MEDOSSIC Existing Situation Analysis in South-Eastern Slovenia

Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

MEDOSSIC

Mediterranean organization structure and strengthening of innovation capacities for sustainable development no. 1G-MED08-289

Existing situation analysis in South-eastern Slovenia Region

Med Programme Priority-Measure 1-2 Axe 1: Strengthening innovation capacities Objective 1.2: Strengthening strategic cooperation between economic development actors and public authorities

Working component: 3 Existing situation analysis – Synthetic Diagnosis-Good Practices

Investigation Benchmarking

Action: 3.1 Existing situation analysis in South-eastern Slovenia

Deliverable: 3.1. Version: 03

Date: 5.2.2010

Status: Final version

Type: Analysis

Availability Public

Responsible Partner Development centre Novo mesto LTD (Andreja Klobučar)

Editor Andreja Klobučar (DCNM), dr. Špela Stres (IJS)

Contributor: dr. Špela Stres (IJS), Primoţ Kunaver (IJS), Alenka Pahor Ţvanut (IJS)

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

CONTENTS PART 1: IDENTIFICATION SHEET ...... 4 PART 2: EXECUTIVE SUMMARY ...... 6 PART 3: METHODOLOGY FOR THE EXISTING SITUATION ANALYSIS IN REGIONS ...... 10 3.1. DEFINITIONS OF USED TERMS ...... 10 3.2. METHODOLOGICAL APPROACH ...... 11 PART 4: EXISTING SITUATION ANALYSIS IN SOUTH-EASTERN SLOVENIA REGION ...... 13

4. 1 INTRODUCTION OF SOUTH-EASTERN SLOVENIA REGION ...... 14 4. 2. INVESTIGATION OF THE SPECIFIC CHARACTERISTICS OF SOUTH-EASTERN SLOVENIA REGION WITH AN EMPHASIS ON FACTS & FIGURES CONCERNING THE (ECO)INNOVATION FIELD ...... 16 4.2.1. General Regional Indicators and Data ...... 16 4.2.2. (Eco)innovation Indicators ...... 21 4.3. INVESTIGATION OF EXISTING POLICIES AND INITIATIVES ADOPTED IN (ECO)INNOVATION FIELD IN SLOVENIA AND ESPECIALLY IN SOUTH-EASTERN SLOVENIA REGION ...... 25 4.3.1.National level ...... 25 4.3.1.1 (Eco)innovaton Policies ...... 25 4.3.1.2 (Eco)Innovation Initiatives ...... 40 4.3.2.Regional level ...... 50 4.3.2.1.(Eco)innovation Policies ...... 50 4.3.2.2.(Eco)innovation Initiatives ...... 53 4.4 INVESTIGATION OF EXISTING PROJECTS AND PROGRAMMES IN THE SCOPE OF (ECO)INNOVATONS IN SLOVENIA AND ESPECIALLY IN SOUTH-EASTERN SLOVENIA REGION. 57 4.4.1. European Programmes and Projects Undertaken...... 57 4.4.2. National Programmes and Projects Undertaken ...... 65 4.4.3. Regional Programmes and Projects Undertaken...... 68 4.5 ANALYSIS OF THE REGIONAL PRODUCTION SYSTEM REGARDING (ECO)INNOVATION ISSUES 72 4.5.1. Market Analysis Regarding (Eco)innovation ...... 72 4.5.1.1 Overall Description ...... 72 4.5.1.2 Preliminary Indications of Sectors/Candidate Areas for (Eco)innovation within the Framework of the MEDOSSIC Project ...... 77 4.5.1.3 Problems and Barriers of Economic Sector Candidates for Dealing with (Eco)innovation Issues ...... 79 4.5.1.4 Opportunities of Economic Sector Candidates for Dealing with (Eco)innovation Issues ...... 80 4.5.2. Matrix (Sectors and Type of Eco-innovation) ...... 81 4.5.3.Situation of (Eco)innovators on National and Regional Level ...... 90 4.5.3.1.Overall Description ...... 90 4.5.3.2. Problems and Barriers on National and Regional Level ...... 91 4.5.3.3. Opportunities on National and Regional Level...... 92 4.5.4. Other ...... 93 4.5.5. Recommended Measures for Stimulation of (Eco)innovations in the Region .... 93 4.6 CONCLUSIONS ...... 100 ANNEX A: REFERENCES and SOURCES ...... 104

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 1: IDENTIFICATION SHEET

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 1: IDENTIFICATION SHEET

Ref. No of project 1G-MED08-289 Project acronym MEDOSSIC Project full title Mediterranean organization structure and strengthening of innovation capacities for sustainable development

Security (distribution level) Public Date of delivery 5 February 2010 Deliverable number 3.1. Type Analysis Status & version Final version Number of pages 100 Responsible Partner Development centre Novo mesto LTD (Andreja Klobučar) Other Contributors dr. Špela Stres (IJS), Primoţ Kunaver (IJS), Alenka Pahor Ţvanut (IJS) Author(s) dr. Špela Stres (IJS), Primoţ Kunaver (IJS) Keywords Ecology, innovation, (eco)innovation, MEDOSSIC, Programme MED, EU, South-eastern Slovenia, policy, initiatives, programmes, projects, regional production system. Abstract The study deals with the situation analysis of (for dissemination) (eco)innovation in South-eastern Slovenia. Areas of policy making and initiatives on national and regional level are analysed. The most influential programmes and projects on EU, national and regional level related to (eco)innovation are listed. The regional production system relating to (eco)innovation is analysed. The most perspective sectors for (eco)innovation in the region with identified key stakeholders in this area are identified.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 2: EXECUTIVE SUMMARY

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 2: EXECUTIVE SUMMARY

The situation analysis in South-eastern Slovenia region deals with (eco)innovation in the region, the methodology used, the introduction of South-eastern Slovenia region, the investigation of specific characteristics of South-eastern Slovenia region, with an emphasis on facts & figures concerning the (eco)innovation field, the investigation of existing policies and initiatives adopted in thee (eco)innovation field in Slovenia and especially in South-eastern Slovenia Region, the investigation of existing projects and programmes in the scope of (eco)innovations in Slovenia and especially South-eastern Slovenia region, and the analysis of the regional production system regarding (eco)innovation issues and conclusions.

In the chapter ―Methodology‖ there is an explanation of the basic methodological approach based on the study of various secondary sources (studies and databases) and the primary research among business entities.

In the chapter ―Introduction of South-eastern Slovenia Region‖, the region is briefly presented, with emphasis on the areas that are important for (eco)innovation. South- eastern Slovenia is with the largest region in Slovenia a total area of 2,675 km². The biggest city in the region is Novo mesto. The population is on the increase due to a positive net migration rate as well as the natural increase. The development of this region is largely the result of industry (car industry, pharmaceutical industry, etc.), as it created a half of the gross value added in the region in 2006. The expenditure on research and development (R&D) amounting to 2.7% of the regional GDP in 2006 underlined the importance of R&D in the region. The main sources of financing were business enterprises, while among researchers the female gender prevailed (55.1%). This region belonged to the half of Slovenian regions that had lower the registered unemployment rates compared to the national average. However, the structure of the unemployed was less favourable since more than half of them had the lowest level of education. For the economy of SE Slovenia, it is typical that the industry is concentrated around the city of Novo mesto, which represents a healthy economic regional centre. The number of small enterprises is below average per capita in relation to other regions in Slovenia; this represents a potential for growth. In addition, higher education in the region is still very limited and should be encouraged. For a sustainable growth of the region, the growth of entrepreneurship and the access to higher education should be supported. The region has considerable (eco)innovation potential. At present, innovation potentials are widely used in the region‘s few and influential big business systems; on the other hand it is necessary to stimulate (eco)innovation in the SMEs and other spheres more intensively.

In the chapter ―Investigation of the Specific Characteristics of South-eastern Slovenia Region with an Emphasis on Facts & Figures Concerning the (Eco)innovation Field‖, general regional indicators, data, and (eco)innovation indicators are presented. An important fact is that the region has the biggest area of all regions in Slovenia. For the economy of SE Slovenia it is typical that the industry is concentrated around the city of Novo mesto, which represents a healthy economic regional centre. The number of small enterprises per capita is below average in relation to other regions in Slovenia. The region belongs to an economically well developed region. In 2006 it contributed 5.4% of Slovenia‘s GDP (the share being a bit smaller than the percentage of the population of the region in relation to the national population).

In the chapter ―Investigation of Existing Policies and Initiatives Adopted in the (Eco)innovation Field in Slovenia and Especially in South-eastern Slovenia‖, ther is a presentation of national policies where innovation is particularly encouraged with growing

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia expenditure on R&D, but there is no effective implementation of innovation support. For Slovenia, innovation performance is just below the EU 27 average but the rate of improvement is above that of the EU 27. Relative strengths, compared to the country‘s average performance, are in human resources, finance and support to innovators. Trends in research and development in the years (2005-2006) indicate a positive shift, so that Slovenia's development reduced the backlog in this area. The gross domestic expenditure on R&D activity has been increasing in GDP since 2004, most progress was made in 2006 when the share reached 1.59% of GDP. As a result, Slovenia reduced the backlog in relation to EU 27 average to 0.25%, which is so far the smallest difference. Slovenia has the largest share of R&D in the national GDP among the new EU Member States. In this regard it is moving faster than some of the old member states. The legal base for (eco)innovation is relatively good; however, the implementation is less efficient.

On the regional level are set the following strategic development priorities: Integration of region inside and outside, Institutions for the development and transfer of knowledge, Joint marketing and Greater development potential and quality of life. These strategic policies are supported with implementation programmes and funds. However, there is lack of regional support infrastructure.

In the chapter ―Investigation of Existing Projects and Programmes in the Scope of (Eco) Innovations in Slovenia and Especially in South-eastern Slovenia Region‖, European programmes and projects undertaken are presented.

Slovenian regions are relatively small in comparison with the regions in larger countries, which is also reflected in the number of submitted EU projects. On the national scale, Slovenian entities have participated in various EU horizontal programmes in the last years. Probably the most important were: 6 th Framework Programme (FP) - now they participate in the 7th Framework Programme, EUREKA, INTERREG Slovenia – Italy, IVC, IV B Alpine, IV B Central and South-eastern Slovenia Europe, VALOR, Leonardo da Vinci, Tempus, CIP and Life+. The most important from the perspective of innovation and also ecology was probably the participation in the 6 th Framework Programme, where Slovenia was at the top among EU members in relation to the population by number of proposals. Participants from South-eastern Slovenia region have participated in the following (eco- innovation) projects: Next Generation European Digital Passport with Biometric Data for Secure and Convenient Boarder Passage, Extended Enterprise Management in Enlarged Europe, Communications for Challenged Areas Architecture, Test beds and Innovative Alliances (all FP6 and FP7), Hightrunk meadow orchards as an element of biodiversity conservation and aesthetic values of landscapes, Project ZONET, Project World of Kolpa, ARCHEOSITES – spAtial integRated enhanCement of arcHaEOlogical SITES (INTERREG programmes), New Efficient Profiled Steel Sheeting For Composite Steel And Concrete, Development Of Technology For High-Technology E-Construction Site, Use Of Regional Potentials With Respect To Problem-Solving Processes In Production, Market-Oriented Flexible Assembly Processes (Eureka Assembly Strategy Cluster), Traceability Of Engineering Information, New Generation Of 3d Integrated Passive Components & Microsystems In Ltcc, Quality Control in The Production Line of Sandwich Panels With Ai Method (EUREKA programme). In relation with (eco)innovation, one of the strategic regional development priorities in the region is the establishment of Institutions for the Development and Transfer of Knowledge and other Greater Development Potential and Quality of Life. Another strategic national project for South-eastern Slovenia region that also deals with (eco)innovation is the ―Construction of an economic centre of South-eastern Slovenia‖, located in the city of Novo mesto. Apart from this strategic project, 23 other projects have also been supported, mostly related to innovation in the industry with an ecological component incorporated.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Most ecology related project in the region are investments in ecology infrastructure, eight such projects were realised in the past financial period or are still running. Individual local authorities promote the activity of small entrepreneurs with tenders for the financing of eligible costs associated with innovations. Where such projects are already underway, the trend is shown in the increase of and quality of innovative proposals. These kinds of projects enhance development in other local communities and foster innovation within the framework of the region. Business innovators and entrepreneurs are also stimulated to use support services (help with procedures to protect industrial property, drawing up business plans and establish R & D links).

In the chapter ―Analysis of the Regional Production System Regarding (Eco)innovation Issues‖ a market analysis regarding (eco)innovation is presented with an overall description and preliminary indications of sectors/candidate areas for (eco)innovation within the framework of the MEDOSSIC project. The following sectors were identified as the most important from the (eco)innovation perspective: automotive manufacturing (assembling of cars and production of parts for the automotive industry), pharmaceutical industry of generic drugs, plastics, metal processing for construction and various B2B industrial markets, information and communication technology and development support of the industry. In addition, real estate, construction, wholesale, retail and education are important sectors regarding the number of companies in the region, but their (eco)innovation potential is smaller.

South-eastern Slovenia is an industrially strong region with reasonably well developed (eco)innovation activities. Key industrial players are present on globalised international markets and play an important role in the Slovenian economy as a whole. Still, there are less innovative SMEs which would be a secure shelter for the local economy if some of the big players moved the industrial plants to more cost-effective countries. Adding new educational programmes to the existing educational programmes is a horizontal plan of the strategic national project planned in the region, the so called Economic Centre of South- eastern Slovenia. More attention should be paid to transferring and implementing good practices of (eco)innovation from successful large firms to smaller business entities. The existing R&D facilities should be outsourced from SMEs to rationalise the amortisation of infrastructure and raise the local economy‘s productivity. The passing foreign tourists at holiday peaks should be stopped and invited to experience the natural beauties of the region. Luxury tourism has a lot of potential and would bring higher value added services to the region.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 3: METHODOLOGY FOR THE EXISTING SITUATION ANALYSIS IN REGIONS

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 3: METHODOLOGY FOR THE EXISTING SITUATION ANALYSIS IN REGIONS

3.1. DEFINITIONS OF USED TERMS

Innovation An innovation is the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relation. The minimum requirement for an innovation is that the product, process, marketing method or organisational method must be new (or significantly improved) to the firm.

Invention An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice (Fagerberg 2004).

For more information see: http://ec.europa.eu/enterprise/policies/innovation/glossary/index_en.htm

(Eco)innovation It presents all forms of innovation activities resulting in or aimed at significantly improving environmental protection. Eco-innovation includes new production processes, new products or services, and new management and business methods, the use or implementation of which is likely to prevent or substantially reduce the risks to the environment, pollution and any other negative impact of the use of resources throughout the lifecycle of related activities.

For more information see: http://ec.europa.eu/environment/eco-innovation/what_en.htm

Economic Sector The economic sector is a part of a country‘s or region‘s commercial, industrial and financial activity, delimited either by public, corporate and private organisation of expenditures or by agriculture, manufacturing and service product types. It is meant as a sector, which includes all business activities, profit or non-profit oriented.

For the needs of this analysis, the national regulation called the Standard Classification of Activities (SKD 2002)is used, which is in terms of contents and structure in accordance with NACE Rev. 1 classification (EU classification of activities). The Slovenian economic sectors are divided into the following standard activities:

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Activities

A+B Agriculture, hunting, forestry and fishing

C+D Mining, quarrying and manufacturing

E Electricity, gas and water supply

F Construction

G Wholesale, retail; certain repair

H Hotels and restaurants

I Transport, storage and communication

J Financial intermediation

K Real estate, renting and business activities

L Public administration and defence; comp. soc. sec

M Education

N Health and social work

O+P Other social and personal services

3.2. METHODOLOGICAL APPROACH

In order to attain the complete overview of the situational analysis and contribute to the stimulation and enhancement of eco-innovation, we used the following methodological approaches:

1. Review of Secondary Sources. The most valuable in this respect were regional strategic documents. For the description of the national level, we used national strategic documents like the Strategic Development of Slovenia of the Government of Slovenia from 2005 and other documents. Some other studies on the European level were also helpful (All relevant secondary sources are listed in the chapter References and Sources).

2. Data Analysis. On the national level, we mostly used databases of the Statistical Office of the Republic of Slovenia (hereinafter: SORS) and the Agency of the Republic of Slovenia for Public Legal Records and Related Services (hereinafter: AJPES). From the European perspective, the database of the innovation indicators by the European Innovation Scoreboard was the most useful. We faced some

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

obstacles in overcoming the different available data relative to the demand of the methodology of the study.

3. Field Research. We conducted research in form of questionnaires with the most perspective companies regarding (eco)innovations in the region. Their responsiveness to our research was mostly weak.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Part 4: EXISTING SITUATION ANALYSIS in South- eastern Slovenia Region

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4. 1 INTRODUCTION OF SOUTH-EASTERN SLOVENIA REGION

South-eastern Slovenia is the largest region in Slovenia with the total area of 2,675 km². The biggest city in the region is Novo mesto. The population is on the increase due to a positive net migration rate as well as the natural increase. The region includes the following municipalities: Črnomelj, Dolenjske Toplice, Kočevje, Kostel, Loški Potok, Metlika, Mirna Peč, Mokronog – Trebelno, Novo mesto, Osilnica, Ribnica, Semič, Sodraţica, Straţa, Šentjernej, Šentrupert, Šmarješke Toplice, Škocjan, Trebnje, and Ţuţemberk.

FIGURE 1: Photo of the Countryside in South-eastern Slovenia [18]:

Typical features of the region include the land of the Karst with woodenware, the light red wine Cviček and the mascot Zeleni Jurij (Green George). The development of this region is largely caused by the industry (car industry, pharmaceutical industry, etc.), as it created a half of the gross value added in the region in 2006. The expenditure on research and development (R&D) amounting to 2.7% of the regional GDP in 2006 underlined the importance of R&D in the region. The main sources of financing were business enterprises, while among researchers women prevailed (55.1%). This region belonged to the half of Slovenian regions that had lower the registered unemployment rates compared to the national average. However, the structure of the unemployed was less favourable since more than half of them had the lowest level of education. Population indicators are much more favourable. In 2007, the region was still among the three regions with more than 10 live births per 1,000 inhabitants. According to the mean age of mothers at birth, women here were the youngest. A fifth of them were younger than 25 and less than a tenth were older than 34. The share of young people (aged 0-14) was still the highest in the country (15.3%), although it was already lower than the share of old people (aged 65+). The mean age of the population in South-eastern Slovenia is the lowest; in 2007, it was 3 years lower than the mean age of the population in South-eastern Slovenia region [1].

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

95.4% of all enterprises in the region are small (including micro enterprises). They employ 31,2% of the employed population in the region and create almost 20% of all income (16.7% of that in foreign markets). The number of middle size enterprises is close to equal with the number of large size ones, but large size enterprises employ 52% of the employed population in the region and create almost 71.4% of all income in the region (71.8% of that in foreign markets) [2]. Among large size enterprises two stand out; Krka d.d. – pharmaceutical industry and Revoz d.d. – automotive industry.

It is typical for the economy of SE Slovenia that the industry is concentrated of around the city of Novo mesto, which represents a healthy economic regional centre. The number of small enterprises is below average per capita in relation to other regions in Slovenia; this represents a potential for growth. In addition, higher education in the region is still very limited and should be encouraged. For a sustainable growth of the region, the growth of entrepreneurship and the access to higher education should be supported.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4. 2. INVESTIGATION OF THE SPECIFIC CHARACTERISTICS OF SOUTH- EASTERN SLOVENIA REGION WITH AN EMPHASIS ON FACTS & FIGURES CONCERNING THE (ECO)INNOVATION FIELD

4.2.1. General Regional Indicators and Data

European Innovation Scoreboard (EIS) 2007 for Slovenia

Data available from the European Innovation Scoreboard (EIS) 2007 (presented in Figure 2 and Table 1) show a mixed picture of Slovenia. The data on innovation activity, mainly in the Entrepreneurship & Innovation section are missing, which relates to the problem of protecting the confidentiality of enterprises. Furthermore, relatively old figures on patenting do not fully reflect the situation in the national innovation performance. Looking at the more recent figures obtained from the SORS, the level of innovation activity in the national terms is improving. In the year 2009, there was a substantial growth of national patent application perceived, of more than 22% compared to the year before. A partial reason for this increase might be financial and other measures adopted by the national grants to promote innovation.

In manufacturing, 41.2% of enterprises report they were innovation-active in the period from 2004 to 2006 and among the selected services, 26.8% of firms — up from less than 20% — in the previously analysed period. Overall, 55.7% of innovation-active enterprises report introducing both product and process innovation, 18.8% of them introduced new or significantly improved products and 22.6% report innovation of process. Once this data is incorporated in the Scoreboard analyses, the overall position of Slovenia is bound to improve. As for patenting, the new available data (45.5 patent applications registered at EPO per million inhabitants) from the European Patent Office do not suggest any significant improvement (2007 [18]). This is one of the areas where the Slovenian innovation policy has not been particularly active [9].

On the other hand Slovenia has outstanding results in the area of lifelong learning, which is also a part of the national priorities. The lowest and one of the most important indicators of innovation performance is non-hi-tech oriented export.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

FIGURE 2: European Innovation Scoreboard: Slovenia, Performance Chart by Indicator [9]

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 1: European Innovation Scoreboard – Slovenia 2007

National Innovation Indicator level

1.1 New S&E graduates , age 20-29 (new on 1,000 inhabitants) 9.8

1.2 Population with tertiary education (%) 21.4

1.3 Broadband penetration rate (% of population) 11.4

1.4 Participation in life-long learning , age 25-64 (%of population) 15

1.5 Youth education attainment level (% of population age 20-24) 89.4

2.1 Public R&D expenditures (% of GDP) 0.35

2.2 Business R&D expenditures (% of GDP) 0.87

2.3 Share of medium-high-tech and high- tech R&D (% of R&D 89.3 investment in production areas)

2.4 Enterprises receiving public funding for innovation n.a.

3.1 SMEs innovating in-house n.a.

3.2 Innovative SMEs co-operating with others (% of SME) 10.5

3.3 Innovation expenditures (% of sales of all companies) n.a.

3.4 Early-stage venture capital n.a.

3.5 ICT expenditures (% of GDP) 5.4

3.6 SMEs using organizational innovation (% of SME) n.a.

4.1 Employment in high-tech services (% of all employed) 2.87

4.2 Exports of high technology products (% of value of all export) 4.5

4.3 Sales of new -to-market products (% of sales of all sales) 7.4

4.4 Sales of new -to-firm not new -to-market products (% sales of 6.9 all companies) 4.5 Employment in medium-high/high-tech manufacturing (%of all 8.5 employed)

5.1 EPO patents per million population 50.5

5.2 USPTO patents per million population 7

5.3 Triad patents per million population 2.7

5.4 Community trademarks per million population 30.5

5.5 Community industrial designs per million population 51.5

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

It is important to emphasize the understanding of the EIS concept. Higher productivity is achieved when innovation efficiency is improved with the same amount of innovation inputs; therefore, the more innovation outputs are generated or vice-versa, the less innovation inputs are needed for the same amount of innovation outputs. Although innovation is not a linear process where inputs automatically transfer into outputs, it is worth examining the differences in efficiency by assuming that efficiency can be defined as the ratio of outputs over inputs. Innovation performance in the EIS is measured as the average performance on both innovation inputs and innovation outputs. Efficiency analyses between the different input and output dimensions show that for most countries there are efficiency gains to be reached. In Figure 3 there is a detailed graph, which shows the efficiencies of each EU 27 country. The picture shows a clear connection between results measured regarding the dependencies of outputs by inputs and the EIS for each country. The highest ranked countries are mostly innovation leaders and, on the other side, the lowest ranked are those who are catching-up. Slovenia as a nation has a position in the lowest quadrant, and it is near to Estonia, which both belong to moderate innovators. They are both lacking the efficiency in intellectual property compared to other moderate innovators of EU 27.

FIGURE 3: Efficiencies Between Innovation Inputs and Application and Intellectual Property Outputs of the EU 27 [9]

Regional Facts & Figures Concerning the (Eco)innovation Field

Due to the smallness of Slovenia as a country we are facing the absence of some data regarding innovation activities of individual regions. The first data ever available of the regional EIS or the so-called RIS for the EU 27 were scarcely accessible in mid December 19

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia last year. In this report, the country Slovenia is divided in two cohesion regions: West and East Slovenia. South-eastern Slovenia is included in the East Cohesion region, which is in general less developed than the western part of the country; however, South-eastern Slovenia is not a typical example. Due to the fact that we are missing some exact data on the regional level, further analyses of the region should be made. An estimation of the general analysis was made with the data available for the entire Slovenia, transferred to the situation analysis of data presented in Table 2.

