An effective institutional and policy context for science, technology and innovation (STI) is essential to boost the knowledge economy. This chapter, along three sub-dimensions, analyses the overall STI trends and performance in the region, the development of sustainable and impactful STI policies and processes. The first sub-dimension, 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.
Western Balkans Competitiveness Outlook 2024: Montenegro
10. Science, technology and innovation
Abstract
Key findings
Montenegro has improved its performance in the science, technology and innovation (STI) dimension since the previous Competitiveness Outlook assessment and scores above the regional average (Table 10.1). Given its progress, Montenegro has overtaken North Macedonia and is now the second‑best performer in the region following Serbia, which still outranks its regional peers significantly. Notable progress has been made with regard to the STI system, as Montenegro has fully operationalised its Innovation Fund. However, overall STI performance remains below the economy’s potential. Further efforts are needed to consolidate recent policy changes and generate real long-term impact, including via increased funding availability for STI, and with a view to stimulating business-academia collaboration.
Table 10.1. Montenegro’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 |
3.8 |
2.9 |
||
|
9.2: Public research system |
2.7 |
2.5 |
|||
|
9.3: Knowledge exchange and co-creation |
2.2 |
2.0 |
|||
|
Montenegro’s overall score |
1.8 |
2.4 |
2.9 |
2.5 |
|
The key findings are:
Montenegro significantly increased government financial support to STI, allocating EUR 10 million in 2023, up from EUR 4.08 million in 2022. Moreover, the government established a dedicated and professionally managed Innovation Fund in 2021, strengthening the institutional framework for STI policy implementation. The Fund has been active and has launched eight programmes since 2022, focusing on innovation in small and medium-sized enterprises (SMEs) and start-up support, and is planning to introduce support to innovations in energy efficiency.
With the expiration of the economy’s innovation and research strategies, the Smart Specialisation Strategy (S3) has become Montenegro’s key strategic framework document for science, technology and innovation policy. The current S3 is set to expire in 2024, and work is under way to develop a successor S3, with the adoption of a Roadmap for the new S3’s development in March 2023 showing commitment to the S3 process.
Montenegro has maintained good momentum in participating in international and regional STI collaboration initiatives. The economy has significantly improved its participation rate in Horizon Europe in recent years, receiving over EUR 3.8 million in EU contributions for 28 projects since 2021, compared to EUR 4.6 million for the entire Horizon 2020 period (2014-20).
Incentives for business-academia collaboration remain low, despite initial encouraging initiatives launched under the Innovation Fund. Private sector participation in research and development has significant room for improvement. In terms of infrastructure, the creation of the flagship science and technology park (STP) in Podgorica has been delayed, further impeding the implementation of the government’s plans for a four-pillar STP network based on the Podgorica, Plevlja, Nikšić and Bar STPs, as currently only the Nikšić STP is operational.
State of play and key developments
Science, technology and innovation (STI) capacity in Montenegro continues to increase and important measures have been taken since the previous Competitiveness Outlook. However, according to the European Innovation Scoreboard (EIS), in which Montenegro participated in 2020 for the first time, the economy is an emerging innovator in 2023 with a performance at 47% of the EU average (EIS, 2023[1]). Compared to the previous assessment, the gap between Montenegro and the EU average is widening as the possible impact of recent policies has yet to materialise. Overall research and innovation capacity remains low in Montenegro. Investments in R&D remain nascent and, in the absence of reliable data on gross expenditure on research and development (GERD), challenging to monitor. In addition, the number of scientific research projects remains stagnant and to date, Montenegro has only submitted one successful patent application to the European Patent Office, suggesting shortcomings particularly about the quality of scientific research.
Sub-dimension 9.1: STI system
Montenegro is currently in the process of renewing its STI policy framework, following the expiration of both the Strategy on Scientific Research Activities (2017-21) and the Strategy on Innovation (2016-20). A working group has drafted a new scientific research strategy for the period 2024-28, and following consultation with the research community, adoption is planned for the second quarter of 2024. At the same time, Montenegro has adopted a two-phased Programme for Innovation for the periods 2021-24 and 2023-27, aimed at creating a single space for implementation of all innovation support programmes. In the absence of a strategic framework, this programme is an important mechanism to maintain momentum gained in recent years in advancing Montenegro’s STI framework.
