Policy Mix Peer Review Report on Serbia

Project Danube-INCO.NET Project Number 609497 Deliverable Number: D4.32 Submission Date April 26, 2017 Lajos Nyiri, Jean-Luc Clément, Michele Genovese, Ülle Must, Adrian Responsible author(s): Pascu, Svend Otto Remoe, Tekla Gaál

Document Control Sheet

Work package Number WP4 Analytical Evidence on Research and Innovation in the Danube Work package Title Region Task Number T4.3 Task Title Policy Mix Peer Review Deliverable Number D4.32 Deliverable Title Policy Mix Peer Review Report on Serbia File Name D4_32_Policy Mix Peer Review_Serbia_final Number of pages 154 Dissemination level Public Lajos Nyiri, Jean-Luc Clément, Michele Genovese, Ülle Must, Adrian Main author Pascu, Svend Otto Remoe Contributors Tekla Gaál (RCISD) Quality Assurance Christian Hartmann

Versioning and Contribution History

Author/Editor Contributors Description/ Version Date Comments November 21, Lajos Nyiri, Tekla Gaál (RCISD) _v01 2016 Lajos Nyiri, Jean-Luc Clément, Tekla Gaál December 13, _v02 Michele Genovese, Ülle Must, Adrian (RCISD) 2016 Pascu, Svend Otto Remoe Lajos Nyiri, Jean-Luc Clément, Tekla Gaál _v03 March 5, 2017 Michele Genovese, Ülle Must, Adrian (RCISD) Pascu, Svend Otto Remoe Lajos Nyiri, Jean-Luc Clément, Tekla Gaál March 22, _v04 Michele Genovese, Ülle Must, Adrian (RCISD) 2017 Pascu, Svend Otto Remoe Lajos Nyiri, Jean-Luc Clément, Christian QA _final April 13, 2017 Michele Genovese, Ülle Must, Adrian Hartmann, Tekla Pascu, Svend Otto Remoe Gaál (RCISD)

Document last saved on May 17, 2017

Table of Content

Table of Content ...... I Tables...... II Figures ...... II List of Abbreviations ...... III Members of the peer review team ...... V EXECUTIVE SUMMARY...... 6 1 Introduction – Background and approach ...... 9 2 Economic context and framework conditions for innovation in Serbia ...... 9 3 Main characteristics of the research and innovation system in Serbia ...... 11 3.1 Innovation Actors in Serbia ...... 11 3.1.1 The business sector ...... 11 3.1.2 Public research organisations (PROs) ...... 11 3.1.3 Higher education institutions ...... 12 3.1.4 Innovation and research services ...... 14 3.2 Resources (inputs) available for innovation and research ...... 14 3.2.1 Funding research and technology development ...... 14 3.2.2 Human resources ...... 16 3.2.3 Regional distribution of performance and resources ...... 17 3.3 Innovation and research performance ...... 18 4 The Role of Government ...... 21 4.1 Institutional setting of Serbia's STI policy ...... 21 4.2 Recent research & innovation policies and strategies ...... 22 4.3 Policy mix ...... 24 4.3.1 Funding schemes managed by MESTD ...... 25 4.3.2 Funding schemes managed by the Innovation Fund ...... 26 4.4 Policy tools applied ...... 27 5 Overall Assessment...... 28 6 Recommendations ...... 31 7 References ...... 35 Annex I – Process of Policy Mix Peer Review ...... 36 Annex II ─ Agenda of the Peer Review Team visit to Serbia...... 37 Annex III ─ Background report ...... 40

Tables

Table 1 R&D expenditures as a share of GDP in Serbia; 2010-2014 ...... 14 Table 2 Expenditures on different types of research activities as a share of GERD in Serbia .. 15 Table 3 Distribution of funding and human resources among the regions in Serbia; 2012 ..... 18

Figures

Figure 1: Share of enrolment by public and private universities and colleges of applied sciences in Serbia. 2013 ...... 13 Figure 2: The share of R&D expenditures. by sectors of performance; Serbia 2010-2014 and EU28 in 2014 ...... 15 Figure 3: Total number of researchers (FTE). by sectors of performance; Serbia in 2010-2014 and EU28 in 2014 ...... 16 Figure 4: GERD/R&D personnel (region) / GERD/R&D personnel (total); Serbia 2012-2015 .. 18 Figure 5: Relative innovation performance of Serbia to the EU28 by selected indicators. 2015 ...... 19 Figure 6: Number of scientific articles with at least one researcher from Serbia in the Thomson Reuters database. 2000-2015 ...... 20

List of Abbreviations

BIP Business Innovation Programme CEFTA Central European Free Trade Agreement CoE Centres of Excellence COST European Cooperation in Science and Technology CREDO Competitive Regional Economic Development Danube-INCO.NET Danube Region INCO-NET DOST Philippines Department of Science and Technology DoW Description of Work DR Danube Region EBRD European Bank for Reconstruction and Development EC European Council EIB European Investment Bank EPO European Patent Office EU European Union FP7 the European Union’s 7th Framework Programme for Research, Development and Demonstration Activities GDP Gross Domestic Product GERD Gross Expenditure on Research and Development GII Global Innovation Index H2020 the European Union’s Framework Programme for Research and Innovation between 2014-2020 Horizon 2020 the European Union’s Framework Programme for Research and Innovation between 2014-2020 ICT Information and Communication Technologies IMF International Monetary Fund IP Intellectual Property IPA Instrument for Pre-Accession IPR Intellectual Property Rights ISI Inter-Services Intelligence NCP National Contact Point for the EU Framework Programmes NGO Non-governmental Organization NIS National Innovation System OECD Organization for Economic Cooperation and Development ORF Open Regional Fund PCT Patent Cooperation Treaty

III

PRO Public Research Organisation PSSTD Provincial Secretariat for Science and Technological Development (Vojvodina) RDA Regional Development Agency R&D&I Research, Development and Innovation R&I Research and Innovation RTD Research and Technological Development RTDI Research, Technological Development and Innovation SME Small and Medium-sized Enterprise S&T Science and Technology STI Science, Technology and Innovation UNESCO United Nations Educational, Scientific, and Cultural Organization VAT Value-Added Tax VC Venture Capital WB Word Bank WP Work Package

Members of the peer review team

According to the “Baseline study and concept for policy mix peer review” of the Danube-INCO.NET project (deliverable number: D4.19), the implementation of the policy mix peer review envisaged a peer review team consisting of 5 international governmental experts from countries other than the country subject to the activity, led by an independent high-level expert (i.e. the team leader) and supported by a rapporteur. The main criterion for the selection of the team members was to possess relevant experience or background knowledge on the country subject to the exercise and/or on a somewhat similar science, technology and innovation (STI) system to that of the targeted country. As a result, the peer review team consisted of the following experts:

Name Function Country Organizational background

Lajos Nyiri Team Leader Hungary ZINNIA Group

Jean-Luc Clément Peer France Ministry of Education, Higher Education and Research

Michele Genovese Peer Italy APRE - Agency for the Promotion of European Research

Ülle Must Peer Estonia Estonian Research Council

Adrian Pascu Peer Romania National Authority for Scientific Research and Innovation

Svend Otto Remøe Peer Norway Research Council of Norway

EXECUTIVE SUMMARY

The present report aims to summarize the main findings of the review team which was set up in the frame of the Danube-INCO.NET project to conduct a research and innovation (R&I) policy mix peer review in Serbia. The review team visited the country between 26th and 30th of September 2016, and had 31 interviews with 38 individuals from all major stakeholder groups (government, academia, business and intermediary organisations providing special innovation services). The findings of the report are based on the lessons learnt during this visit.

Key lessons on the innovation system in Serbia The peer review team perceived that improvements have taken place in the research and innovation policy mix in the past years in Serbia, but a number of issues still have to be addressed. The 2008 crisis has revealed structural weaknesses in the economy and highlighted the need to promote long-term growth through structural policy reforms and innovation. Currently the main weakness of innovation in the country is a gap between industry and research. The demand side is weak due to the low absorptive capacity of the business community and low levels of awareness of the need for innovation in all stakeholder groups (in particular politicians, the academic community and business enterprises). There has been a recent significant boom in start-up creation, in particular in the field of ICT. The supply side (universities and public research institutes) is overwhelmed with other type of activities. With a few exceptions, it has low interest and capability to work with and for industry. Limited amount of financial resources from budget is allocated for research and innovation. Some international aid and solidarity schemes (like the IPA1 and World Bank) have been and are used to support research and innovation. The country is potentially rich in human capital, with great traditions and very promising developments. Talent is to a great extent attracted to positions in the state bureaucracy which offers status and security. One of the preconditions to address successfully the challenges of revitalizing the national innovation system is to improve the learning capacity of and the culture of cooperation in the complex governance system. The key weaknesses of the innovation system of Serbia are the following:

a. low business R&D intensity in terms of expenditure and the number of researchers (the demand for research and research-based services is low, the R&D sector acts as an island, not open to business)

b. a system of public research institutes with insufficient funding, weak management position for multi-year investment decisions, inherited structure, but strong lobbying power in defending privileges)

c. conservative financial market in terms of risk taking capacity and innovation financing

d. the governance of the national innovation system in Serbia is still based on the linear model of innovation

e. the applied measures favour research, public and private financial sources promoting close-to- market innovation activities are both increasing, but still far from satisfactory

1 Instrument for the Pre-Accession Assistance

f. direct support oriented and mostly supply-driven policy measures are applied

g. underdeveloped evidence-based science and innovation policy making (no STI observatory or strategic intelligence function, like systematic monitoring, evaluation, foresight or technology assessment). In summary, there are strengths and opportunities in Serbia. The key question is how to turn these resources into social and economic growth and expansion.

Recommendations The national innovation system in Serbia is facing major challenges: after a successful recovery from the recession and in parallel with taking steps to reduce unemployment, new sources of economic growth and social development should be mobilized. Innovation represents one of the best opportunities to do this. It requires a new generation of entrepreneurs, who are able to adapt to new technologies in a creative way and consider innovation as their daily experience to improve the competitive position of their firms. The changes should focus on the following general objectives:  Encourage businesses to increase demand for innovation and research  Improve human capacity, with a special focus on young scientists and inventors / innovators  Adjust the public research and knowledge & technology transfer system to the requirement of the economy and society, and  Increase private and public funding for RTDI. In line with these general objectives and taking into consideration the state of the country's innovation system, the peer review team suggests the following actions to be taken:

[A] Strengthening the demand side of innovation  To introduce new tax incentives to facilitate companies' R&D and innovation activities  To create a general framework for the development of industry-university partnership, and increase the quality of services of the existing institutional setup of innovation services  To facilitate private financial and investment institutions setting up venture capital and seed funds and to encourage business angel activities  To develop a clear strategy for established SMEs, often low skilled, to help boost basic strategic and technological capacities.

[B] Performance-based quality system in STI  To launch a national programme for the evaluation of R&D and innovation activities  To continue the development of research infrastructures in line with the ESFRI approach (methodology, guidelines, etc.)  To restructure and reform the public research institute system in Serbia in order to adjust the system to the current and emerging social and economic needs (competitive market orientation)  To encourage public research institutes and universities to put more efforts on IPR management  To facilitate the creation of joint laboratories between research institutes and universities  To develop ambitious policies to capitalize on the Serbian diaspora living abroad 7

 To reassess the centre of excellence (CoE) system and establish a strategic CoE programme with a view to generate high level competence in key areas for Serbian development

[C] Institutional development  To broaden the mandate of the National S&T Council to innovation  To improve the networking capacities of the relevant ministries by setting up an institutionalised system of innovation policy coordination and harmonisation  To establish a national STI analysis institution (STI Observatory)  To expand the activities of the Centre for Science Promotion to innovation and HORIZON2020  To strengthen the RTDI section in the Ministry of Education, Science and Technology Development (MESTD) and improve competencies in innovation

[D] Learning capacity building  To develop clear thematic national priorities and corresponding national R&D programmes (the planned S3 strategy may result in such outcomes)  To introduce a wider range of contemporary STI policy intelligence tools and methods (STI Observatory, technology assessment, regular monitoring and program/ funding scheme evaluations, foresight, etc.)  To institutionalise the regular dialogue with main stakeholders in innovation  To abolish the registration of companies in the MESTD

[E] Funding  To put emphasis on improving the quality of the applied instruments and schemes targeting science-industry relationships (like TTOs, industrial PhDs, a voucher system for innovation service promotion, etc.)  To generate more competition among the actors no matter of their legal status and ownership and eliminate inequalities (example: only registered organisations can apply for funding to the direct financial support managed by the Ministry)  To close down the current system of quasi-competitive project funding and introduce a more sophisticated system which includes basic institutional funding, strategic programme funding for nurturing specialization and division of labours, and competitive funding for projects  To allow "seal of excellence" marks from HORIZON2020 competition to be a gateway for domestic funding

1 Introduction - Background and approach

This report aims to summarize the main findings of the review team which was set up in the framework of the Danube-INCO.NET project to conduct a research and innovation (R&I) policy mix peer review in Serbia. The process of the peer review is presented in Annex I. The synthesis report refers to the background report (Annex III) prepared by an expert in STI policy in Serbia. The methodology of the report at hand aims to follow the simplified examination model of the "National Innovation System (NIS)"2: focus was given to the science base, human resources, the economic and market development, business research, technology development and innovation (RTDI) and governance, as well as inter-linkages among them at various levels. The review team put emphasis on studying to what extent the present Serbian R&I policy mix reacts to the social and economic demands. The peer review visit took place between the 26th and 30th September 2016, attended by all members of the peer review team. 31 interviews (including focus group meetings and individual interviews) were organized with 11 government officials, 5 individuals from universities (including 1 person from a private higher education institution) and 4 leaders from other public research organisations, 8 managers from companies (incl. 5 SMEs), 4 representatives of intermediary organizations, 1 national contact point (NCP), 2 representatives of the Serbian chamber of commerce and 1 member of the parliament.3 Findings of the interviews were incorporated into the report which was presented to the Beneficiary in February 2017, represented by high ranking officials at the Ministry of Education, Science and Technology Development in Serbia with the aim of eliminating any missing information or misunderstanding. The visit and the interviews were organised in a professional manner and proved useful concerning the institutions and interviewees the review team met.

2 Economic context and framework conditions for innovation in Serbia

While the country had a relatively good economic position in the late 1980s, the civil war, then the UN sanctions resulted in hyperinflation, deep economic crises, and serious decrease of the per capita GDP by the mid 1990s. Parallel to this process a large number of well-educated, economically active highly qualified citizens left the country during the past two decades. And unfortunately this trend continues. Serbia is in the process of economic transition to a functioning market economy. The economy is recovering from a recession. Thanks to significant consolidation measures and better tax collection, the budget deficit has fallen sharply. Unemployment rate has fallen below 20% in 2014, but is still over 15% (June 2016). According to current economic forecasts this level will not change significantly by

2 Described in the "Baseline Study and Concept for Policy Mix Peer Review" (D4.19) document of the Danube-INCO.NET project (http://rcisd.eu/wp-content/uploads/2015/06/Deliverable_4_19_final_public.pdf) 3 Detailed agenda and the list of interviewees are in Annex II.

