July 27, 2018 Business

Lack of Cash Stifles Serbia’s Innovation Drive

The figures for Serbia’s tech sector look great, but so do the challenges to further growth.

Although start-up pitch events and co-working spaces are flourishing in Belgrade, scarce funding still remains an issue. Photo: Srdjan Garcevic

Srdjan Garcevic

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Addressing business leaders at this year’s Kopaonik Business Forum – Serbia’s Davos – Prime Minister Ana Brnabic stressed that Serbia needed an economy “based on innovation, not just investment”.

It was a statement that reflected her government’s growing focus on entrepreneurship and innovation – not just big-ticket foreign investments – as a way to ensure sustainable growth, inspired by the vibrant tech-scenes that have helped transform the economies of Israel, Estonia, Finland and other innovation nations.

With growth rates for the IT industry of some 20 per cent annually since 2016, there is hope.

The sector now accounts for about 10 per cent of GDP and exports have already exceeded €1 billion this year, according to Finance Minister Sinisa Mali.

But while the figures are great, so are the challenges to further growth.

The latest edition of the Global Innovation Index, published this month, noted the difficulty small Serbian companies have in obtaining loans, the low intensity of local competition, low levels of high-tech imports and meagre spending on digital technology.

Despite its potential, Serbia spends relatively little on Research & Development as a proportion of its GDP – just 0.9 per cent in 2017, compared to 4.25 per cent in Israel, 2.75 per cent in Finland and 2 per cent in fellow former Yugoslav republic Slovenia.

The Index – compiled by Cornell University, the INSEAD graduate business school and the UN’s World Intellectual Property Organisation – ranked Serbia 55 out of 126 countries in terms of innovation performance, behind regional peers Slovenia (30), Bulgaria (37), Croatia (41), Greece (42) and Montenegro (52), though Serbia did feature among 20 countries where innovation output outperforms a country’s development level.

“The greatest obstacle for innovators is the lack of money and easily available capital,” said Vladimir Vojvodic, a senior associate at the government-founded Serbian Innovation Fund, which provides grants to innovative micro or small businesses.

“That is crucial in the early stages of commercially-minded technological development,” he told BIRN.

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