Western Balkans Competitiveness Outlook 2024: North Macedonia

10. Science, technology and innovation

Abstract

An effective institutional and policy context for science, technology and innovation (STI) is essential to boost the knowledge economy. This chapter, along with three sub-dimensions, analyses the overall STI trends and performance in the region and the development of sustainable and impactful STI policies and processes. The first sub-dimension, the STI system, assesses the STI regulatory framework and strategies, including smart specialisation strategies and the institutional framework for STI policy. The second sub‑dimension, public research systems, analyses the governance of the public scientific research sector, funding approaches and human resource capacity to foster academic research excellence. The third sub-dimension, knowledge exchange and co-creation, assesses policies that support integration between scientific research and the private sector, which is critical for technology transfer, as well as policies and initiatives to promote European and regional collaboration in STI.

Key findings

North Macedonia has made steady progress in the science, technology and innovation (STI) dimension since the previous CO (Table 10.1). With an overall score of 2.8, the economy performs above the Western Balkan regional average. Some progress has been made to stimulate business-academia collaboration, and despite adopting a Smart Specialisation Strategy in 2023, further efforts are needed to steer STI policy and implement relevant, effective and efficient policy measures.

Table 10.1. North Macedonia’s scores for science, technology and innovation

Dimension	Sub-dimension	2018 score	2021 score	2024 score	2024 WB6 average
Science, technology and innovation	9.1: STI system			3.5	2.9
	9.2: Public research system			2.7	2.5
	9.3: Knowledge exchange and co-creation			2.3	2.0
North Macedonia’s overall score		2.1	2.4	2.8	2.5

The key findings are:

• In late 2023, the government adopted the Smart Specialisation Strategy 2023-27 (S3) and its accompanying Action Plan, designed to be the new strategic framework for STI policy. There are, however, no strategic guidelines in place to regulate scientific research, making the framework incomplete. The absence of a comprehensive strategic framework presents an obstacle to further enhancing the economy’s STI performance in a holistic way.

• The Fund for Innovation and Technology and Development (FITD) continues to be North Macedonia’s primary vehicle for innovation policy implementation. It has operated several large-scale STI programmes, mainly targeting small and medium-sized enterprises (SMEs). However, its future structure is unclear, with ongoing discussions on its potential merger with North Macedonia’s Agency for the Promotion of Entrepreneurship (APERM), and a recent audit has revealed the need to improve financial management and monitoring of financial support.

• Overall investments into research and development (R&D) remain low at 0.38% of GDP in 2021 (compared to the EU average of 2.23% in 2022). While public funding has increased in recent years, albeit from low levels, private sector participation remains subdued. Business-academia collaboration in North Macedonia remains constrained by a lack of incentives for co-creation and an inadequate support infrastructure. A pilot financial support programme has been discontinued, and renewed efforts to financially stimulate collaboration between academia and industry are subject to legislative amendments. Non-financial support mechanisms are largely absent in this context.

• In 2021, North Macedonia took steps to promote open science by establishing the National Open Science Cloud Initiative (NOSCI.mk), with over 100 researchers publicly declaring their commitment to open access to research. However, further efforts are needed to maintain the momentum and embed open science principles into national legislation and practices to further support its development.

State of play and key developments

Sub-dimension 9.1: STI system

North Macedonia’s STI policy framework expired in 2020 with the conclusion of the Innovation Strategy 2012-20. However, the government’s Economic Reform Programme (ERP) 2022-24 outlines key priorities and policy measures to drive North Macedonia’s knowledge economy agenda (Ministry of Finance, 2022[1]). This includes initiatives such as establishing a hybrid fund for green and digital start‑ups and innovative SMEs, as well as enhancing co-operation between academia and industry. The Fund for Innovation and Technology and Development’s (FITD) 2020-23 work plan also incorporates elements from the expired Innovation Strategy, ensuring some continuity in the economy’s STI vision. In addition, while a Strategy for the development of a start-up ecosystem (2021-25) and its Action Plan (2021-23) for early-stage companies are in place, previous plans to develop a strategy for the development of artificial intelligence and a national strategy for information and communications technology (ICT) have yet to materialise. There is currently also no dedicated strategic document in place to govern scientific research activities, neglecting an important aspect of STI policy. As a result, in 2023, the European Innovation Scoreboard classified the economy as an emerging innovator, performing at only 46.3% of the EU average (EIS, 2023[2]).