TABLE 2: Regional Review through EIS Innovation Indicators

Innovation indicators Regional facts

INPUT DIMENSIONS

1. INNOVATION DRIVERS: higher results are related to more educated inhabitants in general There are only few knowledge centres (only in Novo mesto).

Private expenditures in R&D are modest, those which exist

are concentrated in large companies (e.g. Revoz d.d., Krka 2. KNOWLEDGE CREATION: higher results are related to d.d., Trimo d.d, etc. Expenditures of R&D in SMEs are rare. more R&D expenditures on every level of leaving and Public finance for R&D are not available on the regional working from private and public financial resources level, there are only national or European financial

resources accessible.

The innovation culture in the region is concentrated in the 3. ENTREPRENEURSHIP: better results are related to a more large enterprises. The in-house innovation in SMEs is poor; stimulating entrepreneurial environment with good collaboration between regional SMEs and R&D institutions is infrastructure, technology and modern process equipment weak.

OUTPUT DIMENSIONS

1. APPLICATIONS: better results are related to a more Only large companies in the region are more export knowledge-based and hi-tech economy, which is more oriented, mainly with mid-tech manufactures. Therefore, oriented to internationalisation the professional level of employees is also more or less linked to the mid-tech level of enterprises‘ development. Larger companies are recognized by traditional brand names which in some cases, after the transition, renewed their 2. INTELLECTUAL PROPERTY: better results are related to a appearance. Some brands are still strong locally and higher number of registered IPR throughout in Slovenia, others like Krka d.d. are also well known in Eastern Europe. Patents are rare and originating mostly from larger companies.

If we summarize the observed data in the EIS and transfer them to the regional level as a deductive estimation of the results, we could lay down a few premises. Table 2 shows regional facts about innovation activities and presents a unified premise that R&D and innovation activities are mainly based in large companies and are not present or only in a very small proportion in SMEs. Because of the rigid business environment after the political transition and the low rate of investment in the region from the national level, entrepreneurs still seek for traditional businesses instead of looking for new business opportunities. To establish a more dynamic business sector of SMEs in the region, a significant boost of investments should be made in innovation activities in the economic sectors where goods could be exported abroad or made more attractive to foreign investors.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.2.2. (Eco)innovation Indicators

Eco-innovation indicators measure progress, both regarding economic performance as well as cost reduction and enhanced functionality, and the environmental performance, such as the reduction of emissions and resource depletion and other environmental improvements.

Actual improvement should be measured at micro level, involving technologies, including its upstream systems; goods and services, as well as product systems covering their life cycle and innovative behaviours, both by producers and consumers. As most incentives and improvements are implemented through firms and sectors, performance measurement at regional level is essential as well.

For detailed eco-innovation situation analysis, two types of eco-innovation indicators should be distinguished: 1. the actual economic and environmental performance, 2. the indirect indicators capturing the factors conducive to eco-innovation, such as driving forces, ranging from having an in-house eco-innovation manager to the general eco- consciousness.

Since we are facing a lack of detailed data throughout the analysis, finding data about (eco)innovation is even more difficult. The data are missing on several levels: micro (enterprises), mezzo (regions), macro (country). Yet, Slovenia does not collect the data which comprehend the so called Environmental Accounts which are an important part of the National Accounts. To gain a general perspective of the actual situation in eco- innovation, assumptions will be made on the available data.

1st Group of Eco-innovation Indicators: the Actual Economic and Environmental Performance

TABLE 3: General Regional Indicators [1]

General indicators Data Comments

2 Surface (in km ) 2,675 The region is the largest in Slovenia.

The regional population is an average Regional population 141,547 one among Slovenian regions. Slovenia is a relatively small country, which is among the main reasons for Country population 2,025,866 other Slovenian regions also being small in their size compared to some other European countries. The percentage of the regional Percentage of regional population on 6.99% population is an average one among country total population Slovenian regions. Population density is the third lowest Population density 52.9 among Slovenian regions. The number of municipalities within the region is a little below the average Number of municipalities within the region 20 number of municipalities in Slovenian regions. It is specific for this region that large size enterprises employ 52% of the employed population in the region, Number of persons in employment (active among these two stand out; Krka d.d. – 55,885 population) pharmaceutical industry and Revoz d.d. – automotive industry that employ a substantial part of all employed persons.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

The percentage of persons in Percentage of persons in employment 39.48% employment reflects the demographic situation in Slovenia. The number of persons in paid Number of persons in paid employment 49,681 employment is 11% lower than number (working population) of persons in employment. The percentage of persons in paid employment reflects the demographic Percentage of persons in paid employment 35.10% situation in Slovenia – it is close to average.

Percentage of companies in region by size:

Data for micro enterprises are not a.) Micro n.a. available and are included in the category of small enterprises. Micro and small enterprises employ 31.2% of the employed population in the region and create almost 20% of all b.) Small 95.4 income. Most of 3,803 small entrepreneurs (2,921 or 78.4% of all) employ only one person or less. The number of middle size enterprises c.) Middle Approx.2% is close to equal with the number of large size ones. Large size enterprises employ 52% of the employed population in the region d.) Large Approx.2% and create almost 71.4% of all income in the region.

GDP Data Comments

National GDP has been growing in the last decade; however, data for 2009 National GDP in EUR (current rate) 37,126 mio should be around 8% lower than the presented number (valid for 2008). Due to the evolved industry this region represents better developed regions in Regional GDP in EUR (current rate) 2,008 mio comparison to other regions in East Slovenia. The percentage of the regional GDP in national GDP is a bit smaller than the Regional GDP in % 5.41% percentage of population of the region in relation to the national population. The same comment as for the national National GDP per capita 18,196 GDP current rate goes for the national GDP per capita. Regional GDP per capita with only 11,347 or 62% is considerably lower than the national one and presents Regional GDP per capita 14,186 problems with the development of the regions, except for the central (Ljubljana) region. The same comment as for the regional Regional GDP per capita in % 78% GDP per capita goes for the regional GDP per capita in %.

In relation to its population, South-eastern Slovenia has a reasonably high percentage of expenditure on R&D (Table 4), a large share of that originates from business companies (the large pharmaceutical company Krka d.d. represents a large share of it). Analyses show very large discrepancies between the sources of financing R&D between regions. The absence of centres of knowledge (universities and main state founded institutes) in South- eastern Slovenia also means substantially smaller amounts of government funds available. A relatively large share of female researchers originates from the strong pharmaceutical industry in the region.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 4: Main Innovative and Research Indicators of Slovenian Regions [1]

As can be seen from Figure 4, the share of innovation active enterprises in South-eastern Slovenia is close to the Slovenian average.

FIGURE 4: Main Innovation Active Enterprises in the Slovenian Regions [1]

2nd Group of Eco-innovation Indicators: the Indirect Indicators Capturing the Factors Conducive to Eco-innovation

The indirect indicators, which include the factors conducive to eco-innovation are: - the environmental investments regional indicators, - the regional business-opportunity analysis.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 5: Environmental Investments Indicators [1]

Environmental investments regional indicators can be seen in Table 5. Gross fixed capital formation for environmental protection represent only 1.6% as % of total. Thus, we conclude that ecology-driven investments in the region are relative low. Those investments were used in majority for wastewater management.

The regional business-opportunity analysis comprises generally observed data and has a double role, as a scan of the opportunities situation and as recommendations. A detailed analysis of that kind should be done in the further progress of the MEDOSSIC project.

The business-opportunity analysis is horizontal and concerns all business sectors: Support for development of new technologies in SMEs through technology procurement and aids at national and regional level, Support to increase the uptake of existing products and services, with their significant improvement by using eco-innovation, Incentives targeted at shortening replacement/production cycles, Exemption from local taxes when investing in eco-innovation projects, Utility demand side management approaches to increase the use of eco-innovation products and services at users‘ side.

In general, the eco-innovation indicators analysis of the region exhibits a modest presence of innovation culture in SMEs and not high in-house innovation. The collaboration with R&D institutions is undernourished and needs a significant push-up in the future, using a disposable national or/and EU aid to start new projects. The region should endeavour to establish a small but effective investment fund, which would enable a seed capital for young start-up companies in the region, mainly oriented in development and implementing (eco)innovation projects. People in the region are striving for a better living standard. Rich natural heritage and intact nature offer good environmental conditions for exploiting new business opportunities.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.3. INVESTIGATION OF EXISTING POLICIES AND INITIATIVES ADOPTED IN THE (ECO)INNOVATION FIELD IN SLOVENIA AND ESPECIALLY IN SOUTH-EASTERN SLOVENIA REGION

4.3.1. National Level

4.3.1.1 (Eco)innovaton Policies

Outline of Policies and Distribution of Resources in Innovation Areas in Slovenia:

With the accession to the EU, Slovenia found itself on the evolutionary turning point where traditional approaches to increase competitiveness, such as encouraging foreign direct investment and cost depletion are losing their importance. For further development, approaches that promote the innovative capacity and competitiveness through innovative products have become important. In the last years a large progress was made in the area of support to innovations. At the same time, the problem of Slovenia as a EU country is that it has not prepared a National system of Innovation (NSI). Slovenia has fragmented support to the needs of the business and regions, and to some degree it also has uncoordinated actions of actors for a supportive development environment. One of the problems is also the orientation of the education system in the labour market to "job takers", and not to "job makers". Based on the estimations of various international researches, Slovenia is based on the lower end in the EU in regard to the innovative capacity and even placed at the last place in regard to the cooperation between the industry and the research sphere [4].

However, Slovenia is making progress in certain indicators, particularly in the area of increased business R&D investment. Business sector R&D investment accounted for more than 60% of total R&D costs [8]. In spite of several measures introduced to overcome this, the general perception of the lack of cooperation between public research and the business sector remains and as such represents one of the main challenges for innovation policy. Given the rate of public R&D expenditure (as a share of GDP) close to the EU 25 average (ranked 9th), the key challenge of the Slovenian Innovation System is the insufficient rate of commercialisation of research activity exemplified by the extremely low, although improving, rates of patenting (particularly by the public/academic sectors). Even in terms of new-to-firm products Slovenia performs very poorly (29 % of the EU 25 average, ranked 21st in the EU 25).

For Slovenia, innovation performance is just below the EU 27 average but the rate of improvement is above that of the EU 27 (8). Relative strengths, compared to the country‘s average performance, are present in human resources: lifelong learning and young education as well as finance and support to innovators: public and private R&D expenditures [9].

Trends in research and development in the last two years (2005-2006) indicate a positive shift, and Slovenia's development reduced the backlog in this area. The gross domestic expenditure on R&D activity has increased in relation to the GDP since 2004, most progress was made in 2006 when the share reached 1.59% of the GDP. After 2003 the growth of expenditure on R&D in Slovenia has been higher than the GDP growth. At the same time, R&D expenditure as a proportion of GDP in OECD and EU in countries has stagnated in this period. As a result, Slovenia reduced the backlog in relation to the EU 27 average to 0.25%, what is the smallest difference so far. Slovenia has the largest share of R&D in the national

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

GDP among the new EU Member States; in this regard it is moving faster than some of the old Member States (Table 6). Notwithstanding the already mentioned favourable developments for achieving the Barcelona target of 3% in GDP, Slovenia is likely to require a longer period than it was originally indicated in the development documents. Positive changes are also reflected in the structure of funding R&D towards strengthening the role of the business sector, which is a result of the economic measures policy. The largest real increase in expenditure on R&D in 2006 was made by the business sector (22.6%). Furthermore, the business sector is the largest investor in R&D (59.3%); however, in the most advanced EU countries where the total expenditure on R&D is much higher than in Slovenia, the business sector financed even a much larger share of investment in R&D [9].

TABLE 6: R&D Expenditure in EUR mio in 2006 and Annual Average Growth Rate 2001-2006, by Sector of Performance, EU 27 and Selected Countries

In conjunction with strengthening the business sector expenditure on R&D, the share of employed researchers in business sector is also in gradual increase. However, the share of employed researchers in the business sector is still significantly lower than the EU average, where the share of researchers in the business sector reaches almost 50%.

Slovenia has in recent years made progress on investment in R&D activity; however, challenge for the future remains raising efficiency of use of these funds. In recent years,

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Slovenia has already taken a series of measures for knowledge creation and transfer in the corporate sector, but their implementation is proceeding too slow. This was also mentioned in the European Commission report on the implementation of the Lisbon Strategy in 2007, which states that Slovenia should develop a research and innovation strategy and make the implementation of support measures more effective. To support this process, the Competitiveness Council was established in early 2008, aimed at improving cooperation between the corporate sector, institutions of knowledge and the Government on policy formulation and implementation of policies to promote technological development. Within this framework, 10 development teams were established, whose task is to design programmes in specific areas on which the public funds are concentrated. Prospects for further progress in the field of effectiveness of R&D investment are also the effects of the evaluation of accepted measures and the creation of a coherent and stable framework of innovation policy with clearly stated responsibilities of various ministries and agencies, including the coordination of their activities [5].

Although relatively late compared to other developed countries, support policies focused on tax relief have recently been actively increased. There was a high growth of business sector expenditure on R&D funding in 2006, 20 times higher compared to the results from tax incentives in 2005, and therefore does not totally reflect the real picture. In addition, the creation of links between the research sphere and the entrepreneurship sector is increasing, but this remains one of the weaknesses in the areas of innovation in the country. What continues to be a problem (and has not yet been addressed by the policy), is how to broaden the horizon of innovation policy and make different parts of the Government see the importance of a coordinated horizontal approach to innovation policy.

The number of Slovenian patent applications at the European Patent Office (EPU) is increasing, which results in the reduction of the country‘s deficit of patent applications being below the European average. Slovenia increased the number of patent applications per million inhabitants from 25.5 to 53.8 in the period from 2000 to 2004, and reached the 13th place among the EU 27 members. It ranks before all the new and even before some of the old States, which is understandable given the fact that countries with higher expenditure on research and development are also increasing the number of patent applications. However, this increase is also the result of some funding incentives for patent application, which distorts the picture a bit. Yet, Slovenia still has a large backlog in this area in relation to the average of the EU 27 (in 2004, 112 patent applications per million inhabitants), as well as in relation to the most developed Member States (for example, Germany 282). Nevertheless, Slovenia has halved this gap in the observed period.

Investments in Ecology in Slovenia:

Developments in the European Union in the past decade show that contradiction between economic development and environmental protection does not really exits. In fact, these two objectives go hand in hand, because investments in technological improvements increase efficiency, prevent new pollution and repair environmental damage. According to Eurostat, expenditure on environmental protection in the EU reaches 1-2% of the GDP. In most Member States, private sector expenditure is lower than the expenditure of the public sector. According to recent data, 40% of expenses are related to the scope of water quality, 28% to the areas of waste and 18% to the reduction in the areas of air pollution. In Slovenia, expenditure on environmental protection in reaches somewhere between 1.5 to 2 % of the GDP [6].

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Strategic Guidelines of Slovenia in Innovation and Ecology:

Strategic guidelines for Slovenia are stated in the document Strategic Development of Slovenia, government document, 2005 [7]. This document defines Slovenia‘s strategic development directions in the period from 2006 to 2013. The Strategic Development of Slovenia was accepted in June 2005 and stresses the importance of innovation and R&D for economic and social development of the country, commitment to the Lisbon and Barcelona objectives, including a 3% R&D investment target. The Strategy calls for the systematic re- orientation of public funding from predominantly basic research to a more targeted research, co-funded by the business sector. Business interest would be decisive in selecting research projects. Several areas were identified as priority thematic areas to qualify for both project funding and the network/centre of excellence funding. Similar objectives are proposed in the National Research and Development Programme. Innovations, ecology and regions are covered in the second and fifth strategic priority of the Strategic Development of Slovenia.

The second development priority deals with increasing economic efficiency and the scale of investment in R&D, improving the quality of education and promoting lifelong learning, as well as an effective generation, two-way flow and use of knowledge for economic development and quality jobs.

The second development priority - to increase economic efficiency and the scale of investment in research and technological development: - A priority focus of research and development activities in technological areas, where research potential can be linked to economic activity and achieve a rise of value added (electronic communications and information technology, biotechnology and pharmaceuticals, nanotechnology, new materials, process technology, environmental technology); - Establish criteria of usefulness and a two-way flow of knowledge with economy related to public funding; - Create an appropriate organisational structure of research organisations that will enable a greater degree of dealing with the challenges of modern research; - Adjust the organisational structure and the funding of the research and development sector so as to ensure a more effective use of available research and development funds; - Promote the recruitment of researchers in the economy; - Increase public funding to 1% of the GDP at the latest by 2010, establish a system of incentives for the investment of the business community to achieve the objective of 2% of GDP up to 2010 and to increase the absorption capacity for the results of R&D activities; - Establish a system to solve the problem of initial financing of new high-tech and innovative companies; - Promote the return and integration of Slovenian experts from abroad and from minorities abroad and to attract quality foreign experts in Slovenia; - Increase the use of ICT to promote productivity and entrepreneurship, a greater efficiency of public sector services and an overall competitiveness of the workforce in the global labour market; - Introduce flexible forms of work and distance working, develop and promote forms of employment, exploiting the potential of information society, raise literacy (informational, functional); promoting public access to the Internet and information mediators.

The fifth development priority - Integration of measures to achieve sustainable development, development of the environment, sustainable regeneration of population,

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia regions, space and culture. Environmental policies shall be focused on reducing energy intensity and increase the use of renewable energy as well as increase the promotion of reuse. This will also help to promote development and the use of environmental technologies.

The fifth development priority: Integrating environmental criteria with sectoral policies and consumption patterns:

- Reduce contribution to climate change and adapt to the economy and the expected climate change; - Promote sustainable use of natural resources, energy and substantially reduce the intensity of energy use and promote re-use, increase the organic efficiency and the quality of life; - Increase energy efficiency and renewable energy sources in the public sector, especially at local level; - Continue with the environmental tax reform and promote "green" public procurement; - Promote environmentally appropriate, environmental and consumer business practice; - Promote the development and use of environmental technologies; - Address the environmental problems of transport corridors at the European level, including the development of intelligent transport systems; - Promote the introduction of sustainable forms of mobility and to strengthen the ―modal-split‖ in favour of public transport use and a better matching of services with the needs and the public interest, - Establish and maintain a national information system for soil, necessary to support regional planning, the protection of groundwater (in terms of nitrates, pesticides, pollutants)and the production of quality food, and provide a healthy environment; - Ensure good status (2015) and appropriate water management, strengthen protection of vulnerable marine ecosystems and coastal areas; - Halt biodiversity loss by 2010 and the natural quality of the Slovenian territory as well as enforce the quality of the whole EU, which also means a collective responsibility for its preservation; - Design protective arrangements that will facilitate the protection of plants and animals, including their biostructure and the comprehensive economic and social development even in protected areas (Natura 2000); - Strengthen the capacity of the fields of environmental law and environmental economics; - Strengthen the role of consultative and advisory bodies in the process of preparing decisions (council for sustainable development, cross-sector advisory bodies, cross- cutting working and project groups).

The fifth development priority: Balanced regional development:

- To establish a landscape that will have the powers and resources (regarding fiscal decentralization) to promote its own development; - To strengthen the development of a polycentric urban system and regional centres (especially centres of national importance), the development of the city (innovative) regions and promote regional economies with technology parks and business incubators; - A regional and diverse network of tertiary and lifelong education and other public services; - Municipalities to provide financial incentives for the local economy, social activities and infrastructure (the remaining part of the tax in the municipality), to encourage

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

a quality preparation of spatial planning documents in accordance with development needs, simplify the spatial rules to strengthen the financing of non- profit housing works to regulate the scope of municipal activities; - To ensure supply of clean drinking water and promote local self-supply with food; - Upgrade the current regional development programming and establish a closer cooperation between urban and rural areas on the basis of a binding partnership cooperation and active efforts by the government for the establishment of regions, strengthen the cross-border regional cooperation, including the involvement of Slovenian minorities; - Upgrade measures to maintain the population and the cultural landscape and enhance development viability and attractiveness of rural areas; - Improve transport links to remote, peripheral areas with major transport axes, by strengthening and promoting public transport and the sustainable forms of mobility ("modal split"); - Establish regional partnerships for information society development and integrated regional information society strategies; - Ensure strict adherence to the reduction of risk for the population, from natural and other disasters, in the conservation and development of regions.

Other relevant strategic and operational directions and measures are described in the following documents as well: - Slovenia 2007, the ‗Measures to Stimulate Entrepreneurship and Competitiveness‘ programme 2007–2013 - Operational programme of Development of Human capital 2007-2013 - Operational Programme for Strengthening Development Potential - Resolution about National Development Projects 2007-2023 (updated version January 2008)

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Organisational Structure of Governance and Competences Between Different Actors at National Level in the Area of Innovations:

Figure 5: Map of the Main National Institutions in the Area of (Eco)innovation Policies [3]

The main national institutions with their main tasks and activities executed are described in Table 7.

TABLE 7: Main National Institutions in the Area of (Eco)innovation Policies

Institution Short description Ministrstvo za visoko The MHEST defines policies and performs tasks in the areas of šostvo in znanost – higher education, research, technology, metrology, and Ministry for Higher promotes the information society in areas that do not fall Education, Science and within the responsibilities of other ministries. It also co- Technology (MHEST) ordinates state directed activities in the area of information society. Ministrstvo za okolje in The MESP defines policies and performs tasks in the areas of prostor – ensuring healthy environment for all the inhabitants of Ministry of the Slovenia, encouraging and coordinating efforts aimed at Environment and Spatial sustainable development grounded in social well-being, and Planning (MESP) based on the prudent use of natural resources. Ministrstvo za The Ministry of the Economy defines policies and performs gospodarstvo – tasks in the areas of internal market, enterprise and Ministry of the Economy competition, foreign economic relations, tourism, energy and electronic communications. Sluţba vlade za razvoj in The GODEA is in charge for the implementation of the Lisbon

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Institution Short description evropske zadeve - Strategy and the National Reform Programme for the new 3- Government Office for year cycle of the Lisbon Strategy 2008-2010. One of its main Development and priorities is also national sustainable development. They European Affairs (GODEA) coordinate and monitor the implementation of recommendations following the progress report on the renewed Sustainable Development Strategy of the EU. Javna agencija RS za The main task of the PAEFI to look after the implementation podjetništvo in tuje of the development policy designed to cater to the investicije – development of entrepreneurship and competitiveness in Public Agency for Slovenia on one hand, and to run programmes aimed at Entrepreneurship and attracting foreign direct investments and company Foreign Investment (PAEFI) internationalisation on the other. Tehnološka agencija The STA is an independent public agency responsible for the Slovenije – enhancement of technology development and innovation in Slovenian Technology the Republic of Slovenia. Its main activities are granting Agency (STA). programs aimed at technology development and fostering cooperation of R&D institutions and universities with the industry. An important part of STA's activities are international projects. Through the cooperation with partners abroad, the agency strives to develop new policies in technology development and services to the Slovenian industry. Slovenski podjetniški sklad The SEF is the central national financial institution of the – Republic of Slovenia founded with the aim of making the Slovenian Enterprise Fund sources of funds more accessible to small and medium-sized (SEF) companies (SMEs) in Slovenia. Every year the Fund invites companies to apply for state aid, which would provide more favourable sources of financing development investments in the corporate sector in Slovenia. The Fund closely co- operates with other domestic and international financial institutions. Javna agencija za The SRA performs professional, development and executive raziskovalno dejavnost - tasks relating to the National Research and Development Slovenian Research Agency Programme at every level, as well as other work to promote (SRA) research and development activities. The Agency carries out its legally determined duties in the public interest, providing permanent, professional and independent decision-making on the selection of programmes and projects financed from the state budget and other financial sources. The Agency is an indirect user of the state budget in terms of the legal provisions that govern public finances and public agencies. Ekološki sklad- The Fund encourages the development of environmental Environmental Fund protection by giving loans and guarantees for environmental investments and other forms of assistance, for natural persons and enterprises. The Fund encourages investments that are consistent with the National Environmental Action Plan and the European Union environmental policy. Javni sklad Republike The Public Fund is a financial organisation, which is intended Slovenije za regionalni to achieve sustainable public objectives of Republic of razvoj in razvoj podeţelja Slovenia in regional and rural development. The allocation of - Slovenian Regional public incentive funds pursues a policy of promoting a Development fund (SRDF) balanced regional development and rural development policy.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Innovation Support Programming and Operational Tools:

With the 2004 parliamentary elections, Slovenia re-established the Ministry for Science and Technology (presented graphically in Figure 4). The new body - Ministrstvo za visoko šolstvo in znanost - Ministry for Higher Education, Science and Technology (MHEST) regained from the Ministrstvo za gospodarstvo - Ministry of the Economy most of the staff in the department for technology development and innovation, as well as the activities this department was conducting under the Ministry of the Economy. Slovenia established two agencies in the field of R&D and innovation: the Agency for Scientific Research and the Slovenian Technology Agency (STA). With the first one operational, the STA had a more turbulent history. Finally, in the spring of 2007 it was decided to place both the formal responsibility and the budget line to the STA. This led to the decision to allocate most of the support programmes to the STA for their execution. The position of the STA has changed dramatically, becoming the central agency in the support of business sector R&D and technology development [6].