20204. Many interviewees mentioned that the focus of government economic policy is on short-term employment policy. The shift to new sources of growth is incomplete as investments remain weak. In general, the competitiveness of the Serbian economy is based mostly on the relatively low labour costs. The role of higher value-added activities is marginal. The sector composition of GDP follows more or less the pattern of that of the upper middle-income countries: the share of agriculture in GDP has declined substantially in the past 15 years (from about 20% in the late 1990s to less than 10% in 2014), the share of industry has also decreased but only by a few percent (from 30 to 27 percent in the same period), while the share of services increased dramatically (from 50 to 65%). External imbalances have been reduced by growing exports and subdued imports. The current account deficit fell below 5.0% of GDP in the first half of 2015, down from double-digit levels at the beginning of the decade. Most of the deficit was covered by net foreign direct investment, which stabilised at close to 4% of GDP, still below the needs of the economy. Privatisation attempts have recently been revived. While in practice all SMEs are in private hands and progress has been made in the privatisation of strategic sectors, a large part of assets in major infrastructure services (such as power, energy, telecom, transport, etc.) are still state-owned. Interviewees shared a critical opinion on the impact of the past and present privatisation on innovation by saying that most of the transactions could be considered as mostly large-scale property and much less technology or knowledge transfer. Foreign owners are reluctant to bring research, technology development or prototyping activities into the country, and higher value-added activities are also less favoured. Government policies are changing, but at this moment decisions on privatisation are mostly determined by the amount of the financial offer and the impact on employment. EU member states remain the main source of Foreign Direct Investment (FDI) with a share of almost three-quarters. The informal economy remains a major obstacle to fair competition and business development. To tackle the grey economy, the government adopted an action plan and set up a coordination body. A new law on inspection oversight, introducing a risk assessment system and better coordination between different administrative bodies was also adopted. The banking system continues to be dominated by commercial banks, mostly foreign-owned, holding more than 90 % of all assets, followed by insurance companies with 5.2 %. In recent years the amount of loans increased and the quality of services improved, but the overall availability of credits in relation to the level of GDP and economic activity is far from satisfactory. The risk taking capability of the banking system is low. As one interviewee highlighted, "the foreign owned banks do not look ahead of 20-25 years, but invest into relatively short term projects. They do not move hand in hand with entrepreneurs (and their companies) with high business potential for the longer term, furthermore less attention is given to the value of projects, but more to classical guarantee element, like collaterals". The European Council granted Serbia the status of a candidate country in 2012. The Stabilisation and Association Agreement (SAA) between Serbia and the EU5 came into force in September 2013. Accession negotiations were launched in January 2014. The analytical examination of the EU acquis (screening process) was completed in March 2015. Chapter 25 on "Science and Research" was successfully carried out after the screening (explanatory and bilateral), receiving support from the European Commission and on 13 December 2016 at the Intergovernmental Conference opened and at the same session provisionally closed.

4 http://www.tradingeconomics.com/serbia/unemployment-rate/forecast 5 http://ec.europa.eu/enlargement/pdf/serbia/key_document/saa_en.pdf

3 Main characteristics of the research and innovation system in Serbia

3.1 Innovation Actors in Serbia

3.1.1 The business sector

According to the Community Innovation Survey 2012-20146 the share of enterprises with innovation activities was approximately 40%. The size of the enterprises was a key factor for their innovation activity: 68% of large firms, and 37% of SMEs are considered as innovative. There is no difference between the manufacturing and service sector in terms of their share of innovative firms. Based on the interviews the peer review team has concluded that the incomplete privatisation process has resulted in uncertainties mostly in the segment of large enterprises. A healthy balance among large, medium, small and micro firms is a crucial precondition of a well-functioning national innovation system. The grey/informal economy and corruption are still a bottleneck for competition and innovation. Large enterprises are often a driving force for innovation in their respective sectors, and public policy has a role in ensuring their dynamism. In ICT the level of innovation in general is good. The majority of young companies are active in this sector. But agriculture and food technologies also represent key areas of interest for innovators. Established sectors like metals, etc. show relatively lower innovation activity, but have high potential (there are some internationally visible success stories of newly established firms). Foreign-owned firms are mostly low cost producers or providing outsourcing solutions, but with low domestic innovation, they have no interest to look for higher value-added solutions or applying locally available resources for their global innovation. The venture capital market is weak, only international or foreign firms are investing into innovative projects (interviewees mentioned one US based and one Bulgarian venture fund that are active in Serbia, or the Western Balkans Enterprise Development and Innovation Facility7 as a regional initiative for early stage funding). In the process of creating start-ups, the death valley challenge in Serbia is typically before the pre- incubation phase.

3.1.2 Public research organisations (PROs)

As a legacy of the Yugoslav time there is a large number of independent organisations in Serbia: 67 institutes are members of the Association of R&D Institutes (ZIS) and 8 additional institutes operate under the umbrella of the Academy of Sciences. 90% out of the 67 institutes, large or small, are in public ownership, but there are privately owned ones as well, and some of them are part of public universities (University of Belgrade: 11 institutes, University of Novi Sad: 2 institutes). About 3.000 researchers work in these organisations, but only about 10% of these institutes employ more than 100 researchers, the rest have only limited human resources. Some are active mostly in basic, others in applied research and/or in research and technology services. The disciplines covered by these organisations are very diverse, from natural sciences, medical, life, agricultural and engineering sciences to social sciences and humanities. The Public Research Organisations (PROs) face great challenges in the coming years. They have been established to satisfy very different social and economic needs. The environment of these actors has

6 The Survey was part of the European Commission's usual multi-country exercise and in Serbia it carried out on a sample of 3.587 enterprises 7 http://www.wbedif.eu/about-wb-edif/

11 changed significantly, and neither the government nor the institutes themselves have reacted successfully to this situation so far. Staff salaries and research activities of such organisations are financed mostly by the government through quasi-competitive grants. Basic institutional funding is not a practice at all in Serbia. The basic salary is determined by pre-defined categories the researchers belong to (at universities teachers/researchers receive basic salary only for teaching activities and their research works are paid through the competitive funding schemes). Neither the quality of research (excellence as criterion) nor its relevance on how to contribute to achieve social and/or economic objectives of any national strategy have been assessed as input for the transformation of this network to satisfy the present and future social and market needs. Some institutes have introduced a self-evaluation and monitoring system, but it is not a common practice. The regulative framework of PROs is different as compared to the public universities. It is evident for all actors, including the government, that the present funding model (salaries and other costs are fully based on quasi-competitive application schemes managed by the ministry) for these institutions must be redefined. The sector is in need of urgent reform with measures that promote scientific excellence and social and market relevance, and strengthening of the funding base. A functional analysis should be made in order to decide which organisations should be kept in public ownership, which are to be privatised. The new government strategy on science and technology development has recognised the challenge and aims to complete the reform process by 2020. The implementation of this strategy has started with the preparation of the self-assessment methodology (being done by April 2017). According to government plans, the institutional self-assessments will be completed by the end of 2017, followed by an external evaluation in 2018. Parallel with this process, the Serbian S3 strategy (Smart Specialisation Strategy) will be prepared, which will serve as the basis to assess the excellence and relevance criteria for the public research organisations (as well). The government will decide on the reform of the PROs on the basis of all these inputs by 2020.

3.1.3 Higher education institutions

In Serbia there are 8 public universities with 100 faculties and 11 privately owned universities with 60+ faculties. Also, there are 47 public and 22 privately owned colleges of applied sciences. According to the Background report (see Annex III) the total number of students in Serbia reached 3.3% of the population in the academic year 2013/14. About 15% of all students study at private higher education. Nearly two third of all students in Serbia is enrolled at public universities. (See Figure 1: Universities are non-integrated, faculties have full legal and financial independence, which may create a strategic vacuum and may lock the system in conservative modes. This situation may result in administrative mismatch between university’s administration and faculties, which makes flexible operation very difficult (including IPR policy). Universities are strong in research but their performance is very uneven. In recent years the University of Belgrade has improved its position in the Academic Ranking of World Universities8: while in 2012 it was within the 401-500 range, in years of 2013 to 2015 it moved ahead to the 301-400 range, and in 2016 it is already in the 201-300 range. The Belgrade University's position in mathematics and physics is even better (on 151-200 position). Universities in Novi Sad, Niš and Kragujevac are also strong in teaching and research as well.

8 http://www.shanghairanking.com/World-University-Rankings/University-of-Belgrade.html

Figure 1: Share of enrolment by public and private universities and colleges of applied sciences in Serbia, 2013

2,3

12,8

20,4 62,8

Public universities Public colleges of applied sciences

Private universities Private colleges of applied sciences

Source: MESTD (presented by the Background report)

Salaries at public universities for teaching are covered by the government, but all costs of research, including staff costs, are funded through competitive grant schemes. Private universities play an emerging role, they play a useful and necessary complementary role in the system, but there is still room for improvement for many of them. Interviews from different non-higher educational stakeholder groups shared the opinion that most of the private higher education institutions are rather teaching faculties, while research and third mission activities are much more present at public higher education institutions. There are some growing tensions between public and private higher education institutions, that should be handled by the government. Examples for these tensions:  same accreditation rules apply to all HEIs, but in practice all members of the accreditation board are active professors (i.e. biased) and 90% of them come from public universities,  voting rights in the Rectors' Conference are based on the number of professors and students of each HEIs (all private universities have about 20% voting rights and the largest universities dominate in decision-making),  students of private universities cannot enjoy any financial support, like scholarships or fellowships from the government. Cooperation between universities and PROs are less formal, but existing (exchange of lecturers, jointly managed research projects and access to research infrastructure). Higher level of cooperation, like jointly operated research infrastructure or laboratories, is not a practice. Linkages between universities and established industry are weak. Companies do not consider higher education organisations as good partners for service provision or innovation. This matchmaking challenge underlines that building trust is an urgent task for both sides and for the government. Researchers and intellectual property rules and regulations are little known by professors.

Public universities play a significant role in the Serbian national innovation system. All major universities' technical/engineering faculties are active in technology transfer and incubation (key areas: ICT and biotech/food). They are drivers of local and regional innovation hubs, partners of local governments and national government, and international donors enriching the local innovation network (science parks, technology incubators, accelerators, etc.). Not only institutions in Belgrade and Novi Sad, but local universities in Niš and Kragujevac provide good examples and practices in this sense as well.

3.1.4 Innovation and research services

In the past decade there was a boom of new innovation services in the country. International donors. in particular the EU (IPA), the World Bank and the European Investment Bank are active in financing such activities. Most of the funded projects focused on setting up bridges between academic organisations (mostly public universities and research institutes) and industry. According to the Innovation Register of the Ministry of Education, Science and Technology Development (MESTD) there are 6 innovation centres, 14 research and development centres, 7 business and technology incubators, 4 science and technology parks and 4 technology transfer centres in Serbia. In addition 57 development and production centres started their activities as well. Universities and local authorities play an active role in this boom. Based on analyses (2013 ERAWATCH country report and the Background report) and interviews, the Serbian experience follows the pattern of other transition countries: large number of organisations have been set up thanks to international financial support. But after completing the initial phases most of these newly set organisations face lack of efficacy and resources. Most of the existing organisations suffer from inappropriate development of competencies and lack of funding. The peer review team shares the opinion that high priority should be given to the quality of services provided and to the development of new internal competencies in the upcoming years. Currently, there’s no need to significantly increase the number of such organisations.

3.2 Resources (inputs) available for innovation and research

3.2.1 Funding research and technology development

In 2014, Serbia’s R&D expenditures (GERD) amounted to 0.77% of GDP. The business sector contributed only 30% of the total, leaving the funding burden to be borne essentially by the government (57%). Foreign sources contributed 13% of GERD, while private non-profit organizations in practice none of it.

Table 1 R&D expenditures as a share of GDP in Serbia; 2010-2014

Expenditures 2010 2011 2012 2013 2014 GERD / GDP (%) 0.74 0.72 0.91 0.73 0.77 BERD / GDP (%) 0.09 0.07 0.23 0.1 0.23 Foreign expenditures for R&D per 0.03 0.04 0.08 0.06 0.1 GDP (%) Source: EUROSTAT

The ambitious 2015 target, set by the government in its S&T Strategy for 2010 and 2015, to reach a 1.05 per cent of GDP has not been achieved.

According to official statistics9 the share of R&D expenditures spent in higher education institutions is by far the largest among all actors, while the share of business expenditures is oscillating, changing significantly year by year. The importance of PROs is relatively high, about one third of GERD is spent in this sector (in the EU28 it is slightly more than 10%). Both spending and expenditures of the business sector on R&D are very low, but grow year by year in an oscillating way. (See Figure 2:

Figure 2: The share of R&D expenditures, by sectors of performance; Serbia 2010-2014 and EU28 in 2014

EU28; 2014

2014 Higher Education 2013 Government 2012 Business entreprises

2011

2010

0% 20% 40% 60% 80% 100%

Source: EUROSTAT

Since 2006, funding from abroad, particularly from the EU (Framework Programme) has become an important source of R&D funding in Serbia. The share of funding from abroad increased from 2.6% in 2006 to 13% in 2014. Primarily the increase in project participation in FP programmes may explain this increase. Serbian organisations received over €14 m in FP6 and close to €64m in FP7 as an EU contribution to their project participation.10 The share of basic research in total GERD is high, but between 2010 and 2012, it decreased from 45 to 35 %. The share of experimental development also decreased during the same period.

Table 2 Expenditures on different types of research activities as a share of GERD in Serbia

Share of activity types 2010 2011 2012 Basic research / Total GERD (%) 45% 42% 35% Applied research / Total GERD (%) 28% 34% 42% Experimental development / Total GERD (%) 27% 24% 23% Source: EUROSTAT

9 Published by the Statistical Office of the Republic of Serbia, http://webrzs.stat.gov.rs/WebSite/ 10 Source: eCORDA database of the EU

3.2.2 Human resources

In 2014, there was a total of 13,026 FTE (full time equivalent) researchers reported by the official statistics (EUROSTAT), less than 2 per thousand inhabitants. (EU28: about 3 per thousand inhabitants). The distribution of researchers by sectors is the following: 67% in higher education (HES), 22% in government (GS) and 11% in business (BES).

Figure 3: Total number of researchers (FTE), by sectors of performance; Serbia in 2010-2014 and EU28 in 2014

Share in total

EU28; 2014

2014 Higher Education 2013 Government 2012 Business entreprises

2011

2010

0% 20% 40% 60% 80% 100%

Number of researchers

2014

2013

Higher Education 2012 Government Business entreprises 2011

2010

0 5000 10000 15000

Source: EUROSTAT

Distribution of human resources is very unbalanced across the main sectors of innovation. Only a small percentage of researchers is engaged in the private sector, while the share of researchers working at

16 higher education institutions is far the biggest (about two third of the total in 2014). It does not follow the pattern of the EU28, where about half of the researchers work in business. The good news is that in recent years, the number of researchers employed by companies has risen in Serbia. This number has grown from 252 (2% of the total) in 2010 to 1,421 (11%) in 2014. The numbers in higher education and PROs are oscillating, up and down, but the differences are less than 10% annually. (See Figure 3: Based on the interviews a broader picture of human resources available for innovation (not only for research) can be reviewed. In general, there is a good tradition of a well-functioning educational system and trained workforce is available on the labour market. Overall it is a big concern, as in other countries in the region as well, that the necessary cultural changes towards an entrepreneurial world have not happened yet, and the present educational system has not reacted effectively to this challenge. Interviewees from business agree that "universities produce excellent young graduates with technical and scientific knowledge, but with very poor entrepreneurial skills". The review team has identified significant differences in the approaches of the business and education community on how the education system should react to the actual demands of the labour market. The educational system has always been strong in math and hard sciences, and paved the way for ICT sector development. As a result, all actors have recognised the demand boom for ICT experts, in particular for programmers in the country, that is seriously challenging the universities on how and what sense to react. It is also clear for each actor that industry needs much more graduates with bachelor degree, than MScs and PhDs. At this moment public research and higher education institutions are the only employers for talents with PhD (or they leave abroad). The key challenge for both education policy and universities is to find an appropriate balance between the actual labour market demands for skills and competencies and the longer term interest of the country's economic and social development. For example, no doubt that in the longer term the country would need more MSc and PhD graduates, but the lack of bachelor graduates at present is a bottleneck of business development. The solution is probably to improve significantly the flexibility of the educational programmes, where private universities in Serbia have more experiences (interviewees frequently mentioned IT and business administration & management as good examples). The permanent and well-functioning dialogue among the major stakeholders (higher education, business and government) is the precondition of planning and introducing any changes. The absence of an efficient mechanism of reintegration is one of the main causes of the harmful effect of “brain drain”. According to interviewees, about 40 thousand young, well-educated people left the country between 2013 and 2016, and a large proportion of them had a higher education diploma. A great number of researchers from Serbia is located abroad (live in diaspora). The diaspora probably represents a large, good potential for innovation.

3.2.3 Regional distribution of performance and resources

The RTDI system in Serbia is very centralised. the Belgrade region plays a significant role, both in terms of funding and spending, of human resources and research infrastructures available. (See Table 3) It is important to note that there is a significant difference between the distribution of expenditures and the number of researchers. There are some regions with very modest R&D expenditures, but having a relatively large number of researchers. (See Table 3) The expenditures per research staff are below the national average in all regions, except the City of Belgrade. (See Figure 4: In addition to Belgrade the Region of Voivodina has also local resources (both human and financial) for fuelling innovation. This is not the case for the other two regions. Similar to other countries in the region there is a strong correlation between human resources locally available for research and R&D expenditures of the business sector. In two out of the four regions, the level of BERD is extremely low, but even in the Region of Voivodina, where one fourth of the country's R&D human resources is located, the BERD is very modest. (See Table 3)

There is a limited number of regions, typically close to university cities, where high-level knowledge bases are located (besides Belgrade, first of all Novi Sad, then Niš and Kragujevac should be mentioned). Intensive innovation activities, like the creation of start-ups, and international collaborations are also connected to these centres.