The new Smart Specialisation Strategy (S3) (2023-27), adopted at the end of 2023, will constitute North Macedonia’s main strategic framework for STI policy. It prioritises smart agriculture, ICT and the electro-mechanical industry, as well as smart buildings and infrastructure, which can support North Macedonia’s transition to a digital and low-carbon economy.

The S3 strategy also envisages the creation of a National Committee and S3 steering group. Unless clearly aligned and complementary to the existing institutional framework for STI policy, this may add further complexity to North Macedonia’s already multi-layered institutional setup. The Ministry of Education and Science (MoES) formally oversees STI policy, while the National Committee for Innovation and Entrepreneurship, presided over by the prime minister’s office and comprising several ministries, higher education institutions (HEIs), state agencies and the private sector, de facto co-ordinates STI policy implementation. Additionally, a National Council for Higher Education, Scientific and Research Activity was established in 2021 to advise the government on higher education policy and review the funding model for research and development (R&D) and HEIs. In the same year, a National Start-up Committee was also established, focusing on the development of a coherent approach to building a supportive ecosystem for start-ups. The involvement of multiple institutions involved in STI policy development implementation somewhat hinders a smooth and well-co-ordinated approach to research and innovation.

The Fund for Innovation and Technology Development (FITD), established in 2014, serves as North Macedonia’s dedicated innovation agency with a mandate to improve access to financial support for the stimulation of innovation activity. Additionally, it aims to bolster the development of a triple helix infrastructure1 and strengthen business-academia collaboration through targeted funding programmes. The FITD operates with adequate human resources and has benefited from significant capacity-building support from the World Bank and EU funding. However, large-scale funding provided by the World Bank under the “Skills Development and Innovation Support Project” expired in 2021, leaving the FITD dependent on budgetary support under the ERP. Furthermore, a working group tasked with merging public institutions in North Macedonia is considering a potential merger between the FITD and the Macedonian Agency for Promotion of Entrepreneurship (APERM). In 2022, the Fund also underwent a compliance audit by the State Audit Office, which identified several compliance issues that remain to be addressed. Namely, the audit concluded that there is a need to reinforce the FITD’s financial governance, align its support programmes with policy priorities, and improve performance indicators for its financial instruments (State Auditing Institution, 2023[3]).

The FITD’s donor-funded programmes are regularly monitored. Moreover, a portfolio analysis of the FITD’s project activities between 2016 and 2020 was conducted in 2021, indicating improved economic performance among enterprises that received FITD support. In contrast, however, there has been no independent evaluation of the implementation of the expired Innovation Strategy, and an FITD report on the strategy’s implementation is not publicly accessible.

Sub-dimension 9.2: Public research system

The newly adopted S3 strategy places a strong emphasis on public research excellence as a crosscutting priority. To foster research excellence, the strategy envisages measures to develop human resources for R&D, improve research infrastructure, promote research activities related to green and digital transformation, and increase the internationalisation of North Macedonia’s research sector. The Law on Scientific and Research Activities regulates those activities of HEIs and R&D institutions, while plans to harmonise it with the Law on Higher Education and develop a new regulatory framework have not yet materialised. As part of the National Council for Higher Education and Scientific Research Activities’ 2023-24 work plan, preparations have commenced for a new National Programme dedicated to science that could help elevate the strategic importance of scientific research.