The period from 2007 to 2008 brought a consolidation of the innovation governance system with a clearer organisational set-up in terms of division of labour between the two ministries and their executive agencies. The Ministry of the Economy and the MHEST determined which measures are going to be implemented through the PAEFI, what is to be the overall programme of the STA and where the focus should be for the SEF. Among these three main executive agencies, the division of the programmes under the Financial Perspective 2007–2013 was also prepared, which should help in the coordination of calls under each of the planned measures. The long-awaited development was the finalisation of the STA‘s programme, institutional structure and funding. The STA is now recognised as the implementing agency in the area of innovation and technology development programmes of the MHEST, the Ministry of the Economy and the Ministry of Defence.

The strategic document ―Measures to Stimulate Entrepreneurship and Competitiveness‖ a programme from 2007 to 2013, which was approved by the Slovenian Government in July 2006 (until now even complemented a few times), serves as a clear guideline for a comprehensive and transparent design, and the implementation of measures to improve entrepreneurship and competitiveness, as well as a targeted use of budgetary and Structural Funds [6].

Regarding the allocation of resources from the Structural Funds in the period from 2007 to 2013, the Government drew up the ―Operational Programme for Strengthening Development Potential‖ (Competitiveness of Enterprises and Research Excellence, Promoting Entrepreneurship, and Economic Development Infrastructure in the total amount of EUR 558.71 mio) and the ―Operational Programme for the Development of Human Resources‖ (Fostering Entrepreneurship and Adaptability – Experts and Researchers for Corporate Competitiveness in the total amount of EUR 39.54 mio). The two operational programmes complement the Measures Programme and provide the basis for an effective implementation of the entrepreneurship and competitiveness policy as well as a proper and efficient use of resources from the Structural Funds.

Several of the planned support measures of the Ministry of the Economy (which in their nature would be in line with the STA‘s programme) are to be carried out by the Public

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Agency for Entrepreneurship and Foreign Investment (PAEFI), which is under their concern. The PAEFI is thus involved in supporting technology parks, university incubators, small business voucher schemes, mobility schemes, etc. Another increasingly important actor in innovation policy is the Slovenian Enterprise Fund (SEF), which played a minor role in supporting innovation-related measures until 2005 due to serious limitations in terms of financial resources. The SEF is growing as a national financial organisation for supporting SMEs with different forms of favourable financing. With the ERDF contribution and the European Investment Fund, the SEF has successfully expanded its operation. Besides various subsidised credit lines, the SEF has a special programme of loan guarantees in connection with private banks. The support measures executed via the SEF are subsidised loans to SMEs for the expansion/modernisation of production capacities; subsidies for the establishment and start-up of innovative firms in an innovative environment (e.g. technology parks, business or university incubators) and; technology equipment subsidies for SMEs to enhance the firms' productivity and growth, and consequently improve their position on a global market. Since being under the new financial perspective 2007–2008, the SEF plans to continue to provide financial support to SMEs for the same as well as several new programmes; one can expect a further growth of importance of the SEF.

Support Measures Taken by the Slovenian Enterprise Fund (SEF):

The SEF programme (http://www.podjetniskisklad.si) includes different support activities. To represent their role more in detail there are some data about available funds for the year 2008 laid down: - favourable bank investment loans with a low interest rate (EUR 16 mio); - direct investment loans of the Fund for start-ups in technology parks and incubators (EUR 1.5 mio); - direct loans for R&D projects; - supplementary guarantees for regional guarantee schemes (supplementary guarantee of the Fund – EUR 1.25 mio); - co-financing (subsidies) of start-ups of companies (EUR 0.61 mio); - co-financing (subsidies) of tourist projects; - co-financing (subsidies) of new technical equipment in SMEs (EUR 25 mio); - co-financing (subsidies) of new technical equipment in micro enterprises (up to 9 employees) – EUR 9 mio.

The SEF had a total of 1,053 applications in 2007, and approved 607 different projects with a combined value of EUR 65.04 mio. Most of the financial resources were distributed as subsidies (EUR 49.01 mio). The total amount of investment supported was nearly EUR 150 mio. In comparison with the level of activity in 2004, when less than 300 projects were supported and the total amount of funding available to the SEF was below EUR 30 mio, one can see how the importance of the Fund has increased. The role of the SEF will change a bit from 2010 on be reduced since most of the incentives will shift from grants to various forms of crediting innovation.

Support Measures taken by the Public Agency for Entrepreneurship and Foreign Investment (PAEFI):

The PAEFI (http://www.japti.si), the third executing agency focused more on the promotion of entrepreneurship but also increasingly more active in innovation policy, introduced - in 2008 and 2009 - support measures including the mobility of researchers within the business sector, support to R&D in enterprises as well as support to interdisciplinary development groups in the business sector. New measures include assistance in the growth and development of the enterprise, special training for

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia entrepreneurs and special target groups. They will also continue with the support of the activity of technology/business parks and university incubators and the voucher system.

The PAEFI is the executing agency for most of the measures, initiated by the Ministry of the Economy. Even though its prime focus is the support of entrepreneurship, several measures are closely linked to innovation as well. One such measure is the voucher system for consultancy and training, under which co-financing of the consultancy fees is available to SMEs. Two types of support are available to small businesses and independent entrepreneurs: the already established enterprises are able to apply for a subsidy of 50 % of the costs up to EUR 4,000 per consultancy, while individuals, deciding on forming a firm or becoming an independent entrepreneur are able to claim a 100 % cost compensation for the consultancy — the condition being that they employ at least 1 person within one year of the subsidy. For 2008, a total of EUR 1.6 mio was available. Another novelty is the possibility to receive a training voucher, with which the applicant (a small enterprise or an individual entrepreneur) can receive co-financing for the costs of training in the amount of up to EUR 2,000. This is an important measure for the improvement of the absorption capacity of micro and SMEs. In 2010 the voucher scheme will probably change its form to some degree.

The voucher scheme is to operate through VEM focal points, another activity the PAEFI is responsible for. VEM focal points provide support to new entrepreneurs in all areas relevant for starting a business. In 2008, the PAEFI issued a public call for co-financing VEM focal points, providing consulting and support to new or potential entrepreneurs around Slovenia. The amount available for the call was EUR 1.2 mio for 2008 and another EUR 1.3 mio for 2009. The selection criteria was the completeness of the service offered, human resources available for consultations, experience and geographical coverage of the area with a minimum 25,000 inhabitants or 750 micro and small SMEs.

The support to technology parks, business incubators and university incubators, financed by the Ministry of the Economy, is to be implemented in two stages under the PAEFI. The first call published by the PAEFI called on various suitable organisations to register themselves in the database of innovative support institutions. Those who qualify for registration may then apply for financial support for the services they will be providing to their members as well as to other micro and small firms. The support to the so-called 'innovation environment actors' amounted to EUR 700,000 in 2008 and stood at EUR 900,000 in 2009.

In addition, the PAEFI launched a measure of supporting R&D in enterprises in 2008. The amount available was EUR 4 mio. The human resource issue was addressed also by the measure, introduced by the Ministry of the Economy in 2006, under which a transfer of researchers from public research institutions to business R&D units was supported. The measure was implemented via the PAEFI and it provided co-financing of the salaries of the researchers who had been working in public R&D units and were expected to move to the business sector. Also, the measure was modified to encourage the transfer of highly- skilled personnel from large enterprises to small ones. The specific criteria were that the eligible researchers were those with engineering or natural science backgrounds and they should continue working in the same area of research. The success rate of the uptake of such a mobility scheme in 2006 was modest, so several modifications were introduced to make it more attractive. The goal was to achieve at least 30 transfers from public R&D to the business sector and another 30 from large corporations to small and micro firms.

Cooperation between public research institutions and the business sector is promoted also with a new measure, where financial assistance is offered for the formation of interdisciplinary development teams working on technology development projects in

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia enterprises. The eligible costs are the costs of consultancy of highly qualified experts hired to help with a specific technology development project. In case of industrial research, the consultancy costs can be co-financed up to 50 %, while for the pre-feasibility research the co-financing is limited to 25 %.

Overall, the number of measures and the amount of available funds for innovation and entrepreneurship are increasing, confirming that the challenge for the Slovenian innovation system will be to apply these resources effectively on one hand, and to further improve the coordination of different agents in the system on the other [6].

Support Measures taken by the Ministry of Higher Education, Science and Technology:

Under the Ministry of Higher Education, Science and Technology (http://www.gov.mvzt.si), the following main activities were performed in 2008: 1. Promotion of innovation infrastructure development (technology centres, innovators); 2. Development of a knowledge transfer system (specific measure: Young researchers from industry); 3. Promotion of R&D cooperation among enterprises (Technology Platforms) and identification of R&D themes and priorities relevant to the Slovenian economy 4. Promotion of development cooperation and subsidies for industrial R&D projects and development of new technologies, services and products in enterprises (strategic R&D projects of Slovenian enterprises); 5. Coordination of the international programme EUREKA, encompassing the preparation and implementation of the public call for the international industrial R&D projects, as well as the implementation of the EUROSTARS programme; 6. Participation in ERA-NET projects (e.g. MANUNET, CORNET, EraSME, COMPERA); 7. Participation in the establishment of cooperation with the ESA-European Space Agency; 8. Support the Slovenian application to host the Galileo executive board; 9. Coordination of the activities related to the Investment Fund for new technologies in cooperation with the SEF; 10. Supervision of the activities of the Technology Agency.

Support Measures taken by the Slovenian Technology Agency:

With the STA fully operational, most of the above mentioned activities were implemented by the agency. The 2007 call for Young Researchers from the industry was already one of such measures. In 2007, the ministry funded altogether some 150 young researchers at a cost of EUR 4.2 mio annually. From 2008, the financing has been supplemented by the SEF. This makes it possible to add more than 100 new young researchers each year. This measure is a direct response to the lack of highly skilled researchers in business R&D and has been well received by the enterprises.

The Technology Platforms (TP) are supported through two measures: one directed specifically to their functioning (EUR 140,000) and the other, significantly larger, to joint research projects, initiated by the Technology Platforms (EUR 6.1 mio). This call was realised in August 2008. TPs are also encouraged to participate actively in the formation of the platforms at the EU level.

The TIA is also running a smaller support measure for the intermediary organisations supporting inventors. These are different associations offering support to individuals, independent businessmen, students, etc. in their innovative endeavours. Conditions include a membership of at least 300 innovators and the ability of the organisation to

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia support its members by providing them advice, information and visits to different meetings or innovation fairs. The measure aims at contributing to a friendlier innovation environment.

The innovation infrastructure support programme envisages the continuation of the existing support to technology centres. In 2007, 28 centres were co-financed with a total amount of EUR 551,000.

Even though the Ministry of the Economy has its own implementing agency for most of its support measures, certain activities are to be implemented through the STA as well. The single largest measure, initiated by the Ministry of the Economy, to be implemented by the STA in the period 2008–2011, is the measure under the title ‘Direct Subsidies for Joint Development-Investment Projects‘. Here, financing is available for projects where the development of new products and/or services or the development of significantly improved products and/or services with a higher value added is planned. The result of the project must be an innovation for all cooperating enterprises, which may, if in line with the business policy, be protected as intellectual property.

Within these joint development-investment projects the following costs can be co- financed: R&D activity of the cooperating enterprises; the cost of investment in related research equipment and high-tech machinery required for the test production and the costs of cooperation with research teams. The total amount of the resources available for the measure is EUR 42 mio, with 35.7 mio to come from the ERDF and 6.3 from the Slovenian side. The 2008 allocation of resources was worth EUR 7 mio and EUR 18 mio in 2009.

In 2008, the STA continued the programme ―Technology for Security and Peace‖, financed by the Ministry of Defence. The programme supports technology development projects in enterprises in the areas defined by the Ministry of Defence and amounted to EUR 10.5 mio in 2008.

In the conditions of financial crisis some other support schemes have been introduced for the companies, but they are oriented in the solving the social problems.

Overall, there is a wide range of different support measures available at different institutions: the STA, the PAEFI and the The policy mix SEF, and in some cases directly at the ministries. The policy mix covers most of the does cover most of the identified challenges: from the identified challenges promotion of R&D activity in the business sector, increased in business cooperation between public R&D institutions and businesses to environment. the support for human resources (mobility/training) and the financial support to start-ups. A wide range of options open to SMEs suggests that supporting institutions work together to make their programmes as visible as possible. In this regard, the initiative of the three main institutions to organise the so-called entrepreneurial days was welcomed by the enterprises, since they were able to see what is being offered to them through various channels.

However, two policy areas seem to be missing from the current policy mix. The ministries neither continued their support to the organisational changes nor the modernisation of management techniques, so there is now no promotion of this type of 'soft' innovation. The programme on ―Promotion of Entrepreneurship‖ only very briefly talks about the introduction of models of business excellence and promises measures in this area, while carrying out the survey on policies for innovation in services [7]. Several government officials have mentioned that they are planning to introduce specific measures addressing

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia innovation in the services sector. However, no direct instrument has been designed to date. What should be noticed, however, is that the dictions of all public calls now regularly quote 'for new product/service/process' and try not to discriminate against innovation in services.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

The SWOT analysis of Slovenian innovation capacity is presented in Table 8.

TABLE 8: Slovenian Innovation Capacity [4]

Strengths: Weaknesses

• R&D-potential of institutions and individuals, • Complex and long administrative procedures, • a relatively successful transition and great • non-market orientation of research; selection is capacity to adapt to the market situation, not always directed towards excellence in • favourable strategic geographical location, international level, there are no priorities in the quality environment and new transport links, existing medium-term plan, • a stable banking system, low risk, • lack of critical mass and insufficient cooperation • relatively suitable investments of the state in the between researchers and industry, organisational environment and the preparation of • difficulties in placement of R&D in the strategies development strategies. at local level, • lack of incentives for innovation in the public sector (universities and institutes), • non-existent or unadjusted economic infrastructure for a supportive environment and the lack of a visionary approach, • sub-optimal exploitation of the existing supportive environment, • lack of entrepreneurial and innovation culture, • the educational system is not focused on the needs of companies, • low level of output adopted in the medium and long-term plans (NRRP, Development Strategy, etc.) Opportunities Threats

• Installation of best practices in the legislation in • Faster growing competitiveness of other markets the field of innovation, and countries compared to Slovenia, • The importance of innovation in the EU (including • other new Member States of the EU adopt in the field of research), legislation in the field innovation and have a more • EU incentives and practices (foreign investment, supportive environment for innovation, freedom of movement of capital, people and • other countries are more attractive for talents, goods), • some other countries take advantage of EU funds • technology transfer and knowledge in the EU and more effectively, Slovenia. • outflow of unproductive private capital abroad.

Relevant Legislative Environment for the Development of (Eco)innovation in Slovenia:

In general, Slovenia has a reasonably modern legislative environment. In the process of accession to the EU, Slovenia modernised the majority of its relevant legislation before 2004. Areas of innovations and ecology were attributed particular importance, not only linked to the EU, and received special attention. There are some not well-covered areas like the non-existence of a National System of Innovation (NSI) and the lack of a comprehensive innovation strategy. However, the legislative environment in the areas of innovations and ecology is sufficiently covered; funds available for R&D are also relatively substantial. On the other hand, the situation is less positive in the area of legislation implementation and the efficient use of financial support for innovation and ecology. The main relevant regulations in the areas of economic environment, entrepreneurship, research, development and innovation and ecology are listed.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Economic Environment, Entrepreneurship: - Companies Act - Zakon o gospodarskih druţbah (ZGD-1) Ur.l. RS, št. 42/2006 (60/2006 popr.) - Public Funds Act - Zakon o javnih skladih (ZJS-1) Ur.l. RS, št. 77/2008 - Restructuring Economies Act with the Merits of Funding - Zakon o kriterijih za usmerjanje sredstev za prestrukturiranje gospodarstva Ur.l. SRS, št. 5/1990 - Venture Capital Companies Act - Zakon o druţbah tveganega kapitala (ZDTK) Ur.l. RS, št. 92/2007 - Award for Business Excellence Act - Zakon o priznanju Republike Slovenije za poslovno odličnost (ZPPO) Ur.l. RS, št. 22/1998 - Promotion of Foreign Direct Investment and Internationalisation of Enterprises Act - Zakon o spodbujanju tujih neposrednih investicij in internacionalizacije podjetij (ZSTNIIP) Ur.l. RS, št. 86/2004 - Promotion of Balanced Regional Development Act - Zakon o spodbujanju skladnega regionalnega razvoja (ZSRR-1) Ur.l. RS, št. 93/2005

Research, Development and Innovation: - Research and Development Act - (ZRRD) Ur.l. RS, št. 96/2002 - Resolution on the 2006 – 2010 National Research and Development programme- Resolucija o Nacionalnem raziskovalnem in razvojnem programu za obdobje 2006 - 2010 /ReNRRP/Ur.l. RS, št. 3/2006 - Rules on Keeping the Register of Innovative Environment - Pravilnik o vodenju evidence subjektov inovativnega okolja Ur.l. RS, št. 25/2008 - Industrial Property Act - Zakon o industrijski lastnini (ZIL-1) Ur.l. RS, št. 45/2001 - Employment Related Industrial Property Rights Act - Zakon o pravicah industrijske lastnine iz delovnega razmerja (ZPILDR) Ur.l. RS, št. 45/1995

Ecology: - Act Declaring the Ecological Protection Zone and Continental Shelf of the Republic of Slovenia - Zakon o razglasitvi zaščitne ekološke cone in epikontinentalnem pasu Republike Slovenije (ZRZECEP) Ur.l. RS, št. 93/2005 - The Environment Protection Act - Zakon o varstvu okolja (ZVO-1) Ur.l. RS, št. 41/2004 - Noise Safety in Natural and Living Environment Act - Zakon o varstvu pred hrupom v naravnem in bivalnem okolju (ZVPH) Ur.l. SRS, št. 15/1976 - Ionising Radiation Protection and Nuclear Safety Act - Zakon o varstvu pred ionizirajočimi sevanji in jedrski varnosti (ZVISJV) Ur.l. RS, št. 67/2002 - Water Act - Zakon o vodah (ZV-1) - Resolution on The National Environmental Action Programme 2008–2016 (Neap) - Nacionalni akcijski načrt za energetsko učinkovitost za obdobje 2008-2016

4.3.1.2 (Eco)Innovation Initiatives

Slovenia has established a series of innovation initiatives at the national level. Initiatives are coordinated by the already mentioned institutions, the MHEST, the PAEFI, the TIA, and the SEF. Some chosen particular initiatives are presented in Table 9 (a broad overview in presented in the preceding chapter).

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 9: Overview of Existing (Eco)innovation Initiatives Undertaken at National Level

Title of measure Voucher system for consultancy and training services

The objectives of the measure are (cited from the official document of the Public Agency for Entrepreneurship and Foreign Investment- PAEFI): - to increase the number of dynamic, growing enterprises, to keep the existing and establish new working places, to stimulate eBusiness, to stimulate the development of entrepreneurship, to improve Overview (nature, main access to consultancy for potential entrepreneurs and existing enterprises, to increase goals) the number of SMEs. With subsidised costs of consultancy a larger number of potential entrepreneurs would decide to start a business and establish an enterprise. Provided consultancy could help newly founded SMEs to survive the initial critical years and achieve a timely reorganisation and modernisation of the older SMEs.

Small businesses are often reluctant to approach consultancy services due to high costs. Background and rationale The aim of the measure is to increase the demand for external expert help through the (Analytical reasoning why assurance of quality and financially accessible consulting services for different target this measure is being groups. Besides this, the measure objectives are also to improve the operation of created) entrepreneurs, initiate self-employment and rural development.

Policy Priorities 4.2.1 Support to innovation management and advisory services 4.2.2 Support to organisational innovation incl. e-business, new forms of work organisations, etc 4.3.1 Support to innovative start-ups incl. gazelles

Start date 2001

Expected ending No End Date Planned

Target groups

Please indicate which group(s) are the targets or beneficiaries of the programme and also which group(s) are eligible to apply for funding

Category Target of measure Eligible for funding SMEs only

If more than one target Only proposals from single organisations are accepted group is eligible Target groups: 1. existing SMEs 2. potential entrepreneurs (young people above 18 starting a business, unemployed people registered with the Employment Agency and other individuals, starting a business or self-employment status)

Aspect of the innovation process addressed by the Awareness raising among firms on innovation measure Innovation management tools (including quality) Promotion of Promotion of entrepreneurship/start ups (including incubators) entrepreneurship/start up (including incubators)

What are the eligibility The access to vouchers is assured by the VEM entry point. The first step is an interview and selection criteria for with an entrepreneur/an individual with the qualified advisor at the VEM entry point. participating in the The advisor makes an expert decision whether the applicant should be included in the measure? programme. The acceptance in the programme gives the entrepreneur an opportunity to use the consultancy services on the base of a subsidised price. It is important that the entrepreneurs select the consultant on the basis of their own judgement, but from the database of consultants at the PAEFI.

In what form is funding Grants provided?

What are the eligible External expertise (consultants, studies, etc.) costs, where direct

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

funding is provided?

Sources of financing (other than national public Co-financed by the private sector sources of funding)

Overall budget The overall budget in EUR 3,700,000 further information The value of voucher is different: existing SMEs can get a subsidy from 2,500 to 4,000 EUR, individual future employees' subsidy is 1,500 EUR.

Information Website: http://www.podjetniski-portal.si/ustanavljam-podjetje/vavcersko-svetovanje Source/Reference English website: http://www.japti.si/home

Legal basis Programme for promotion of entrepreneurship and competitiveness, Ministry of Economy - Annual work programme of the PAEFI

Launching Agency Ministry of the Economy

Agency Administering Public Agency for Entrepreneurship and Foreign Investment- PAEFI

Funding Agency Ministry of the Economy

Regional eligibility Beneficiaries from all regions are eligible for utilisation of funds!

Title of measure Support to VEM services

The measure supports the establishment of a network of local consultancy companies which will be able to assist the Public Agency for Entrepreneurship and Foreign Overview (nature, main Investment (PAEFI) in providing different services to SMEs, especially to new businesses. goals) The PAEFI will co-finance the services provided by the selected consultancy firms in their locality. The list of services such a consultancy firm needs to be able to provide has been specified and is related closely to the overall programme of the PAEFI.

In the process of improving the entrepreneurial environment for SMEs, the government introduced the system VEM (I know) as a single entry point for SMEs. To assure client- friendliness and yet, not go into establishment of offices throughout the country, the Background and rationale PAEFI decided to select a certain number of existing business consultancy firms and entrust them with the implementation of their programmes: standard business consultancy on setting up a firm, assistance in registering as well as running of the voucher programme. This system should especially provide an easier access to start-ups.

Policy Priorities 4.3.1 Support to innovative start-ups incl. gazelles 5.1.1 Support to the creation of a favourable innovation climate (ex. roadshows, awareness campaigns) 5.3.3 Support to the innovative use of standards

Targeted research and No specific thematic focus. technology fields

Addressing innovation- Improvements in innovation support services, in particular for dissemination and related Lisbon guideline technology transfer. elements

Start date 2008

Expected ending No End Date Planned

Target groups

Category Target of measure Eligible for funding Consultancies and other private service providers (non-profit) Technology and innovation centres (non-profit) Business organisations (Chambers of Commerce...)