In the current absence of dedicated research and innovation strategies, the Smart Specialisation Strategy (2019-24) has emerged as Montenegro’s key STI policy document. Its priorities include, among others, information and communication technologies (ICT), energy efficiency and renewables, sustainable agriculture and health tourism. As it is the first such strategy in the Western Balkan region which was launched in 2017 and adopted in 2019, the economy has invested EUR 70 million in the period 2019-22 with around 60% support from the national budget, demonstrating the economy’s commitment to the S3 process. While the overall implementation progress has been slower than planned, the strategy’s implementation has accelerated more recently in line with the currently ongoing third Action Plan (2023-24). In March 2024, the Government Council for Innovation and Smart Specialisation (ISS) adopted a Roadmap for the development of a new Smart Specialisation Strategy to ensure continuity and commitment to the process.
The institutional framework for STI policy has been strengthened since the last Competitiveness Outlook. The Ministry of Education, Science and Innovation is responsible for the economy’s STI policy framework, while the ISS, initially set up in 2019 with the support of the United Nations Development Programme (UNDP), advises and co-ordinates STI policy across ministries. Moreover, in line with the European Commission’s Joint Research Centre (JRC) recommendations, the ISS Council became an integral body of the S3 implementation framework adopted in 2021. Following a further reshuffle in 2022 to preside under the Ministry of Science, the ISS Council is now mandated to oversee budget allocations for STI activity and implement the S3 Action Plans, supported by a number of S3 working groups and a dedicated monitoring support unit within the Ministry. The Council for Scientific and Research Activities, established in 2015, complements the institutional STI setup, advising the government on policies specifically related to academic research.
Since the previous Competitiveness Outlook assessment, Montenegro established an Innovation Fund in 2021, which is now fully operational. With capacity-building support provided by the World Bank with funding from the EU, UNDP and Norway, the Innovation Fund is on track to become Montenegro’s key vehicle for innovation policy implementation. Following the launch of two pilot programmes in 2022, the Fund launched an additional six different schemes in 2023 in line with the adopted work plan and adequate budgetary support.
There are some mechanisms for internal monitoring and evaluation of STI policy in place. In 2021, an evaluation of the expired Innovation Strategy found that clearer and more tangible performance targets and objectives would be required to ensure a sustainable impact of innovation policy. The Smart Specialisation Strategy, in line with good practice, does entail such SMART key performance indicators,1 which are regularly reviewed. The implementation of the S3 was externally evaluated and an evaluation report was published in October 2023. It found that the S3’s objectives continue to be relevant and that the strategy’s implementation resulted in tangible impacts, but that additional understanding of the S3 process’ importance is needed from several sectors, including parts of the public sector responsible for implementation. While this evaluation represents a positive step in ensuring continuous monitoring and evaluation of STI policies, it did not go deeper into the results or the impact of the realised activities. Montenegro’s continuous participation in the European Innovation Scoreboard since 2021 and improving data availability are expected to contribute to more evidence-based policy making in the medium term.
Sub-dimension 9.2: Public research system
The expired Strategy for Scientific Research Activities (2017-22), together with the new planned strategy in this area, promotes public research excellence in Montenegro. In addition, the economy has undertaken several regulatory reforms to strengthen scientific research outputs. In 2020, the government adopted a new Law on Incentive Measures for Research and Innovation Development – the legal basis for establishing the Innovation Fund – and a number of important implementation acts have been introduced in 2023 to implement the Law on Scientific Research Activities fully. These include provisions for measuring scientific performance and conditions for licensing scientific research institutions, thereby constituting important steps towards establishing credible, integrated and high-quality research.
Investments into research and development (R&D) have decreased according to latest available data, to 0.36% of GDP in 2019 compared to 0.5% in 2018 (World Bank, 2024[2]). However, these data do not reflect efforts made in recent years, as budgetary support has increased to assist Montenegro’s economic recovery, including STI activities. In 2023, the authorities reported to have allocated nearly EUR 10 million to implement STI-related activities, a sharp increase compared to the allocated EUR 4.08 million in 2022 and allocations in previous years. Public scientific research remains largely based on institutional block funding and geared towards education, although in line with good practice a new performance-based financial contracting model to complement institutional funding was piloted in 2018 for the University of Montenegro. Under the new model, project-based funding schemes were introduced via the Ministry of Science and Technological Development and in 2023, a call for co‑financing national scientific research projects with total funds amounting to EUR 2.3 million was published.
