Innovation in Eastern Europe : a case study of Czech Republic

In this study we evaluate innovative performance of the economies of Central and Eastern Europe (CEE) based on the available statistics of innovation processes. We compare such country-level indicators as educational levels, investments in R&D, FDI, trade and licensing flows, patents and scientific articles, and find that the most developed CEE economies are also the most innovative. At the same time, as supported by the results of the interviews in Czech Republic, one of the top performers in the CEE region, its economy is facing a number of challenges that are similar to other middle-income countries around the world. We suggest addressing these challenges from the prospective of the Middle Income Trap, when a middle-income economy to sustain growth must learn to compete with advanced economies in high-skill innovation. Development of effective innovation policy should be a priority for the CEE countries to escape from the middle income trap.