Overall implementation In accordance with the density of enterprises, selected consultancy firms will be structure of the subsidised to provide the required services to SMEs and especially, start-ups. The

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

programme: services include a one-stop registration point for new entrepreneurs, different types of consultancy provided through the voucher programme, distribution of information on business financing opportunities, etc.

Management structure: The measure is to be managed by the Public Agency for Entrepreneurship and Foreign Investment.

Review of progress: The selected consultancy firms need to report on the services provided on a periodic basis.

Selection criteria

What are the eligibility and selection criteria for - completeness of the services offered, past record of providing assistance to SMEs, participating in the qualified staff measure?

What are the eligible costs, Labour costs (including overheads) where direct funding is Equipment provided? Other advertising costs

Overall budget The overall budget in EUR 2,500,000

Year : - 2008 1,200,000 - 2009 1,300,000

Information Website: http://www.podjetniski-portal.si/ustanavljam-podjetje/vem-tocke Source/Reference English website: http://www.japti.si/home

Legal basis Programme for promotion of entrepreneurship, 2007, Ministry of the Economy Annual Programme of Work of the PAEFI, 2008-09

Launching Agency Ministry of the Economy

Agency Administering Public Agency for Entrepreneurship and Foreign Investment

Funding Agency Ministry of the Economy

Regional eligibility Beneficiaries from all regions are eligible for utilisation of funds!

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Title of measure Research Group Programme Financing Scheme

The Research Group Programme is a scheme that supports long-term basic research. The Programme was introduced as a response to the requests voiced by the science community, in particular by the large research institutes, which found it difficult to develop longer-term basic research under the conditions of annually changing budgets in Overview (nature, main the second half of the nineties. This led to the elaboration of the Research Group goals) Programme, where three to six year contracts are awarded for public funding of basic research in the field of natural sciences, engineering, medical sciences, biotechnology sciences, social sciences and humanities. Since its inception, this has been the largest source of public funding for research.

The Research Group Programme financing scheme is among the key instruments that contribute to fulfilling the goals of the National Research and Development Programme, by financing long-term basic research. The scheme was introduced in 1999 under the Background and rationale pressure of large research institutes who argued for more stability in research funding. (Analytical reasoning why The previous system of annual or two-year research projects had caused serious liquidity this measure is being problems due to delays in public calls for research projects and complicated created) administrative procedures. The long-term financing, it was argued, should especially support basic research, where the evaluation of results is not even possible on short-term basis.

Policy Priorities 1.2.1 Strategic Research policies (long-term research agendas) 2.1.1 Policy measures concerning excellence, relevance and management of research in Universities 2.1.2 Public Research Organisations

Addressing innovation- 2. The creation and development of innovation poles, networks and incubators bringing related Lisbon guideline together universities, research institutions and enterprises, both at regional and local elements level, helping to bridge the technology gap between regions.

Start date 1999

Expected ending 2014

Target groups

Category Target of measure Eligible for funding Higher educations institutions research units/centres Other non-profit research organisations (not HEI) Higher education institutions (education function)

If more than one target Co-operation/networking optional (e.g. associating SMEs as users) group is eligible Other (please specify) The Research Group Programme is opened to the researchers in public research institutions, universities, independent education institutions and other research groups organised by public and private legal entities on the basis of concessions. The key condition for the eligibility for funding is meeting the basic criteria for the composition of the research group.

Type of Research Activity Basic research targeted: Problem driven (basic) research

Overall implementation The Slovenian Research Agency which administers the Research Group Programme, structure of the publishes a public call for the research proposals. The eligibility criteria specify the programme: composition of the research group and request a detailed description and argumentation for the proposed research. The eligibility and the evaluation criteria are included in the call. The grant covers the labour costs, overhead and material costs for the research team, but only in the amounts prescribed within the so called Full Time Equivalent (FTE). The value of the FTE is annually set by the Slovenian Research Agency.

Management structure: The programme consists of 3-6 year cycles, which start with the public call for research programmes/research groups‘ proposals. The selected programmes are awarded by 3-6 year contracts, which are verified annually. The final evaluation takes place at the end of

Author: Development centre Novo mesto ltd. 44

Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

the project.

Review of progress: Reports are submitted by programme groups for each year and at the end of the fifth year for the final evaluation. The report template is provided by the Slovenian Research Agency and requests key scientific and bibliographic results and a self-assessment of the socio-economic relevance of the programme. The templates are frequently changed as are the evaluation criteria.

What are the eligibility The Research Group Programme is open to groups of researchers which are comprised of and selection criteria for the head of the group (renown senior researcher with international reputation), at least participating in the five researches holding a doctorate and technical staff. The members can be from one or measure? more research organisations. Programme group members can take part only in one such group. Researchers must have a record of research and development results for the last five years, and research titles in line with the existing regulations. Researchers financed under the Young Researchers Scheme may also participate in the programme group, but do not receive extra funds. The evaluation process is spelled out by the Slovenian Research Agency, which is responsible for monitoring and administering programmes. The Agency organises the evaluation process with the help of advisory bodies it appoints. The proposals are evaluated within their scientific field. So far, bibliometric criteria were favoured, especially scientific articles and citation indexes.

Selection of projects/ Research groups submit proposals on fixed calls. Proposals are evaluated by designated participants evaluators. The evaluation process looks at the scientific records of the programme coordinator and of the team and evaluates the scientific and economic or social relevance of the research programme. So far, each call had a specific evaluation process.

What State Aid framework The programme does not correspond to any State Aid Framework. is applied to the measure

In what form is funding Grants provided?

What are the eligible Labour costs (including overheads) costs, where direct Equipment funding is provided? Training (including study trips)

Overall budget The overall budget in EUR 56,006,964 (2009) further information The budget for the total Research Programme Financing Scheme is set for a 3-6 year period, while a more detailed distribution of funds among programme groups is made on an annual basis. In 2009, the annual budget was 56 million EUR, covering 885 FTE.

Year : 2007 – 51,466,395 2008 55,344,808 2006 – 50,600,454

Information Website: http://www.arrs.gov.si/sl/progproj/rprog/ Source/Reference English website: http://www.arrs.gov.si/en/progproj/rprog/obseg.asp

Relevant further After the completion of the first five-year round of programme financing for the period information 1999-2003, the second round started in 2004 and ran until the end of 2008. The current financing scheme started in January 2009, but now the period of financing programme groups varies from three to six years. No formal indication of future developments has been made so far, but it is likely that the programme groups, which received only three- year contracts, will be advised to apply for research project funding. Due to its importance in financing basic research, it is unlikely that the system of research programme groups will cease to operate in the near future.

Legal basis Law on Research and Development (2002) (http://www.uradni- list.si/1/content?id=39210) National Research and Development Programme (http://www.uradni-list.si/1/content?id=67936). Rules on the quality assessment of the research programmes of universities and national research institutes (Official Gazette of the RS, No. 52/98, 67/98, 72/98, 102/2001 and 47/2003).

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Launching Agency The launching agency was the Ministry of Education, Science and Sport (Ministrstvo za šolstvo, znanost in šport, MSZS), since 2004 renamed into the Ministry of Higher Education, Science and Technology (Ministrstvo za visoko šolstvo, znanost in tehnologijo).

Agency Administering The agency administering the scheme is the Slovenian Research Agency (Javna agencija Republike Slovenije za raziskovalno dejavnost, ARRS).

Funding Agency The funding agency is the Slovenian Research Agency.

Regional eligibility Beneficiaries from all regions are eligible for utilisation of funds!

Title of measure Young Researchers' Programme

The Young Researchers Programme is one of the most successful activities in the area of education and training for R&D and innovation. The Programme was already set up in 1985 and has suceeded over the years in bringing young people into research. The impact was so significant that it actually lowered the average age of researchers in the public research sector in Slovenia. The programme finances young people, selected by higher education institutions and public research institutes as potential candidates for researchers, during their M.A. or Ph.D. studies. During their studies they have a mentor in this institution and take part in the research as junior assistants. The Ministry, responsible for science (MHEST) pays for their salary, tuition fees as well as mentorship costs. Since the establishment of the Slovenian Research Agency, the programme has been coordinated and executed by the Agency. In 1993, the programme was expanded with a special sub-programme, open only to young people from the business sphere who continued to be employed in the business sector and had constant links with the sector during their training period. This was designed to respond to criticisms that the Young Researchers Programme was too focused on the Overview (nature, main public research sector. The recipient of funds under the new scheme is a legal entity in goals) the business sector, technology centre or regional development agency which has an independent research and development group or has established cooperation with a research institution where the young researcher will complete his/her Ph.D. education. Since 2006, the two programmes have been separated and the one for the Young researchers from business sector is implemented by the Slovenian Technology Agency (TIA). The Slovenian Research Agency provides financing for around 1200 young researchers every year, representing around 850 to 900 FTEs (full-time equivalents for young researchers on full salary). Between 200 and 250 new young researchers complete the training programme every year, with the same number of new young researchers being included in the programme. A new condition has been added to the Young Researchers' contracts since 2006/07, requesting that each of the participants in the programme takes a compulsory 20 hours course on Entrepreneurship and Innovation. This was introduced with the ambition to give the future researchers some of the very basics of entrepreneurship and thus stimulate cooperation between the R&D sector and the business sector in the long run.

At the time the programme was conceptualised, the research sector in Slovenia experienced a lack of interest among young people to continue their post-graduate studies with the aim Background and rationale of going in research. Research organisations had limited funds to employ young people and (Analytical reasoning why thisfinance their studies, and the number of research staff was decreasing. Even though now measure is being created) the age structure in the research sector has improved significantly, the programme is assessed as successful and still needed. It has expanded and is now opening an extra window for young researchers in the business sector R&D units.

Policy Priorities 1.2.1 Strategic Research policies (long-term research agendas) 3.1.3 Stimulation of PhDs 3.2.1 Recruitment of researchers (e.g. fiscal incentives)

Start date before 1995

Expected ending no end date planned

2.5. Target groups

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

2.5.1 Please indicate which group(s) are the targets or beneficiaries of the programme and also which group(s) are eligible to apply for funding

Type of Research Activity Basic research targeted: Problem driven (basic) research Applied industrial research Social sciences

Overall implementation The call for young researchers' programme is announced annually. First the call is issued structure of the for the selection of mentors, where university professors and senior researchers, who programme: meet relatively strict criteria, can apply (there is a special emphasis on the selection of younger mentors). Once they are selected, their employer can announce an open position for a junior researcher. The selection of the candidate is primarily done by the institute/ university, but needs to be approved by the Slovenian Research Agency. A tripartite agreement is signed at the end which sets the rules by which the financing will be implemented.

Selection of projects/ Research Organisations issue public calls for candidates for young researchers to work participants with the selected mentors in the daily press and/or the Official Gazette of the Republic of Slovenia. They shall send the Slovenian Research Agency a statement confirming that candidates have been selected by public call, and provide proof that individual young researchers meet the call criteria.

Young researchers must: have at least a university-level education in the appropriate field; have an average grade for all examinations and coursework (excluding the degree examination) of at least 8.00; if a young researcher is already registered for a postgraduate study or has completed a master's degree, the average grade for the first degree work shall not be relevant; be aged up to 28 years inclusive (with respect to the year of birth); if a young researcher has already enrolled in a postgraduate study programme without financial support from the Agency or ministry responsible for science, the age of the candidates may rise above 28 years, namely, one year shall be added for each study year. The following are the criteria for evaluating candidates: The average grade for all examinations and coursework at undergraduate level (excluding the degree examination) must be at least 80% of the average for examinations and coursework at that level; A completed master‘s degree; Enrolment in a postgraduate study programme; An award or prize; Published articles; Collaboration in research work. The selection of candidates applying to a Research Organisation for public calls is carried out by the Research Organisation in agreement with the selected mentors. The mentors check that candidates meet the conditions and evaluate them in writing (for details see http://www.arrs.gov.si/en/mr/akti/prav-MR-RO-januar08.asp ).

In what form is funding Grants provided?

What are the eligible Labour costs (including overheads) costs, where direct Equipment funding is provided? Training (including study trips) Other

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

mentorship

Overall budget The overall budget in EUR 31,726,280 Further information: The budget for the year 2009 was a proposed figure by the Slovenian Research Agency (SRA), which still needed to be approved by the government. But since this figure represented contractual obligations of the SRA, it was unlikely that it would be lowered.

Year : 2007 – 26,637,390 2008 – 30,449,509

Were any indicators specified ex ante for the No measurement of the results

Website: http://www.arrs.gov.si/sl/mr/index.asp 5.1 Information English website: http://www.arrs.gov.si/en/mr/ Source/Reference

The programme was expanded by an additional programme, Young Researchers from Relevant further Business Sector, first implemented by the Ministry of Higher Education, Science and information Technology. From 2007 on, this programme has been coordinated by the Slovenian Technology Agency.

Rules on the Training and Financing of Young Researchers in Research Organisations Legal basis http://www.arrs.gov.si/en/mr/akti/prav-MR-RO-januar08.asp

At the time (1985) the launching agency was the Republic of Slovenia's Office of Science and Technology. Later, the programme was moved under the Ministry of Science and Launching Agency Technology (1991). With the establishment of the Slovenian Research Agency in 2004, the implementation of the programme was entrusted to the Agency.

Agency Administering Slovenian Research Agency.

Funding Agency Slovenian Research Agency.

Regional eligibility Beneficiaries from all regions are eligible for utilisation of funds!

Title of measure Technologies for Security and Peace 2006-2012

The main goals of the official programme called Technologies for Security and Peace, financed by the Ministry for Defence, the Ministry of the Economy and the Ministry of Higher Education, Science and Technology and executed by the Slovenian Technology Overview (nature, main Agency are: development of research and development in the Slovenian Defence industry goals) sector and the promotion of R&D cooperation between public institutions and private business enterprises in the area of defence & security technologies. The goals are linked to the Slovenian membership in the EU and NATO and are focused on the improvement of Slovenian defence capabilities. Through annual calls, technology development projects in areas specified by the Ministry of Defence are financed.

The key reason why ministries decided to promote the project of Technologies for Background and rationale Security and Peace was the restructuring of the Slovenian military to a higher, more (Analytical reasoning why professional standard. It is important to engage both private as well as public R&D this measure is being capabilities for the purpose of military and security technologies development in various created) fields.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Policy Priorities 2.2.3 R&D cooperation (joint projects, PPP with research institutes) 2.3.1 Direct support of business R&D (grants and loans) 4.1.1 Support to sectoral innovation in manufacturing

Addressing innovation- 1. Improvements in innovation support services, in particular for dissemination and related Lisbon guideline technology transfer. elements

Start date 2007

Expected ending 2012

Target groups

Category Target of measure Eligible for funding All companies Higher educations institutions research units/centres Other non-profit research organisations (not HEI) Technology and innovation centres (non- profit) Business organisations (Chambers of Commerce...)

Overall implementation The measure is implemented through annual calls, issued by the Technology Agency structure of the (TIA) on behalf of the Ministry of Defence and also supported by the Ministry of Higher programme: Education, Science and Technology. For each call, the Ministry of Defence prepares the specification as to the technology fields to be covered by the applicants and sets selection criteria jointly with the TIA.

Management structure: The annual call is managed by the Technology Agency (TIA). Once the TIA completes the selection procedure, the awarded contracts are verified by the Ministry of Defence. Their supervision and payment of financial instalments is carried out by the TIA.

In what form is funding Grants provided?

What are the eligible Labour costs (including overheads) costs, where direct Infrastructure (buildings) funding is provided? Training (including study trips) External expertise (consultants, studies, etc.)

Overall budget The overall budget in EUR 5.4 million Further information: The budget specified relates to the call published in the beginning of 2009. Since some of the projects, selected through the calls issued in the previous years were still running and being financed, this meant that the budget for the entire measure was larger, but could only be estimated on the basis of the Technology Agency overall annual Work programmes. In 2009, this measure received 4.5 million EUR.

Year : 2009 4.5 million EUR 2008 4.0 million EUR 2007 1.4 million EUR

Information Website: http://www.tia.si/TPMIR08,556,0,1,1.html#Opis Source/Reference English website: http://www.tia.si/o_agenciji,533,0.html

Legal basis Law on R&D activities (OG 96/02, 115/05) and VII. point of Conclusion on executing and financing the technology programme "Technology for Security and Peace" (2006 - 2012)

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Launching Agency Ministry of Defence and Ministry of Higher Education, Science and Technology.

Agency Administering Slovenian Technology Agency - TIA.

Funding Agency Ministry of Defence.

Regional eligibility Beneficiaries from all regions are eligible for utilisation of funds!

4.3.2. Regional level

4.3.2.1. (Eco)innovation Policies

Outline of Country’s Regional Policies Influencing South-eastern Slovenia Region

According to the NUTS 2, Slovenia is a single region country. But over the years, especially in view of the absorption on the EU Structural Funds, the country wants to be split into two regions for planning purposes (not politically but the so called Cohesion split): the more developed western and the less developed eastern Slovenia.

In Slovenia's strategic thematic and territorial priorities for the period from 2007 to 2013, as set out in the National Strategic Reference Framework (NSRF), one of the priorities is ―to promote a balanced regional development‖. The operational programme for Strengthening Regional Development Potentials (OP SRDP) will receive funding from the ERDF. The operational programme for Human Resources Development will be funded by the European Social Fund (ESF). Finally the operational programme for Environmental and Transport Infrastructure Development will be funded both by the ERDF and the Cohesion Fund (CF) [9].

The OP SRDP consists of four development priorities, each with specific measures: 1. Competitiveness and Research Excellence: 1.1. Improvement of competitive capabilities of enterprises and research excellence: direct subsidies for joint development-investment projects, strategic research projects, R&D Centres of Excellence and development of research infrastructure of the Centres of Excellence. 1.2. Promotion of entrepreneurship: subsidies for investment in new technical equipment for enterprises with one to nine employees, subsidies for investment in new technical equipment for other SMEs. 2. Economic Development Infrastructure: 2.1. Economic-developmental-logistical centres: co-financing of regional entrepreneurship training centres. 2.2. Information society: Co-financing of R&D projects in e-services and e-content, support in construction and maintenance of broadband networks in local communities. 3. Integration of Natural and Cultural Potentials: 3.1. Development of tourist capacities, regional tourist services, youth tourism, etc. 3.2. Renovation of cultural monuments at local level. 3.3. Sport and recreational facilities. 4. Development of Regions 4.1. Regional development programmes. 4.2. Development of boarder regions with Croatia.

Even though Slovenia is still a single region in the EU context, the differentiation is made within specific measures for the applicants depending on the level of development of a 50

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

particular part of the country. This means that the co-financing is larger in cases of projects from the parts which are under the average level of development (GDP/per capita). This way a more balanced regional development of the country is to be secured in the long run.

A network of economic development-logistics centres is proposed in all geographical areas of Slovenia, where sufficient critical mass of knowledge, economic development, business concentration and population is present. According to the Operational Programme (OP), such centres will, as stated in the OP “with regard to their recognised competences and development possibilities be able to include business-industrial areas, logistics areas (zones), technology parks and technology centres, regional business incubators, university pre-incubators with offices for technology transfer, higher education and research centres, inter-enterprise education centres and similar”.

With increasing attention to regional development issues, some of the support measures have what one could call ―a regional dimension‖. In the eligibility criteria enterprises coming from the less developed parts of Slovenia are eligible to either receive a higher percentage of subsidies or obtain additional points in the evaluation on account of their status. Even the R&D tax subsidy differentiates this way.

One of such differentiated schemes is the Slovenian Fund for Regional Development, which offers loans at subsidised interest rates: the less developed the region from which the applicant comes, the higher the subsidy. For 2008, a special line of entrepreneurship loans opened with EUR 7 mio, with the EURIBOR interest rate at + 0.25% to + 1.00%. The applicant needs to secure a minimum 25% of their own participation, but the loan can be used to cover the purchase of land, and costs of construction and significant change/improvements of the production process. For the SMEs, the costs of preparatory project documentation as well as project consultancy may be covered as well. The applications are approved on a monthly basis, subject to resources availability.

In addition, different regions and local communities are introducing their own entrepreneurship support measures, often co-financed indirectly through the Structural Funds. One of the popular measures is the establishment of a local business zone, where physical infrastructure is provided for new enterprises. Some of the larger communities also have different entrepreneurship support centres, which help SMEs with information and advice on different national/EU support schemes [9].

The most important regional policy defining document is the Regional Development Programme of South-eastern Slovenia Region from 2007 to 2013, prepared by the Regional Development Agency. It contains (eco)innovation as one of the main strategic directions.

South-eastern Slovenia region does not have the status of a particularly less developed region. However, it is neither one of the most developed regions in accordance with that. Furthermore, national support measures related to the development of the region do not promote South-eastern Slovenia Region and are not influencing enough the absorption potentials of this region.

(Eco)innovation Support Organisations in the Region:

In South-eastern Slovenia there are no strategic entities of supportive environment established (apart from the Javni sklad RS za regionalni razvoj in razvoj podeţelja – Public Fund of Slovenia for Regional Development and Development of Countryside). However, there are some local ones. Nevertheless, access to such entities located in Central Slovenia 51

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

is relative easy. In addition, a few secondary and primary types of supporting organisations, such as an incubator, a technology park and the society of innovators, are also missing (which, given the number of companies, might be expected). (Table 10).

TABLE 10: Innovation Support Organisations in the Region [3]

Year of Services Support organisations establishment

Javni sklad RS za regionalni razvoj in razvoj podeţelja* 1995 1, 2, 3, 4, 5 (Slovenian Regional Development fund)

1 Visokošolsko središče Novo mesto* (Higher Education Centre Novo 1998 mesto)

Gospodarska zbornica Dolenjske in Bele krajine – samostojna 2007 1, 2, 3, 4, 5 regionalna zbornica (regional chamber of commerce)

Območne obrtno-podjetniške zbornice (OZS): Črnomelj, Kočevje, 1979 Metlika, Novo mesto, Ribnica, Trebnje (regional craft and 1, 2, 3, 4, 5 entrepreneurial chambers)

2, 4, 5 Razvojni center Novo mesto, Svetovanje in razvoj, d. o. o. – tudi 1997 točka VEM (Development Centre Novo mesto ltd.)

2 Razvojni center Kočevje-Ribnica, d. o. o., druţba za razvoj in 2000 svetovanje – točka VEM (Development Centre Kočevje-Ribnica ltd.) * Also on the national level

Categories of entities of supportive environment: 1. allow generating ideas themselves (education) or provide assistance in assessing the ideas and prepare a business plan 2. advise or assist in establishing and running businesses and the initial market research 3. support or advice on further development of products or services or the transfer of technology on the market 4. advise or help with the marketing of services, products, technologies 5. advise or help in expanding the market for a product, service, technology

Distribution of Development Funds in South-eastern Slovenia Region

In Table 11, the distribution of funds is shown according to the regional and national priorities in 2008. The distribution is based on the strategic outlines on the national and regional level, which were relatively stable in the given strategic period. (Eco)innovation incentives were funded according to these outlines and distribution.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 11: Distribution of Development Funds According to the Regional and National Priorities in 2008 [23]

Priorities of the Region Approved funds (mio EUR) Paid funds (EUR) 1. Integration of the region inside and outside 11.4 2.328.355,81 2. Institutions for the development and transfer of knowledge 8.7 - 3. Joint marketing 13.5 5,636,615.93 4. Greater development potential and quality of life 64.7 10,270,159.43 TOTAL: 98.3 18,235,131.17 Priorities of the national development Approved funds (EUR) Paid funds (EUR) programme 1. Competitive economy and faster growth 14,099,741.96 6,278,483.62 2. Effective generation, two-way flow and use of knowledge for economic development and quality jobs 7,319,692.63 - 3. Effective and less costly state 212,499.00 70,438.32 4. A modern social state and higher employment 1,238,996.00 50,065.00 5. Integration of measures to achieve sustainable development 75,459,135.38 11,836,144.23 TOTAL: 98,330,064.97 18,235,131.17

4.3.2.2. (Eco)innovation Initiatives

Priority Regional Project within the Framework of National Strategic Priorities

Within the framework of the implementation of the first priority (Competitive economy and faster growth) of the Strategic Development of Slovenia in the period from 2007 to 2023, priority projects have been in the Slovenian regions. For South-eastern Slovenia region such priority project is the ―Construction of the Economic Centre in South-eastern Slovenia‖. The Centre should be located in the city of Novo mesto [12].