After becoming fully operational, in 2022 the Innovation Fund launched two finance schemes totalling EUR 770 000 and added an additional six programmes to its portfolio in 2023, amounting to EUR 1.65 million (Box 10.1). While these budgets are relatively small, they constitute significant developments and send an important signal to the local STI ecosystem. Lastly, a EUR 1 million programme related to energy efficiency measures in industry has been adopted and the call for applicants published in September 2023. The programme, which will be implemented by the Innovation Fund, aims to promote innovation related to energy efficiency by incentivising companies to invest in efficient equipment and smart digital technologies. It also envisages the establishment of an energy management system to stimulate the use of renewable energy sources by companies in alignment with the objectives of the S3 strategy. The operationalisation of the Innovation Fund and the availability of financial support to incentivise research on strategic priorities such as the digital and green transition is a significant positive development. However, this assistance primarily targets innovative SMEs and start-ups, leaving scope to make similar funding available to encourage broader scientific research.
Box 10.1. Programme portfolio of the Innovation Fund of Montenegro
Since its inauguration in 2021, the Innovation Fund of Montenegro has become an organisation with substantial institutional capacity, comprising seven full-time employees as well as independent experts. The Fund has benefited from capacity-building support from a number of international donors, including UNDP and the Norwegian Government, and is on track to becoming Montenegro’s main policy tool to implement the economy’s innovation and knowledge economy vision – in particular for the Smart Specialisation framework. Since 2022, it has launched eight financial support schemes with national budget support of EUR 2.4 million, and is covering a broad scope of innovation and start-up support activities, including:
Innovation vouchers aimed at incentivising micro, small and medium-sized enterprises (MSMEs) to co-operate with research and development institutions to test the commercialisation potential or further development of prototypes via research, with a total budget support of EUR 100 000.
Proof of innovation concept aimed at SMEs to help introduce process innovations or develop new or improved market-oriented products, services or technologies, with a total budget support of EUR 1 million.
Pre-acceleration for start-ups, consisting of a training programme for potential entrepreneurs to support them in validating their innovative ideas on the market and further improving start‑up projects, with a total budget support of EUR 1 million.
Vouchers for the protection of invention to support SMEs in filing a patent application or further testing ahead of application, with a total budget support of EUR 20 000.
Programme for strengthening the innovation of newly established or existing SMEs, designed to support start-up teams in validating their business ideas by confirming their proposed problem-solution fit, and demonstrating the future usefulness of their new product, service, process or technology through development of a first prototype or a minimum viable product (MVP). The total programme budget is EUR 100 000.
Programme for encouraging innovations related to energy efficiency, aimed at encouraging private firms to introduce energy efficiency measures by co-financing investments into energy efficiency or smart technology in the total amount of EUR 1 million (first call not yet published).
Lastly, the Innovation Fund also conducts awareness-raising activities in line with Montenegro’s Smart Specialisation Strategy to foster and showcase a holistic innovation culture.
Source: Innovation Fund of Montenegro (2024[3]).
Available data on the number of researchers have not been updated since 2019 and remain low at 734 researchers per 1 million inhabitants (World Bank, 2024[4]). Nevertheless, several measures are in place to strengthen Montenegro’s capacity of human resources for research and innovation. Notably, the 2020 Law on Incentive Measures for Research and Innovation envisages tax incentives for scientific research and innovation projects that employ qualified researchers. Similarly, the national Council for Scientific and Research Activities provides scholarships to doctoral candidates as well as mobility opportunities, although on an irregular basis. Meanwhile placements of scholars in private sector entities is also encouraged via an ongoing EU-funded project aimed at promoting the potential of scientific research for innovation and stimulating the historically low participation in such opportunities. Since the last assessment, participation in the Marie Skłodowska-Curie Action (MSCA) has also increased. Other support measures to foster human research capacity include training on proposal writing and financial support to participate in international networks, such as Horizon Europe. There is also a financial support programme for patent applications for SMEs and individuals in place, run by the Innovation Fund. Despite this large number of measures to support young researchers in particular, there is scope to improve engagement with Montenegro’s diaspora to strengthen the economy’s scientific research capacity.
International and regional collaboration in the area of STI remains strong and Montenegro participates in various European and global innovation networks. It has significantly improved its participation rate in Horizon Europe in recent years, receiving over EUR 3.8 million in EU contributions for 28 projects under Horizon Europe since 2021, compared to EUR 4.6 million under the entire Horizon 2020 framework (2014-20) (Horizon Europe, 2023[5]). The Ministry of Science and Technological Development provides additional co-financing for successful projects. While the economy’s improved participation is encouraging, the vast majority of projects remain small in size, with nearly 50% of funds going to one research institution (Horizon Europe, 2023[5]). Montenegro also actively participates in the European Strategy Forum on Research Infrastructure (ESFRI) and is currently updating its research infrastructure roadmap. Lastly, the economy continues to successfully host the regional South East European International Institute for Sustainable Technologies (SEEIIST).
