The report is based on an Economist survey of over 370 local and foreign executives in the region. The report shows that "progress to date in promoting home-grown innovation has been slow and patchy," says Lewis.
He believes innovation is indispensable for sustainable economic growth and thus CEE countries cannot just copy foreign ideas and expect to grow.
MNC innovation does not help local companies as massive amounts of foreign direct investment have not fostered any spillover of technology or knowledge into local economies, claims Lewis.
The author observes that there has only been "modest" innovation in CEE over the last five years, calling for R&D spending to be increased and science education and IT infrastructure improved.
Nevertheless, Lewis notes that SMEs have innovated and exported successfully and should "provide a standard for others to follow". But "finding the right staff has been made harder by the persistence of a 'brain drain' from the region".
Lewis concludes by questioning intervention by public authorities to help business to innovate, claiming that local firms have become "ambivalent about the effectiveness of government reforms". The main sticking points are the lack of effective tax legislation, employee share ownership and fragile contacts with universities, he adds.