Content of the project: a. The development of higher education in the area of science, engineering and construction University centre with all relevant facilities b. Building of a Science and Technology Park c. The regional business incubator network d. Commercial-industrial zone in Novo mesto

The objective of the project is reaching the economic breakthrough of the region, by concentrating the institutions of knowledge and a supportive environment for entrepreneurship Establishing of higher education centre will offer access to higher education to the population in the region. The incubator and the business zone will offer opportunities for the development of entrepreneurship. The business incubator started to operate in the beginning of February 2010. 53

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

The development of a science and technology park and a business incubator will help with the development of high-tech companies and the construction of appropriate business zones. This will contribute to added value, technological breakthrough and global competitiveness of the region. Therefore, this should result in approximately 1,300 new jobs. The development of the concentrated business environment will have positive effects for regional development in Slovenia, for example, the survival of people in rural areas and a rapid development of economy in Bela krajina, Kočevsko and Ribnica areas (subcontractors in the supply chain).

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

SWOT Analysis of South-eastern Slovenia Region

South-eastern Slovenia is an industrially strong region with reasonably well developed (eco)innovation activities. Key industrial players are present on globalised international markets and play an important role in the Slovenian economy as a whole. Still, there are less innovative SMEs which would be a secure shelter for the local economy if some of the big players moved the industrial plants to more cost-effectively countries. Adding new educational programmes to the existing educational programmes is a horizontal plan of the strategic national project planned in the region, the so called Economic Centre of South- eastern Slovenia. More attention should be paid to transferring and implementing good practices of (eco)innovation from successful large firms to smaller business entities. The existing R&D facilities should be outsourced from SMEs to rationalise the amortisation of infrastructure and raise the local economy‘s productivity. The passing foreign tourists at holiday peaks should be stopped and invited to experience the natural beauties of the region. Luxury tourism has a lot of potential and would bring higher value added services to the region.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 12: Integral SWOT Analysis of MEDOSSIC Regions [1-9, 21] STRENGTHS: WEAKNESSES - Economically efficient industrial region with a - Lack of innovative SMEs healthy core - Lack of some major subjects of supportive - A relatively successful transition and great environment capacity to adapt to the market situation - Lack of critical mass and insufficient cooperation - Favourable strategic geographical location between researchers and industry - Natural potentials - Mainly poor internal regional accessibility, - Preserved environment infrastructure and internal cohesion - Fast economic development based mostly on - Poorly developed entrepreneurship the export oriented processing industry - Lack of regional belonging, which is also - Good employment potentials reflected in the small social and political impact - developed spa tourism of the region in the country - Appropriate social infrastructure - Insufficient investment in R&D - Rich natural and cultural heritage - Lack of human resources for the needs of the - Successful domestic and foreign investments business and corporate sectors - Still a large number of jobs with low added value - Brain drain in the state capital or foreign countries OPPORTUNITIES THREATS - Establishing innovation support infrastructure - Dependence on the few big industrial companies - Establishing centres of higher education in case of their business downfall - Stimulation of final customers towards - Further concentration of knowledge in the demanding eco products and eco services capital Ljubljana - Realisation of the strategic national project - Faster growing competitiveness of other planned in the region – the construction of the markets, countries, regions ―Economic Centre of South-eastern Slovenia‖ - Dependence on the few large foreign - Encouraging development of innovative SMEs investments, which may be due to the - inclusion of best practices in the legislation in deterioration of operating conditions in Slovenia the field of innovation and may change the situation on world markets - EU incentives and practices - Too slow restructuring of traditional industries - Favourable geographical position (between with new programmes Ljubljana - Zagreb - Karlovac); fifth European corridor, close to the tenth European corridor - Faster cross-border integration and economic growth in the integration of border areas and less developed areas - Further development of large industrial enterprises

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.4 INVESTIGATION OF EXISTING PROJECTS AND PROGRAMMES IN THE SCOPE OF (ECO)INNOVATONS IN SLOVENIA AND ESPECIALLY IN SOUTH-EASTERN SLOVENIA REGION.

4.4.1. European Programmes and Projects Undertaken

National Level:

In general, Slovenia had in the past and still has access to several sets of EU programmes that support (eco)innovation , which were financed from Cohesion Funds, Structural Funds or EU horizontal programmes. In the period from 2004-2006 188.71 mio [11] EUR were assigned to Slovenia within the framework of Cohesion Funds for projects that deal with: - The trans-European transport networks: Priority projects of European interest identified by the European Union were supported in particular. - Environment: Funds were provided for projects related to energy and transport that clearly presented environmental benefits: energy efficiency, renewable energy, development of rail transport, supporting intermodality, strengthening public transport, etc.

In the Structural Funds financial perspective from 2007 to 2013, EUR 1.960 mio are assigned to Slovenia for implementing the OP Strengthening Regional Potentials, the OP Development of HR and the OP Development of Environmental and Traffic Infrastructure. A substantial part of these funds has already been or will be assigned to (eco)innovations (presented in Figures 6 and 7). National programmes co-funded from the Structural Funds have been described in the previous chapters [12].

FIGURE 6: Absorption of Structural Funds in Slovenia in 2007 – 2013 (Situation on the Date 30th of June 2006) [12]

Funds that have % of consumption right in 2007-2013 been called

Assigned funds

Signed contracts

Paid funds

Returned funds

OP Strenghtening Regional Potentials OP Development Of HR OP Development of Environmental and Traffic Infrastructure

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

FIGURE 7: Available Funds of Structural Funds in Slovenia in 2007 – 2013 (Consumption Right in mio EUR)

● OP Strenghtening Regional Potentials ● OP Development of HR ● OP Development of Environmental and Traffic Infrastructure

Slovenian entities have participated in various EU horizontal programmes. Probably the most important were: - 6th Framework Programme (now they participate in the 7th Framework Programme) - EUREKA - INTERREG Slovenia – Italy, IVC, IV B Alpine, IV B Central and South-eastern Slovenia Europe - VALOR - Leonardo da Vinci - Tempus - CIP - Life+ - …

Probably the most important from the perspective of innovation and ecology was the participation in the 6th Framework Programme (now they participate in the 7th Framework Programme).

In the 6th Framework Programme, Slovenia was at the top among EU members in relation to the population by number of proposals. For comparison, we indicate the number of applications from Germany (51,030) with the number of applications 3.2 times lower than Slovenia, followed by Great Britain (41,808), 2.79 times lower, Italy (38,704), whose number is 2.97 times lower than Slovenia‘s. There were 616 participants from Slovenia, which represents 1% of all participants. Most projects with the participation of Slovenians were implemented in the field of Information Society Technologies (100 projects or 20%), followed by sustainable development, global change and ecosystems (60 projects or 12%), nanotechnologies, materials and manufacturing processes (49 projects or 9.7% ), the scientific support to EU policies (40 projects and 8% respectively), Marie Curie mobility (38 projects or 7.6%), knowledge-based society (30 projects or 6%), support for SMEs (29 projects or 5.8%), science Life (28 projects or 5.6%), research and innovation (24 projects or 4.8%), coordination actions (ERANET) (21 projects or 4.2%) and nutrition (20 projects and 4%). Slovenian participants absorbed a total of EUR 76.4 mio or 0.46% of funds available. In the thematic area of sustainable development FP6 Slovenian participants have been successful in four projects in the role of project co-ordinators, namely: 58

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

1. Support for sustainable transport research in Slovenia Activity area acronym: FP6-SUSTDEV Project Reference: 44571 Project Acronym: TRANSSLOVRTD Action Line: SUSTDEV-2.1.1 New technologies and concepts for all surface transport modes (Road, Rail and Waterborne) Action Line (spf): FP6-SUSTDEV SUSTDEV-2.1.1 New technologies and concepts for all surface transport modes (Road, Rail and Waterborne)

2. Biofuel polygeneration system integrating MSW landfill gas and solar energy Activity area acronym: FP6-SUSTDEV Project Reference: 38696 Project Acronym: SOLBIOPOLYSY Action Line: SUSTDEV-1.1.4 Polygeneration Action Line (spf): FP6-SUSTDEV SUSTDEV-1.1.4 Polygeneration

3. Sustainable Pavements for European New Member States Activity area acronym: FP6-SUSTDEV Project Reference: 31467 Project Acronym: SPENS Action Line: SUSTDEV-2005-3.2.2.2.4 Research domain 2.2 (only for a new generation of products and systems in waterborne transport), research domain 2.3 (for all types of transport vehicles and vessels excluding passenger cars), research domain 2.4 and research domain 2.6 (wi, SUSTDEV Sustainable development, global change and ecosystems Action Line (spf): FP6-SUSTDEV SUSTDEV-2005-3.2.2.2.4 Research domain 2.2 (only for a new generation of products and systems in waterborne transport), research domain 2.3 (for all types of transport vehicles and vessels excluding passenger cars), research domain 2.4 and research domain 2.6 (wi, SUSTDEV Sustainable development, global change and ecosystems

4. Central European Research in TrAnsport INfrastructure Activity area acronym: FP6-SUSTDEV Project Reference: 31457 Project Acronym: CERTAIN Action Line: SUSTDEV-2005-3.2.2.2.5 Research domains 2.1 to 2.7 for all surface transport modes Action Line (spf): FP6-SUSTDEV SUSTDEV-2005-3.2.2.2.5 Research domains 2.1 to 2.7 for all surface transport modes

In the FP7, Slovenian participants have been successful in 236 projects (in roles of project partners or co-ordinators).

In the thematic area of Environment in the FP7 Slovenian participants have been successful in the following projects (in roles of project partners or co-ordinators):

1. EO-MINERS Title: Earth observation for monitoring and observing environmental and societal impacts of mineral resources exploration and exploitation Research area: ENV.2009.4.1.3.2 Earth observation in support of a sustainable exploitation of mineral resources Project start date: [2010-02-01] 2. PERPETUATE Title: Performance-based approach to the earthquake protection of cultural heritage in European and Mediterranean countries Research area: ENV.2009.3.2.1.1 Technologies for protecting cultural heritage assets from risks and damages resulting from extreme events, especially in the case of earthquakes

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Project start date: [2010-01-01] 3. CAPHAZ-NET Title: Social capacity building for natural hazards: Toward more resilient societies Research area: ENV.2008.1.3.2.1. Natural Hazards: Social perception, behaviour and responses to risks Project start date: [2009-06-01] 4. AQUAFIT4USE Title: Water in industry, fit-for-use sustainable water use in chemical, paper, textile and food industry Research area: ENV.2007.3.1.1.1. Innovative technologies and services for sustainable water use in industries Project start date: [2008-06-01] 5. SAFELAND Title: Living with landslide risk in Europe: Assessment, effects of global change, and risk management strategies Research area: ENV.2008.1.3.3.1. Prediction of triggering and risk assessment for landslides Project start date: [2009-05-01] 6. CLIMATE FOR CULTURE Title: Damage risk assessment, economic impact and mitigation strategies for sustainable preservation of cultural heritage in the times of climate change Research area: ENV.2008.3.2.1.1. Development and application of methodologies, technologies, models and tools for damage assessment, monitoring and adaptation to climate change impacts (excluding extreme events) Project start date: [2009-11-01] 7. EUROGEOSS Title: European approach to GEOSS Research area: ENV.2008.4.1.1.1. European Environment Earth Observation system supporting INSPIRE and compatible with the GEOSS (Global Earth Observation System of Systems) Project start date: [2009-05-01] 8. PERSUADE Title: PoroElastic Road SUrface: an innovation to Avoid Damages to the Environment Research area: ENV.2008.3.1.5.1. Innovative environmental technologies including design concepts and materials for the reduction of damage to the environment Project start date: [2009-09-01] 9. BIOFRESH Title: Biodiversity of freshwater ecosystems: Status, trends, pressures, and conservation priorities Research area: ENV.2008.2.1.4.1. Improving the capacity to protect and manage the biodiversity of continental waters Project start date: [2009-11-01] 10. ENNAH Title: European network on noise and health Research area: ENV.2008.1.2.1.3. European research network on noise and health Project start date: [2009-09-01] 11. ARCRISK Title: Arctic health risks: Impacts on health in the Arctic and Europe owing to climate- induced changes in contaminant cycling Research area: ENV.2008.1.2.1.2. Comparison of health risks in populations in the Arctic and selected areas in Europe due to the spreading of contaminants resulting from climate change Project start date: [2009-06-01] 12. EU CHIC Title: European cultural heritage identity card Research area: ENV.2008.3.2.1.2. EU cultural heritage identity card Project start date: [2009-09-01] 13. SCALES

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Title: Securing the conservation of biodiversity across administrative levels and spatial, temporal, and ecological scales Research area: ENV.2008.2.1.4.4. Scale dependency of sustainable use of biodiversity Project start date: [2009-05-01] 14. CSS Title: Civil society for sustainability Research area: ENV.2007.4.2.3.2. Engaging civil society in research on sustainable development Project start date: [2009-01-01] 15. HUNT Title: Hunting for sustainability Research area: ENV.2007.2.1.4.3. Biodiversity values, sustainable use and livelihoods Project start date: [2008-11-01] 16. CADASTER Title: Case studies on the development and application of in-silico techniques for environmental hazard and risk assessment Research area: ENV.2007.3.3.1.1. In-silico techniques for hazard-, safety-, and environmental risk-assessment Project start date: [2009-01-01] 17. BTG2008 Title: Bridging the gap conference Research area: ENV Environment (including Climate Change) Project start date: [2008-04-01] 18. TESS Title: Transactional environmental support system Research area: ENV.2007.4.2.1.1. Methodologies for scaling down to the regional and local level the analysis of policy impacts on multifunctional land uses and the economic activity Project start date: [2008-10-01] 19. HYDRONET Title: Floating sensorised networked robots for water monitoring Research area: ENV.2007.3.1.1.2. Technologies for measuring and monitoring networks Project start date: [2008-12-01] 20. POPART Title: Strategy for the preservation of plastic artefacts in museum collections Research area: ENV.2007.1.2.1.1. Indoor air pollution in Europe: an emerging environmental health issue Project start date: [2008-10-01] NET - HERITAGE Title: European network on research programme applied to the protection of tangible cultural heritage Research area: ENV.2007.3.2.2.1. ERA-NET for the preservation of the tangible cultural heritage Project start date: [2008-10-01] 22. CHRESP Title: Cultural heritage research meets practice Research area: ENV.2007.3.2.2.2. Consolidation and dissemination of results related to cultural heritage Project start date: [2008-04-01]

Another popular EU horizontal programme for Slovenian participants was the EUREKA. In 2007, 44 EUREKA projects were running with the participation of 83 different organisations (enterprises, higher education institutions, research institutes, etc.) from Slovenia and received EUR 2.03 mio. In addition, 14 projects were successfully concluded in the same year. Slovenia chaired the EUREKA in the period from 2007 to 2008, and successfully participated in the launch of the new EUROSTARS programme, the first one to be jointly financed and implemented by the EUREKA and the European Commission.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Slovenian participants have been very active in all Interreg programmes. With the accession of Slovenia to EU, the Interreg programmes of co-operation with the bordering Austria, Italy and Hungary expanded to Croatia as well.

For the Ministry of the Economy, the TIA is also coordinating the Slovenian participation in the EU VALOR project. The project is trying to assist in the commercialisation of research results, be it at the research institutes or the R&D units of enterprises. Support is to be provided with the development of a common assessment methodology, which should have the potential to indicate the marketability of research results. In 2008, EUR 0.5 mio were available through a special call for co-financing the introduction of the new product/service to the market.

The Ministry of Higher Education, Science and Technology also co-ordinates the Slovenian participation in some other EU horizontal programmes: ERA-NET projects (e.g. MANUNET, CORNET, EraSME, COMPERA), co-operation with the ESA-European Space Agency, support of the Slovenian application to host the Galileo executive board and others [9].

Regional level:

Some entities from South-eastern Slovenia region participated in the EU horizontal programmes. An all-inclusive overview of the participation in EU horizontal programmes of the regional entities is not available; however, several programmes and projects where entities from South-eastern Slovenia region participated have been identified.

Participation in the 6th and 7th Framework Programmes:

Participants from South-eastern Slovenia region participated in the following (eco- innovation) projects:

1.) Project: DIGITAL PASSPORT- Next Generation European Digital Passport with Biometric Data Data for Secure and Convenient Boarder Passage Funded under the 6th FWP (Sixth Framework Programme) Instrument: STREP Status: Partner Participant: Mirage holografhy studio holografija, sitotisk in storitve, d.o.o., Novo mesto

2.) Project: E4 - Extended Enterprise management in Enlarged Europe Funded under the 6th FWP (Sixth Framework Programme) Instrument: STREP Status: Partner Participant: Kovinastroj gastronom tovarna gostinske opreme d.d., Grosuplje

3.) Project: N4C - Communications for Challenged Areas: Architecture, Test beds and Innovative Alliances Funded under the 7th FWP (Seventh Framework Programme) Instrument: STREP Status: Partner Participant: Meis storitve za okolje d.o.o., Šmarje - Sap

Participation in INTERREG Programmes:

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Participants from South-eastern Slovenia region participated in the following (eco- innovation) projects:

1.) Project: Hightrunk Meadow Orchards as an Element of Biodiversity Conservation and Aesthetic Values of Landscapes Programe: INTERREG III A Slovenia – Hungary - Croatia Participant: Kmetijsko-gozdarski zavod Novo mesto Short description: The project is carried out under the Community Initiative INTERREG III A Slovenia-Hungary-Croatia 2004-2006. Applicant for the Agriculture and Forestry Institute, Novo mesto. The Novomeška Regional Unit of the Institute in the project will contribute to the work of the Task Force and the preparation of promotional material (posters, leaflets, teaching certificates). It will also prepare papers by nature of the content - "Apple" - and animated in relation to Natura 2000.

2.) Project ZONET Programme: Interreg III A Participant: Development centre Novo mesto ltd. Short description: Promoting the integration of business zones, incubators and technology parks in an innovative entrepreneurial network in the border area Slovenia-Croatia. The main objectives of the project SLOHRA ZONET are to improve access and dissemination of information on the cross-border business environment, increase the participation of business zones and establish a structure for the development of a partner network, to improve awareness of small and medium-sized companies on cross-border business opportunities and promote a common economic space.

3.) Project World of Kolpa Programme: Interreg III A Participant: Municipality of KOSTEL (and other participants from the region) Short description: The main objective of the project seeks to establish a new tourist product, based on the establishment of high quality offers for the most demanding, eco- conscious guests, people under stress or recovering from a disease, who expect high standards in terms of basic tourism, authenticity and familiarity, with emphasised contact with the local population. The new tourism product is based mainly on spiritual growth, opening the energy, natural treatment and harvesting of new power as well as finding internal balance in the natural unspoiled environment. The project is designed on the basis of equality and offers equal opportunities to all users.

Participation in the EUREKA Programme:

Participants from South-eastern Slovenia Region participated in the following (eco- innovation) projects:

1.) Project: New Efficient Profiled Steel Sheeting for Composite Steel and Concrete Participant: Trimo D.D. - Engineering and Production of Prefabricated Buildings Short description: The aim of the projects is to develop a new profiled steel sheeting for composite steel and concrete floors. Status: Finished - 11-Mar-2008 Technological Area: 2.6.1 / Building Materials, Components and Methods Start Date: 01-Jun-2004 End date: 01-Oct-2009 Duration: 64 Months Actual cost: 0.47 M€ Participating countries: Germany, Slovenia 63

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

2.) Project: Development of Technology for High-Technology E-Construction Site Participant: Trimo D.D. - Engineering and Production of Prefabricated Buildings Short description: The aim of the projects is to develop a system capable of autonomous accurate placement and mounting of panels. This will ensure better quality of the assembly and reduce the risks of injuries, thus saving material and construction time. Status: Announced - 14-Jun-2007 Technological Area: 2.6.3 / Construction Equipment Market Area: 10.1 / Construction Start Date: 03-May-2006 End date: 03-Jul-2009 Duration: 38 Months Actual cost: 0.97 M€ Participating countries: Austria, Slovenia

3.) Project: Traceability of Engineering Information Participant: TPV, trţenje in proizvodnja opreme vozil d.d. Short description: With the current emphasis being on companies to supply products and provide support services throughout the product lifetime, advanced engineering information traceability methods, models and tools are required to be developed, which allow the information development to be traced into the future. Status: Announced - 29-Jun-2009 Technological Area: 1 / ELECTRONICS, IT AND TELECOMS TECHNOLOGY Market Area: 8 / INDUSTRIAL PRODUCTS / MANUFACTURING Start Date: 01-Jul-2009 End date: 01-Jul-2011 Duration: 24 Months Actual cost: 0.5 M€ Participating countries: Croatia, Slovenia

4.) Project: New Generation of 3d Integrated Passive Components & Microsystems In Ltcc (Low Temperature Co-Fired Ceramic) Participant: Hipot-Rr D.O.O. Short description: Research, development, fabrication and characterisation of new generations of miniaturised passive components (inductors, transformers), sensors (pressure, temperature) as well as microsystems for life science applications using the advanced Ltcc technology. Status: Announced - 29-Jun-2009 Technological Area: 1.1 / Electronics, Microelectronics Market Area: 3.1 / Electronic Components Start Date: 01-Aug-2008 End date: 01-Aug-2011 Duration: 36 Months Actual cost: 1.3 M€ Participating countries: Austria, Poland, Serbia, Slovenia

5.) Project: Quality Control in the Production Line of Sandwich Panels with Ai Method Participant: Trimo D.D. - Engineering and Production of Prefabricated Buildings Short description: The aim of the project is to lower operative costs of production lines, increase productivity through decreases in errors and break-downs, and decrease organisational delays, and to develop non-destructive testing methods to be put forward as standards. 64

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Status: Finished - 10-Mar-2008 Technological Area: 1.2.3 / Artificial Intelligence (AI) Start Date: 01-Jan-2005 End date: 01-Jul-2007 Duration: 30 Months Actual cost: 0.75 M€ Participating countries: Germany, Slovenia

4.4.2. National Programmes and Projects Undertaken

National Programmes and Projects Undertaken as specified in the Strategic Development of Slovenia from 2007 to 2023:

• Construction of an economic centre of South-eastern Slovenia • Construction of an economic centre PHOENIX in Posavje • Construction of an economic centre in Gorenjska with networking sponsoring institutions • Construction of an economic centre PERSPEKTIVA in South-eastern Slovenia • Construction of an economic centre OKO in Pomurje • Development of an economic – development project IN PRIME in Goriško • Construction of an economic centre OREH in Podravje • Construction of an economic centre NOORDUNG in Koroška • Construction of an economic centre TEHNOPOLIS+ in Savinjska Region • National wide-lane network • Slovenian Adriatic island • Integration of natural and cultural potentials of the Karst • Amusement park MEGALAXIA • Sports and business park Leon Štukelj • Nordic centre Planica • Goriško tourists centre

The strategic project for South-eastern Slovenia region ―Construction of an economic centre of South-eastern Slovenia‖ is described in detail in chapter 4.3.2.2.(Eco)innovation Initiatives.