Sub-dimension 9.3: Knowledge exchange and co-creation
While the promotion of connections between science and economic activity is one of the priorities of the forthcoming Strategy for Scientific Research Activities as well as the existing S3 framework, incentives for business-academia collaboration are overall limited. To date, only a few targeted measures exist and private sector investments into R&D activities remain chronically low. However, recent efforts include the launch of two pilot programmes in 2022 by the Innovation Fund. EUR 100 000 was allocated to an innovation voucher scheme, which supported 10 SMEs with up to EUR 8 000 for engaging with R&D institutions or laboratories on small-scale research projects. Meanwhile EUR 670 000 was provided in the context of a collaborative grants for innovation (CGI) programme, awarding up to EUR 100 000 for joint research programmes between SMEs and public scientific research institutes. In total, seven projects were supported under the CGI, promoting joint research in priority areas such as ICT, energy and resource efficiency, and sustainable tourism. In 2023, the programme was officially certified for the Plug-In scheme within the European Innovation Council (EIC) Accelerator, which enables awarded projects to be directly submitted for funding consideration under the EIC Accelerator programme.2 Implementation of the innovation voucher scheme continued into 2023 and the Innovation Fund plans to continue implementing the CGI in 2024.
In addition to these financial incentives, Montenegro adopted a new Intellectual Property (IP) strategy in 2023, aimed at strengthening enforcement capacity and improving Montenegro’s low track record on investigations, prosecution and judicial follow-up of IP infringement. In combination with the Innovation Fund’s support for patent application, the new framework may increase patent applications and commercialisation of research in the medium term; however, it does not involve tailored incentives to stimulate academia-private sector STI co-operation.
Some progress has been made in upgrading the research and innovation (R&I) infrastructure for business-academia collaboration. The Innovation and Entrepreneurship Centre Tehnopolis in Nikšić remains the only fully operational pillar of Montenegro’s first science and technology park (STP), which envisages a networked structure with a central base in Podgorica and three decentralised impulse centres in Nikšić, Bar and Pljevlja. As such, Tehnopolis continues to provide Montenegro’s main institutional support structure to foster innovation and R&D through a variety of support programmes, including business incubation services, a biotechnological laboratory, a tech lab and data centre, as well as through close collaboration with a number of higher education institutions (HEIs). Against this background, further expansion of the centre is currently under way, including a stronger focus on digital transformation and pre-acceleration support for start-ups. In contrast, Montenegro’s flagship project, the central STP Montenegro in Podgorica, has been delayed and has yet to become fully operational, but preparations for selecting its first tenants have started in 2023. The establishment of a Technology Transfer Office (TTO) is also planned. There are currently no concrete plans in place to construct the remaining two centres in Bar and Pljevlija and complete the STP’s planned four-institution structure.
The Smart Specialisation framework envisages further measures to establish R&I infrastructure, including the establishment of a network of centres of excellence. Since the last assessment, FoodHub, a centre of excellence for digitalisation in the field of food safety and authenticity, has opened at the University of Donja Gorica with governmental support, while Montenegro also successfully bid to host a Regional Centre for Cybersecurity Capacity Building (WB3C) in 2022, supported by France and Slovenia. The development and capacity building of the centre is included as a priority in the government programme in 2023 and the legal foundations for establishing the centre have been completed. Initially, it will provide training facilities for civil servants of all Western Balkan economies to increase awareness about cybersecurity threats.
Lastly, initial steps have been taken to enhance open science principles and improve the accessibility of publicly funded research. The forthcoming strategy on scientific research specifically mentions open science, while Montenegro’s finance scheme to support co-financing of national scientific research projects requires publishing in open access journals. Moreover, a programme to implement open science principles was adopted together with an action plan in 2020, while in 2021 a feasibility study for establishing a national open science repository was completed. However, no concrete actions have been taken to date to enable open access to publicly funded scientific research.
Overview of implementation of Competitivenss Outlook 2021 recommendations
All Recommendations set forth in the CO 2021 have been addressed or implementation is in progress (Table 10.2). Most notably, the Innovation Fund, established and fully operationalised since the last assessment, provides multiple large-scale programmes to stimulate R&D among enterprises. As a result, government funding for STI-related activities has increased, although the allocation towards fostering research excellence in public scientific research activities remains unclear and statistical evidence for R&D investments remains outdated. While some steps have been taken to strengthen the institutional support structure for business-academia collaboration, further efforts are required to stimulate knowledge exchange and co-creation.
