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Entrepreneurial& Innovationecosystem Inalbania

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Entrepreneurial& Innovationecosystem Inalbania Entrepreneurial & Innovation Ecosystem in Albania Author: Kate Hach & Eileen Trenkmann NOVEMBER 2019 EU FOR INNOVATION INSTRUMENT FOR PRE-ACCESSION ASSISTANCE (IPAII) 2014-2020 FOR THE COMPETITIVENESS AND INNOVATION SECTOR ALBANIA: EU SUPPORT FOR TOURISM-LED MODEL FOR LOCAL ECONOMIC DEVELOPMENT (COMPONENT 3: INNOVATION) PROJECT NUMBER: 2018/400-907 Page_ 1 Content 1. Introduction and context ................................................................................................................ 7 2. The Albanian start-up ecosystem ................................................................................................. 15 2.1. Tirana versus the regions ...................................................................................................... 15 2.2. Opportunities of the ecosystem ........................................................................................... 16 2.3. Business activity and framework conditions ........................................................................ 17 2.3.1. Doing business .............................................................................................................. 20 2.3.2. Socioeconomic factors .................................................................................................. 23 2.4. The triple helix model of innovation in Albania .................................................................... 25 2.5. The current roles of support organisations .......................................................................... 31 2.5.1. Incubators/Accelerators/Co-Working ........................................................................... 35 2.5.2. Universities.................................................................................................................... 40 2.5.3. Government .................................................................................................................. 47 2.6. Cooperation of actors ........................................................................................................... 52 2.7. Status of the Albanian start-up ecosystem ........................................................................... 54 2.8. Start-up definition within the programme context .............................................................. 55 2.9. Start-Up development support organizations ...................................................................... 57 3. Sources .......................................................................................................................................... 60 Page_ 2 Table of Figures Figure 1: Start-up ecosystem ................................................................................................................ 13 Figure 2: Number of active enterprises per city ................................................................................... 18 Figure 3: Number of enterprise registrations per city .......................................................................... 19 Figure 4: Active enterprises by municipality, gender & year (in %) ...................................................... 24 Figure 5: Ecosystem actor mapping Tirana ........................................................................................... 32 Figure 6: Regional ecosystem actor mapping ....................................................................................... 33 Figure 7: Current level of development ................................................................................................ 38 Figure 8: Global Entrepreneurship Index Albania score ....................................................................... 39 Figure 9: Institutional versus individual score regional ........................................................................ 40 Figure 10: Actor mapping Tirana (inner circle) and the regions (outer circle) & interconnectedness of selected actors ...................................................................................................................................... 52 Figure 11: Start-up ecosystem maturity ............................................................................................... 54 Figure 12: Start-up development cycle ................................................................................................. 55 Figure 14: Cycle of support for innovative seed-stage start-ups ......................................................... 56 Figure 15: Cycle of support for innovative scale start-ups .................................................................. 57 Figure 13: Correlation start-up development phases and start-up ecosystem actors* ....................... 58 Page_ 3 Abbreviations AIA Albanian Innovation Accelerator AIDA Albanian Investment Development Agency BIDS Business and Investment Development Strategy COSME Competitiveness of Small and Medium-Sized Enterprises DAAD Deutscher Akademischer Austauschdienst EBRD European Bank for Reconstruction and Development EIF European Investment Fund EU European Union DCM Council of the Minister’s Decision FDI Foreign Direct Investments GEDI Global Entrepreneurship and Development Institute GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GERD GDP on research and development HEI Higher Education Institutions ICT Information and Communication Technology INSTAT Albanian Institute of Statistics IPA Instrument for Pre-Accession Assistance ISI Fraunhofer Institute for Systems and Innovation Research JRC Joint Research Center of the European Commission NASRI National Agency of Scientific Research and Innovation NGO Non-Governmental Organisations MoU Memorandum of Understanding OECD Organisation for Economic Co-operation and Development OSFA Open Society Foundation for Albania PPP Public-Private-Partnership ProSeed Sustainable economic and regional development, promotion of employment, and vocational education and training in Albania R&D Research and Development SME Small and Medium Sized Company TTO Technology transfer Office UN United Nations UNDP United Nations Development Programme VC Venture Capital WB EDIF Western Balkans Enterprise Development and Innovation Facility Page_ 4 Executive summary Entrepreneurship and start-ups are important ingredients for the innovation ecosystem in a country. With new technologies, business models or innovative processes, they can contribute to economic growth and prosperity. The Albanian start-up ecosystem is nascent and ranks among the lowest entrepreneurial ecosystems in Europe. In the latest Global Entrepreneurship Index, Albania was on place 83 out of 137 analysed economies. Indeed, the Albanian start-up sector has stagnated and for the last few years, no significant growth in numbers of innovative start-ups with potential to disrupt the Albanian market has been measured. The Government has not been able to reverse this trend and revive the business sector due to very limited resources in terms of financial and technical support. Albanian universities are also a victim of low government funds. While a few private universities, especially located in Tirana, have the financial means to initiate extra curricula activities in areas such as entrepreneurship, public universities, in particular those located in other cities of Albania, are faced with decreasing student’s numbers, resulting in lower budgets provided by the government. Additionally, even though the government aspires to a triple helix model of innovation, little can be seen of these aspirations at a university-level. Research is stalled by lacking funds and the need for additional income generating activities by academic staff, leaving little time and scope for research. Adding to this challenge, PhD programmes in universities located in the regions are scare. Innovation and entrepreneurship are thus not on the agenda of many universities. However, while entrepreneurship promotion is gaining traction in universities in Tirana, to most public universities in other cities than Tirana, it remains an unknown concept. The few structures supporting entrepreneurship that are currently being implemented in public universities outside of Tirana are mostly part of European funded programmes. University-industry collaboration is currently very low with both sides not recognizing potential to cooperate. There are a few pockets of excellence where promising pilot projects have yielded results and show that an investment into more sustainable structures would make sense. In addition, universities are unable to provide structures and methods for start-ups to develop innovative solutions as they on the one side miss the outreach to the industry that could create demand for start- up products and services, and on the other side miss knowledge on entrepreneurship and commercialisation of ideas that aspiring entrepreneurs could learn from. On the other side, the private sector is also struggling with nine out of ten businesses being micro- sized and not in the business of research and development (R&D), operating in traditional sectors such as agriculture, forestry, fishing, accommodation and food service, and trading, thus, with little growth scope. While a few tech companies such as EasyPay have emerged in Tirana, businesses in the regions continue to operate in traditional sectors with little regional or global growth opportunities. In addition, the private sector is unable to communicate innovation needs and is hesitant to cooperate with universities. The government lacks policies to overcome
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