Overall investments into R&D activities, particularly from the private sector, remain low at 0.38% of GDP. However, according to the latest data available on gross domestic expenditure on research and development (GERD) from 2021 (UNECE, 2021[4]), there has been a substantial increase in public spending on R&D since the establishment of the National Council for Higher Education and Scientific Research Activities. Between 2021 and 2022, the government provided EUR 3.8 million to support selected research projects of public interest, including funds to upgrade laboratory resources and assist research by public scientific research institutions. In total, 51 projects received funding during this period. In 2023, an additional EUR 3.6 million was allocated to research projects and other scientific activities. A call for proposals for innovative and collaborative projects related to S3 specialisation, green, and digital transformation in the manufacturing industry was launched, but overall funding of the public research system continues to be primarily based on non-merit-based institutional block funding.

The FITD is the government’s main financial support vehicle for STI activities. Between 2016 and 2021, the fund supported over 669 projects with almost EUR 50 million through nine programmes, ranging from grant support for start-ups and spinoffs to commercialisation support, acceleration programmes, and technology development and extension support. In total, until the end of 2023, over 1 177 projects have been implemented, largely to the benefit of private business entities. In 2022, the FITD had an annual budget of over EUR 16 million. Moreover, in 2023, preparatory work to launch a new “greening businesses” facility with EU support started, suggesting an increased focus on eco-sustainability.

North Macedonia continues to face limited capacity in human resources for research and innovation, with the number of active researchers (per one million inhabitants) showing a decline in recent years after a significant increase between 2010 and 2015. Progress in aligning human resource policies with the principles of the Charter and Code of the EU’s Human Resources Excellence in Research framework has stalled, with only two research institutions currently holding the award for human resources excellence. Some policy measures have been implemented to encourage and attract young researchers to the field, for example, through government scholarships for postgraduates and Ph.D. studies. Moreover, under the FITD’s Young Minds Fund, young researchers can access grant support via the Challenge for Young Researchers initiative. In 2021, the FITD also launched FabLabs, providing young people with access to laboratories to offer them space, technical facilities and guidance to design prototypes or small-scale productions of innovative solutions for further testing. A similar initiative, MAKERSPACE, was launched in 2022 but remains to be fully implemented.

North Macedonia engages actively in international and regional co-operation for R&D activities. Since 2014, nearly 170 projects have received financial support under the EU’s framework programmes; participation has accelerated greatly under Horizon Europe in recent years, reflecting the economy’s greater involvement in European innovation networks. Since 2021, 46 participants have received EUR 8.5 million in EU contributions, compared to 123 and EUR 14.41 million under Horizon 2020 (2014‑2020) (Horizon Europe, 2023[5]). North Macedonia is also in the process of joining the European Research Area (ERA) and participating in the European Strategy Forum on Research Infrastructures (ESFRI). As a result, and with the support of the Regional Cooperation Council (RCC), a new research infrastructure roadmap was adopted in 2022. In addition, North Macedonia has numerous bilateral co‑operation agreements in place, including with the People’s Republic of China since 2021, to strengthen scientific and technological collaboration. However, the uptake and implementation of these agreements remain subdued.

Sub-dimension 9.3: Knowledge exchange and co-creation

Incentives for business-academia collaboration remain overall limited in North Macedonia. The innovation voucher scheme, piloted by the FITD in 2020 to encourage businesses to collaborate with R&D institutions for prototyping and testing innovative ideas, has been discontinued. In addition, plans to establish a competitive collaboration grant scheme, under way since 2021, have faced delays due to necessary legislative changes. In 2021, the FITD also launched a EUR 9 million programme to co-finance grants for commercialisation of innovations for SMEs where collaboration projects with R&D institutions were eligible (although not mandatory), but information on its impact remains limited. Nevertheless, a working group was established in 2023 to develop relevant amendments to the Law on Innovation Activities, marking a positive step that could result in the launch of new targeted financial incentive schemes in support of collaboration. In addition, the ongoing Economic Reform Programme (ERP) (2022-24) highlights the strengthening of synergies between the business community and public research sector as a key priority to address persistently low levels of private sector investment in R&D.