Apart from the main strategic project, also a number of other projects were supported; priorities and funds approved and paid are presented in Table 7. Some of these funds related to innovation and ecology originated from national sources (presented in Table 13) and some from regional sources (presented in Table 14). All projects of the enterprises dealing with innovation that are presented in Table 13 were evaluated also for their ecological impact and should contain an ecological component.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 13: National Support to Innovative Projects that should also have Ecological Impact on the Enterprises in the Region [23]

Approved Project Beneficiary Instrument funds in € Investment in the purchase of new Direct subsidies for purchase of technological equipment for the EKI proizvodnja new technology equipment production of electromechanical elektromehanskih 2007/2008 components – with eco contribution komponent, d.o.o. 210,000 Direct subsidies for purchase of New information and technology RIKO RIBNICA D.O.O. new technology equipment solutions to support the production RIBNIŠKA INDUSTRIJA 2007/2008 process – with eco contribution KOVINSKE OPREME 104,655 Direct subsidies for purchase of Mobile technology for biomass LESOJ PROIZVODNO IN new technology equipment processing line – with eco TRGOVSKO PODJETJE, 2007/2008 contribution D.O.O. DOLENJA VAS 168,965 Introduction of new technology and Direct subsidies for purchase of information solutions for the new technology equipment production of a new generation of EKOP PROIZVODNJA 2007/2008 environmentally friendly equipment EKOLOŠKE OPREME – with eco contribution D.O.O., RIBNICA 100,910 Introduction of new products using POVŠE METAL Direct subsidies for purchase of state of the art laser technology – PROIZVODNJA IN new technology equipment with eco contribution TRGOVINA D.O.O. 2007/2008 210,000 Introduction of new information Direct subsidies for purchase of technology solutions for the new technology equipment industrial mode of production of MI & CO LESNA 2007/2008 wood handbags – with eco DEJAVNOST BOŠTJAN contribution MIHELIČ S.P. 210,000 Purchases of equipment - CNC RIKO EKOS INDUSTRIJA Direct subsidies for purchase of plasma cutting machine and device EKOLOŠKIH STROJEV, new technology equipment for electrostatic coating colours D.O.O. 2007/2008 210,000 Robotics information supported TOVARNA Direct subsidies for purchase of production line – with eco ELEKTROMATERIALA new technology equipment contribution ČATEŢ D.D. 2007/2008 184,400 Acquisition of a new printing press Direct subsidies for purchase of guide UV Flexo, 8 colour + chill new technology equipment drums for printing – with eco SOREX MARKETING, 2007/2008 contribution D.O.O. 210,000 Investment in manufacturing Direct subsidies for purchase of technology, innovative new LESTRA STRAŢA IZDELKI new technology equipment generation of massive furniture – IZ MASIVNEGA LESA 2007/2008 with eco contribution D.O.O. 160,612 Relocation of existing distillation Direct subsidies for purchase of columns for methanol and MELAMIN KEMIČNA new technology equipment installation of two new distillation TOVARNA D.D. 2007/2008 columns – with eco contribution KOČEVJE 210,000 Direct subsidies for purchase of Purchase of new technological REM MONTAŢA IN new technology equipment equipment KLEPARSTVO D.O.O. 2007/2008 195,200 Investment in purchasing new Direct subsidies for purchase of technological equipment – with eco FUKS ORODJARNA JOŢE new technology equipment for contribution SIMONIČ S.P. micro enterprises 2008 149,667 Purchase of a new exstrudor line FOLEX proizvodnja, Direct subsidies for purchase of for the manufacturing of film – with storitve in trgovina new technology equipment for eco contribution d.o.o. micro enterprises 2008 200,000 New technological equipment for Direct subsidies for purchase of municipal machinery and SON - IZDELAVA new technology equipment for equipment of larger dimensions and STROJEV, ORODIJ IN micro enterprises 2008 geometries – with eco contribution NAPRAV D.O.O. VINICA 101,075 66

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Approved Project Beneficiary Instrument funds in € PREDELAVA Direct subsidies for purchase of Purchase of new technological NERJAVNEGA JEKLA new technology equipment for equipment – with eco contribution ZVONKO LAH S.P. micro enterprises 2008 137,808 Investment in purchasing new Direct subsidies for purchase of technological equipment for the new technology equipment for production of complex high-tech LIPNIK TEHNIČNE micro enterprises 2008 springs – with eco contribution VZMETI D.O.O. 193,010 Equipment for the recovery of AKROBAT Direct subsidies for purchase of waste unclean plastic packaging – PROIZVODNJA ŠPORTNE new technology equipment 2009 with eco contribution OPREME, D.O.O. 200,000 Investment in purchasing new Direct subsidies for purchase of technological equipment for REPROMAT new technology equipment 2009 metalworking – with eco PROIZVODNJA IN contribution STORITVE, D.O.O. 64,251 KSE TOVARNA ZA Direct subsidies for purchase of PROIZVODNJO new technology equipment 2009 KONEKTORJEV IN Purchase of a special galvanic belt SPOJNIH ELEMENTOV, line – with eco contribution D.O.O. NOVO MESTO 77,949 KOVINOKEMIJA Direct subsidies for purchase of Automatic galvanic lines for zinc PROIZVODNO new technology equipment 2009 products in drum s– with eco TRGOVSKO PODJETJE contribution TREBNJE D.O.O. 200,000 Direct subsidies for purchase of MIZARSTVO BOGOVIČ new technology equipment 2009 Purchase of new technological PROIZVODNJA, equipment – with eco contribution TRGOVINA D.O.O. 48,328 MITHRAEUM Direct subsidies for purchase of PROJEKTIRANJE, new technology equipment 2009 Investment in purchasing new PROIZVODNJA IN technological equipment – with eco TRGOVINA D.O.O. contribution ČRNOMELJ 42,525

TOTAL 3,589,353

Efficient Use of Energy:

The promotion of the efficient use of energy and the enhancement of sustainable use of available energy sources have become priorities on the European level, as well as on the national level. In order to efficiently implement the tasks related to this area, a few years ago, the EU started promoting, through the Intelligent Energy – Europe programme, the establishment of local energy agencies. The network of agencies should be organised in such a way that there would be one local agency per 100,000 inhabitants in Slovenia. However, until now only four local agencies – LEA Pomurje, GOLEA Nova Gorica, Energy of Savinjska, Šaleška and Koroška Region and LEA Podravje – have come to life. Within the mentioned programme, the European Union co-finances the operation of local energy agencies equal to 50% for the first three years of operation.

Local energy agencies are active in three fields: support to the implementation of policies of ministries in this field, the implementation of energy management of municipalities and the preparation and implementation of projects by involving other subjects. The tasks of the LEA include the development of innovative activity in the field of eco-innovations. This is also evident in the summary of the GOLEA's activities:

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

- performance of development, research, education, promotion, support and counselling activities in the field of constant improvement of energy efficiency and a speedy introduction of the use of renewable sources of energy; - enhancement of the positive attitude and increased engagement of people and institutions in the field of sustainable use of available energy sources with special emphasis on renewable sources of energy; - integration of experts and institutions in relation to development and support of research and development in the new technologies and procedures in the field of sustainable use of available energy sources; - formation and implementation of research and development and educational programmes, which are important for the promotion of sustainable energy development from the social, economic, technological, scientific and cultural view, and the implementation and development of publishing for scientific and educational purposes; - transfer of attained knowledge, experience and technologies into practice and the development of innovative activities in the field of conservation and protection of the environment and natural heritage, as well as ensuring development and sustainability of human, natural, energy, information, cultural and other resources.

In the bill regarding regions it was determined that energy agencies would be under the auspices of the future regions. However, the final form of regions remains unknown. Therefore, the obligations imposed on municipalities by the energy legislation can be regarded as the basis.

The efficient use of energy and the promotion of the use of renewable sources of energy are integral parts of Slovenia's energy policy determined in the energy act from 2007. In accordance with the act, the municipalities are required to implement programmes of efficient use of energy and renewable sources of energy on the basis of local energy concepts. The act stipulates that local communities (or a few local communities together) had to adopt their own local energy concept by 1 January 2009 [22].

4.4.3. Regional Programmes and Projects Undertaken

Strategic regional development priorities are the following: 1. Integration of the region inside and outside 2. Institutions for the development and transfer of knowledge 3. Joint marketing 4. Greater development potential and quality of life

Project support on the regional level is distributed in accordance with the presented priorities and allocated budget (presented in Table 12). Some funds are distributed in the regional frame and others in the national frame.

Most ecology related project in the region are investments in ecology infrastructure. Specific incentives for (eco)innovation were not present in the region.

Programmes and projects related to innovation were supported within the national framework and are described in the previous chapter.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

and foster innovation within the framework of region. Business innovators and entrepreneurs are also stimulated to use support services (help with procedures to protect industrial property, drawing up business plans and establish R&D links) [8].

Strategic Projects in the Region Related to Ecology:

1. The World of Kolpa

The project deals with the development of a new tourist product of ecological health tourism, which is the basis for the development of sustainable tourism in the upper valley of Kolpa. Within the project, we will prepare geometrical studies and analysis of energy and spatial potential of the upper river Kolpa, regulate vital energy centres, prepare project documentation for the organic spa village Fara and prepare promotional and marketing activities. The project will prepare options for new jobs in the place where there are none. The whole area where the project takes place is a part of Natura 2000 and is a bordering area.

2. Waterworks Stare Žage – Občice II. Phase

In Stare Ţage, four wells were drilled in 1987, 1988 and 1989 with a total movement of 30 l/s. Long-term care with drinking water is foreseen for Dolenjske Toplice, Straţa and Novo mesto. It will also be possible to supply villages in the municipality of Semič.

The interest of Dolenjske Toplice is the optimum way of supplying drinking water to the settlements Stare Ţage, Občice, Mali Rigelj, Veliki Rigelj, Cerovec and others which do not have water supply. In addition, the construction of water supply is a condition to start the treatment plant in the community of Semič and supply drinking water to some villages in this municipality.

Waterworks Stare Ţage-Občice consist of the following facilities: - 4451,5 m of primary pipeline from wells to Mali Rigelj, - 174 m of pressure pipeline from wells to the water station, - 3,032 m of secondary network, - 3 pumping stations, - Water station with the volume of 100m3 (Phase I is already in execution).

3. Construction of Waterworks and Water Storage Drganja Sela

The construction of the drainage system (pumping station, water station, and primary and secondary water supply networks) supplies more villages with drinking water and fire water systems and links the three communities.

From the existing main water line Dolenjske Toplice - Dobindol, we will - with the extraction of Dolenja Sušica on 210 m above sea level in the water - use the water station on Ljubno, from which the water will freely run into the drainage system. The water station, with a volume of 100 m3 at an altitude of 347m, will link about 4,340 m of connecting pipes to connect over 43 households or 170 people, and most commercial buildings (vineyard cottages)ion Ljubno. The drainage system will indirectly affect the greater reliability and safety of water supplies for people in the neighbouring villages: Uršna sela, Dol. Sušice, Selišče, Rigelj and Dolenjske Toplice.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

After the completion of the project, health and fire safety will be increased. Water systems of the three municipalities will be more reliable. Development potential of the area will be larger, increasing the demand for immigration.

4. Waterworks Koglo

The Koglo waterworks is a pipeline from the existing VH Gorenja vas to the future and part of the VH Koglo branch Mevce in the total length of approximately 1,500 m. It is necessary to build another 4 km pipeline, a pumping station at the existing water station Gorenja vas and 2 water stations (water station Mevce VH 360 and water station Koglo VH 420). The technical implementation of the drainage system Koglo is demanding and expensive, whereas the area under consideration extends from 250 m to 420 m above sea level; the area is planted with vineyards, roads and tracks are asphalted.

5. Rehabilitation and Construction of the Waterworks Infrastructure in Mirna Peč

The existing water resources, the replacement of new constructions and new water stations will remedy the rehabilitation of water supply networks. Only they will connect with the existing pipelines. The drawing will be done on the new bores, which are in the municipality of Mokronog-Trebelno and the water station, which is the municipaliry of Mirna Peč. The transit pipeline will largely feed the commercial zone Dolenja vas and will be built under the highway infrastructure construction. Resorts in the western part of the region will be linked to the project water supply for Suha krajina, which will take place in the context of inter-municipal cooperation. By providing enough quantities of drinking water, the municipality may be self-sufficient.

6. Sustainable Drinking Water Supply for the Population and Protecting Water Resources of Bela Krajina

Plumbing will be performed for the new building settlements and hamlets, which are established but do not have water supply from the public water supply system. These include the renovation of existing water supply systems, which do not meet the criteria of the Cohesion Fund. With the implementation of the project, the water supply of Bela krajina will be completed as a whole. The new construction plumbing is financed, because it will not be built from the cohesion part of the project. The project will provide better living conditions for all residents of Bela krajina and allow the development of activities in remote locations. The cost is covered by the production of necessary design documentation and construction supervision.

7. Sustainable Drinking Water Supply for the Population and Protecting Water Resources of Bela Krajina

The project "Sustainable drinking water supply for the population and protecting water resources of Bela krajina" or ―Belokranjski waterworks II. phase‖ comes across the three municipalities: Črnomelj, Metlika and Semič. The project is divided into the cohesion part (funding from EU funds) and the Slovenian part (funding from state funds).

8. Treatment Plant Mokronog

The subject of the project is the removal of buildings, reconstruction and expansion of the treatment plant Mokronog. The treatment plant would greatly affect the quality of surface waters and aquatic ecosystems by-pass. Pollution of soil, plants and living environment should also be significantly reduced [15]. 70

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 14: Regional Strategic Projects Related to Ecology [15]

(EUR)

Project project

Duration

Location of Location

Head of the of Head

Funds by EU by EU Funds

Budget (EUR) Budget

implementation Ecological stance Ecological

Community The world of Kolpa Kolpa valley Kostel 520,000.00 162.585,00 2007-2008 Project documentation for the organic spa village Fara The interest of Dolenjske Toplice is to supply drinking water in an optimum way to the settlements Stare Ţage, Občice, Mali Rigelj, Great Rigelj Cerovec and others, Community which do not have water supply. In addition, the construction of water supply is a Dolenjske condition to start the treatment plant in the community of Semič and supply Waterworks Stare Ţage – Občice II. phase Stare Ţage Toplice 1,008,435.00 589.708,00 2007-2009 drinking water to some villages in this municipality.

The construction of the drainage system (pumping station, water room, primary and secondary water supply network) supplies more villages with drinking water and fire water systems and also links the three communities. After the completion of the project, health and fire safety will be increased. Water systems of the three Construction of waterworks and water Community municipalities will be more reliable. Development potential of the area will be storage Drganja sela Drganja sela Straţa 760,000.00 343.291,00 2007-2009 larger, increasing the demand for immigration. Community It is necessary to build another 4 km pipeline, a pumping station at the existing Šmarješke water station Gorenja vas and 2 water stations (water station Mevce VH 360 and Waterworks Koglo Gorenja vas toplice 771,600.00 275.535,00 2007-2008 water station Koglo VH 420) to supply the inhabitants with clean drinking water.

Rehabilitation and construction of Community By providing enough quantities of drinking water, the municipality may be self- waterworks infrastructure in MP Mirna Peč Mirna Peč 1,119,000.00 665.733,00 2007-2009 sufficient.

Sustainable drinking water supply for the population and protecting water Community The project will provide better living conditions for all residents of Bela krajina resources of Bela krajina Bela krajina Črnomelj 3,047,322.00 2.124.727,00 2008-2012 and allow the development of activities in remote locations. Sustainable drinking water supply for the population and protecting water Črnomelj, Community resources of Bela krajina Metlika, Semič Metlika 4,569,460.00 3.111.987,00 2007-2012 Constructing primary waterworks for the whole area of Bela krajina.

Community The treatment plant would greatly affect the quality of surface waters and aquatic Mokronog- ecosystems by-pass. Pollution of soil, plants and living environment should also be Treatment plant Mokronog Mokronog Trebelno 1,020,170 714.119,00 2007-2010 significantly reduced.

Author: Development centre Novo mesto ltd. 71 Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5 ANALYSIS OF THE REGIONAL PRODUCTION SYSTEM REGARDING (ECO)INNOVATION ISSUES

4.5.1. Market Analysis Regarding (Eco)innovation

4.5.1.1 Overall Description

In the period from 2004 to 2006, 35.1% of Slovenian companies dealt with innovation activity. From innovation active enterprises, 18.8% introduced a new or significantly improved product or service. In the same period, 22.6% of innovation active enterprises introduced an innovation process (innovation process means the introduction of a new or significantly improved production process, a way to distribute materials, products or services or support the activity for the product or service). 55.7% of innovation active enterprises established both an innovation and a product innovation process. At the forefront of companies in this respect are the manufacturing companies as it is evident from Table 16. The share of innovation active enterprises in the manufacturing sector was 41.2%, and 26.8% in the selected service industries. Given its size, the proportion of enterprises with innovation activity increases with the size of the company as it is evident from Table 15. Thus, small businesses (businesses with 10 to 49 employees) are still the least engaged in innovation activity; innovation active companies in the period from 2004 to 2006 were only 27.7%. On the other hand, 76.9 % from large companies (companies with more than 250 employees) were innovation active [3].

Author: Development centre Novo mesto ltd. 72

Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 15: Innovation Expenditure by Enterprise Size in Slovenia [14] Extramural Acquisition of Size of Intramural R&D R&D External Preparation of machinery, enterprises Total expenditure expenditure knowledge production Training equipment Marketing 1996 39,647 17,223 2,726 - 2,227 532 10,873 2,200 1998 70,389 21,375 3,390 - 6,103 1,124 24,889 4,611 2000 81,772 26,904 4,971 4,798 10,270 1,488 29,092 4,248 2002 77,968 33,968 6,559 2,038 6,456 1,426 22,138 5,383

TOTAL 77,968 33,968 6,559 2,038 6,456 1,426 22,138 5,383 small 7,056 2,971 881 256 416 197 1,932 403 medium-sized 15,107 6,472 1,557 361 770 261 4,774 912

large 55,805 24,525 4,121 1,421 5,270 968 15,432 4,068 *The size of enterprise is defined by the number of persons in paid employment: - small enterprises have 1-49 persons in paid employment; - medium-sized enterprises have 50-249 persons in paid employment; - large enterprises have 250 and more persons in paid employment.

TABLE 16: Innovation Expenditure of Slovenian Enterprises Relative to the Various SKD Business Sectors [14]

Preparation of Acquisition of Market Activities External production or machinery and introduction Other Total R&D expenditure knowledge services Training equipment Marketing of innovation preparation intramura total l extramural 1996 39,647 19,949 17,223 2,726 - 2,227 532 10,873 2,200 - - 1998 70,389 24,765 21,375 3,390 - 6,103 1,124 24,889 4,611 - - 2000 81,772 31,876 26,904 4,971 4,798 10,270 1,488 29,092 4,248 - - 2002 77,968 40,527 33,968 6,559 2,038 6,456 1,426 22,138 5,383 - - 2004 147,317 65,768 56,477 9,292 6,003 - 2,892 61,446 - 7,970 3,238

TOTAL 147,317 65,768 56,477 9,292 6,003 - 2,892 61,446 - 7,970 3,238 C C Mining and quarrying z z z z z - z z - z z

Author: Development centre Novo mesto ltd. 73 Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

D D Manufacturing 117,982 54,431 47,202 7,229 5,310 - 1,952 46,766 - 7,026 2,496 DA DA Mfr. of food, beverages and 6,301 497 327 170 43 - 64 3,852 - 1,828 17 tobacco prod. DB DB Mfr. of textiles and textile 2,932 1,331 1,299 32 9 - 97 1,169 - 318 7 products DC DC Mfr. of leather and leather 366 189 177 11 11 - 19 80 - 56 11 products DD DD Mfr. of wood and wood 1,245 234 199 35 25 - 26 810 - 85 64 products DE DE Mfr. of paper; publishing 2,604 208 182 26 52 - 30 1,849 - 456 10 and printing DF+DG DF+DG Mfr. of coke, petroleum 42,460 27,798 23,704 4,094 3,891 - 571 8,852 - 1,080 269 mfr. of chemicals, prod.& man- made fibres DH DH Mfr. of rubber and plastic 3,820 1521 1,410 110 131 - 111 1734 - 215 108 products DI DI Mfr. of other non-metal 2,654 325 271 53 8 - 51 2,223 - 14 33 mineral products DJ DJ Manufacture of basic metals 15,885 1,758 1,535 222 217 - 170 13,419 - 291 30 &fabricated products DK DK Mfr. of machinery and 12,269 4,893 4,668 225 146 - 180 4,958 - 1,703 390 equipment nec. DL DL Mfr. Of electrical and 17,601 12,272 11,065 1,207 425 - 416 3,054 - 636 799 optical equipment DM DM Mfr. of transport equipment 6,764 2,999 1,969 1,029 339 - 125 2,466 - 130 706 DN DN Mfr. of furniture; 3,080 409 396 13 13 - 92 2,299 - 214 52 manufacturing nec. E E Electricity, gas and water z z z z z - z z - z z supply G G Wholesale, retail; certain 253 210 43 62 - 40 1,015 - 54 26 repair 1,451 I I Transport storage and 2,124 818 710 109 33 - 314 465 - 436 58 communications J J Financial intermediation 10,513 1,531 1,126 405 288 - 254 8,155 - 246 39 K K Real estate, renting & 9,191 6,914 6,802 112 168 - 278 1,214 - 181 436 business activities All data are in mio SIT (millions of tolars)

Author: RRA South-eastern Slovenia Region Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

FIGURE 8: Share of Innovation Active Companies of all Companies Relative to the Various SKD Business Sectors in 2008

30 2006

% 25 2004 2000 20

0 Skupaj B C D E F G H I K L, M, N

Regional specifics:

Economy: within the region, economic development is dominant in Dolenjska - the central part of the region (58% of companies, 66% employees, 59% of entrepreneurs) where the largest companies are located, the region has a relatively good economic activity compared to the other Slovenian regions (presented in Table 17) large internal differences in regional economic activity are present predominant influence of large companies, the deterioration of economic activity of small companies and entrepreneurs

In comparison with the average Slovenian company, the region recorded: above-average economic performance, above-average productivity (revenue/employee) above-average return on assets and capital, greater economy, average value added/employee is less well equipped with the means to work reduced labour costs, has a high coverage of fixed assets to equity

Author: Development centre Novo mesto ltd. 75

Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 17: Regional Distribution of Companies and Employees in 2007 [14]

Number of Percentage of Number of Percentage of companies companies employees employees SLOVENIJA 10,5272 649,744 Pomurska 4,167 3.96% 26,437 4.1% Podravska 14,545 13.82% 92,164 14.2% Koroška 3,091 2.94% 21,134 3.3% Savinjska 11,475 10.90% 82,924 12.8% Zasavska 1,504 1.43% 10,380 1.6% Spodnjeposavska 3,094 2.94% 15,178 2.3% South-eastern Slovenia 5,471 5.20% 39,497 6.1% Central Slovenia 35,112 33.35% 226,417 34.8% Gorenjska 10,022 9.52% 57,092 8.8% Inner- Karst 2,405 2.28% 12,196 1.9% Goriška 6,951 6.60% 34,114 5.3% Coastal-Karst 7,435 7.06% 32,211 5.0%

A special feature of the regional economy is represented by large industrial companies sponsoring the economic and social development. These are export oriented and are responsible for the region being among the largest exporters among Slovenian regions. The industry accounts for 40% of regional value added. Among the 100 largest Slovenian companies in 2008, there were 7 companies from South-eastern Slovenia, 5 from Dolenjska and 2 from Bela krajina. The first and the third best Slovenian companies Krka d.d. and Revoz d.d. are located In the region. Companies that are not yet fully adapted to the requirements of the global market and have lower operating results, are in the textile and wood processing sectors, where large reductions in the workforce were made, by more than 6,000. The region faces the deterioration of the economic activity in small companies and entrepreneurs. Although the region invests a lot in research and development (more than Slovenia‘s average), the value of this fact is reduced because investments in of R&D activities are typical only for a small number of large companies.[15]

The region has several small companies (95%). They employ a third (31%) of all employees in companies and create nearly 20 % of all revenue (17% of their revenue generated in foreign markets). Their net value added per employee in 2005 amounted to EUR 22,750, which is approximately 10% more than the previous year. This shows that the companies slowly started to produce innovative products with high added value, which contributed to the breakthrough of the region. Given the important role played by small enterprises in developing economies, the measures to support and encourage their start-up should be intensified. In addition, necessary measures should be taken to promote the development of new products, technologies and the co-operation with research institutions. This would allow the development of innovative products with higher added value.[2]

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5.1.2 Preliminary Indications of Sectors/Candidate Areas for (Eco)innovation within the Framework of the MEDOSSIC Project

One of the criteria for the selection of key economic activities is the share of value added by each activity, added value created in the whole region and the size of value added per employee. The industry as a whole produces more than 40 % of regional value added; real estate and rental contribute an additional 12 %. Otherwise, the highest value added per employee is created by financial intermediation, which falls within the service sector, and by the chemical industry. These two have a much higher value added per employee than the average in this region. The first exceeds the average regional value added by more than five times (over 146,000 EUR), and the other is twice higher (58,000 EUR). The automotive industry presents a two-times higher value added per employee compared to the regional average. Large and worldwide known companies (Krka d.d., Revoz d.d., Danfoss d.o.o., Adria Mobil d.o.o.) can be found in this region. They developed a wide network of quality suppliers and subcontractors who may enable the development of new businesses and the expansion in the world market. With their export orientation and financial indicators, these large companies suggest that the sectors where they operate in, are the most appropriate drivers of economic development.