Table 3 Distribution of funding and human resources among the regions in Serbia; 2012-2015 (%)

Region of Šumadija Region of Region of Southern Serbia City of Belgrade and Western Vojvodina and Eastern Serbia Serbia

2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015

Regional GERD as a percentage of GDP

0.91 0.73 0.77 0.87 0.68 0.51 0.53 0.60 0.16 0.16 0.18 0.20 0.03 0.02 0.02 0.03 0.03 0.03 0.03 0.03

Regional BERD as a percentage of GDP

0.23 0.10 0.23 0.28 0.22 0.06 0.16 0.18 0.0 0.03 0.06 0.08 0.0 0.0 0.0 0.01 0.0 0.01 0.01 0.01

Share of R&D personnel (FTE) as % of total R&D personnel in the country

100 100 100 100 61.9 60.4 59.7 59.4 21.7 23.6 27.3 24.7 5.6 5.3 5.5 5.7 10.8 10.7 7.5 10.2 Source: MESTD. referring to the Statistical Office of the Republic of Serbia

Figure 4: GERD/R&D personnel (region) / GERD/R&D personnel (total); Serbia 2012-2015

1,4

1,2 City of Belgrade 1

0,8 Region of Voivodina

0,6 Region of Šumadija and Western Serbia 0,4 Region of Southern and Eastern Serbia 0,2

0 2012 2013 2014 2015

Source: Own calculation based on data in Table 3

3.3 Innovation and research performance

According to the Innovation Union Scoreboard 201611, Serbia is a moderate innovator. The country's innovation performance is far behind the Czech Republic or Slovenia, closely follows Slovakia and Hungary, and better than Poland, Croatia or Bulgaria. Serbia is in a catching up phase in this respect. During the past 10 years (except for a small decline in 2011) its innovation performance grew every year, and its relative performance to the EU average has significantly increased from 45% in 2008 to 62% in 2015. Serbia is performing below the EU average on nearly all dimensions and indicators. The most significant relative strength is in non-R&D innovation expenditures. The strongest relative weaknesses are in VC investments, community designs, community trademarks, R&D expenditures in the business sector, such as license and patent revenues from abroad. (See Figure 5: Scoreboard statistics show that SMEs are much more active in innovation when they have resources in-house. Research and collaborations with the traditional public knowledge-creating networks (universities and PROs) are very weak, direct spending on R&D is low, and in general the cooperation among companies is also poor. Not surprisingly, the co-publications of public and private actors are far below EU average, the low R&D intensity of the business sector keeps these stakeholders away from strong collaborations. (See Figure 5: Since 1st October 2010, inventors from Serbia may file a patent application directly to the European Patent Office. According to the analysis made by the Danube-INCO.NET project12 patent statistics show that foreign companies and inventors are mostly interested in pharmaceuticals, organic chemistry, basic chemistry, biotechnology and medical technologies. (Nearly 75% of the total number of their patent applications belong to these technology areas.)

Figure 5: Relative innovation performance of Serbia to the EU28 by selected indicators. 2015

New doctorate graduate SMEs 1 Population with product/process 0,8 completed tertiary innovation 0,6 education

Public-private 0,4 International scientific co- 0,2 scientific co- publications 0 publication

Innovative SMEs Most cited scientific collaborating with publications others SMEs innovating in- R&D expenditures in house the business sector

Source: Innovation Union Scoreboard 2016

The Science Law, adopted by the Parliament in 2010 (with amendments in 2015), promoted excellence in research; imposing publishing of scientific articles in ISI-referred scientific journals as a precondition

11 http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_hu 12 "Co-publication and co-patenting analysis among countries in the Danube Region", Deliverable D4.16 of the Danube- INCO.NET project

19 for career advancement. A direct empirical consequence of such regulation was a large increase in the number of publications. In recent years Serbia has improved its scientific research potential, that is illustrated by the fact that the country’s share of total world production of scientific works accounts for 0.3% and is ranked 46th on the list of over 140 countries13. (SCImago Journal & Country Rank)

Figure 6: Number of scientific articles with at least one researcher from Serbia in the Thomson Reuters database, 2000-2015

7000

6000

5000

4000

3000

2000

1000

Source: http://sciencewatch.com/

The analysis of the Serbian participation in projects supported by the EU's research and technology development Framework Programmes (FP6, FP7 and HORIZON2020) underpins all main lessons learned in the previous pages:  scientific and technological areas most targeted by Serbian researchers are: ICT, food and agriculture and environment,  public organisations are most interested in joining international consortia, they represent the far most successful sector both in terms of number of supported projects and funds contracted with the EU,  the business enterprise sector's portfolio of preferred technology areas follows the general pattern of Serbian participation: strongest in ICT, but also good in food, agriculture, environment, energy, and  the number of SMEs successfully applying to the European Commission for funding is growing FP by FP (in FP6: 9 SMEs, in FP7: 55 SMEs, in HORIZON2020 by the end of 2016: 19 SMEs).14

13 http://www.scimagojr.com/ 14 eCORDA data base - http://cordis.europa.eu/projects/home_en.html

4 The Role of Government

4.1 Institutional setting of Serbia's STI policy

The following figure shows a simplified organigram of the organisations in the Serbian institutional STI system (actors interviewed by the review team are underlined and in bold):

Source: Background report (see Annex III), revised by the review team based upon recent structural changes made by the government formed in 2016

The STI policy system in Serbia consists of three levels:  Policy level - the parliament and the national government  Operational level - organisations which are responsible for the design and implementation of STI policy measures and specific activities (like IPR or measurement)  The performers' level - organisations and individuals performing RTDI (research, technology development and innovation) activities The National Council for Science and Technology Development (NCSTD) with an advisory function has only one administrative secretariat, so members have to do the substantive work themselves. Innovation is not part of its mission. A vast majority of the members are from the academic community and less from business. After the parliamentary election in early 2016 the new government was formed just some weeks before the peer review visit. The members of the NCSTD have not been appointed at that time.

Several ministries are involved in innovation, but the responsibility for policy design and implementation is given by law to the Ministry of Education, Science and Technology Development (MESTD). Several interviewees, from all groups of stakeholders, shared the opinion that the portfolio of the MESTD is too broad and the science, technology and innovation portfolio is relatively weak in it, and much more political attention and resources are dedicated to education. The Ministry of Economy is responsible for SME development, FDI promotion and privatisation. Earlier the Ministry had some funding programmes to promote innovation, but now it has no budget for such activities. Sectorial ministries' position in innovation is weak, they have no policies on research and innovation, and they have no budget for such activities. It is not unique in Serbia that ministries have no departments or even a single officer responsible for R&I. Mechanisms for coordination and cooperation among ministries have been set up, but in complex areas, like innovation, the present system cannot be considered effective enough. The communication between different strategy setting and/or advisory bodies is at low level. (Example: the councils on SME development and S&T development.) The government plans to identify areas of STI that would require not a project but a programme level approach, which would be a positive development. MESTD is responsible for coordinating all efforts of preparing these programmes in close collaboration and communication with interested ministries. Interviewees highlighted that the understanding of the term of innovation is very diverse among public servants in different ministries. The low level of policy learning in and the lack of learning opportunities for public administration makes it difficult for officials to follow and understand the very fast changing innovation environment in Serbia (see the start-up booms in ICT or establishment of new technology based firms in food industry, etc.). Typically, the linear model of innovation is followed, innovation is frequently considered narrowly as the commercialisation of research results and the importance of large firms in the national innovation system is not recognised. Awareness building across the whole administration may set free resources for innovation governance. According to the constitution the Autonomous Province of Vojvodina also plays an active role in promoting science and innovation in its territory (in a strongly coordinated way with the national authorities). The Provincial Secretariat for Science and Technological Development (PSSTD) runs funding schemes, but their budget is very limited. (See Table 3)

4.2 Recent research & innovation policies and strategies

The country has no innovation policy/strategy officially and formally approved by the central government, any ministry or the parliament. Since 2000 two ministers aimed to create such a document and to submit for approval to the government, but both attempts have failed. In 2006 an EU funded project, managed by the European Agency for Reconstruction in Serbia15, aimed to adapt a “National Innovation Strategy for Serbia”, but it also remained a draft. The legal framework for research and innovation has been significantly developed in the past 15 years. There are laws on innovation, on scientific research, on education and higher education, on intellectual property rights and on public procurement. The interviews, however, highlighted two challenges:  Firstly, the environment regulated by a specific law is changing fast and the legislation is not adjusted to them. The government has recognised some of these problems, so the revision of laws on innovation and higher education is under way.

15 Support to Enterprise Development and Entrepreneurship – Serbia, 2005-2006)

 Secondly, the value of the laws is highly determined by the quality of their implementing regulations. There is a widely shared opinion in the government that one of the priority areas in the coming years is the consolidation of education, science and health. Based on experiences of other countries in transition, this task seems to be extremely ambitious, but important for the successful recovery and transformation of the society. In the past decade the main goal of economic policy in Serbia was to consolidate the national budget. Now the diminution of unemployment rate is in the focus. While in the past economic policy targeted mostly horizontal issues, now it is also changing: sectoral priorities have already been applied (rubber & plastic, ICT software, metal, etc.). In time of budget consolidation the introduction of tax incentives has not been favoured. There are no existing traditions of R&D and innovation tax incentives in Serbia. Indirect measures are rarely used to promote innovation or research commercialisation. Interviewees complained about the too high taxes on labour and profit (as compared to competitors' situation in Western Europe or in the US). Interviews underpinned the statement of the Background report: "The establishment of 'spin-off' companies by researchers employed in scientific research organisations is not regulated by any of the existing laws." The challenge has been recognised by the government, which set up in late 2016 a new inter-ministerial council for IT development with a clear focus on SMEs and start-ups. As the peers learned during the feedback visit in February 2017 the mandate of this council is planned to be broadened to other sectors as well and the council's recommendations for government actions are expected to be submitted by the end of 2017. The regulation of the financial market does not follow the opportunities emerging in the market: the lack of venture capital is one of the main bottlenecks for financing risky technology and/ or knowledge- based projects with high growth potential. The peer review team learned during the interviews that the government is working on a new regulation for facilitating venture capital financing in the country. Serbia, as most EU member states, launched its cluster policy 10 years ago. Many new clusters were established, but most of them have proved to be artificial, not driven by the markets and members' business interests, they are not strong in networking. The government adopted in 2015 a strategy for developing the SME sector. It has 6 pillars, which seems to respond accurately to the problems and challenges: improving the business environment, access to financing, business services, better channelling of labour market demands and developing entrepreneurial skills at each level of the formal educational system). These are good targeted areas, but the question is whether there are (and will be) an appropriate budget allocated to implement them successfully. The interviews have strengthened the opinion of the review team that the analysis of the actual situation and the formulation of policy objectives in official strategies are correct, but the implementation is suffering from the lack of competence, resources (budgetary, human, etc.), close monitoring of the outcomes, and evaluation of the impacts. In February 2010, the government adopted its Strategy for the Scientific and Technological Development of the Republic of Serbia 2010–2015. The document demonstrated the government’s long-term orientation toward competitive rather than institutional funding of R&D activities. The overriding goal of this policy was to devote 1.05% of GDP to GERD by 2015. The strategy defined seven national priorities. The restructuring of the public R&D system together with harmonised efforts toward recognition and integration of the business R&D into the national innovation system were key objectives. While the implementation of the strategy resulted in important achievements, some of the key objectives could not be fully achieved. The GERD per GDP has not reached the targeted 1.05%,

23 the integration of the business R&D has not improved significantly, and the applied funding model of the public research organisations show discrepancies. Based on the analysis of lessons learned during the implementation of the 2010-2015 strategy, a new strategy for 2016-2020 was adopted by the government in early 2016. The analysis was very critical, it highlighted key challenges of the Serbian innovation system, identified the main bottlenecks of potential improvements and pinpointed actions to be done in order to generate the necessary changes in the system. The essential novelty of this strategy is that "research for innovation" for the economic and social development of the country is at the core of it. According to this document the main preconditions for the creation of an innovative knowledge society are the excellence and relevance of scientific and research results. Excellence is a measure of quality and international visibility of scientific and research results, and the relevance represents the impact of scientific and research results on the economy and society. The Strategy for 2016-2020 was prepared using the established top-down approach with contributions from informal panels for selected S&T fields. The objectives and the priority areas highlighted by the strategy seem to be correct, the question is whether the Action Plan (prepared now by the MESTD) will be realistic and sufficient resources will be allocated for the implementation. The devil is always in the details: the quality of the strategy can be measured in outcomes and results achieved. On the other hand, sophisticated preparation of performance indicators and permanent monitoring efforts are needed for effective implementation. The government decided in 2016 to launch a new strategy-setting process with the aim of creating a strong basis for priority setting. The planned S3 (Smart Specialisation Strategy) setting follows the objectives, approach and methodology the EU is suggesting, and the EU JRC from Seville, the IPTS is invited to provide consultancy services on successfully running the process. According to the present plan the draft S3 document will be submitted to the government for approval by the end of 2018.

4.3 Policy mix

The present policy mix applied in Serbia to promote innovation and research & technology development is characterised by two important factors:  mostly supply side measures are applied, demand side approach and tools/measures are missing from the policy design and formulation;  direct measures (direct financing of research and innovation activities) are dominant, the application of indirect measures is sporadic. The only tax incentive related to R&D and innovation activity in Serbia is addressed to organisations registered for R&D activities as non-profit organisations. These organisations are not obliged to pay taxes for R&D services they provide to clients under non-profit contracts. In some funding schemes the government introduced incentives, like tax credit or tax exemption (see examples in the Background report), but their impacts have never been assessed. In general, very little attention is paid to low-key innovation like designs, trademarks etc., and in particular to low-tech industries. The direct funding schemes are managed by a limited number of agents. Financial support of R&D and innovation from public sources is prioritised and budgeted within the framework of multi-annual plans to ensure predictability and long term impact. Project financing based on open competition for R&D and Innovation projects has a decade-long practice in Serbia. Programmes for the support of R&D and innovation activities are not sector-specific.

In 2016 there were two main actors in managing RTDI funding schemes: the Ministry for Education, Science and Technology Development (MESTD) and the Innovation Fund (IF). The Autonomous Province of Vojvodina also runs funding schemes.

4.3.1 Funding schemes managed by MESTD

Interviews suggest that MESTD itself managed schemes that mainly support research, while the MESTD via IF implements the schemes that are focused on innovation, in particular early stage funding of companies and technology transfer. While the national government favoured project-level funding on a competitive basis, the Autonomous Province of Vojvodina launched several program-level actions as well (in areas of geospatial systems, e-school, e-government, energy efficiency, etc.). The MESTD is planning to launch R&D programmes in selected application areas important for the country. The selection will be based on collaborations with other ministries. In general, the applied funding schemes of MESTD cover all priority areas declared by the relevant strategies, but with a limited budget. The majority of funds provided to the grantees is for covering the staff costs of organisations (salaries). MESTD funding schemes have four main orientations:  basic research,  technology transfer,  multidisciplinary areas, and  innovation. One of the largest and most focused funding schemes aimed to improve significantly the research infrastructure of the country: the Project of Infrastructural Investments of a total value of €305m, started in January 2010 and is financed by the European Investment Bank and the Council of Europe Development Bank. According to interviews researchers agreed that as the outcome of this programme, laboratories at the moment have the necessary equipment and research infrastructure is not a major bottleneck of doing research. About half of the available resources has been used, the rest will target larger RI investments and will be managed by the prime minister's office for Big Infrastructural Projects. The MESTD is involved in the decision-making on selecting the locations of RIs developed from this budget. In other funding schemes managed by MESTD, financing has been done through multi-year calls open only for organisations officially registered by the ministry (in practice mostly universities and research institutes can compete, only a very small proportion of businesses are registered). Thanks to the very high success rate, the level of competition is low and the system serves mostly the survival of the public research community. The MESTD occasionally offers funding opportunities on supporting innovation, but the size of available sources is very small, and the majority of the interested actors stay out of the application process. Small companies, in particular start-ups and spin-offs are usually not registered at the Ministry. The ministry has planned significant changes in the application process with a result of increased competition. The call of 2016 has been cancelled in the summer of 2016 because of protests from the research side (mostly PROs) and the MESTD has been given 6 months to solve the problem. Previous funding contracts have been postponed for another year in order to provide the necessary sources, mostly for salaries. At the time of the feedback visit in February 2017 the call was still not open.