Non-financial incentives to stimulate business-academia collaboration equally remain limited. While researcher mobility is available under the Marie Skłodowska-Curie Actions (MSCA),2 the level of engagement in such activities remains below potential, and there are no national support schemes in place to encourage research collaboration. In a positive development, support is available for the preparation of patent applications, and the number of patent applications filed with the European Patent Office (EPO) has seen a substantial increase since the previous CO, albeit from low levels. This rise suggests an increase in commercially viable research activity, but most applications have remained unsuccessful. There has also been limited progress since the last assessment to increase the enforcement of intellectual property (IP) protection. A database on IP-related aspects to improve co-ordination and exchange between different law enforcement bodies has been set up, but has yet to be fully operationalised.

Efforts to enhance the research and innovation (R&I) infrastructure for business-academia collaboration in North Macedonia continue, albeit at a slow pace. There has been no progress in establishing North Macedonia’s first science and technology park (STP) despite the ERP envisaging an allocation of up to EUR 5 million for the construction of the site by 2025. Once established, the STP is expected to provide incubation services and a technology transfer office, but there are currently no plans to design services that specifically target the promotion of co-creation and exchange between scientists and the private sector. In contrast, the Centre for Technology Transfer and Innovations (INNOFEIT), operational since 2018, has become an important cornerstone in the local research and innovation ecosystem. INNOFEIT successfully hosts the Business-technology Accelerator UKIM. Moreover, in addition to offering incubation and mentoring services for start-ups, it provides a number of services, including co-working spaces, matchmaking with scientists, empirical research for proof of concept, collaborative research opportunities, and access to laboratories. There are ambitions to elevate INNOFEIT into a centre of excellence, a status that very few R&D institutions in North Macedonia currently reach. Furthermore, the draft National ICT Strategy includes plans for the establishment of Digital Innovation Hubs that could support North Macedonia’s digital transition. In 2023, the European Institute of Innovation and Technology (EIT) established a new community hub in North Macedonia as part of its regional innovation scheme, aimed at serving as a platform to strengthen co-operation between the private sector and R&D institutions.

North Macedonia has taken several steps to promote open science. In 2020, the economy joined the European Open Science Cloud (EOSC) governance board and, in 2021, the Faculty of Information Technology and Computer Engineering at the University Ss. Cyril and Methodius in Skopje became members of the EOSC. North Macedonia also successfully participated in a regional project on Open Access Research Infrastructure in the Western Balkans, implemented by the RCC in 2020: four institutions contributed to the development of open access policies and received capacity building to introduce open access principles in their research. In addition, several initiatives were taken to raise awareness about open science. Most prominently, in 2021, the National Open Science Cloud Initiative (NOSCI.mk) was established as a consortium by North Macedonia’s leading universities, with over 100 researchers publicly declaring their commitment to open access to science (Box 10.1). Despite these advances, there currently is no policy framework in place to regulate open access to science in North Macedonia, and the pace of activities has slowed down in 2023, requiring additional efforts to maintain the momentum.

Box 10.1. NOSCI.mk – North Macedonia at the forefront of promoting open science principles

In 2021, the National Open Science Cloud Initiative of North Macedonia (NOSCI.mk) was established with the support of the National Initiatives for Open Science in Europe (NI4OS) and funding under Horizon Europe. The initiative aims to bring together all stakeholders within the R&D community to promote and disseminate open science principles. Led by North Macedonia’s eight leading universities, the key objectives of NOSCI.mk include:

• participation in EOSC governance and advocacy

• promotion of national EOSC-related services

• integration of science principles into national legislation and strategies.

