Highly trained personnel key to attracting foreign investment

30 July 2001 A workshop on ‘Upgrading absorptive capacities of domestic firms and institutions’ in Central and Eastern Europe (CEE) has reaffirmed that well-trained personnel are a country’s trump card when it comes to attracting foreign direct investment (FDI).

One logical outcome of the workshop, organized in Budapest (Hungary) from 7 to 11 March 2001 by the Centre for Innovation Policy Research and Education for Central and Eastern Europe (CIPRE) has thus been a regional mentor programme.

The CIPRE will be launching the mentor programme with a three-day seminar from 8 to 10 November 2001. High-ranking officials will serve as mentors for young and mid-career national-level and regional-level policy-makers and administrators who will be involved in subsequent CIPRE training seminars.

Mentor seminars will concentrate on such topics as institutional mechanisms for policy-making, the use of S&T indicators by policy-makers, evaluation of S&T programmes, technology and risk assessment and foresight.

Several countries, including Bulgaria, Romania and Slovakia, have already nominated national contact points who will help CIPRE to identify the proper candidates for mentor and mid-career training seminars.

The provisional date for the first mid-career training seminar is 14–25 January 2002. It will look at the changing role of national governments in policy-making in the age of globalization and regionalization.

By forging new linkages among East and West Europeans and deepening network activities between Western Europe and the CEE, the March workshop has breathed life into the fledgling CIPRE established jointly by the American Association for the Advancement of Science (AAAS) and Hungarian IKU Innovation Research Centre.

The workshop provided a forum for sharing experiences in shaping science policy in the USA and the CEE and for examining ways of improving the capacity of CEE businesses to capture knowledge flows to make them competitive on the world market.

Of the 51 participants, one-third came from each of Western Europe and the CEE, two from the USA and the remainder from Hungary. Research organizations and universities made up two-thirds of participants and governmental bodies one-fifth, with the business sector being represented by four private corporations.

The AAAS representative explained that the federal budget was the major policy-making arena in the USA. The budget served both as a planning and priority-setting mechanism and as a management tool. As the amount of R&D in the federal budget had grown (it exceeded $90 billion in 2001), the AAAS and other organisations representing the scientific community had become more involved in analysing the contents of the budget, in engaging in discussions on its priorities and in seeking to influence budget debates and outcomes, despite the fact that they had no official, statutory role in this process.

Factors identified at the workshop for determining absorptiveness and innovation output included licensing, technological partnerships, and – participants highlighted this – investment in human resources (specialised employees, personnel training and stimulation). Capabilities in these areas pointed to a country’s ability to assimilate and exploit international knowledge spillovers mainly in the form of incoming FDI.

TEMIC Telefunken Hungary Ltd, a Hungarian-German joint venture company in the machinery industry, was among those who stressed the need for highly trained personnel to attract FDI; a sentiment echoed by the speaker from the European Union (EU) Research Directorate, for whom investing in learning through research and developmpent (R&D) and training was a crucial step in accessing the capital market.

In an exchange of experiences on transforming and restructuring their respective R&D systems, CEE countries cited accelerated international diffusion as the basis for making their R&D systems competitive. One speaker stressed the importance of efficient use of R&D funds, another the necessity of a stable macro-economic environment and transparency. A third focused on the role of venture capital as the motor of technological development and innovation, although capital flows were hampered by the dearth of firms involved in venture capital investments and the reluctance of sponsors to invest in start-up companies.

Forward-looking, a number of speakers even hazarded predictions. One anticipated that the technological specialization of foreign-owned affiliates in each region would become more closely related to the regional indigenous specialization pattern.

Another predicted that the European Research Area would make the EU the most cognitive knowledge-based economy in the world.

Topics discussed for future CEE–EU joint research activities included the socio-economic impact of FDI, university–industry–government co-operation, promoting knowledge flows through mobility and migration of personnel, the public role in R&D budgeting and the main features and impact of technology parks and centres of excellence.

The March workshop was co-financed by UNESCO, the EU, Hungarian Ministry of Education and the Joint Hungarian-American S&T Foundation.

For further information: contact Dr Annamária Inzelt, Director, IKU Innovation Research Centre: annamaria.inzelt@iku.bke.hu