According to the Law on Innovation a Registry of innovative actors has been set up by the MESTD.16 The number of registered actors in the private sector are the following: 121 innovation organisations and 187 individual inventors. No doubt these numbers do not reflect the real innovation capacities of the business sector, the Community Innovation Survey of 2012-2014 reported on much higher number of firms introducing innovation. Start-ups or innovative projects (before setting up a legal business form) typically do not get into the Registry, other organizations, which do not want to apply for any public support, are not interested in running an administrative procedure of being registered. The peer review team has tried to identify the rationale behind the need for the registry and found that the only benefit of being registered is the right to submit proposals to the ministry-managed grant schemes. The Registry acts as a limitation of the market pool of grants distributed by the ministry. On the other hand not all actual public funding mechanisms require this registration. (Schemes managed by the Innovation Fund are good examples.) This system is counterproductive, decreases competition in funding research and innovation, and limits very much the impact of government actions to facilitate innovation in Serbia.

4.3.2 Funding schemes managed by the Innovation Fund

The Innovation Fund was established 5 years ago as an implementing agency for spending financial sources provided by international donors (World Bank, EU, European Investment Bank and others). The organisation can accept applications from companies not registered in the ministry. The IF launched two funding schemes: Mini Grants in 2011 and Matching Grants in 2012. The MINI GRANTS17 differ significantly from the applied practices of other funding agencies in Serbia: a single project may receive substantially larger amount of money in comparison with all past and on- going innovation projects, i.e. up to EUR 80,000 is provided to innovative start-ups with a mandatory 15% of co-financing from the company. The scheme targeted early-stage, private, micro- and small- enterprises, possessing a technological innovation with a potential for creation of a new intellectual property (IP), and respond to a clear market need. The MATCHING GRANTS scheme18 is also unique in Serbia, by introducing a new funding approach: it is a conditional grant with a 5% royalty component, with projects of up to EUR 300,000 and a mandatory 30% co-financing from the company. It aims to expand collaboration opportunities for Serbian innovative micro-, small- and medium sized companies having strategic partners (e.g. private sector, R&D organizations and venture capital/private equity funds) with a goal to increase private sector investment in technology development and commercialization projects for new and improved products/services. Through four public calls between 2012 and 2014, 53 project proposals were approved within the Mini and Matching Grants Program, with an amount of EUR 6 million,. The government agreed with the international sponsoring organisations (in particular with the EU and World Bank) to continue funding these schemes. The Serbian government provides EUR 2.7 million from its 2017 budget to the Mini Grant and Matching Grant schemes, and according to an agreement signed with the EU, the IPA provides EUR 2.4 million and the Serbian government an additional EUR 2 million for the same schemes in the following 3 years. The administrative procedure in the EU is expected to be completed by the end of 2017, then these sums will be transferred to the program. The newest scheme of the IF is called Collaborative Grant Scheme for R&D Organizations and Private Sector Enterprises, financed by the European Union with EUR 2.4 million, the Republic of Serbia with

16 State of May 2016, http://www.mpn.gov.rs/tehnoloski-razvoj-2/inovaciona-delatnost/registar-inovacione-delatnosti/ 17 http://www.innovationfund.rs/mini-grants-about-the-program/ 18 http://www.innovationfund.rs/matching-grants-about-the-program/

EUR 1 million and another EUR 1 million from the private sector. The scheme aims to enhance cooperation between the private sector and public R&D organizations, and to support their joint initiatives to develop new products, services, technologies and/or processes. The size of available support is EUR 300,000 per project. Beneficiaries eligible for this instrument are consortia of up to five members including at least one SME. This scheme targets important policy objectives, improving industry-academy linkages. Interviewees, who planned to apply, mentioned that one of the reasons they gave up the application preparation process was that companies are cost-sensitive and efficiency- driven, while the public research teams prefer to put as many researchers into the project as possible, no matter what is their role in the project. In March 2016 IF has launched another scheme, the Technology Transfer Facility (TTF), also financed by the EU. The TTF has a dual mandate: (1) to demonstrate that commercialization of inventions arising from Serbian public R&D institutions are possible, and (2) to build capacities of Technology Transfer Offices (TTOs) of Serbia’s four leading universities by providing them with hands-on experience in technology transfer and commercialization process. Prototyping and demonstration are weakly targeted activities of public funding, while the private sector is usually not ready to finance them. (The IF has some money available for prototyping, but only for 4 public universities!)

4.4 Policy tools applied

In the STI policy setting in Serbia a limited number of contemporary policy tools are systematically applied. The accreditation procedure is obligatory for R&D, HE and registered innovation organisations:  for teaching competence - regulated by the Law on Higher Education  for R&D competence - regulated by the Law on Scientific and Research Activities  for innovation capacity - regulated by the Law on Innovation Activities The permanent and transparent monitoring and evaluation in governance of innovation policy measures is not part of the daily exercise in Serbia. There are no evaluation standards or institutions responsible for evaluation in the country. Only ex-ante evaluations of innovation activities are made regularly by the Ministry of Education, Science and Technology Development (MESTD). Further monitoring of on-going activities, ex post and impact evaluation of innovation activities are organised as sporadic initiatives within EU-sponsored projects. University accreditation and research performance assessment are conducted through two different bodies made up of university professors and leading researchers. In this way these two activities are done through self-governance. Evaluation of programmes and initiatives is beginning to take shape through ministerial actions, but could benefit from a sharper evaluation strategy based on robust statistical evidence and institutional capacity building. The scientific committees of the MESTD make analysis of achieved results of the different funding programmes/schemes on an annual basis. The analysis of the performance of scientific production bibliometric indicators, defined by the database Web of Science (WoS-Thomson Reuters), are used. In the field of humanities and social sciences the Serbian Citation Index – SCI is used covering the journals of domestic publishers referred in the COBSON system of the National Library of Serbia. Researchers' performance is mostly measured through publication and citation data, patenting, HORIZON2020 successes are not considered. Some universities, however, are going to introduce a more sophisticated approach and are more open to introduce innovation-related criteria and performance indicators as well.

Any technology foresight exercise, as a methodological tool for consultations with the innovation stakeholders, has not been implemented in Serbia yet. It is important to mention that there is a Science and Technology Policy Research Centre (STPRC), working as a think tank, founded at the “Mihajlo Pupin” Institute. It's experts have focused on studying and synthesizing development strategies, policies, plans and programmes to meet the needs of governmental agencies, regional and local administration, companies, as well as the Institute’s own research agenda. A network of STI policy analytical centres has already been set up in the major university cities (in Belgrade, Novi Sad, Niš and Kragujevac). These centres collect data and make analysis on a regular basis, following the same methodology.

5 Overall Assessment

Innovation policy setting and implementation are challenging the traditional public services all over the world. This horizontal policy matter should be managed successfully by the vertically organised government structure. Synchronisation of broad areas of governance, the use of a large number of tools and measures require new approaches and a well-developed communication and coordination culture in the public administration. It is a complex system in which many factors should be integrated in an organic way in order to maintain long-term economic growth and to improve social welfare. The peer review team perceived that improvements have taken place in the research and innovation policy mix in the past years in Serbia. At the beginning of the decade a brand new approach was introduced both in terms of the objective and targets of public intervention, and the methodology and management applied. The Innovation Fund, as an agency under the supervision of the government and the funding international sponsors run funding schemes directly aimed at market-driven innovation at SMEs and start-ups. The technology and innovation servicing infrastructure has also been developed significantly, new science and technology parks, university technology transfer offices, public and private incubators and several private innovation promotion initiatives have started their activities, mostly in the main university cities. The ex-ante evaluation has become a practice in decision making, and some ex-post evaluations have also been done since 2010. The targeted GERD/GDP level, set by the government RTD strategy for 2010-2015 was not achieved, but the share of business expenditures for R&D (BERD) slowly started to increase after 2013. The government has addressed a number of key issues (challenges and bottlenecks this report has also highlighted) in its new strategy of "Research for Innovation. 2016-2020". The 2008 crisis has revealed structural weaknesses in the economy and highlighted the need to promote long-term growth through structural policy reforms and innovation. The national innovation system is facing major challenges: after a successful recovery from the recession and in parallel with taking steps to reduce unemployment, new sources of economic growth and social development should be mobilized. Innovation represents one of the best opportunities to do this. It requires a new generation of entrepreneurs, who are able to adapt to foreign technologies in a creative way and consider innovation as their daily experience to improve the competitive position of their firms. As the peer review team learned, at this moment special emphasis is given to fight unemployment, and less to create business opportunities. The still high unemployment rate and the huge number of mostly well-educated young workforce leaving the country explain the rationality of such policy target, but it should also be connected to horizontal policies, like innovation policy, which creates more higher value-added workplaces and a stronger business sector, including innovative SMEs. No doubt, that brain-drain is a challenge for Serbia, and it presumably affects strongly its potential for development. On the other side, the diaspora may and should be considered as resources for the transition from the recovery status to a knowledge-based economy.

Currently the main weakness of innovation in the country is a gap between industry and research. The demand side is weak due to the low absorptive capacity of the business community and low levels of awareness of the need for innovation in all stakeholder groups (in particular politicians, the academic community and business enterprises). However, there has been a recent significant boom in start-up creation, in particular in the field of ICT. The supply side (universities and public research institutes) is overwhelmed with other type of activities. With exceptions, it has low interest and capability to work with and for the industry. Research does not appear to be a high priority for public policies, only a limited amount of financial resources is allocated for this purpose. Some international aid and solidarity schemes (like IPA and World Bank) have been used to support research and innovation. The country is potentially very rich in human capital, with great traditions and very promising developments. Talent is to a great extent attracted to positions in the state bureaucracy which offers status and security. One of the preconditions to address successfully the challenges of revitalizing the NIS is to improve the learning capacity of and the culture of cooperation in the complex governance system. There are strengths and opportunities in Serbia, the key question is how to turn these resources into social and economic growth and expansion. The strategy of "Research for Innovation 2016-2020" contains a SWOT analysis. The review team is convinced that the country has a strong basis for future development: in many fields research excellence is available, the research community and the government have strong international linkages and long and rich experiences in collaborating in foreign teams, there are good traditions of education, both the innovation community and the relevant public services have learned lessons in recently applied market driven public support schemes in innovation promotion, the new generations are open toward entrepreneurship and new technological solutions, and the growing interest of business in investing R&D form a strong bases for future development – to enumerate just a few examples as for the strengths and opportunities. The large number of organisations set up in the past decade to provide innovation services, the Serbian diaspora in business and research abroad, and the European integration process creates additional good opportunities to initiate significant changes in the national innovation system in Serbia. There are plenty of well defined strategies related to innovation, the objectives are well formulated, if they meet appropriate implementation capacities and resources, the necessary improvements can be achieved. The key weaknesses of the innovation system of Serbia are the following:

a. Demand side  Although some progress has been made in privatising state- and socially owned companies, privatisation process is far from complete. There is low interest of FDI in local research and higher value-added production and services.  There is low business R&D intensity in terms of expenditure and the number of researchers.  The demand for research and research-based services is low.  Government policies poorly address the demand side of innovation. Indirect measures are barely applied, government initiatives have more focus on scientific research and the public organisations (universities and research institutes), and much less on innovation and private companies. The promotion and facilitation of private investors to take higher risk, set up venture and risk capital funds is very weak in public policies.

b. Supply side

 The research performance is strong, with an active research base in terms of publication output statistics, but poor in patenting and industrial exploitation of research achievements.  The R&D sector acts as an island, not open to business. The science community is not knowledgeable to "sell its value" at the market. There is a poor readiness to collaborate with industry, with a lack of consolidated structural channels.  There are strong universities with innovation facilitating intermediaries (science parks, technology transfer offices, incubators, accelerators), but the technology transfer system is in an early stage, and significant improvements are needed to increase the deal flow from research.  There is a limited number of staff specialized in the creation of start-ups, management of incubators and accelerators, supporting innovators' efforts in patenting, etc.  There is a relatively large system of public institutes with insufficient funding, weak management position for multi-year investment decisions, inherited structure, but with strong lobbying power in defending privileges. The system is not well adjusted to the present and potential future demand of the society and economy, and the present project- based funding cannot solve the general financial challenges.  Government policies aim to address many of these challenges, but the measures applied so far could not result in the necessary improvements. c. Framework conditions  Laws and regulations should be adjusted to new requirements (growing demand for risk and venture capital, more and more intensive need for facilitating start-ups, business hubs, accelerators, etc.)  The financial market is conservative in terms of aversion to high risk taking and innovation financing. There is neither a regulatory framework nor any incentives for venture capital and business angels.  The entrepreneurial culture is weak ("public should pay researchers"). There is still a poor awareness of the importance of lifelong learning. Another important cultural gap to be noted is that there is a strong mind-set implying a "stay employed" and "failure is a shame" culture. d. Policy making  Structure of governance  The key problem is that the governance system follows the outdated linear model of innovation.  A single ministry is responsible for research and innovation, but with a much broader portfolio (including the whole education system). The position of (and attention to) innovation in such a system is not strong enough.  Funding and implementation are mostly located at the ministry itself, with a high degree of potential direct control. The Innovation Fund is a successful exception.  Other ministries have an important role in innovation (see SME development, financial framework regulations, etc.), but all work as independent bodies in an environment with a low level of synchronisation and collaboration.

 The mandate of the National STD council is narrow, innovation is not in its scope. The composition of the body reflects this situation, it is dominated by representatives of public research.  Coordination is not satisfactory, but some positive trends can be recognised (jointly prepared decisions on important R&D programmes in specific areas, like water management, environment protection, energy efficiency, etc.).  Funding of RTDI  Because of low business R&D expenditure, the role of public financial sources in funding this activity is higher than in economically stronger EU member states.  There are more traditions of financing research (grant systems apply internationally accepted methods, peer reviewers, etc.), than innovation.  Policy measures  They are very many direct support oriented measures, and in the area of research and innovation there are no traditions and culture of applying indirect measures.  There are a limited number of schemes and funding agents in RTDI. The level of funding for innovation is far from satisfactory, some pilot projects are managed by the Innovation Fund.  Tools applied  Evidence-based policy making is underdeveloped (no STI observatory, strategic intelligence function is weak).  There is no systematic evaluation and monitoring of programmes or RTDI organisations.  A stakeholder dialogue, a key to transparency and prioritization is weak and not yet institutionalised.

6 Recommendations

The national innovation system of Serbia needs significant improvements in order to produce new sources of economic growth and social welfare. The key driver of economic growth and social welfare should be the absorption and diffusion of technologies. The existing R&D potential and the talented human capital should form a strong basis not only for supporting such absorption and diffusion, but also for creating new knowledge- and technology-based economies. A well-established legal and institutional framework for promoting innovation, in combination with an efficient policy making and well-functioning administrative system is a crucial precondition to improve the innovation system of Serbia. Main objectives of the necessary changes: 1. Encourage businesses to increase demand for innovation and research (tax incentives, public procurement policy, special financial schemes to promote cooperation with universities and public research institutes, etc.); 2. Improve human capacity, with a special focus on young scientists and inventors (start-uppers) ─ internationalisation and relevance to local business and social demands should be the key selection criteria; 3. Adjust the public research and knowledge & technology transfer system to the requirement of the economy and society ─ A special focus should be given to decide on the future role of

PROs, performance-based promotion and funding. Quality based on excellence and relevance should be the primary criterion in all public decision making (policy design, funding, promotion of university professors, etc.). It is suggested to create a mechanism for better associating research institutes and universities; 4. Increase private and public funding for RTDI. In line with these general objectives and taking into consideration the state of the country's innovation system, the peer review team suggests the following actions to be done:

[A] Strengthening the demand side of innovation  To introduce new tax incentives to facilitate companies' R&D and innovation activities (based on an overview of good practices in Europe19), eliminate administrative and taxation burdens of start-ups during their first year of existence.  To create a general framework for the development of industry-university partnership, make an overall evaluation of the existing institutional setup (science parks, university technology transfer offices, incubators and accelerators, etc.) and based on the lessons learned put more emphasis on increasing the quality of services offered by existing institutes.  To facilitate private financial and investment institutions to set up venture capital and seed funds and to encourage foreign funds to increase their activities in this field in Serbia (analyse first the present state of the financial market in Serbia in order to identify bottlenecks in facilitating venture and risk capital businesses, study good practices in Europe, in particular in the new member states, then decide on actions to improve this financial market segment in the country).  To develop a clear strategy for established SMEs, often low skilled, to help boost basic strategic and technological capacities.