One of the main achievements of NOSCI.mk is the establishment of an online “Declaration on Open Science Cloud Research”, allowing researchers to publicly commit to open access research. Over 100 individual researchers and four R&D institutions have signed this e-declaration. NOSCI.mk is also collaborating with the Ministry of Education and Science, which is not a member of the initiative, to develop national legislation that incorporates open science principles. Additionally, the initiative created a glossary and best practice guide, as well as open access research repositories. In 2022, NOSCI.mk launched a programme called “Scientific Spectrum” on national television to raise awareness about the benefits of open science for the general public, business community, institutions and researchers.

Source: National Initiatives for Open Science (2021[6]).

Overview of implementation of Competitiveness Outlook 2021 recommendations

Only a few of the policy Recommendations set forth in the CO 2021 have been fully or partially addressed (Table 10.2). Compared to the previous assessment, North Macedonia’s STI policy framework is incomplete following the expiration of its Innovation Strategy (2012-20), which poses a risk to the positive momentum achieved through recent STI developments. While government spending on R&D activities has increased significantly, overall GERD remains very low, particularly in the private sector. Additionally, North Macedonia’s main vehicle for distributing financial support programmes for STI is facing uncertainty and is not actively issuing calls for proposals. Financial and non-financial incentives aimed at stimulating business-academia collaboration continue to be scarce.

Table 10.2. North Macedonia’s progress on past recommendations for science, technology and innovation

Competitiveness Outlook 2021 recommendations	Progress status	Level of progress
Complete the development of the Smart Specialisation Strategy	While North Macedonia adopted its Smart Specialisation Strategy (2023-27) in 2023, STI policy co-ordination remains complex.	Strong
Increase investments in the public research system	GERD remains low at 0.38% of GDP (in 2021), with over two-thirds of investments stemming from the public sector. However, investments in public sector research have increased significantly to EUR 3.6 million in 2023. While the FITD has increased its financing schemes for STI, few programmes directly support scientific research activities.	Moderate
Increase participation in Horizon 2020	Overall participation rates have accelerated since the launch of the successor programme, Horizon Europe.	Moderate
Promote business-academia collaboration through a systematic and targeted approach	Some efforts have been made to stimulate business-academia collaboration, particularly via the FITD. However, a robust R&I institutional infrastructure is lacking, and efforts remain non-systematic.	Limited
Strengthen enforcement of industrial property rights (IPR)	An information platform for law enforcement bodies to exchange IP-related data has been set up but needs to become operational. Other enforcement challenges remain unaddressed.	Limited

The way forward for science, technology and innovation

While North Macedonia continues to make progress in advancing its STI policy framework and performance, the pace of reform has slowed down. The authorities should maintain their commitment to policy reforms that draw from the economy’s STI potential to support a sustainable and digitalised economy, with a particular emphasis on the following:

• Update the strategic framework to cover all science, technology, and innovation aspects. Adopting the Smart Specialisation Strategy (S3), accompanied by a comprehensive Action Plan and adequate budget, is an essential step toward renewing North Macedonia’s STI framework and demonstrating the government’s continuing commitment to strengthening research and innovation activities. However, while the S3 covers essential elements of STI policy, it needs to complement the S3 to create a more comprehensive strategic vision that includes scientific research and uses its role in creating a knowledge-based economy.

• Accelerate synergies between industry and academia as a priority to facilitate the green and digital transition. A systematic approach to encourage greater engagement between the private sector and scientific research institutes will be key for creating relevant research outputs with commercialisation potential, particularly in areas of strategic economic importance. The FITD can play a critical role in this process by implementing targeted support programmes that incentivise engagement and require collaboration activities in priority domains. Notably, the government should also follow up on its plans to create a hybrid fund for green and digital start‑ups that can contribute to a more sustainable and technologically advanced economy.

• Adhere to plans to build the science and technology park. The authorities should implement plans to establish North Macedonia’s first STP on time to demonstrate their commitment to strategy and predictability. To ensure the efficient use of funds for such large‑scale infrastructure investments, the set-up of the STP should go beyond traditional business incubation models and focus on creating a genuine co-creation space for businesses and R&D activities. This could involve the timely establishment of a fully equipped technology transfer office and state-of-the-art laboratories to attract and facilitate collaboration. Establishing the Brno Technology Park in the Czech Republic can be an example of good practice (Box 10.2).