Table 10.2. Montenegro’s progress on past recommendations for science, technology and innovation
|
Competitiveness Outlook 2021 recommendations |
Progress status |
Level of progress |
|---|---|---|
|
Ensure swift operationalisation of the new Innovation Fund |
The Innovation Fund has become fully operational, including through capacity building support from the World Bank, and has adequate staff resources. |
Strong |
|
Invest in the scientific research system |
Reliable data on gross domestic R&D expenditure (GERD) remain unavailable. More recent absolute figures have increased, but lack detailed information, including on whether these funds are geared towards scientific research or entrepreneurial innovation activities. |
Moderate |
|
Continue increasing Montenegro’s participation in international research programmes such as Horizon 2020 |
Montenegro has significantly improved its participation rate in Horizon Europe. |
Strong |
|
Continue building a national and regional research infrastructure |
While the operationalisation of Montenegro’s flagship science and technology park (STP) is delayed, another pillar of its STP is being expanded. Montenegro has opened a centre of excellence and has successfully applied for the establishment of a regional Centre for Cybersecurity Capacity Building. |
Moderate |
The way forward for science, technology and innovation
Montenegro has taken important steps further to enhance its performance in science, technology and innovation. As the existing policy framework is due to expire, it will be important to maintain momentum and prioritise the completion of outstanding policy measures to create a sustainable, long-term foundation for the economy’s future STI-related activities. Going forward, Montenegro should focus on the following:
Continue implementation of the Smart Specialisation Strategy. S3 implementation has improved in recent years but it is crucial to sustain this progress moving forward. The mid-term evaluation findings, once finalised, will provide important insights for adjustments and re‑prioritisation as the S3 reaches its final implementation phase. Efforts should be accelerated to ensure that a strategic framework, based on monitoring and evaluation findings, is in place beyond 2024.
Swiftly adopt the new Strategy for Scientific Research Activities. The new strategy will provide the framework for stimulating strategically relevant, high-quality research with commercialisation potential. Long-term adequate budget allocation to upgrade the public research system will further underline the authority’s commitment to research excellence, and is expected to increase further Montenegro’s active participation in European and global research programmes and collaboration with private sector players. As such, improved data collection to better monitor R&D activities will be critical.
Consolidate the programme portfolio of the Innovation Fund. As operations of the Innovation Fund begin to mature, an independent review of programme impacts should be considered to ensure the efficiency and effectiveness of measures. This would also help to prioritise efforts and align programme targets with the overall STI policy framework and the S3 strategic vision, including a stronger focus on incentivising energy efficiency and renewables as well as smart technology.
Implement and expand planned measures to stimulate business-academia collaboration. As the STP in Podgorica becomes operational, efforts should be made to ensure that available services go beyond business incubation and entail targeted measures to stimulate research collaboration between academia and the private sector. For example, establishing the Technology Transfer Office (TTO), including adequate human resources and implementing an action plan to raise awareness about the TTO’s services, would be an important signal to both the academic and business communities. Furthermore, up-to-date information on GERD would help determine and monitor the private sector’s share in R&D investments to support evidence‑based policy making.
References
[1] EIS (2023), European Innovation Scoreboard 2023: Country Profile Montenegro, https://ec.europa.eu/assets/rtd/eis/2023/ec_rtd_eis-country-profile-me.pdf.
[5] Horizon Europe (2023), “Horizon Europe dashboard - R&I country profiles”, 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/ME (accessed on 1 March 2024).
[3] Innovation Fund of Montenegro (2024), Home, https://fondzainovacije.me/en/home/ (accessed on 28 May 2024).
[2] World Bank (2024), Research and Development Expenditure (% of GDP) - Montenegro, https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locations=ME (accessed on 1 March 2024).
[4] World Bank (2024), Researchers in R&D (Per Million people) - Montenegro, https://data.worldbank.org/indicator/SP.POP.SCIE.RD.P6?locations=ME (accessed on 1 March 2024).
Notes
← 1. Indicators to understand whether policies meet their set-out objectives should be SMART: specific, measurable, attainable, real and time-based.
← 2. The European Innovation Council Accelerator Programme is a funding programme under Horizon Europe that offers grant support, equity investments, coaching, mentoring and networking opportunities to individuals, SMEs and MidCaps (i.e. companies with a mid-sized market capitalisation) with innovative ideas that have the potential to create new markets or disrupt existing ones. More information can be found here: https://eic.ec.europa.eu/eic-funding-opportunities/eic-accelerator_en.