[B] Performance-based quality system in STI  To launch a national programme for the evaluation of R&D and innovation activities, including the development of evaluation standards, identification and training of evaluators, establishment of legal framework for such activities, etc.  To continue the intensive development of research infrastructures in line with the ESFRI approach (methodology, guidelines, etc.).  To restructure the public research institute system in Serbia, based on an overall assessment of each organisation. The main aim should be to create a viable and dynamic system of research institutes while keeping the social costs of this transformation at a minimum. Assessment of whether they should remain public institutes, develop into private or semi- private institutions, or be transformed into private consultancies, should be transparent. The associated policy for basic, programme and competitive funding is key to the implementation of this transition. Key steps suggested:  Self-assessment of each institute  Preparation and adoption of the national strategy for innovation (incl. thematic or sector specific priorities)  International evaluation of each institute (based on three sets of performance criteria: scientific excellence, social/economic relevance, and marketability)

19 See "A Study on R&D Tax Incentives" - a report on the European practices to use taxation as promoting innovation (published on 28 November 2014 in den Hague, Netherland; source: TAXUD/2013/DE/315, FWC No. TAXUD/2010/CC/104)

 Grouping the PROs according to the evaluation, decide on their future legal status and then the necessary level of public funding, initiate their restructuring  Develop a new funding system including (a) basic funding for prime competence, (b) strategic institutional programmes for strategic reorientation (meeting relevance criteria, and competitive projects), and (c) decide on how to apply this system to the different groups of institutes  Introduce a well-specified, transparent monitoring and performance measuring system on institutes in the public sector and invite independent foreign evaluators to do this exercise  To encourage public research institutes and universities to put much more efforts in protecting knowledge of individual researchers, departments and faculties and improve their innovation offer.  To facilitate the creation of joint laboratories between research institutes and universities.  To develop ambitious policies to capitalize on the Serbian diaspora living abroad, often young researchers and experts.  To reassess the centre of excellence (CoE) system and establish a strategic CoE programme with a view to generate high level competence in key areas for Serbian development (the relevance and excellence criteria should be revised according to the S3 strategy of the country).

[C] Institutional development  To broaden the mandate of the National S&T Council to innovation and increase the number of members from the business community.  To improve the networking capacities of the relevant ministries by setting up an institutionalised system of innovation policy coordination and harmonisation.  To split policy design from implementation and establish a funding institution as an agency, as well as an accreditation agency. NCPs should also work in the funding agency, not in a ministry in order to improve its servicing capacities.  To establish a national STI analysis institution (STI Observatory), with a mandate to collect information, develop statistical, indicators, run key evaluations, and monitoring and support the National S&T Council.  To expand the activities of the Centre for Science Promotion to innovation and HORIZON2020.  To strengthen the RTDI section in the MESTD and improve competencies in innovation.  To drop the registration obligation for companies in the MESTD.

[D] Learning capacity building  To develop clear thematic national priorities and corresponding national R&D programmes (the planned S3 strategy may result in such outcomes).  To introduce a wider range of contemporary STI policy intelligence tools and methods, like regular monitoring of the implementation of policies, evaluation of programmes and funding schemes, technology foresight, etc.  To institutionalise the regular dialogue with main stakeholders in innovation.

[E] Funding

 To put emphasis on improving the quality of the applied instruments and schemes targeting science-industry relationships (like TTOs, student thesis in companies, industrial PhDs, a voucher system for which companies can purchase research and innovation in universities and institutes. etc.) ─ the implementation should start with an overall evaluation of the existing organisations and public measures.  To generate more competition among the actors no matter of their legal status and ownership and eliminate inequalities (good example: the counterproductive impact of the Registry kept by the Ministry or the too high success rate in some of the ministry-managed funding schemes)  To close down the current system of quasi-competitive project funding and introduce a more sophisticated system which includes basic institutional funding, strategic programme funding for nurturing specialization and division of labours, and competitive funding for projects.

 To allow "seal of excellence" marks from HORIZON2020 competition to be a gateway for domestic funding.

7 References

European Innovation Scoreboard 2016; European Commission European Research Area, Facts and Figures 2014 - Serbia; European Commission, EUR26803 EN Integrating Intellectual Property into Innovation Policy Formulation in Serbia; WIPO, 2014 Kutlaca, Djuro; 2014; ERAWATCH Country Reports 2013: Serbia; EU JRC (Report EUR 26768 EN) National ICT Innovation systems study and national PESTLE &SWOT analysis - Serbia, FORSEE project report, 2011 Strategy for Education Development in Serbia 2020; The Ministry of Education, Science and Technological Development of the Republic of Serbia (ISBN 978-86-7452-046-8) Schwab, Klaus; The Global Competitiveness Report 2013–2014; World Economic Forum (ISBN-13: 978-92-95044-73-9) Western Balkans Regional R&D Strategy for innovation: Country Paper Series - Serbia; World Bank Technical Assistance Project (P123211); October 2013

Annex I –Policy Mix Peer Review Process

1) Preparing the background paper by 6) Draft synthesis 7) Country reflections the national report correspondent

5) Individual 8) Consolidated 2) Kick-off meeting reflections by peers synthesis report

4) Peer review visit, 9) Final report 3) Preparation of the interviews with following the quality peer review visit stakeholders assurance

Annex II ─ Agenda of the Peer Review Team visit to Serbia

26.09.2016, Belgrade

Time Interviewee Venue Nemanja Đorđević, Director 08:30-09:30 Meeting room Center for Science Promotion, CPN Prof. Dr. Viktor Nedović, Assistant Minister for 10:00-10:30 International Cooperation and EU Integration - Meeting room welcoming notes, meeting Duško Blagojević (President), Dr. Aleksa Zejak 11.00-12.00 Meeting room Association of Institutes of Serbia (ZIS) Metropolitan 14.00-15.00 Dragan Domazet, Rector, Metropolitan University University 15.30-16.30 Predrag Marković, General manager, Smartwave Meeting room

27.09.2016, Belgrade

Time Interviewee Venue Moamer Zukorlić, President 09:00-10:00 Parliament Committee on Education, Science, Meeting room Technological Development and the Information Society Prof. Dejan Popović 11.10-12.10 SANU Serbian Academy of Sciences and Arts Ivan Rakonjac, General Manager, Milena Kostadinović, Science Operation manager, Natalija Sandić, Programme Technology Park Programme manager, Mladjan Stojanović, TTF 14.00-15.00 Belgrade coordinator, Bojana Novaković, Advisor

Innovation Fund

Dejan Ranđić, General Manager Science 15.05-16.05 Technology Park Kosta Andrić, Managing Director, ICT Hub Belgrade

28.09.2016, Belgrade

Time Interviewee Venue 08:00-09:00 Tijana Kneževic, SMEs, NCP Meeting room

Katarina Obradović Jovanović, Assistant Minister Ministry of 09.15-10.15 Ministry of Economy Economy

Mirjana Čojbašić, Assistant Minister Ministry of 10.30-11.30 Sanja Mešanović, Katarina Urošević Finance Ministry of Finance

Ph. D. Jasna Atanasijević, Director Ministry of 13.00-14.00 Public Policy Secretariat Economy Jovan Miljković, Specialist for Policies on Attracting FDI Competitiveness and Jobs Project 14.50-15:50 Meeting room Ministry of Economy / Development Agency of Serbia RAS - Development Agency of Serbia

14:50 – Mr Vladimir Marić – Acting Director, Intellectual 15:50 Intellectual Property Office Property Office Marko Blagojević, Director Public Investment 16:10 – Darko Đukić, Advisor Management 17:10 Office Public Investment Management Office

29.09.2016, Belgrade

Time Interviewee Venue Aleksandar Kemiveš, Director of Economic Development Chamber of 08:00-09:00 Ognjen Stanković, Senior Advisor for Innovation Commerce Chamber of Commerce Đuro Kutlača, MPI, STI analyst 09.30-10.30 Meeting room

Savo Marinković, General manager, MySkin 09.30-10.30 Meeting room Kristina Jankovic, MySkin 11.30-12.30 Ivanka Popović, PhD, Vice Rector, University of Belgrade Meeting room Mladen Šarčević, Minister Prof. Dr. Viktor Nedović, Assistant Minister for International Cooperation and EU Integration Ministry of Education. Dr. Nikola Tanić, Assistant Minister for Science 13.00-14.10 Science and Dr. Vesna Mandić, Assistant Minister for Higher Technological Education and Development Development Ministry of Education, Science and Technological Development Nikola Orlić, EPG Manager, Microsoft Serbia & 14.50-15.50 Meeting room Montenegro

Jelena Ružičić, Business Development Manager Education Microsoft Serbia & Montenegro 16.20-17.20 Zoja Kukić, Editor and Manager of Start it - SEE ICT Start it - SEE ICT Biljana Kosanović, Head of the Department of Scientific 16.20-17.20 Start it - SEE ICT Information at the National Library of Serbia

30.09.2016, Novi Sad

Time Interviewee Venue Gordana Danilović Grković, General Science 07:30-08:30 manager. Science Technology Park Technology Park Belgrade Belgrade Sanja Vraneš, Director. Institute Institute Mihajlo 07:30-08:30 Mihajlo Pupin Pupin Prof. Dr. Vladimir Crnojević, Director 11.25-12.25 Institute BioSens Institute BioSens Vice rector Dr. Snežana Smederevac, University of Novi 13.00-14.00 University of Novi Sad Sad Dr. Gordana Velikić, adviser, RT-RK 13.00-14.00 RT-RK Dr. Aleksa Zejak, adviser, RT-RK Ivana Sabo, Community Manager, Business Incubator 16.15-17.00 Business Incubator Novi Sad Novi Sad Nikša Bogovac, Co-founder and Business Incubator 17.00-17.20 General manager, Simple Task Novi Sad

Annex III ─ Background report

Background report of Serbia

For the purpose of policy mix peer review

January - May, 2016

Project Danube-INCO.NET Project Number 609497 Deliverable Number: D4.32 Policy Mix Peer Review Reports – Background Report of Serbia Kutlača Đuro [with support from other members of the IMP-STPRC (Institute Mihajlo Pupin – Science and Technology Policy Research Centre)] Responsible author(s): in cooperation with The Ministry of Education, Science and Technology Development of the Government of the Republic of Serbia

Table of content

Introduction ...... 43 Basic information on Serbia’ national innovation system ...... 44 Short introduction of the Serbia country ...... 44 Economic performance ...... 46 Innovation and R&D performance ...... 50 Research and innovation system in Serbia – short overview...... 50 Resources and efforts ...... 52 Publications and citations ...... 56 Innovations ...... 58 Patents and other intellectual property right activities ...... 59 Science and Innovation in Serbia today ...... 61 1.1.1 SWOT analysis ...... 70 Governance and organisational structure of the NIS ...... 71 Governance: policy making and implementation ...... 71 Actors and roles: A. Existing structure ...... 71 Actors and roles: B. Structure proposed within new ST Strategy ...... 79 Policy tools applied...... 81 Other Policies of relevance for research and innovation in Serbia ...... 83 Business enterprises ...... 86 Research community ...... 91 Public research organisations...... 91 The higher education sector ...... 92 The business enterprise (BE) sector ...... 95 Private non-profit (PNP) sector ...... 96 Human resources ...... 96 Integration into the ERA ...... 99 Innovation and research services ...... 100 Legal framework for innovation and R&D ...... 113

Legal documents ...... 113 Strategies for developing the NIS ...... 118 Regulations and strategies in preparation ...... 121 Policy measures ...... 122 References ...... 131 List of Abbreviations ...... 134 Annexes – Tables and Figures ...... 136

Introduction

The Danube-INCO.NET project position toward the Policy Mix Review Exercise of National R&I systems Background The Danube Macro-Region has huge economic and innovation potential – but first of all, several pitfalls have to be overcome. Countries from the upper stream can provide good practices, whereas countries in the middle stream of the river sharing some common historical features of Eastern Europe can provide their experiences and also learn how to improve their practices in the field of the research and innovation policy mix as well.

What is meant by a “policy mix peer review”? The policy mix peer review is a systematic examination and assessment of the performance of a national R&I system by international experts which aims at improving the design and the implementation of national Research and Innovation (R&I) policy. This activity shall facilitate the exchange of good practices on innovation support within and beyond the Danube Region; programme and instruments portfolios, incentive schemes and support structures, funding bodies and institutional set-up, framework conditions for R&I among countries lying at the different sections of the Danube will be analysed and compared; recommendations for improvement will be defined on the basis of the critical friend approach.

Who will participate? National authorities responsible for R&I from Danube Region countries that will express their interest to join the exercise.

The implementation of the policy mix exercise in Serbia within the frame of the Danube-INCO.NET project The Ministry of Education, Science and Technological Development, Government of Serbia, confirms its interest and commitment for a Policy Mix Review of the R&I system to be implemented in Republic of Serbia in the framework of the FP7 funded project “Danube Region INCO-NET” [Letter of Commitment, Belgrade, July 15, 2015].

Applied methodology The Policy Mix Review Exercise of R&I system in Serbia is organised on a voluntary based participation of national authorities in Serbia within the Danube-INCO.NET project. Evaluation will be performed by the foreign peers, i.e. group of international experts who will: (a) firstly, analysed available documentation, facts and other empirical evidence describing organisation, performance and governance of R&I system in Serbia; (b) secondly, (the peer review_ visit with number of interviews with stakeholders and authorities in Serbia; (c) and thirdly, prepare synthesis report on Serbia, collecting feedbacks from peers, sending the report to Serbia, gathering country reflections, and finalising “The Policy Mix Peer Review Country Report on R&I System in Serbia”. This background study/country report on Serbia will serve for first activity of an international set up group of peers, the analysis of present state of R&I system in Serbia through facts and findings elaborated in the following text.

Basic information on Serbia’ national innovation system

Short introduction of the Serbia country

Serbia is situated in the central part of the Balkan Peninsula, in South-Eastern Europe. The northern portion belongs to central Europe, but in terms of geography and climate it is also partly a Mediterranean country. The total area is approximately 88,412 sq km. The entire country is about the size of Maine. Serbia is bordered on the north by Hungary, on the north-east by Romania, on the east by Bulgaria, on the south by Macedonia and Albania, on the south-west by Montenegro, on the west by Bosnia and Herzegovina, and on the north-west by Croatia; total land boundary length is 2,114.2 km. Serbia's capital is Belgrade, situated in north central Serbia. From the agricultural regions of the Pannonian Plain in the north, across the fertile river valleys and orchard-covered hills of Šumadija, the landscape of Serbia continues southward, gradually giving way to mountains rich in canyons, gorges and caves, as well as well-preserved forests. Number of population (2011): 7,186,862 (census 2011; excluding Kosovo20). Population in 2014: 7,131,787. In the period from 2004 to 2014, the number of population decreased by 331 370, the average annual growth rate was –4.5 per 1.000 inhabitants. The average age of the population in the Republic of Serbia increased from 40.4 years (2004) to 42.6 years (2014). The European Council granted Serbia the status of candidate country in 2012. Accession negotiations were launched in January 2014. The analytical examination of the EU acquis (screening process) was completed in March 2015. The Stabilisation and Association Agreement (SAA) between Serbia and the EU entered into force in September 2013.

Constitutional system The changing of the socio-economic and political system and introducing of multiparty system, established by the latest Constitution of the Republic of Serbia of 1990, led to some changes in the political system. The name of the election of assemblies, the President of the Republic and legal authority holders have been changed, as well as Existing government (time of last election, parties forming the government, etc.) the election method. According to the proportional electoral system, political parties, parties’ coalitions or citizens’ groups propose the nominees for national deputies. Since 2000, the whole territory of the Republic of Serbia has been one electoral unit. For the President of the Republic of Serbia, candidates are also proposed by political parties, parties’ coalitions or citizens’ groups. In local elections in 2004, the proportional system was applied for the first time in elections for delegates, which was also applicable to the delegates in 2008. Since 2008, presidents of municipalities and mayors have been elected by municipalities, i.e. the mayors are, according to the Law on Local Self-Management from 2007, holders of executive authority. The mandate of national deputies and board members lasts four years. Mandate of the President of the Republic lasts five years. After the amendments to the Law on Election of the President of the Republic, since 2004, the minimum of half of the registered voters has not been required any more for presidential elections. Following the adoption of the Constitution of the Republic of Serbia, confirmed at the referendum of 28 and 29 October 2006, the first presidential elections were held on 20 January 2008. In the presidential elections held on 6 May 2012, no candidates won the necessary majority in the first ballot round; the voting was repeated on 20 May 2012 with two candidates who gained the largest number of votes. Last elections for national deputies to the National Assembly held on 16 March 2014. Elections for delegates of municipal assemblies and cities were held on 6 May 2012. The Statistical

20 This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.

Office of the Republic of Serbia does not have available data for the AP of Kosovo and Metohija, so they are not covered by the data for the Republic of Serbia (total).