Considering innovation potential, Krka d.d. and Revoz d.d. are the key companies in the region, mainly because of their economic power to bind to themselves many subcontractors. However, these companies are not innovators of new products, since Revoz d.d. does not develop new models of cars and Krka d.d. produces generic drugs, but they do innovate a lot in regard to process innovations and product improvements. On the other hand, other important companies that innovate new products are also vital for the development of the region (Trimo d.d., Adria Mobil d.o.o...); this enables them to sell products with higher added value.[2]

Important sectors of the region, in regard to the large amount of jobs or added value, are: automotive industry, pharmaceutical industry, metal processing industry.

For evaluating the investment and innovation potential, it is interesting to list the enterprises that got national support for their (eco)innovation projects (presented in Table 18). All projects of the enterprises that are presented in Table 18 deal with innovation and were evaluated also for their ecological impact, and should contain an ecological component. They originate from metal processing, electronics, wood processing, and electric and chemical industry sectors (pharmaceutical and automotive industry has difficulties to obtain funds since these are large companies that are not eligible to some forms of national support).

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

TABLE 18: Enterprise (eco)innovation projects from the region that got national support 2007-2009[23]

Project Beneficiary Approved funds in € Investment in the purchase of new technological equipment for the production of EKI proizvodnja electromechanical components – with eco elektromehanskih komponent, contribution d.o.o. 210,000 New information and technology solutions to support the production process – with eco RIKO RIBNICA D.O.O. RIBNIŠKA contribution INDUSTRIJA KOVINSKE OPREME 104,655 LESOJ PROIZVODNO IN Mobile technology for biomass processing line TRGOVSKO PODJETJE, D.O.O. – with eco contribution DOLENJA VAS 168,965 Introduction of new technology and information solutions for the production of a new generation of environmentally friendly EKOP PROIZVODNJA EKOLOŠKE equipment – with eco contribution OPREME D.O.O., RIBNICA 100.910 Introduction of new products using state of the art laser technology – with eco POVŠE METAL PROIZVODNJA IN contribution TRGOVINA D.O.O. 210.000 Introduction of new information technology solutions for the industrial mode of production of wood handbags – with eco MI & CO LESNA DEJAVNOST contribution BOŠTJAN MIHELIČ S.P. 210,000 Purchases of equipment - CNC plasma cutting machine and device for electrostatic coating RIKO EKOS INDUSTRIJA colours EKOLOŠKIH STROJEV, D.O.O. 210,000 Robotics information supported production TOVARNA ELEKTROMATERIALA line – with eco contribution ČATEŢ D.D. 184,400 Acquisition of a new printing press guide UV Flexo, 8 colour + chill drums for printing– with eco contribution SOREX MARKETING, D.O.O. 210,000 Investment in manufacturing technology, innovative new generation of massive LESTRA STRAŢA IZDELKI IZ furniture – with eco contribution MASIVNEGA LESA D.O.O. 160,612 Relocation of existing distillation columns for methanol and installation of two new MELAMIN KEMIČNA TOVARNA distillation columns – with eco contribution D.D. KOČEVJE 210,000 REM MONTAŢA IN KLEPARSTVO Purchase of new technological equipment D.O.O. 195,200 Investment in purchasing new technological FUKS ORODJARNA JOŢE equipment – with eco contribution SIMONIČ S.P. 149,667 Purchase of a new exstrudor line for the FOLEX proizvodnja, storitve in manufacturing of film – with eco contribution trgovina d.o.o. 200,000 New technological equipment for municipal machinery and equipment of larger SON - IZDELAVA STROJEV, dimensions and geometries – with eco ORODIJ IN NAPRAV D.O.O. contribution VINICA 101,075 Purchase of new technological equipment – PREDELAVA NERJAVNEGA with eco contribution JEKLA ZVONKO LAH S.P. 137,808 Investment in purchasing new technological equipment for the production of complex LIPNIK TEHNIČNE VZMETI high-tech springs – with eco contribution D.O.O. 193,010 Equipment for the recovery of waste unclean AKROBAT PROIZVODNJA plastic packaging – with eco contribution ŠPORTNE OPREME, D.O.O. 200,000 78

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Project Beneficiary Approved funds in € Investment in purchasing new technological equipment for metalworking – with eco REPROMAT PROIZVODNJA IN contribution STORITVE, D.O.O. 64,251 KSE TOVARNA ZA PROIZVODNJO KONEKTORJEV Purchase of a special galvanic belt line – with IN SPOJNIH ELEMENTOV, eco contribution D.O.O. NOVO MESTO 77,949 KOVINOKEMIJA PROIZVODNO Automatic galvanic lines for zinc products in TRGOVSKO PODJETJE TREBNJE drums– with eco contribution D.O.O. 200,000 MIZARSTVO BOGOVIČ Purchase of new technological equipment – PROIZVODNJA, TRGOVINA with eco contribution D.O.O. 48,328 MITHRAEUM PROJEKTIRANJE, Investment in purchasing new technological PROIZVODNJA IN TRGOVINA equipment – with eco contribution D.O.O. ČRNOMELJ 42,525 TOTAL 3,589,353

The primary research was conduced to obtain the relevant data concerning (eco)innovation within the individual companies. The questionnaires were sent to a number of companies operating in the region. Apart from the responses, selected interviews were also conducted in the target influential companies in the region. Based on this inputs, some relevant responses were obtained. According to the obtained results we can form the following observations: the major influential business entities concerning (eco)innovation in the region are production companies from the metal processing industry, automotive industry and pharmaceutical industry; electronics, IT, wood processing, electric and chemical industry are also important. The prevailing types of (eco)innovations are cleaner process technologies, waste supply, noise and vibration control and services that are less pollution intensive. From the companies that have introduced ecological innovations, one third use the 3R (Reduce/Reuse/Recycling) principle in the area of water, paper, batteries, oil, and 17% in the are of metal. However, these results may be a bit distorted since companies dealing with (eco)innovation may be more interested in participating in research than others.

Threats connected with (eco)innovation are mostly related with the economic output of innovations. On one part, these are connected to the final customers (whether they value an ―eco‖ product more than a ―non eco‖ product) and on the other hand, to the actual output of innovation in terms of relation between costs : benefits of innovation. An important internal threat can also be a (non)ecological perception of employees; therefore, values like ecological stance and innovative spirit have to be encouraged.

4.5.1.3 Problems and Barriers of Economic Sector Candidates for Dealing with (Eco)innovation Issues

Industrial centres near the city of Novo mesto characterise the economy of South-eastern Slovenia region. All economic indicators show an economically efficient industrial region with a healthy core, which represents the main power of the economy. Although the strong industry in form of large enterprises is an advantage to the region, on the other hand this can also be a weakness. The dependence on large companies would cause a major regional and national economic problem in the scenario of their economic failure, with significant 79

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

unemployment.[16] On average, there are less small companies in the region, making it necessary to continue to encourage the development of small companies in this area in order to avoid economic risks of the region.

Higher education in the region is at the beginning of the development path. Most research takes place in export-oriented enterprises. There are no major subjects of supportive environment. Maybe it is because a reasonably good access to support organisations exists in Central Slovenia, where most of such national organisations are located. Therefore, a few secondary and primary types of supporting organisations, such as an incubator, a technology park and the Society of innovators, are missing (which, given the number of companies, might be expected).

There are many barriers for the creation, management and growth of several enterprises (bureaucracy, low purchasing power, lack of costly labour, poor infrastructure, limited access to financial resources, etc.). Slovenian entrepreneurs also have a lack of desire for growth, notably a lack of entrepreneurial and innovation culture; the environment is not supportive enough for entrepreneurship.

From the business perspective of individual companies, it is crucial to have a clear financial business outcome of (eco)innovation. The primary research was conduced to obtain the relevant data concerning (eco)innovation within the individual companies in South-eastern Slovenia region. 83% of contacted companies agree that ecology is important for the competitiveness of their company. One third of organisations have raised the sales with implemented (eco)innovation (however, less than 5% of total sales). On the other hand, 64% of the participating companies also responded that it is exactly the economic barriers that are the most influential barriers, which they encounter when introducing (eco)innovations. It seems that the main challenge is how to to develop (eco)innovation that brings economic success as well. 50% of respondents also responded that laws and standards have represented barriers for their (eco)innovations, the same percentage perceived barriers in the lack of demand for ―eco‖ products in the market. It seems that the main challenge is how to develop (eco)innovation that brings economic success as well

4.5.1.4 Opportunities of Economic Sector Candidates for Dealing with (Eco)innovation Issues

The development of a science and technology park and a business incubator will support the gradual development of high-tech companies and the construction of appropriate business zones, which will contribute to greater added value and technological breakthrough (increased innovation) as well as to the global competitiveness of the region. The development of the concentrated business environment will have positive consequences for regional development in Slovenia, for example, the survival of people in rural areas and a rapid economic development in Bela krajina and Kočevje-Ribnica sub- region (from where many sub-contractors in the supply chain originate) [2].

Individual local authorities promote the activity of small entrepreneurs with tenders for the financing of eligible costs associated with innovations. Where such projects are already underway, the trend is shown in the increase of both the volume and quality of innovative proposals. These kinds of projects enhance development in other local communities and foster innovation within the framework of the region. Business innovators and entrepreneurs are also stimulated to use support services (help with procedures to protect industrial property, drawing up business plans and establish R & D links)[2].This is surely an opportunity that needs to be stimulated in the future.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

An opportunity for the region is surely also achieving bigger independence of small and medium-sized enterprises and speeding up their economic growth. In addition to the conversion of enterprises to be able to compete on foreign markets, the flexibility of industries should also be achieved by accelerating the growth of new technology businesses.

According to the research that has was conducted within individual companies in South- eastern Slovenia region, most of the participating companies expressed their interest in a further development of (eco)innovations, which surely presents a big opportunity for the future. The biggest interest was expressed in the area of environmental technologies (half of the respondents), followed by the production and service technologies. As a rule, companies developed their previous (eco)innovations themselves, which indicates that they have internal research and development potentials for further (eco)innovations. All this represent an opportunity for the future.

Surely, the success of future (eco)innovation will mostly depend on the possibilities of evolving synergies between ecology and economic success. In addition, an increasingly important opportunity will be the growing eco awareness of the final customers, which will reward eco products, eco services and eco organisations.

4.5.2. Matrix (Sectors and Type of Eco-innovation)

4.5.2.1 Overall Objective

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5.2.2 Structural and Economic Situation of the Economic Sectors

Table 19 – Structural and Economic Situation of the Economic Sectors [19], [20] Sector Section GDP Number Human Enterprises size distribution Natural laws % growth of (to be (2008) of active resources (2008)** enterprises distribution the sector in defined by enterpris employed 2003-2008 each es (2008) (2008)** (number of partner) enterprises) Individ Partners Corpor (100% = no Small Medium Large uals hips ation change) A+B Agriculture, hunting, forestry and * 75 291 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 127% fishing C+D Mining, quarrying * 693 1,336 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 92% and manufacturing E Electricity, gas and * 24 29 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 322% water supply F Construction * 121 1,111 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 157% G Wholesale, retail; * 123 1,164 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 99% certain repair H Hotels and restaurants * 24 587 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 87% I Transport, storage and * 102 527 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 87% communication J Financial * 43 180 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 462% intermediation K Real estate, renting * 275 86 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 10% and business activities L Public administration and defence; comp. soc. * 87 124 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 39% sec M Education * 88 763 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 631% N Health and social work * 80 202 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 116% O+P Other social and * 25 498 Table 20 Table 20 Table 20 Table 20 n.a. n.a. n.a. 27% personal services * Various sub-sectors are included in the statistics ** Only data in the form that is presented in Table 20 are available statistically. 82

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Table 20 – Human Resources Employed and Enterprises Size Distribution in [20]

Number of Number of Sector Size companies Sector Size companies A 6 G 51 A 0 employed 103 G 0 employed 488 A 1 employed 12 G 1 employed 193 A 2 employed 10 G 2 employed 108 A 3 or 5 to 9 employed 7 G 3 or 5 to 9 employed 109 A 5 to 9 employed 5 G 5 to 9 employed 78 A 10 do 19 employed 1 G 10 do 19 employed 36 A 50 to 99 employed 1 G 20 to 49 employed 16 A 100 do 149 employed 1 G 50 to 99 employed 9 A 150 do 199 employed 1 G 100 do 149 employed 1 A No data available 133 G 200 do 249 employed 2 B 0 employed 3 G No data available 73 B 1 employed 1 H 17 B 3 or 5 to 9 employed 2 H 0 employed 262 B 5 to 9 employed 1 H 1 employed 92 B 10 do 19 employed 1 H 2 employed 38 B 20 to 49 employed 1 H 3 or 5 to 9 employed 67 B No data available 2 H 5 to 9 employed 50 C 45 H 10 do 19 employed 17 C 0 employed 459 H 20 to 49 employed 10 C 1 employed 174 H 50 to 99 employed 3 C 2 employed 107 H 250 to 499 employed 1 C 3 or 5 to 9 employed 93 H No data available 30 C 5 to 9 employed 106 I 20 C 10 do 19 employed 79 I 0 employed 143 C 20 to 49 employed 52 I 1 employed 87 C 50 to 99 employed 23 I 2 employed 59 C 100 do 149 employed 14 I 3 or 5 to 9 employed 50 C 150 do 199 employed 8 I 5 to 9 employed 45 C 200 do 249 employed 3 I 10 do 19 employed 7 C 250 to 499 employed 6 I 20 to 49 employed 4 C 500 to 999 employed 5 I 250 to 499 employed 1 C 15 to 9 employed 3 I No data available 111 C No data available 144 J 15 D 2 J 0 employed 88 D 0 employed 8 J 1 employed 18 D 1 employed 1 J 2 employed 11 D No data available 4 J 3 or 5 to 9 employed 11 E 4 J 5 to 9 employed 9 E 0 employed 5 J 10 do 19 employed 3 E 1 employed 5 J 20 to 49 employed 3 E 3 or 5 to 9 employed 1 J No data available 22 E 5 to 9 employed 1 K 8 E 10 do 19 employed 5 K 0 employed 45 E 20 to 49 employed 2 K 1 employed 11 E 50 to 99 employed 3 K 2 employed 5 E 100 do 149 employed 1 K 5 to 9 employed 2 E No data available 2 K 20 to 49 employed 1 F 70 K 200 do 249 employed 1 F 0 employed 501 K No data available 13 F 1 employed 144 L 3 F 2 employed 81 L 0 employed 75 F 3 or 5 to 9 employed 90 L 1 employed 12 F 5 to 9 employed 70 L 2 employed 5 F 10 do 19 employed 36 L 3 or 5 to 9 employed 7 F 20 to 49 employed 17 L 5 to 9 employed 2 F 50 to 99 employed 5 L 10 do 19 employed 2 F 200 do 249 employed 1 L 20 to 49 employed 2 F 250 to 499 employed 2 L No data available 16 F No data available 94 M 52 M 3 or 5 to 9 employed 51 M 0 employed 325 M 5 to 9 employed 27 M 1 employed 103 M 10 do 19 employed 12 M 2 employed 55 M 20 to 49 employed 5 M No data available 133 N 13 83

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Number of Number of Sector Size companies Sector Size companies N 0 employed 78 N 1 employed 19 N 2 employed 12 N 3 or 5 to 9 employed 4 N 5 to 9 employed 7 N 10 do 19 employed 7 N 20 to 49 employed 3 N 50 to 99 employed 2 N 100 do 149 employed 1 N 250 to 499 employed 1 N No data available 55 O 1 O 0 employed 252 O 1 employed 6 O 2 employed 2 O 3 or 5 to 9 employed 4 O 5 to 9 employed 10 O 10 do 19 employed 5 O 20 to 49 employed 4 O 50 to 99 employed 3 O 150 do 199 employed 1 O No data available 9 P 21 P 0 employed 57 P 1 employed 10 P 2 employed 1 P 3 or 5 to 9 employed 4 P 5 to 9 employed 9 P 10 do 19 employed 10 P 20 to 49 employed 22 P 50 to 99 employed 26 P 100 do 149 employed 4 P 250 to 499 employed 1 P No data available 36

The majority of companies (693 in the year 2008) in South-eastern Slovenia region are in the production sector, numerous are also in real estate, retail and construction; however, most of these are very small companies. What is interesting from the perspective of ecology, is the very big increase in the number of enterprises from 2003 to 2008 (322% in relation to the number in 2003) in electric, gas and water supply. Clearly, the ecological component is especially important for the companies from this sector. However, the structure of companies presents a big difference in numbers between micro companies on one side, and middle and large companies on the other. In this respect it is important that most of the R&D demanding (eco)innovations originates from (a relative small number of) middle or large companies. In this respect, the following large business systems, Krka d.d., Revoz d.d., Adria Mobil d.o.o., Trimo d.d. and possibly some others, hold a special position.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5.2.3. The Existing Situation in Terms of Eco-innovation

Table 21- The Existing Situation in Terms of Eco-innovation

Type of eco-innovation Eco-innovation indicators Other innovation Sector Section Environ- Organi- Product and Green % of firms Eco- Other innovation (to be defined by each mental sational service system with EMAS patents partner) technologies innovation innovation innovation or ISO14001 A+B Agriculture, hunting, forestry and fishing Automotive manufacturing X X XXX * * C+D Mining, quarrying and Pharmacy manufacturing Plastics Metal processing E Electricity, gas and water supply

F Construction

G Wholesale, retail; certain repair H Hotels and restaurants Information and XX X X I Transport, storage and * * communication technology communication Transport J Financial intermediation K Real estate, renting and business activities L Public administration and defence; comp. soc. sec M Education N Health and social work O+P Other social and Scientific and technical X * * personal services development * Statistically non reliable data

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

According to the obtained results, we can conclude that the most important sectors concerning (eco)innovation in the region are the metal processing industry, the automotive industry and the pharmaceutical industry, IT and some development services connected to these industries.

The prevailing types of (eco)innovations are product and service innovations and environmental technologies, more precisely: cleaner process technologies, waste supply, noise and vibration control and services that are less pollution intensive as presented in Figure 9.

FIGURE 9: Presence of Various Types of (Eco)innovations at Business Entities in the Region

30 % of companies 20

waste supply

chain management

environmental services

green financial products

noise and vibration control

green energy technologies

pollution control technologies

pollution prevention schemes

cleaner process technologies

waste management equipment

cleaning technologies that treat pollution

services that are less pollution intensive

new or environmentally improved products

environmental monitoring and instrumentation

environmental management and auditing systems alternative systems of production and consumption

Two thirds of companies know EU funded support programmes for (eco)innovations, half of them have already applied for such funds and 17% have been successful in such EU or national 86

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

programmes. In addition, two thirds of the companies have already offered ecologically improved products to the market, approx. half of them dealing with the advantage of reduced energy consumption, one third of them dealing with the reduced use of materials. Innovation dealing with improved recycling after use and lower C02 emissions were also present, as presented in Figure 10.

FIGURE 10: Impact to the Environment of Implemented (Eco)innovations

20 % of companies of %

0 Reduced use of Reduced use of Reduces earth, Improved Lower CO2 materials energy water, noise or air recycling after emissions pollution use

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5.2.4. Candidate Sectors for the Third Level of the ESA (Field Research)

Matrix 1 – Candidate Sectors for the Third Level of the ESA (Field Research)

Sector Section South-eastern (to be defined by each partner) Slovenia A+B Agriculture, hunting, forestry - and fishing C+D Mining, quarrying and manufacturing Automotive manufacturing XXX Pharmacy XXX Plastics X Metal processing XX E Electricity, gas and water supply F Construction G Wholesale, retail; certain repair H Hotels and restaurants I Transport, storage and Information and communication X communication technology

J Financial intermediation K Real estate, renting and business activities L Public administration and defence; comp. soc. sec M Education N Health and social work O+P Other social and personal Scientific and technical development X services NB: XXX = Very high relevance; XX = High relevance; X = Medium relevance; - = Not relevant

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.5.2.4. Candidate Sectors for Eco-innovation

Matrix 2 - Candidate Sectors for Eco-innovation

Sector Section Sub-Section PP5 - (to be defined by (to be defined by Marche each partner) each partner) Region A+B Agriculture, - hunting, forestry and fishing C+D Mining, quarrying and manufacturing Automotive Assembling of cars XXX manufacturing Production of parts XXX for the automotive industry Pharmacy Generic drugs XXX Plastics X Metal processing Metal processing for XX construction Metal processing for X various B2B industrial markets E Electricity, gas and water supply F Construction H Hotels and restaurants Information and Various IT services I Transport, storage and X communication and development communication technology

M Education Scientific and Development support O+P Other social and X technical of the industry personal services development NB: XXX = Very high relevance; XX = High relevance; X = Medium relevance; - = Not relevant

Clearly, the relevant (eco)innovation potential is present in the greatest measure in the sectors: automotive manufacturing (assembling of cars and production of parts for the automotive industry), pharmaceutical industry of generic drugs, plastics, metal processing for construction and various B2B industrial markets, information and communication technology and development support of the industry. In addition real estate, construction, wholesale, retail and education are important sectors regarding the number of companies in the region, but their (eco)innovation potential is smaller.

4.5.2.5. Effects of (Eco)innovation

According to the implemented survey among the companies in South-eastern Slovenia region, the driving forces for dealing with (eco)innovations in companies are in most cases cost pressures and the public image of the brand. One third of the organisations have increased the

Author: Development centre Novo mesto ltd. 89

Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

sales with implemented (eco)innovation (however less than 5% of total sales); however, production costs have also grown. Two thirds of the organisation also claim that they employ more people because of (eco)innovations.

Most of the investments in (eco)innovations were relatively small and accounted for 5-25,000 EUR, with only one company having investments in the range between 25,000 - 100,000 EUR. Most of the contacted companies agree that ecology is important for the competitiveness of their company.

It is clear that (eco)innovations have brought a positive economic effect to the surveyed companies. However, it is important to differentiate between a direct economical impact in terms of cost savings, due to innovations that have for example contributed to the lower consumption of water used in the production process and - on the other hand - (eco)innovations that perhaps create even higher production costs but have a positive economic effect due to the public image of the company or the direct ―eco‖ image of the products, if the consumers are willing to pay for that. Anyway, the companies that participated in the survey clearly state that, in general, (eco)innovations had an economically positive effect for them.

Eco)innovation effects spread their effect across the value chain. In this respect, (eco)innovations that are driven by the final customer demand of preferences (one third of participating companies marked this as the driver for their (eco)innovations) are especially effective, because this represents an extra pressure along the whole product chain so that the products can be declared as ―eco‖ products.

Clearly, (eco)innovations‘ final effect is on the environment, which multiplies its positive effects in many different ways.

4.5.3. Situation of (Eco)innovators on the National and Regional level

4.5.3.1. Overall Description

In the period from 2004 to 2006 there were over a third of innovation active businesses in Slovenia, which means a considerable rise compared to the previous two years. According to the data of the SORS, there were 35.1% innovation active firms in Slovenia in that period, which is 8.2% more than in the previous measured period from 2002 to 2004.

In the most recent data for the EU, which are available for the period from 2002 to 2004, the proportion of companies in the EU that innovate is 39.5 % on average. Most progress in innovation activities has been made in the services where the share of innovation active firms increased from 16% (2002-2004) to 26.8% in 2004-2006. The progress in services is particularly encouraging in the light of the data for the preceding period (2002-2004), which indicated that Slovenia was lagging behind in relation to the EU average - 21% in innovative services (the difference in industry was much smaller, only 7.2%). Innovation activity of service companies in Slovenia was particularly weak because of low levels of innovation active enterprises in knowledge-based business services. These companies in the EU 27 have been at least as innovative as the companies active in manufacturing, the only exceptions to this being Slovenia (knowledge-based business services 27.2%, industry 35.0%) and Cyprus [9].

According to the primary investigation, (eco)innovation is relatively developed in South-eastern Slovenia region with two thirds of all participating companies that have already offered ecologically improved products to the market. The prevailing types of (eco)innovations are cleaner process technologies, waste supply, noise and vibration control and services that are less 90

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

pollution intensive. However, these results may be a bit distorted since companies dealing with (eco)innovation may be more interested in participating in research than others.

