000 dinars in January 2023, which also means that companies willing to invest here must re-think their idea that Serbia is a country of cheap labour cost and invest more in innovative manufacturing processes. 

The founder of eastCOM Consulting and Serbian Monitor underlined that, in the last eight years, the unemployment rate in Serbia has fallen from 23% to 9%, but yet, good salaries and talent are mainly in Belgrade and Novi Sad. Therefore, there are two kinds of brain drain – one directed toward foreign countries and another from marginal towns and countryside directed toward Belgrade and Novi Sad,  thus worsening the depopulation process and the quality of life in many rural areas, as well as putting at risk the government’s ambition to develop innovative agriculture.. 

“We see here a big contradiction – ICT professionals are not only having very high wages but also work in environments that support free speech, gender equality, environmental protection, open dialogue, listening and critical thinking. Outside their companies, in Serbian society, these values are not so well promoted. Then, there are emerging needs regarding environmental protection, rule of law, quality public education for their children, social responsibility, free speech, promotion of competence and integrity. To give an answer to these needs and reduce the brain drain of young professionals it’s essential to also start promoting social innovation, grassroots organizations and new tools to tackle social and environmental challenges, as well as exchanging international experience in all these fields. “In my opinion, brain drain in today’s Serbia is more related to social and political discontent than to monetary rewards for highly qualified persons on the job market,” Carrano concluded.

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