Economic performance

GDP in 2014: 33318.6 (total, million EUR; source: EUROSTAT) GDP per capita in 2014: 4.700 EUR (source: EUROSTAT) vs. 4.635 EUR (source: Statistical Office of the Republic of Serbia) Trends in major output indicators

2000 2005 2010 2011 2012 2013 2014 GDP annual growth (%) 7.8 5.5 0.6 1.4 -1.0 2.6 -1.8 Industry 11.4 0.8 1.2 2.5 -2.2 5.5 -6.5 Services (value added, WB data) 13.6 9.3 0.228 0.483 0.425 0.4 0.114 Foreign trade balance (M €) -1.937 -4.831 -5.030 -5.809 -5.979 -4.473 -4339 Exports-imports ratio (%) 46.46 42.75 59.47 59.30 59.32 71.10 72.02 Investment (Gross fixed 12.7 20.1 18.6 18.4 21.2 17.2 16.7 capital formation)/ GDP (%) GDP per capita, EUR 3.640 2.836 4.082 4.619 4.400 4.781 4.635 Source: Statistical Office of the Republic of Serbia (Statistical Yearbooks)

[source: Serbia 2015 Report, Commission Staff Working Document, Brussels, 10.11.2015, SWD(2015) 211 final] As regards the economic criteria, Serbia is moderately prepared in developing a functioning market economy. Good progress has been made to address some of the policy weaknesses and the positive momentum for advancing structural reforms needs to be preserved. Serbia's economy is recovering from a recession. Thanks to significant consolidation measures and better tax collection, the budget deficit has fallen sharply. Fiscal consolidation should be sustained and underpinned by implementing reforms as planned. Inflation remains very low, allowing the central bank to reduce interest rates. Unemployment, though very high, has fallen below 20%. Progress has been made with restructuring of publicly owned companies and main utilities, but it needs to advance further. The private sector is underdeveloped and hampered by weaknesses in the rule of law and difficult access to finance. The process of economic reforms needs to continue with particular emphasis on restructuring state owned enterprises and public utilities. Economic policy essentials The government’s determination to pursue economic reforms has strengthened. Serbia submitted its Economic Reform Programme, covering the period 2015-2017, in March 2015. The objectives of the programme are to achieve macroeconomic stability, to remove obstacles to growth and to improve competitiveness. To this end, the authorities have already undertaken significant measures to reduce the budget deficit. They have also outlined an ambitious reform agenda aimed at restructuring state- owned enterprises, streamlining and improving the performance of public administration, improving the business environment, and strengthening financial stability. Since February, the government reform agenda has been supported by a new arrangement with the International Monetary Fund. Macroeconomic stability Serbia’s economy is recovering from a third recession in five years, but GDP remains around its pre- crisis level. Economic growth averaged 1.0% over 2008-2013, while it was negative in 2014. The economy has become less dependent on consumer spending and more open as exports have increased

46 by close to 50% since 2009. The shift to new sources of growth is incomplete as investments remain weak despite some signs of picking up in 2015. Slow economic development has led to stagnating average income per capita (PPS), which stands at 36% of the EU average. External imbalances have been reduced by growing exports and subdued imports. The current account deficit fell below 5.0% of GDP in the first half of 2015, down from double-digit levels in the beginning of the decade. Most of the deficit was covered by net foreign direct investment, which stabilised at close to 4% of GDP, still below the needs of the economy. External debt has increased since mid-2014 to around 80% of GDP but, in view of shrinking external imbalances, debt sustainability does not raise immediate concerns. The official foreign exchange reserves stand at a comfortable level, covering about seven months of imports of goods and services — an important buffer in view of external risks. Unemployment remains very high despite signs of improving labour market conditions. Unemployment fell below 20% and both employment and activity rates have increased. Although some of the new jobs were in the public sector or in informal employment, large gains were observed in registered private employment, especially for women. Most of these jobs, however, went into less paid, low productivity sectors. Average real wages fell as a result of public sector wage cuts. However, private sector wages have recently increased. Prices have been broadly stable, allowing the central bank to reduce interest rates. Inflation has been below the central bank tolerance band (4% ±1.5 percentage points) for more than a year. Low inflation is the result of low international prices of primary commodities, weak domestic demand, exchange rate stability and delays in administrative price adjustments. The low inflationary environment and a rapidly falling budget deficit in 2015 allowed the central bank to cut its key interest rate in successive steps, from 8.0% in February to 5.0% in September 2015 and to gradually cut the foreign currency reserve requirement ratio by six percentage points by February 2016. The budget deficit fell sharply in the first half of 2015, but fiscal consolidation still needs to be sustained and underpinned by implementing structural reforms. The 2015 budget targets a deficit of 5.8% of GDP and is based on a large decrease in current expenditure. Considerable savings have already been made from the cuts in pensions and public sector salaries implemented last year. Additional savings are expected from a number of other measures ranging from public administration reform, to lower subsidies and reforming public enterprises. Revenue collection continued to improve in 2015, in particular due to some excise duties and non-tax revenue (e.g. telecom licences and state-owned enterprises dividends). In addition, expenditure restraint and under execution of capital spending have led to a better-than-expected budgetary performance. By the end of August the cumulative deficit stood at only 1.1% of the annual GDP — a third of its level in the previous year and far below the target. In view of Serbia’s high indebtedness and the extensive structural reform agenda, and in line with ERP recommendations, consolidation efforts need to be sustained. This requires Serbia to tackle the biggest sources of fiscal risk by further strengthening tax administration and public finance management, implementing public administration reform and restructuring state-owned enterprises in line with adopted plans. The recently improved fiscal performance followed years of increasing fiscal imbalances and missed budget deficit targets. The budget deficit averaged 5.7% of GDP over 2009-2014, regularly overshooting planned deficits. It went up to 6.7% of GDP in 2014, reflecting mainly higher spending on interest payments, activated government guarantees and expenditure related to bail outs of failed state-owned banks and loss-making state-owned enterprises. Revenue was lower than planned and budget execution was marked by significant under execution of capital expenditure, pointing to a general problem of weak preparation of public investment projects. Government debt rose above 70% of GDP. Interplay of market forces

Some steps have been taken to start restructuring large state-owned enterprises. Payment discipline between state-owned enterprises has been improved and could be further strengthened following recent legislative amendments. However, state-owned enterprises restructuring continued to face delays and big utility companies remain a significant source of market distortions and fiscal risk. Therefore, it is important that Serbia advances the restructuring of these companies in accordance with ERP recommendations. Privatisation attempts have been revived recently, although results so far are marginal. The sustainable operation and future privatisation of the steel mill in Smederevo is a key challenge. In June, the government took steps to start the privatisation of the majority state-owned Telekom Srbija. In January, it adopted an action plan to resolve 188 companies through a bankruptcy procedure. In addition, about 200 enterprises are expected to be fully or partially privatised, either by equity or asset sales, or through strategic partnership. The protection of companies in restructuring from forcible collection of debts and bankruptcy expired in June. However, it was extended for 37 of them until October, while for another 17 firms, deemed of strategic importance and employing some 22.000 people, protection was extended until end of May 2016. As the end of the restructuring process is expected to result in redundancies, the government has put in place an adequately funded social programme. In view of the time and capacity needed to process such a large number of privatisations, the government should prioritise the restructuring of the biggest and most problematic cases. Market entry and exit Procedures for construction permits have been improved but further efforts are needed to ensure proper implementation. As in previous years, in 2014 the number of newly established companies (8,209) was more than three times the number of companies closed (2,601). Still, market entry has continued to be burdened by lengthy and costly procedures to obtain various permits. One major improvement was the introduction of a new integrated procedure for issuing construction permits (‘one-stop shops’); its implementation has in most cases significantly shortened the time required to obtain permits. The establishment of an electronic permitting system is envisaged to be set up by 2016. The issue of converting usage rights into ownership rights of construction land, which had hindered potential investments, was solved but further efforts are needed to ensure proper implementation. Legal system Legal predictability and enforcement have remained weak and significant efforts are needed to further improve the business environment. Many laws, important for structural reforms and socioeconomic development, are still adopted through emergency procedures, without proper consultation and public debate. Moreover, the implementation of laws remains problematic as there are long delays in the adoption of by-laws. The judicial system has been slow to enforce property rights. The backlog in the courts is still substantial and companies often avoid using the courts as a solution to their problems. Enforcement of legislation on property restitution, which is expected to improve legal clarity over real estate ownership, is making progress; 42% of all claims submitted have now been resolved. The informal economy remains a major obstacle to fair competition and business development. To tackle the grey economy, the government adopted an action plan and set up a coordination body. A new law on inspection oversight, introducing a risk assessment system and better coordination between different administrative bodies, was adopted in April. Implementation of the new legislation and rules still needs to be tested. Further efforts are needed to better control para-fiscal charges and to regulate labour leasing, and to further simplify the regulatory environment in accordance with ERP recommendations. Financial sector development

The banking system is still facing a number of challenges, including weak credit activity and a high level of non-performing loans (NPLs). The financial sector continued to be dominated by commercial banks, mostly foreign-owned, holding more than 90% of all assets, followed by insurance companies with 5.2%. In June, the central bank enhanced its monitoring of majority Greek-owned banks and limited their transactions with parent banking groups. Euroisation continued to be widespread, with about three quarters of deposits and of loans to households and businesses denominated in or linked to foreign currencies. Financial intermediation was revived only temporarily due to a boost from a government subsidised programme. Still, credit growth remained weak and credit to the private companies continued shrinking, marking an absolute five-year low in April. Commercial banks have channelled their resources into lending to the government, albeit at a slower pace, and in building up their net foreign assets. Mirroring the difficult economic environment and constraining lending activity, NPLs remained very high at 22.8% in June. However, the banking system as a whole remained adequately capitalised and liquid. With the help of international financial institutions, the government adopted a comprehensive strategy and an action plan for NPL resolution in line with ERP recommendations. In August, the central bank also adopted an action plan for implementing this strategy. Special bank diagnostic studies, to be completed in October, should also provide additional information on the quality of bank assets and support the implementation of the NPL strategy. Governance weaknesses prompted the strengthening of the supervisory and improvement of the bank recovery and resolution frameworks. Economic integration with the EU Serbia improved its external competitiveness and increased further its trade integration with the EU. A weaker dinar and a relative decrease of labour costs have boosted external competitiveness. The EU increased its trade with Serbia and remained by far the country’s main trading partner, accounting for 69% of total exports and 61% of total imports of goods. Exports to Central European Free Trade Agreement (CEFTA) countries represent 20 % of all exports and have the potential to be boosted by the planned trade liberalisation in the services sector. The EU also remains the main source of FDI with a share of almost three-quarters. Through the network of various free trade agreements, Serbia enjoys good market access but needs to facilitate trade by measures removing non-tariff barriers, especially for companies operating in global value chains.

Innovation and R&D performance

Research and innovation system in Serbia – short overview

[source: Kutlaca, Djuro: "Southeast Europe: Albania, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Serbia, Slovenia", Chapter 10 in: UNESCO Science Report: Towards 2030, Paris, UNESCO, 2015, p. 273-295, http://en.unesco.org/unesco_science_report ]

In 2014, Serbia’s R&D effort amounted to 0.77% of GDP. The business enterprise sector contributed just 8.19% of the total, leaving the funding burden to be borne essentially by the government (53.48%) sector. Foreign sources contributed 12.45% of GERD and private non-profit organizations virtually none of it. Non-profit organizations are the only category which benefits from a tax incentive for R&D in Serbia; they are exempted from paying tax on R&D services they provide to clients under non-profit contracts. According to the Innovation Union Scoreboard (EU, 2015), Serbia is a moderate innovator, like Croatia. Serbia’s innovation performance has improved, however, since 2010, according to this scoreboard, thanks to greater collaboration among SMEs and the efforts of various categories of innovators. Serbia is performing below the EU average for most dimensions and indicators. The most significant relative strength is in Non-R&D innovation expenditures which lifts Firm investments to the best performing dimension. Strongest relative weaknesses are in Community designs, Community trademarks, R&D expenditures in the business sector and License and patent revenues from abroad. The 1% GERD/GDP ratio goal within reach: In February 2010, Serbia adopted its Strategy for the Scientific and Technological Development of the Republic of Serbia 2010–2015. The overriding goal of this policy is to devote 1% of GDP to GERD by 2015, not counting investment in infrastructure, a goal which is currently within reach but requires additional effort. The strategy is guided by two basic principles: focus and partnership. Focus is to be achieved by defining a list of national research priorities; partnership is to be achieved through the strengthening of ties with institutions, companies and other ministries to allow Serbia to validate its ideas in the global market and enable scientists to participate in infrastructural and other projects in Serbia. The strategy defines seven national R&D priorities, namely: biomedicine and human health; new materials and nanoscience; environmental protection and climate change mitigation; agriculture and food; energy and energy efficiency; ICTs; and better decision-making processes, as well as the affirmation of the national identity. The Strategy for the Scientific and Technological Development of the Republic of Serbia launched the Serbian R&D Infrastructure Investment Initiative in January 2011 with a budget of EUR 420 million, half of which comes from an EU loan. Its priorities are to: upgrade existing capacities (circa€ 70 million); adapt existing buildings and laboratories; purchase new capital equipment for research; develop centres of excellence and academic research centres (circa EUR 60 million); develop supercomputing via the Blue Danube initiative, as well as other ICT infrastructure (EUR 30–80 million); create a campus for the technical science faculties of the University of Belgrade; build science and technology parks in Belgrade, Novi Sad, Niš and Kragujevac (circa EUR 30 million); and implement basic infrastructure projects, such as the construction of apartment buildings for researchers in Belgrade, Novi Sad, Niš and Kragujevac (circa EUR 80 million). In 2012, basic sciences accounted for 35% of all research done in Serbia, applied sciences for 42% and experimental development for the remaining 23%, according to the UNESCO Institute for Statistics. The Strategy sets out to raise the ratio of applied sciences. This goal is supported by a Programme for Co-funding of Integrated and Interdisciplinary Research for the Research Cycle, which emphasizes the commercialization of research results. Another priority of the Strategy has been the creation of a national Innovation fund to increase the monetary value of grants awarded to selected innovation projects. The fund is endowed with an initial treasury of EUR 8.4 million through the Innovation Serbia Project, which is financed by the EU pre-accession funds allocated to Serbia in 2011 and implemented

50 through the World Bank. Another programme finances the modernization of research facilities: the Programme for Providing and Maintaining Scientific Research Equipment and Scientific Research Facilities for the Research Cycle 2011–2014. On the proposal of the Ministry of Education, Science and Technological Development, the Government of the Republic of Serbia has adopted, at its meeting held on 3rd of March 2016, the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation". The strategy, based on an analysis of the current situation and key problems, identified objectives in the area of science and innovation in the Republic of Serbia until 2020, as well as instruments and guidelines for their achievement. The vision of the strategy is that within five years of Science in the Republic of Serbia should be based on a system that supports excellence in science and relevance for economic development, competitiveness of the economy in the Republic of Serbia, as well as the development of society as a whole. The mission of the strategy is the establishment of effective national research and innovation system integrated into the European Research Area, which relies on partnerships at home and abroad, and contributes to economic growth, social and cultural progress, raising the standard of living and quality of life. The essential novelty of this strategy, compared to the previously adopted strategies, is that in its core lies "research for innovation" in the function of economic and overall social development of the country.

