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Countries in the Black Sea Basin

All seven Countries in the Black Sea Basin profiled (chapter 12) – Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova, Turkey and Ukraine – consider the digital economy to be a growth engine. For instance, information technology accounts for more than 40% of Ukraine’s exports of services. Ukraine’s Concept for the Development of a Digital Economy and Society covering the years 2018–2020 has sought to create a ‘digital workplace’.

Countries in the region have launched initiatives to foster innovation. Azerbaijan, for instance, created an Innovation Agency in 2018 that provides venture capital to innovative businesses, including start-ups. Belarus has been reforming the national innovation system since 2015. More than 90 legal acts directly or indirectly relating to R&D had been issued by 2018. In 2016, the government consolidated its 25 innovation funds into a single Republican Centralized Innovation Fund, which functions as a state agency.

Notwithstanding these efforts, countries are struggling to incentivize experimentation, dynamism and the creation of new knowledge in the economy. In the post-Soviet countries, restrictive oligarchic structures are limiting the rewards from innovation.

In Turkey, structural imbalances lie elsewhere. Recent firm-level evidence shows that Turkey’s technology-intensive firms carry out little R&D relative to their size. This picture contrasts sharply with the state’s strong emphasis on supporting innovation: tax breaks for technology-intensive firms grew three-fold in local currency between 2015 and 2018, according to the Turkish Statistical Institute. However, firms in the services and construction sectors, which accounted for 64% of GDP in 2018, remain largely shielded from competition and can, thus, afford to ignore the government’s support programmes for R&D and manufacturing-focused innovation.

All but Belarus are dovetailing with European structures and networks. Armenia, Georgia and Ukraine became formally associated with the EU’s Horizon 2020 programme in 2015–2016. Ukrainian and Georgian researchers submitted their first project proposals to the European Research Council in 2015 and 2017, respectively.

Turkey’s geothermal industry has benefited from a favourable regulatory environment for business investment, as well as the experience gained by Turkish geothermal power companies through their participation in the EU’s Horizon 2020 programme via consortia. Between 2009 and 2019, the number of geothermal power plants in Turkey shot up from three to 49.

Figure 12-9
  • Figure 12.1: Socio-economic trends in the Black Sea Basin
  • Figure 12.2: Trends in research expenditure in the Black Sea Basin
  • Figure 12.3: Density of public-sector researchers, publications and citations in the Black Sea Basin, 2017–2018
  • Figure 12.4: Trends in patenting in the Black Sea Basin
  • Figure 12.5: Trends in human resources in the Black Sea Basin
  • Figure 12.6: Distribution of electricity generation capacity in Armenia, 2015 (%)
  • Figure 12.7: Trends in scientific publishing in the Black Sea Basin
  • Figure 12.8: Doctoral admissions and degrees at Azerbaijani universities, 2007–2017
  • Figure 12.9: Breakdown of Turkey’s primary energy supply by source, 2012 and 2018 (%)
  • Box 12.1:  How Turkey became a role model for geothermal energy within a decade