It is also clear that the main stimulus as well as an obstacle for (eco)innovation is the ability of a certain (eco)innovation to result in economic benefits for the innovator. Therefore, for a further development in this direction it is crucial to stimulate the final customers towards demanding eco products and eco services. Such demand is then directed down through the whole value chain.

From the broader perspective of a supportive environment for innovation, the creation of new centres of knowledge in the region would improve the situation significantly. This remains one the main challenges for the region in this respect.

4.5.3.2. Problems and Barriers on the National and Regional Level

On the national level Slovenia has built a relatively extensive R&D, innovation and entrepreneurship support network. Several institutions were established with the aim of improving knowledge flows from public R&D institutions to business enterprises, while others were initiated to promote cooperation in industrial R&D or to assist small enterprises in their development. Nevertheless, the lack of cooperation between the public R&D sphere and the business sector remains one of the deficiencies of the innovation system, as does the slow technological restructuring of the business sector. One of the causes for such a situation is a numerous, but insufficiently coordinated and specialised support network. Many of the existing institutions are underfinanced, understaffed and preoccupied with their own survival. In many ways, the fragmented network is a reflection of several actors involved in innovation policy at the level of government: the Ministry of Higher Education, Science and Technology, the Ministry of the Economy, the Ministry for Local Self-governance and Regional Development and the Office for Growth. Since the strengthening of entrepreneurial support is an important development policy orientation, the challenge of a coordinated approach is to design the most efficient network, combining the roles of university incubators, technology parks, technology centres, platforms, centres of excellence, regional development agencies, clusters, business promotion centres, etc. in a coherent and transparent support system [7].

On the national level the educational structure - in spite of the improvements - is still not sufficiently adapted to the needs. In some areas as medicine, science and technology, there is a lack of staff. The reasons for this lie in the educational system, which is not aimed at the needs of the market or responds too slowly to these needs.

An important inhibitor of the development of innovation environment is also the not sufficiently flexible labour market and the high tax burden on labour. A high proportion of labour-intensive industries and the low technological complexity of Slovenian products indicate a low level of innovation. The international competitiveness of business sectors, except road vehicles and chemical products, is relatively low. The restructuring towards more productive and technologically sophisticated activities is happening relatively slowly. Competition and efficiency in the services sector are important factors in economic growth. The increase in the rate of innovation in the services sector, which is currently low, will raise the innovation potential of the whole economy. Unfinished major transport links (road and rail) have a further impact on the innovation lag in some regions.

Slow processing and the inefficiency in the removal of administrative barriers is an important inhibitor of innovation activities. Ineffective justice is a major obstacle in developing an 91

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

innovative, high-tech environment. Financial indiscipline also has a strong negative impact on the innovation environment.

A large part of the companies operating in South-eastern Slovenia region are lagging behind in the transition to information technology and advanced programmes. Important initiatives and investments that would enable the development of new, innovative products are in most cases limited to few big industrial players in the region. The supportive environment is poorly developed.

4.5.3.3. Opportunities on the National and Regional Level

On the national level many of the innovation challenges remain relatively stable, reflecting in part that the change in certain areas needs time to realise (e.g. improving cooperation among the public R&D and business sectors) and that the policy response has not been sufficient. On the other hand, we see quick reaction time in some areas: the introduction of a tax subsidy for business sector R&D investment in the year 2006 and its application in the year 2007 already resulted in a changed trend in business R&D. We saw a stagnation of business R&D investment in real terms in the years 2004 and 2005, but an increase of 23% of business expenditure on R&D (BERD) was recorded in 2006. This, however, leads to new opportunities. The increased public and private resources need to be used wisely and more efficiently than in the past to overcome the discrepancy between R&D inputs and outputs. In this respect, the growth in the number of science and technology graduates will be crucial. This is becoming an increasingly important challenge: increased R&D investment spending, calls for an efficient support network, assisting R&D cooperation between the public sector and enterprises, as well as among enterprises [9].

On the regional level an important opportunity for achieving greater added value of outputs and technological breakthrough (increased innovation) and the global competitiveness of the region would be the establishment of an adequate support environment. The region needs a science and technology park and a business incubator. Fostering local innovation initiatives is surely another opportunity that needs to be stimulated in the future

Furthermore, an opportunity for the region is surely achieving a bigger independence of small and medium-sized enterprises and speed up their economic growth. In addition to the conversion of enterprises to be really able to compete on the foreign markets, the flexibility of industries should also be achieved by accelerating the growth of new technology businesses.

The main stimulus as well as an obstacle for (eco)innovation is the ability of a certain (eco)innovation to result in economic benefits for the innovator. Therefore, the opportunity for a further development in this direction is surely the stimulation of final customers towards demanding eco products and eco services. Such demand could then be directed down through the whole value chain.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

According to the research that was conduced within the individual companies in South-eastern Slovenia region most of the participating companies expressed their interest in a further development of (eco)innovations, which what surely presents a big opportunity for the future. The biggest interest was expressed in the area of environmental technologies (half of the respondents), followed by production and service technologies. As a rule, companies developed their previous (eco)innovations by themselves, which indicates that they have internal research and development potentials for further (eco)innovations. All this represent an opportunity for the future.

4.5.4. Other

South-eastern Slovenia region has already reached a certain level of quality in the area of (eco)innovation; however, the potentials of the region have much more to offer. For a further development of the region, the growth of entrepreneurship and the access to higher education should be supported.

It is necessary to supplement the missing infrastructure across the region, particularly the society of innovators, incubators, technology parks, as well as offices for technology transfer that should be implemented across the region at appropriate levels of supportive environment.

It is necessary to support specialised services of individual actors of the supportive environment, the orientation of the entity in one or two priority areas, more networking among stakeholders working in the same area of supportive environments in the region and at national level. A better co-ordination between government agencies and funding bodies should be established, adapting the supportive and innovation environment in terms of content services and activities that they perform.

4.5.5. Recommended Measures for Stimulation of (Eco)innovations in the Region

Based on performed analyses and premises made of supposed future development, several measures, projects and pilot actions are proposed, in order to improve the current state in the field of innovation in South-eastern Slovenia region.

1. DIVERSIFICATION OF THE BUSINESS STRUCTURE IN SOUTH-EASTERN SLOVENIA, WITH EMPHASIS TO SUPPORTING INNOVATION IN SMEs

Measure 1.1: Detection of business areas with potential critical mass for the development breakthrough in South-eastern Slovenia.

Purpose of the Measure In relation to large business structures, SMEs are not adequately developed in the region, which represents a threat and an obstacle for innovation development.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Measure Description Maximize the effect of the business development by achieving a critical mass for the establishment of effective synergies in knowledge and capital for the development breakthrough, especially among SMEs.

Activities Proposed: . Implement a research that would identify business areas with potential critical mass for the development breakthrough in South-eastern Slovenia. . Forming of strategy for achieving the desired aim. . Implementing measures in the form of sectoral subsidies and business zones, installation of sectoral centres of knowledge, etc.

Measure 1.2: A wide range of activities for supporting SMEs in the region and promoting entrepreneurship and innovation

Purpose of the Measure: Raise the number, influence and added value of the SMEs in South-eastern Slovenia.

Measure Description: The measure encompasses a wide range of approaches to SMEs, entrepreneurship and innovation. A certain part of the population uses large and safe business structures and does not fully use its entrepreneurial potential. In addition, a certain number of the existing SMEs are not able to cross the line to the next step of business development, which demands a high use of innovation and the use of knowledge.

Activities Proposed: . Various promotion activities for entrepreneurship. . Various promotion activities for innovation. . Creation of a favourable business environment for SMEs (taxes, access to infrastructure, support environment, etc.) . Subsidies and other forms of support for knowledge gathering/use, innovation and development in the SMEs.

2. INNOVATION POLICY AND CULTURE

Measure 1.1: Innovation culture and framework conditions for innovation in the regional context

Purpose of the Measure Increase the innovation culture of all innovation components of the region as a whole, create framework conditions for innovation development in the region and increase the quality of entrepreneurial environment.

Measure Description The innovation process is being realised under certain framework and legislative conditions. The participation in the innovation process should have a high priority and the combination researcher – entrepreneur should become desirable. An awareness of the impact of innovation on economy and the competitiveness of enterprises must be built. Successful innovation activities and their positive effects should be a matter of propagation through accessible information sources.

Activities Proposed: . Organisation of conferences, seminars and workshops on innovation. 94

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

. Building a new or associating to the already existent network of eco-social awareness with a strong PR component to attain a broader population. . Creation of more accessible information of enterprise innovation performance in the region. . Propagation of examples of best practice in the field of innovation and their effect . Development of innovation culture in R&D workplaces.

Measure 1.2: Elaboration of strategic innovation documents on the tactical and operational level

Purpose of the Measure: Proceed from the formulation of strategic objectives into their realisation.

Measure Description: Only a formal declaration of objectives pursuing innovation activities is not sufficient and does not bring innovation effects. That is why it is necessary to realize the whole innovation process and to proceed from the strategic to the tactical and operational level.

Activities Proposed: . Prepare a detailed business opportunity analysis of the region business environment. . Build a proposal of steps for an effective transformation of strategic plans into concrete objectives and control their implementation.

Measure 1.3: Support of progressive branches of the region

Purpose of the Measure: Pay attention to branches, which can markedly contribute to regional development from a long- term view. Measure Description: In the knowledge economy, innovation enterprises achieve good results that make business in progressive branches marked, as high-tech or mid-tech companies. Based on analyses outcomes, there is only a small proportion of such enterprises in South-eastern Slovenia region, especially among SMEs. Because the development of these enterprises is a base for the future innovation development, there is a trend in EU regions to stimulate the growth of high-tech branches. These enterprises create innovation with higher added value and they are able to utilize venture capital.

Activities Proposed: . Support of selected high-tech sector by grants, regional tax dispensation and other incentives

3. COOPERATION IN INNOVATION

Measure 2.1: Creation of effective models of R&D and industry interconnection

Purpose of the Measure: Creation of effective innovation networks to support the cooperation of SMEs.

Measure Description: The most progressive forms of cooperation are clusters or other types of smaller branch networks, which present a block of regional firms of a certain branch that are connected with other R&D institutions and have common interests. The creation of clusters increases 95

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

competitiveness in associated firms on the basis of a synergic effect by reaching common aims, sharing of otherwise not accessible services and activities and complex information. Within regional innovation activities it is possible to stimulate the creation of clusters by financial, methodical and information support.

Activities Proposed: . Identification of possibilities to establish clusters of enterprises on the regional level. . Methodical and financial support of feasibility studies of regional clusters. . Foster cooperation with foreign enterprises including R&D institutions

Measure 2.2: Execution of systematic rules for technology transfer

Purpose of the Measure: To support technology transfer and the commercialisation of research and development outputs.

Measure description: The technology transfer presents the intermediation of research and development and results into feasible practice. The system of technology transfer in the region needs to be fully developed. The process starts by searching and evaluating the commercial R&D potential, continuing with its realisation - at first in licensing. The creation and realisation of the described process of technology transfer is the basic assumption of R&D utilisation in practice.

Activities Proposed: . Approval of institutional and procedural system rules for the process of technology transfer. . Establishing centres of technology transfer. . Development of marketing activities. . Motivation of national R&D institutions to commercially utilise R&D outputs into the regional enterprises. . Development of services engaged in searching commercially utilisable outputs of R&D.

Measure 2.3: Participation of enterprises in international programmes of research and development

Purpose of the Measure: Use institutions of research and development on the national level to support innovation in SMEs.

Measure description: SMEs do not utilise the possibility to participate in the programmes of R&D. The reasons can be found in limited financial resources for these activities and the absence of a stimulating tax legislation. Because most SMEs do not dispose of their own R&D capacities, special subsidies for R&D are currently used worldwide to increase involvement in national and international R&D programmes. SMEs require help of qualified professionals with experience in the preparation and solving of R&D project; in some cases, lease of special equipment for development and testing is needed. R&D institutions and universities can help in this process. The risk can be a different approach, mainly in the speed of project solution.

Activities Proposed: . Promotion and information support of R&D programmes for SMEs . Support in financing and preparation of R&D projects in SMEs . Support of projects, realised with the financial participation of companies and the compatibility with EU framework programmes

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Measure 2.4: Creation of a favourable business environment

Purpose of the Measure: Eliminate barriers restraining the formation of an innovative business environment.

Measure Description: Innovation development of the region is created by a partial innovation in individual enterprises. Unfavourable entrepreneurial conditions negatively influence the development of innovation potential in the region. Barriers as corruption, bureaucracy and the low enforcement of the law hamper the development process. The base for innovation development in the region is to form favourable and equal conditions for all enterprises.

Activities Proposed: . Use quality systems as tools for efficiency measurement and improvement in enterprises and institutions. . Establishing favourable infrastructural conditions with low rent facilities to boost entrepreneurial activities.

Measure 2.5: Institutional intellectual property rights protection

Purpose of the measure: Support innovation activities by applying European principles in intellectual property protection.

Measure Description: Intellectual property protection is a very important field in the whole innovation process. Because this is a difficult problem, which requires special knowledge it is necessary to create an innovation infrastructure, which will simplify and enable intellectual property protection. Sufficient attention is not paid to this area; it requires more professional consultants and experts. To increase information in this area, it is necessary to create or to use the existing promotional material (from the Slovenian Intellectual Property Office and technology parks or relevant agencies), containing the main information on the whole cycle of protection, i.e. from the birth of the idea to its valorisation.

Activities Proposed: . Creation of valorisation methodology for the purpose of intellectual property protection. . Creation of a standard procedure on how to proceed in the intellectual property process. . Support assistance in the commercialisation of the IPR. . Creation of supporting tools (patent fond, trade mark exchange, exchange of patents, support of licensing, etc.)

4. FINANCIAL SUPPORT OF INNOVATION

Measure 3.1: Public financial support of innovation, entrepreneurship and innovation infrastructure

Purpose of the Measure: Public regional financial support towards innovation infrastructure and innovation processes of enterprises in South-eastern Slovenia.

Measure Description: Public financial investments are focused on balancing the demand and supply in the field of innovation solutions, to overcome structural deficits, bottlenecks in innovation processes of

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

firms and in the innovation infrastructure, and to start other innovation activities to increase enterprises‘ competitiveness

Activities Proposed: . Support to enterprises to prepare application for national grants for intellectual property protection especially in SMEs. . Formation of regional financial grants to support new firms with expressive innovation activity. . Enable the support of financial availability of consulting services at Focal Points of VEM or other existing information points. . Support to enterprises in preparing applications for national grants for intellectual property protection, especially in SMEs. . Formation of regional financial grants to support new firms with expressive innovation activity. . Enable the support of financial availability of consulting services at Focal Points of VEM or other existing information points.

5. KNOWLEDGE BASE OF (ECO)INNOVATION

Measure 4.1: Educational system for knowledge-based economy

Purpose of the Measure: To prepare students of all educational types to be more in-line with labour market‘s demands.

Measure Description: To increase the awareness of the (eco) innovation in the region it is necessary to perform more regional research of these topics and on the basis provide additional education.

Activities Proposed: . To adapt the content and the process of education to the demands of the information society (rise of interest in education, support of creativity and ability to learn, cooperate, identify and solve problems, communicate, develop key competences, support by ICT, support of informal and distant education) . Students´ participation in practical projects in enterprises, mainly in SMEs on (eco)innovation projects. . Introduce a new approach to the initial education, containing tools and motivations so that students try to obtain the best knowledge and skills on their own.

Measure 4.2: Lifelong learning in the area of (eco) innovation

Purpose of the Measure: To increase the knowledge of employees and managers of enterprises and to spread (eco)innovation behaviour and culture.

Measure Description: Demands of principal innovation and changes require a high level of adaptability and individual initiative, common cooperation on the level of enterprises and institutions and also on the level of individuals. They must all develop their individual initiative, the ability to solve problems on their own. The continual changes of production, technologies and market, result in marked work character changes, business structures changes, job position requirements and thereby also education. Lifelong learning is becoming a part of work and life and must be adapted to this reality.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Activities Proposed: . Creation of free educational courses based on practice requirements for the purpose of lifelong learning of (eco)innovation. . Achieve the transition to a learning organisation in the enterprises.

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.6 CONCLUSIONS

4.6.1. Summary

According to the primary investigation, (eco)innovation is developed in South-eastern Slovenia region with two thirds of all participating companies that have already offered ecologically improved products to the market. The prevailing types of (eco)innovations are cleaner process technologies, waste supply, noise and vibration control and services that are less pollution intensive. However, these results may be a bit distorted since companies dealing with (eco)innovation may be more interested in participating in research than others.

On the other hand, higher education in the region is at the beginning of the development path. Most research takes place in export-oriented enterprises. There are no major subjects of supportive environment. Maybe it is because a reasonably good access to support organisations exists in Central Slovenia, where most of such national organisations are located. Therefore, a few secondary and primary types of supporting organisations, such as an incubator and technology park and the society of innovators are missing (which, given the number of companies, might be expected),.

In addition, regional economic dependence on few big industrial companies can be a disadvantage in case of their business downfall. A large part of the companies operating in South-eastern Slovenia Region are lagging behind in the transition to information technology and advanced programmes. Important initiatives and investments that would enable the development of new, innovative products are in most cases limited to few big industrial players in the region. The supportive environment is poorly developed.

The strategic national project planned in the region is the construction of the ―Economic Centre of South-eastern Slovenia‖ in the city of Novo mesto. The centre would contain: the development of higher education in the area of science, the engineering and construction University centre with all relevant facilities, the building of a Science and Technology Park, the regional business incubator network and the commercial-industrial zone in Novo mesto. With the realisation of this project, the situation concerning the lack of supportive infrastructure in the region will be significantly improved.

The problem of Slovenia in terms of regional potential for (eco)innovation is the concentration of knowledge in the capital Ljubljana. This is clearly visible in South-eastern Slovenia region, which only has a few centres of knowledge of national importance in the region.

Important sectors of the region in regard to the substantial number of jobs or added value, where further (eco)innovation should be stimulated and where a critical mass of innovation potential in the region could be achieved are: automotive industry pharmaceutical industry metal processing industry.

100

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

4.6.2. Qualification of the Partner

Partner regions of South-eastern Slovenia have a relatively developed level of (eco)innovation in certain areas. These areas are the following: automotive manufacturing (assembling of cars and production of parts for the automotive industry), pharmaceutical industry of generic drugs, plastics, metal processing for construction and various B2B industrial markets, information and communication technology and development support of the industry. In addition real estate, construction, wholesale, retail and education are important sectors regarding the number of companies in the region, but their (eco)innovation potential is smaller.

The prevailing types of (eco)innovations are cleaner process technologies, waste supply, noise and vibration control and services that are less pollution intensive.

Some relevant individual partners for (eco)innovation projects can be the following:

Table 22: Relevant Potential Individual Partners for (Eco)innovation Projects

Sector Organisation Type of organisation Address

Regional development Razvojni center Novo Ljubljanska 26 agency - Development mesto, Svetovanje in Support organisation 8000 Novo mesto Centre Novo mesto ltd. razvoj, d. o. o. Slovenian Regional Javni sklad RS za Škrabčev trg 9a Development fund – regionalni razvoj in razvoj Support organisation 1310 Ribnica national organisation podeţelja Higher education - Higher Visokošolsko središče Na Loko 2, 8000 Novo Education Centre Novo Support organisation Novo mesto mesto mesto Chamber of Commerce regional chamber of Novi trg 11, 8000 Novo for Dolenjska and Bela Support organisation commerce mesto krajina Območna obrtno- Local craft and Ulica 21. oktobra 10, podjetniška zbornica Support organisation entrepreneurial chamber 8340 Črnomelj Črnomelj Območna obrtno- Local craft and podjetniška zbornica Support organisation Roška 9, 1330 Kočevje entrepreneurial chamber Kočevje Območna obrtno- Local craft and Partizanski trg 5, 8330 podjetniška zbornica Support organisation entrepreneurial chamber Metlika Metlika Območna obrtno- Local craft and Foersterjeva 10, 8000 podjetniška zbornica Support organisation entrepreneurial chamber Novo mesto Novo mesto Območna obrtno- Local craft and podjetniška zbornica Support organisation Vrvarska 3, 1310 Ribnica entrepreneurial chamber Ribnica Območna obrtno- Local craft and podjetniška zbornica Support organisation Rimska 8/a, 8210 Trebnje entrepreneurial chamber Trebnje

101

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Sector Organisation Type of organisation Address

Local development centre Razvojni center Kočevje- Trg zbora odposlancev - Development Centre Ribnica, d. o. o., druţba Support organisation Kočevje 1330 Kočevje-Ribnica ltd. za razvoj in svetovanje Belokranjska cesta 4, Automotive industry Revoz d.d. Enterprise 8000 Novo mesto Straška cesta 50, 8000 Automotive industry Adria Mobil d.o.o. Enterprise Novo mesto Šmarješka cesta 6, 8000 Pharmaceutical industry Krka d.d. Enterprise Novo mesto Prijateljeva cesta 12, Metal processing industry Trimo d.d. Enterprise 8210 Trebnje Metal processing industry Riko Ribnica d.o.o. Enterprise Lepovče 23, 1310 Ribnica Ljubljanska cesta 4, 8000 Hydraulics, plastics Hidex d.o.o. Enterprise Novo mesto

Electrotechnics Eki d.o.o. Enterprise Majer 27, 8340 Črnomelj

Wood processing - Savska cesta 13, 8290 Stilles d.d. Enterprise furniture Sevnica Levičnikova 34, 8310 Electrotechnics HYB d.o.o. Enterprise Šentjernej

102

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

Annexes

103

Author: Development centre Novo mesto ltd. Ref. No. 1G-MED08-289 MEDOSSIC Existing situation analysis in South-eastern Slovenia

ANNEX A: REFERENCES and SOURCES

[1] Slovenske regije v številkah, SORS 2009 [2] Regionalni razvojni program razvojne regije jugovzhodna slovenija 2007 -2013, Razvojni center Novo mesto, 2006 [3] Raziskava o stanju inovacijske dejavnosti v Sloveniji s predlogom aktivnih ukrepov za spodbujanje konkurenčnosti in inovativnosti v slovenskem gospodarstvu [4] Inovativna, podjetna in učinkovita druţba spodbujanje inovativnosti, Sluţba vlade za razvoj - Svet za konkurenčnost, 2008 [5] Poročilo o razvoju za leto 2008, Urad Republike Slovenije za makroekonomske analize in razvoj, 2008 [6] Tehnološka predvidevanja in slovenske razvojne prioritete, IER, 2008 [7] Strategija razvoja Slovenije, Government of Republic of Slovenia, 2005 [8] Innovation activity in manufacturing and selected services, Slovenia, 2001-2002, Statistical Office, 2004: [9] INNO-Policy TrendChart – Policy Trends and Appraisal Report Slovenia, European Commission, 2008 [10] From quantity to quality: critical assessment of Slovenia's potential for knowledge-based growth, Bucar, Stare, 2007 [11] http://www.proinno-europe.eu [12] Resolucija o nacionalnih razvojnih projektih za obdobje 2007–2023 (dopolnjena, januar 2008) [13] Resolucija o nacionalnih razvojnih projektih za obdobje 2007–2023, oktober 2006 [14] Statistical yearbook 2007, SORS 2007 [15] Izvedbeni načrt Regionalnega razvojnega programa regije JV Slovenija, obdobje 2010-2012, september 2009 [16] Resolucija o nacionalnih razvojnih projektih za obdobje 2007–2023, oktober 2006 [17] INNO-Policy TrendChart – Policy Trends and Appraisal Report – Slovenia, 2008 [18] http://www.mojalbum.com/golf110/dolenjska/foto/12107330 [19] Data Bank of SORS - Statistical Office of the Republic of Slovenia, 2008 [20] Data Bank of AJPES (Agency of the Republic of Slovenia for Public Legal Records and Related Services), 2008 [21] Vizija razvojne regije JV Slovenije v programskem obdobju 2007-2013, Razvojni center Novo mesto [22] MEDOSSIC, Existing situation analysis in Coastal-Karst Region, RDC Koper, 2009 [23] Internal documentation of the RRA Notranjsko - kraške regije, 2009

104

Author: Development centre Novo mesto ltd.