Resources and efforts

2000 2005 2010 2011 2012 2013 2014 Personnel Total researchers per 5.29 5.32 6.65 6.65 6.65 6.65 6.65 thousands of labour force (Head count; source: Statistical Office of the Republic of Serbia) Government researchers 97.71% 98.73% 97.66% 96.99% 89.09% as % of total researchers (FTE; GS+HES) Government researchers 23.99% 24.48% 25.76% 25.09% 22.06% as % of total researchers (FTE; GS) Private sector researchers 2.29% 1.27% 2.34% 3.01% 10.91% as % of total researchers (FTE; BES) Expenditures GERD (M €) 221,541 242,118 287,337 249,038 256,461 GERD / GDP (%) 0.74 0.72 0.91 0.73 0.78 BERD / GDP (%) 0.09 0.07 0.23 0.1 0.23 Foreign expenditures for 0.03 0.04 0.08 0.06 0.1 R&D per GDP (%) Type of activity Basic research / Total 44.66% 41.97% GERD (%) Applied research / Total 28.41% 33.76% GERD (%) Experimental development 26.93% 24.27% / Total GERD (%) Source: EUROSTAT

Figure 1: R&D system in Serbia: GERD as % of GDP, 1997-2014 Serbia: GERD/GDP (%)

0.997 1.000 0.801 0.898 0.800 0.758 0.866 0.907

0.710 0.744 0.770 0.600 0.724 0.583 0.620 0.727 0.521 0.400 0.467 (%) 0.417 0.321 0.304 0.200

0.000

1997

1998

1999

2000

2001

2002

2003

2004

2005 2006

2007 GERD/GDP (%)

2008

2009

2010

2011

2012

2013 2014 Year

Figure 2: GERD as % of GDP, data for selected countries for 2000-2013 period GERD/GDP, 2000-2013 (%) 4

3.5 Albania

B&H 3 Bulgaria

Croatia 2.5 Estonia

Finland 2 Greece

Hungary 1.5

Montenegro GERD as percentage of GDP of percentageas GERD Poland 1 Romania

Serbia 0.5 Slovenia

FYROM 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: UNESCO Institute for Statistics (UIS), February, 2016

Figure 3: GERD per capita (in current ppp$), data for selected countries for year 2013

GERD per capita (in current PPP$), 2013 1400 Finland

1200

1000

800 Slovenia US$ ppp

600

Estonia 400 Hungary

Poland 200 Croatia Bulgaria Serbia Albania B&H 0 Greece Montenegro Romania FYROM

Source: UNESCO Institute for Statistics database, February, 2016

Figure 4: GERD by sector of performance (%), data for selected countries for year 2013

GERD by sector of performance, 2013 (%) Business enterprise Government Higher education Private non-profit 100%

80%

60%

40%

20%

0% Albania B&H Bulgaria Croatia Estonia Finland Greece Hungary Montenegro Poland Romania Serbia Slovenia FYROM

Source: UNESCO Institute for Statistics (UIS), February, 2016

Figure 5: GERD by source of funds (%), data for selected countries for year 2013

GERD by source of funds, 2013 (%)

Business enterprise Government Higher education Private non-profit Abroad Not specified source 100%

80%

60%

40%

20%

0% Albania B&H Bulgaria Croatia Estonia Finland Greece HungaryMontenegro Poland Romania Serbia Slovenia FYROM Source: UNESCO Institute for Statistics (UIS), February, 2016 Figure 6: Researchers (FTE) by sector of employment (%), data for selected countries for year 2013

Researchers (FTE) by sector of employment, 2013 (%) Business enterprise Government Higher education Private non-profit 100%

80%

60%

40%

20%

0% Albania B&H Bulgaria Croatia Estonia Finland Greece HungaryMontenegro Poland Romania Serbia Slovenia FYROM Source: UNESCO Institute for Statistics (UIS), February, 2016.

Publications and citations

The Science Law, adopted by the Parliament in 2005, promoted excellence in R&D work; imposing publishing of scientific articles in ISI referred scientific journals as a precondition for career advancement in the R&D sector. A direct empirical consequence of such regulation was a large increase in the number of publications. Thus, the figure of 1022 scientific papers published in 2000, grew to 3.614 in 2010. Following the Essential Science Indicators from Thomson Reuters, ScienceWatch.com produced a listing of the scientists, institutions, countries, and journals that achieved the highest percentage increase in total citations from the second bimonthly period of 2011 to the third bimonthly period of 2011- i.e., from April 2011 to June 2011. Serbia's citation rise continued, as it achieved the highest percent citation increase in nine fields. Serbia has achieved Rising Star status in multiple fields: Agricultural Sciences, Biology & Biochemistry, Chemistry, Clinical Medicine, Computer Science, Engineering, Materials Science, Neuroscience & Behaviour, Pharmacology & Toxicology, and Physics.

Number of scientific articles in ISI referred scientific journals, authors from Serbia: Year 2000 2001 2002 2003 2004 2005 2006 2007 Number of scientific articles 1352 1338 1630 1669 2105 2499 2560 3537 Number of scientific articles 1026 982 1003 1149 1409 1608 1747 2325 Year 2008 2009 2010 2011 2012 2013 2014 2015 Number of scientific articles 4137 4877 5136 5574 7191 6383 6477 5729 Number of scientific articles 2773 3137 3678 4507 5715 5241 5193 4819 Source: National Library of Serbia , 15.05.2015, http://kobson.nb.rs/nauka_u_srbiji/nasi_u_wos.3.html

Figure 7: Publications by authors from Serbia, 2000-2016

8000 7191 7000 6383 6477

5715 5729 6000 5574 5136 5241 5193 4877 5000 4819 4507 4137 4000 3678 3537 3137 3000 2773 2499 2560 2325 2105 1747 2000 1630 1669 1608 1352 1338 1409 1149 1026 982 1003 1000 207203 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

All articles Scientific articles Year

Source: National Library of Serbia, http://kobson.nb.rs/nauka_u_srbiji/nasi_u_wos.3.html, February 2016

Figure 8: Scientific papers per million population, data for selected countries for year 2014

Scientific papers per million population, 2014

Finland, 3019.7

Slovenia, 2367.2

Estonia, 1967.6

Greece, 1464.2

Croatia, 1118.7

Hungary, 975.5

Serbia, 926.2

Poland, 873.4

Romania, 738.4

Macedonia, FYR, 505.4

Montenegro, 468.2

Bulgaria, 451.4 Bosnia and Herzegovina, 154.5 Albania, 116.0

0 500 1000 1500 2000 2500 3000 3500 Source: Thomson Reuters (Scientific) Inc. Web of Science database, compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia, Population data: EUROSTAT; February 2016

Figure 9: Publications by selected field of science (%), data for selected countries for year 2014

Publications by selected field of science, 2014 (%) 100% Other FoS

90% Agriculture

80% General internal medicine 70% Telecommunications

60% Business economics

50% Mathematics

40% Computer sciences

30% Materials science

Physics 20%

Chemistry 10%

Engineering

Serbia

Poland

Greece

Croatia

Finland

Estonia

Albania

Bulgaria

Slovenia

Hungary

Romania

Macedonia

Bosnia and Bosnia Herzegovina Source: Thomson Reuters (Scientific) Inc. Web of Science database, compiled by the ScienceMontenegro and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia; February 2016

Innovations

According to Innovation Union Scoreboard 2015, Serbia is a moderate innovator. Innovation performance has increased over the whole period, except for a small decline in 2011. Relative performance to the EU has improved significantly from 48% in 2007 to 69% in 2014. Serbia is performing below the EU average for most dimensions and indicators. The most significant relative strength is in Non-R&D innovation expenditures which lifts Firm investments to the best performing dimension. Strongest relative weaknesses are in Community designs, Community trademarks, R&D expenditures in the business sector and License and patent revenues from abroad. Performance has increased for most dimensions and most indicators. The dimension of Linkages and entrepreneurship has grown strongly at 22%. Highest growth is observed for Public-private scientific co-publications (22%), Non-R&D innovation expenditures (20%), License and patent revenues from abroad (19%), Innovative SMEs collaborating with others (12%) and SMEs with marketing or organisational innovations (12%). A strong decline in performance is only observed for Community designs (-23%). [Innovation Union Scoreboard 2015, European Commission, 2015 – 94 pp – 210 x 297 mm, ISSN 2363- 3107, ISBN 978-92-79-44089-2, doi: 10.2769/247779; http://ec.europa.eu/growth/tools- databases/newsroom/cf/itemdetail.cfm?item_id=8264&lang=en&title=Innovation-Union- Scoreboard-2015- ]

Figure 10: Innovation performance in Europe: Summary Innovation Index 2014

Innovation performance in Europe: Summary Innovation Index 2014

0.900

0.800

0.700

0.600

0.500

0.400

0.300

0.200

0.100

0.000 RO BG MK TR LV LT PL HR SK EL HU RS ES MT PT IT CY CZ NO EE SI EU AT FR BE IS IE UK LU NL DE FI DK SE CH Modest Innovators Moderate Innovators Innovation Followers Innovation Leaders

Source: IUS, 2015 [[19] Innovation Union Scoreboard 2015, European Commission 2015, http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards/files/ius-2015_en.pdf ]

Patents and other intellectual property right activities

Patenting activity of resident inventors in Serbia is growing in a certain period from 1986 to 1990, which may be explained partly due to the growth of overall economic activity in the Republic, but also focusing on domestic problems in technological development. Years (1991-1998) of the dissolution and the wars in the former Yugoslavia and the international isolation of the country, were characterized by an attempt to create a system of "self-sufficiency", that is, independence in solving of technological problems and compensating the missing products and technologies by developing its own, so that even though expected, patent activity fall was not so pronounced until 1998. Due to bombing and destruction of the infrastructure in 1999, this decline has led to the patenting of Serbia to the brink of survival. Then follows the growth of patenting, which in 2004 reached the level of patenting in 1982 and with small fluctuations maintained at this level until 2010. Since that year, resident patent activity is in constant decline, with the fact that from 1 October 2010 inventors from Serbia may file a patent application directly to Euro patent (that date, Serbia has become a permanent member of the EPO - European Patent Organization), leading to minimization of importance of national patent statistics. Figure 10 illustrates resident patent applications in Serbia, contained in the database of the Intellectual Property Office. By comparing the intensity of patenting by fields of technologies in the 90s of the last century and the first decade of this century, one can see changes in the structure of interest and engagement of inventors in Serbia: the biggest number of patents in this century is recorded in technologies relating to electric machines, appliances, pumps, motors and other equipment, with a significant increase in patenting in the field of chemical technologies for food production (Figure A1 in Annex). A non-resident patenting in Serbia follows the trends of domestic inventor in the period 1985-1991, practically died out in the period 1993-1997, then rises slightly to 2005 and then drastically decreases and from 2010 reaches barely twenty patent applications annually. These trends illustrate the interest of foreign companies and inventors to protect their technology in Serbia, as well as their evaluation of skills and capacity of local development that they compete in technological development. Using the same approach in the analysis of trends by areas of patenting technology in the 90s of the last century and the first decade of this century , one can see that there is no change in the structure of interest and involvement of foreign inventor in Serbia: the only technology areas of interest of foreign companies and inventors with nearly 75% of the total number of patent applications in both the analysed periods, are the following areas: pharmaceuticals, organic chemistry, basic chemistry , biotechnology, and medical technology (Figure A2 in Annex). Protection of intellectual property in Serbia in the period 2006-2011 is presented in the following table (Source: Intellectual Property Office of the Republic of Serbia).

Protection of intellectual property 2006 2007 2008 2009 2010 2011 National patent applications Resident patent applications 431 388 386 299 290 180 (Applications filed directly in the Non-Resident patent applications 27 20 16 21 23 28 Office) International patent applications PCT applications in the national 246 55 73 40 16 21 (Applications filed by means of phase the PCT Agreement and Extended applications of the 3.246 5.372 5.625 4.258 3.559 n.a. Cooperation and Extension European patent Agreement) Patent applications – total 3.950 5.835 6.100 4.618 3.888 n.a. Patent grants – Resident 46 71 70 103 98 n.a. Patent grants – Non-Resident 70 207 224 300 854 n.a. Patent grants – total 116 278 294 403 952 n.a. Resident patent applications – petty patents 185 155 136 101 97 67 Non-Resident patent applications – petty patents 4 3 1 4 4 4

Petty Patent applications – total 189 158 137 105 101 71 Trademarks – International applications 5.211 5.754 6.358 5.422 4927 4968 Trademarks – National Non-Resident applications 1.151 1.023 1.111 711 785 852 applications Resident applications 1.861 2.112 2.067 1.376 1376 1135 Trademarks applications – total 8.223 8.889 9.536 7.509 7088 6955 Registered trademarks – International applications 4.964 5.162 5.659 5.885 5158 4823 Registered trademarks – Non-Resident applications 961 856 1.472 1.521 727 615 National applications Resident applications 962 1.246 1.636 1.819 1143 790 Registered trademarks – total 6.887 7.624 8.767 9.225 7028 6228 Designs – Hague Agreement 433 431 322 197 258 280 Designs – National applications Non-Resident applications 28 16 37 17 23 24 Resident applications 147 148 116 118 81 78 Registered designs 608 595 475 332 362 382 Copyright – Resident applications 679 638 724 310 312 305 Copyright – Non-Resident applications 2 4 7 3 2 2 Copyright – total applications 681 642 731 313 314 307 Related rights – Resident applications 0 0 10 3 1 5 Related rights – Non-Resident applications 0 0 0 0 0 0 Related rights – total applications 0 0 10 3 1 5

Patenting activity in Serbia, 2010–2014 2010 2011 2012 2013 2014 Resident patent applications Individuals 244 151 143 151 145 Universities, Institutes 18 21 30 19 28 Companies 28 8 18 31 28 Total 290 180 191 201 201 Resident patent applications – petit patents Individuals 84 56 63 60 55 Universities, Institutes 5 4 5 2 2 Companies 8 7 7 9 8 Total 97 67 75 71 65 Registered patents – Residents Individuals 83 47 68 59 40 Universities, Institutes 7 3 5 11 19 Companies 8 10 6 8 3 Total 98 60 79 78 62 Registered patents – Residents – petit patents Individuals 71 40 52 39 43 Universities, Institutes 5 3 3 2 Companies 3 3 6 5 5 Total 74 48 61 47 52 Source: The Intellectual Property Office of the Republic of Serbia, http://www.zis.gov.rs/home.59.html

Science and Innovation in Serbia today

[Source: The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation"]

In the assessment of the state of science in the Republic of Serbia, one should bear in mind that the implementation of the Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2010 – 2015 was ongoing in conditions of severe economic crisis, in the country and on the global level. Despite numerous difficulties which our society and the country were facing in the past, science in Serbia has kept its critical mass, and in some segments it has strengthened and recorded growth and success at international level. The purpose of this part of the Strategy is to identify key issues of science and innovation in the Republic of Serbia today, through an analysis based on facts. In addition, the aim is to identify the strengths, weaknesses, opportunities and threats within the existing system through the so-called SWOT analysis.

KEY ISSUES

I1. The excellence of scientific research and their relevance for economic and social development of the country and society as a whole are not sufficiently supported through the system of research funding

In recent years, the Republic of Serbia has improved its scientific research potential, which is illustrated by the fact that the Republic of Serbia, in the total world production of scientific works, accounts for 0.3% and is ranked 46th on the list of over 140 countries (SCImago Journal&Country Rank), and the University of Belgrade is ranked on the “Shanghai List” of the world’s best universities between 300 and 400 positions.

Analysis of achieved results

This analysis includes the results of scientific research work on the projects of the current project cycle for the period 2011 – 2015 under the program of general interest: 1) the Program of basic research (BR); 2) the Program of research in the field of technological development (TD) and 3) the Program of co-financing Integrated and Interdisciplinary research (IIR).

The analysis of achieved results was carried out on the basis of regular annual reports that scientific committees prepared every year for the funded projects based on the conducted research. The analysis of the performance of scientific production used the bibliometric indicators, defined by the database Web of Science (WoS-Thomson Reuters) which covers the largest number of the most important journals in most field of science. In the field of humanities and social sciences, this analysis could not include the results from the local journals and research production included in monographic works, so instead the Serbian Citation Index – SCI was used which covers the journals of domestic publishers referred in the COBSON system of the National Library of Serbia.