Box 10.2. Brno Technology Park in the Czech Republic

Established in 1995, the Brno Technology Park (BTP) is strategically located in the heart of Brno, the second-largest city in the Czech Republic. The park was envisioned as a catalyst for innovation, providing a conducive environment for research institutions, universities, and technology-based companies to collaborate and thrive.

The primary objectives of the Brno Technology Park are:

• to stimulate innovation and technology transfer

• to support the growth of technology-based start-ups and SMEs

• to foster collaboration between academia and industry

• to attract foreign investment and talent

• to contribute to regional economic development.

With this in mind, BTP was designed with the following key features:

• State-of-the-art infrastructure – The park offers facilities equipped with cutting-edge technology, including laboratories, office spaces, and conference rooms

• Incubation and acceleration programmes – BTP provides comprehensive support programmes for start-ups and SMEs, offering mentorship, access to funding, and networking opportunities to accelerate their growth and market entry.

• Research and development (R&D) partnerships – BTP facilitates collaborative R&D projects between academia and industry, fostering knowledge exchange and technology transfer to address real-world challenges.

• Internationalisation – Through partnerships and networking initiatives, BTP promotes international collaboration, facilitating access to global markets, investment, and expertise.

• Education and training – BTP organises workshops, seminars, and training programmes to enhance the skills and knowledge of entrepreneurs, researchers and professionals, thereby strengthening the innovation ecosystem.

The BTP example can inspire policymakers in North Macedonia to better understand the potential of an STP in fostering regional development through science and technology and promoting collaboration between businesses and the scientific community. They should also understand the prerequisites and key factors for an STP’s success.

Source: Technology Park Brno (2024[7]).

• Sustain the momentum to promote open access to scientific research. North Macedonia’s authorities should use the momentum generated to continue educating researchers and advocating for open access to science. By making published academic research freely, readily and permanently available on line for everyone to access and (re-)use, they can maximise the academic, societal and economic impact of research. Such efforts will also bolster the integrity and rigour of research by fostering greater openness and transparency.

References

[2] EIS (2023), European Innovation Scoreboard - Country profile North Macedonia, European Commission, https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-country-profile-mk.pdf.

[5] Horizon Europe (2023), Horizon Dashboard - R&I Country Profile, https://dashboard.tech.ec.europa.eu/qs_digit_dashboard_mt/public/sense/app/1213b8cd-3ebe-4730-b0f5-fa4e326df2e2/sheet/0c8af38b-b73c-4da2-ba41-73ea34ab7ac4/state/analysis/select/Programme/H2020/select/Country%20Code/MK.

[1] Ministry of Finance (2022), Economic Reform Programme 2022-2024, https://neighbourhood-enlargement.ec.europa.eu/document/download/504cc56a-60a0-4f36-b7b7-1a2423e6fa59_en.

[6] National Initiatives for Open Science. (2021), Open Services and Infrastructure, https://nosci.mk (accessed on 5 June 2024).

[3] State Auditing Institution (2023), Legal Inconsistencies in Financial Support for Innovations, https://dzr.mk/mk/230309-zakonski-nedorechenosti-za-finansiska-poddrshka-na-inovaciite.

[7] Technology Park Brno (2024), About the Unique Project Brno Technology Park, https://www.technologypark.cz/en/about-us. (accessed on 5 June 2024).

[4] UNECE (2021), UNECE Statistics, United Nations, https://unece.org/statistics (accessed on 1 March 2024).

Notes

← 1.  The triple helix model refers to the engagement and collaborative relationships between academia, industry and government.

← 2.  Marie Skłodowska-Curie Actions (MSCA) is an EU programme, which provides grants to support research careers and encourages transnational, intersectoral and interdisciplinary mobility (https://marie-sklodowska-curie-actions.ec.europa.eu/).