Based on the analysis of the results achieved in the previous project cycle, the following conclusions can be provided:

– The scientific research results are dominated by research papers

o of the total number of results achieved, 88% are research papers published in international or national journals with peer-review. Out of the total number of scientific papers 40% are the papers published in the journals indexed by the WoS database, and 60% are scientific papers published in national journals. o the number of scientific papers published in the journals indexed by the WoS database increased almost twice compared to the previous project cycle 2006-2010. The annual number of these papers per thousand inhabitants is 0.76 (the European average is 0.85 -2010), or an average of 390 papers per thousand budget funded researchers; o in top international journals – journals that belong to the 30% of journals in their field with the highest values of the two-year impact factor, and 36% of the total number of scientific papers from the Republic of Serbia that were indexed in the WoS were published; o Citations of papers originating from the Republic of Serbia is on the rise, but it is still lagging behind the European average; o Dominant results in the field of social sciences and humanities are the papers published in the national journals (60%), monographic works that make up 30%, and only 10% are the papers published in international journals. The number of papers published in international journals has not significantly grown during the implementation of the current project cycle. – Research excellence depends on the area of research o The distribution of papers published in top international journals is not uniform, nor by programs, nor by areas within the program (shown for the program BR – figure 1г). The highest percentage of published papers in top international journals is realized within the Program of basic research (BR) - 43%, and the highest share of papers in leading international journals is in physics 69%; o In the Program of Integrated and Interdisciplinary research (IIR), the percentage of papers in leading international journals is 36%, with the largest field of New materials and nanomaterials 59%.; o In the Program of research in the field of technological development (TD), of the total number of scientific papers indexed in the WoS, 26% was published in the leading international journals. – The number of results that may be of interest for the economy is low o Of the total number of achieved results (patents and technical solutions) they account for 3.3%; o 2,300 results of scientific research works are technical solutions, 733 are patents, strains, variety or race, construction or architectural work on the international or national level. Most of these results were achieved through (TD) projects (70%), 23% in (IIR) projects, and only 7% in (BR) programs; o Electronics, telecommunications and information technologies are the most successful areas in the number and commercialization of achieved technical solutions. Of the total number of new technical solutions, 38% are the results in this area, out of which 90% has already been commercialized on the national or international market; o biotechnology and agriculture are the most successful areas in the number of patents. Of the total number of patents in technological development projects, 57% belong to this area; o a significant number of areas within the program (TD) and program (IIR) provide insufficient contribution to the implementation of new technical solutions or patents; o some areas of technological development participate in the research financed through budget funds through projects of other ministries, such as the area of agriculture and environmental

protection, energy, transport, urban planning and construction, defence, etc. The results of the research are mostly studies, research expertise or other required results.

Based on the conducted analysis, the conclusion is that the research activities are mainly focuses on the production of scientific papers. Despite the extensive production, there is still a significant number of results with no international visibility, since the papers are published in national journals or publications from scientific conferences. Although some areas reached an enviable excellence, it is not sufficiently present in the entire research system. What is obvious is that the elements of the research orientation are underrepresented. The presented data, however, clearly show that the Republic of Serbia has significant scientific and research potential, but this potential is insufficiently transferred into new products and services on the market.

Financing of scientific research

The excellence of scientific research and their relevance for the economic development of the country and society in general are not sufficiently supported through the current system of financing. The total investment in science and research, from the budget and from other sources, are insufficient. According to the data of the Republic Statistical Office, the total share of spending for research and development in the gross domestic product of the Republic of Serbia is below 1% and it is still well below the EU-27 average which is 2.06 % (Eurostat).

Research in the Republic of Serbia are concentrated in the public sector, universities and institutes. The distribution of funding sources for research and development in 2013 shows that the share of funding from the state budget is 59.5%. The funds that the scientific research organizations realize on the market are 25.1% which is well below the EU average of 63%. BERD is 7.5%; foreign sources contribute 7.8% and non-profit organisations 0.1%.

Direct budget support to research

Budget funds intended for research and development (BFI as % of GDP), according to the Strategy (2010-2015) were supposed to continuously grow and reach 0,9% in 2014, while in 2015 they should have reached 1.05% of GDP, which was not realized. Over the past few years, BFI as % of GDP were below 0.5 % (they vary in the range of 0.36% - 0.46%. The system of budget financing includes 16 programs of general interest for the Republic of Serbia, which are defined by the Law on Scientific and Research Activity, and which are project funded after conducted public calls/invitations and selection, under predefined rules. The largest part of the budget funds (68.4%) is distributed for research programs that are financed through projects. During a public call for project financing that was conducted in 2010, the percentage of projects accepted for financing was 87.5%. High percentage of granted projects is the results of the system of research funding, but also the fulfilment of one strategic objective, that the project should include as many, mainly, young researchers. The funds allocated to research projects were primarily for this reason directed into the work of researchers (around 57% of total funds, with 8.3% for overhead costs of research). The share of the funds allocated for material costs of research was extremely low, only 3.2% of the total amount, which has significantly affected the scope and the quality of research, and hence the excellence and the application of results achieved. In addition, the low level of resources dedicated to the direct costs of research has reflected in the reduction of the number of papers published after 2012. There is an obvious lack of funds needed to cover the material costs of research, and without the increase of these funds it is not possible to

63 neither increase nor improve the excellence and relevance of research, especially in experimental research. The lack of funds is significantly reflected on the possibility of commercialization of research that requires testing and prototype development.

Remaining funding goes to: Project Research and Development in the Public Sector, with 16.8%; and All other programs and subsidized institutions, with 14.8% of total budget in 2014.

Investments in research and development infrastructure

Direct budget support for research is implemented through the project “Research and Development in the Public Sector” which began in 2011. This support includes a number of investments for the revitalization of research and development in the public sector in the Republic of Serbia, including the modernization of the existing research capacities and infrastructure, creation of new research centers, building apartments for young researchers and modernization of academic computer network. The projects under this project are financed from the credits of the European Investment Bank (EIB) and the Council of Europe Development Bank (CEB), the Instrument for Pre Accession Assistance of the European Union and the resources from the budget of the Republic of Serbia. Important infrastructural facilities have been completed: technology parks “Belgrade” and “Novi Sad Phase 1”, central building of the University of Novi Sad and apartments for young researchers Block 32 in New Belgrade, facilities for Science center Petnica and Natural History Museum Svilajnac.

One of the most important sub-projects implemented within this project is the procurement of capital equipment for the needs of scientific and research organizations. Research teams received approval (project cycle 2011–2015) to procure 3.070 pieces of capital equipment in the total value of EUR 53.2 million. So far, the scientific research organizations have receive and put into operation the total of 803 pieces of research equipment in the value of EUR 24 million, and one part of equipment will be purchased and delivered during 2016. However, the total resources of this project will not be used and they will not be used in a way that it was planned.

The presented data on research results and the amount of financing clearly show that the Republic of Serbia has significant research and scientific potential since, even in times of economic recession and lack of funds, it has achieved significant results, but that the financing of science and technological development at the current level is insufficient. The low level of resources devoted to research makes it difficult to provide excellence and greater application of the achieved results in practice, and therefore the greater impact of science on economic and social development of the country. Higher investments from all sources of financing would be necessary in order to intensify research and innovation.

I2. There are no adequate financial instruments, nor the institutional framework for linking science with industry and the public sector

The participation of the business sector in funding research in the Republic of Serbia is only 7.5%, while in the OECD countries the business sector finances 60.8% of all expenses for research and development.

The relationship of science and economy in the Republic of Serbia is characterized by:

– Inadequate human resources for research and innovation in the business sector,

– Small number of financial instruments to support research and innovation in the economy, – Insufficiently developed institutional and legal framework to support research and innovation in the economy.

1) Inadequate human resources for research and innovation in the business sector

An extremely small percentage of researchers in the Republic of Serbia are engaged in the private sector. In the Republic of Serbia in 2013, there were 75.2% of researchers in higher education, 21.4% in scientific institutes, and only 3.3% in the business sector (the data of the RSO). In OECD countries, that structure in 2012 was as follows: 32.2% researchers in higher education, 7.8% in the government sector and 59.9% in the business sector. The situation is similar in the EU countries where the number of researchers in the business sector in 2011 was almost 37% of the total number of researchers.

2) Small number of financial instruments to support research and innovation in the economy

In Serbia, there are no financial instruments and mechanisms or programs for stimulating demand for innovation, for example, there are no tax incentives for companies that implement activities of research and innovation, as well as credit support for innovation projects of companies. The following instruments of (co)financing of research and innovation in economy are applied in the Republic of Serbia through:

– Serbia Innovation Project implemented by the Innovation Fund aimed at private micro and small enterprises in the early stages of development that possess technological innovation. Through four public calls conducted in the period from 2012 to 2014, the financing of 53 projects was approved, in the amount of EUR 6 million, within the Mini and Matching Grants Program. More than 300 jobs for employees with higher education was supported, including 65 PhDs, with the involvement of over 20 scientific and research organizations. In the implementation so far, this project has shown positive results with growth of revenue and export of companies that were the beneficiaries of these projects. – The Program of knowledge and technology transfer and the incentives to the application of the results of scientific research work conducted by the Ministry provides support to finance innovation projects in organizations registered for performing innovative activities which represent the finalization of the most successful technological research to their market commercialization. In the period 2011–2014, the total of 217 projects of registered innovation organizations was financed. Also, the co-financing of 25 projects of physical entities/innovators was financed through this project in the implementation of innovative activities. The monitoring of the susses of the programme shows the growth of total revenues of innovative organizations that are registered in the Registry of Innovation Activity in the period 2011–2014, and which were supported by the Ministry through the financing of innovation projects. – The introduction of quality systems as an innovation into the organization of business operations is implemented through the financial support provided by the Ministry of Economy. – Innovation vouchers that represent the system of state aid to small and medium-sized enterprises and aimed at the development of cooperation between research organizations and small and medium sized enterprises are implemented by the Ministry of Economy.

3) Underdeveloped institutional and legal framework to support research and innovation in the economy

The establishment of “spin-off” companies by researchers employed in scientific research organizations is not regulated by current laws – the Law on Higher Education and the Law on Innovation Activity. In addition, positive regulation does not regulate the financing through venture capital funds.

Despite a number of new institutions that were founded in Belgrade, Novi Sad, Nis and Kragujevac in the past five years (eight business-technical incubators, four science technology parks and four TT centers), there is still lack of infrastructural support for innovation in the Republic of Serbia. However, these organization for support to innovation activity often do not have enough capacity, human or financial, to fulfil their mission. A large number of business-technological incubators were established with the aim of supporting “spin-off” and “start-up” companies, but these are often donor initiatives that do not provide long-term and sustainable financing.

I3. The system of management in science and innovation is not sufficiently effective, and there is little coordination of relevant institutions and various stakeholders

Research and innovation in the Republic of Serbia are an integral part of most strategic documents adopted in the previous years, and therefore, they are related to the activity of a number of ministries. Although substantial responsibility for the development of science and innovation is in the domain of all the ministries, the main tasks in this field have been entrusted to the Ministry of Education, Science and Technological Development. According to the Law on Ministries, the Ministry performs the public administration tasks that, among other things, refer to: system, development and advancement of scientific research in the function of scientific, technological and economic development; proposing and implementation of policy and strategy for scientific and technological development; defining and implementation of the scientific, technological and development research; training of personnel for scientific research activities; proposing and implementation of innovation policy; incentivizing techno- entrepreneurship, knowledge and technology transfer and technologies in the economy and development and improvement of the innovation system in the Republic of Serbia.

Due to a large number of institutions that are essential for the development of science and innovation and due to the lack of coordination among these institutions, the total budget resources to support this area are not being used effectively and optimally.

In addition, no proper mechanisms were established within the research system that would ensure that the research results find their way to a competitive product or service:

– Research system is organized according to the Law on Scientific and Research Activity, and the innovation system according to the Law on Innovation Activity. Innovation organizations are involved in the implementation of scientific research programs of general interest, and scientific research organizations are not recognized as an integral part of the innovation system; – The largest numbers of research organizations do not have a strategic approach to managing research and directing research towards innovation. Organizational and management structure of universities and faculties recognize two components of their activities, education and research, but not innovation. Organization and management of innovation is not an integral part of the activities of the majority of institutes, even those that generate a significant portion of revenues on the market;

– Management of the scientific research work in the system exclusively relates to project financing. Scientific committees implement the policy of monitoring research work of researchers and the results achieved in the projects, but not innovative activities.

In order for the innovative process to be accelerated, it is necessary for the different actors in this process, at all level of management, to achieve the necessary level of cooperation and coherence.

I4. Lack of adequate human resources in scientific research organizations, economy and public sector, and there are no long-term measures to address this issue

In 2013, the Republic Statistical Office recorded that there is a total of 21,044 employees in the field of research and development, which is 2.8 employees per thousand inhabitants. This is well below the European average, where the number is more than five (Eurostat). The number of women in this area is 10,793 or 51% of the total number of employees which is significantly above the European average, where this percentage is slightly above 25%. Among the total number of employees, there are 14,643 researchers, which are 2.0 researchers per thousand inhabitants. This average is well below the European average of three researchers per one thousand inhabitants.

Of this, 59% or 8,620 of researchers have PhDs. Only 3% of researchers are located in the nonfinancial sector which includes businesses and organizations whose primary activity is the production of goods and services and their sale. The distribution of researchers by sectors is: 75% in HES, 22% in GS and 3% in BES.

Of the total number of researchers, around 85% are engaged in the funded projects (state sector and higher education). One of the priorities of the Strategy for the Development of Research System in the period 2010 – 2015 was to increase the total number of researchers, which included, above all, the involvement of young researchers and fellows in projects and increasing the total number of researchers with PhDs. The total number of researchers engaged in projects that were financed in 2014 was 13,323, of which 7,970 (62%) are PhDs. The growth index in the number of researchers, according to the data of the RSO (2010-2013) was 115%, while the growth index for the researchers in the projects of the Ministry was 140%, and the growth index in the number of PhDs in the period 2010– 2014 was 154%. Distribution of the number of researchers engaged in the projects of the Ministry by types of SRO (registered scientific research organizations - SRO) is: 67% in HES, 25% in GS, 8% in BES.

Between 2010 and 2015, the distribution of researchers by age in comparison to the period before 2010 has changed and improved. There is a significantly higher number of researchers under the age of 40, and the number of PhDs under the age of 40 has increased.

Mobility is a very important segment in the process of development of each researcher. Consequently, the mobility of researchers is an important step in improving human capacity in our research area, and it plays an important role in the desired rapid development of science in our country. The mobility of researchers can be geographical or cross-sectoral. Geographic mobility is realized within the country or through transfer from one country to another and it can be incoming or outgoing.

Incoming mobility refers to the conditions under which foreign researchers could come, live and work in the Republic of Serbia and return to their own country or a third country and continue their career. For incoming mobility there is a number of substantive and administrative obstacles: 1) there is no

67 basis for the financing of foreign researchers from the budget of the Republic of Serbia; 2) lack of integration of universities has a negative impact on incoming mobility due to: the lack of any effort to improve the existing capacities in order to improve international cooperation, lack of a unified procedure for the recognition of diplomas, the absence of a system of collecting information on international cooperation of faculties; 3) the stay of foreign researchers is not regulated from the legal aspect; 4) there is not system of “research visa”, so the same procedures are applied to researchers, very lengthy and complicated, as to any other foreigner.

Outgoing mobility refers to departure of researchers to other institution or other country and their return to the same or to some other institution. When it comes to outgoing mobility, the main problem are visas for certain countries and regulating the returning mobility, i.e. reintegration of a returnee researcher.

The absence of an efficient mechanism of reintegration is one of the main causes of the harmful effect of “brain drain”. A large number of researchers from the Republic of Serbia is located abroad (diaspora). Unfortunately, the link with the diaspora is weak and there are no official data (database) on the number of our researchers and their areas of activity abroad. Also, there are no precise data on the number of researchers who were educated abroad. In the previous five years, the Ministry has funded 102 post-doctoral studies and around 4,000 participations in conferences in the country and abroad. Taking into account the total number of researchers in the Republic of Serbia, this is not enough and there must be a way to improve this situation.

A special type of mobility of researchers is the intersectoral mobility. It deals with the problem of movement of researchers from academia to industry and vice versa. This type of mobility in our country practically doesn’t exist.

The analysis of the current situation provides specific requests: to increase the number of researchers in the system, to increase the number of students on doctoral academic studies, to support young researchers to stay in the country, to improve (modernize programs) doctoral academic studies, to increase the mobility of researchers in the country and abroad, to use the potential of the diaspora, to provide greater cooperation with the industry, to increase the number of researchers in the non- academic sector.

I5. Although there are programs to support international cooperation, science in the Republic of Serbia is not fully integrated into the European Research Area and the insufficient number of researchers participate in international projects

Researchers from our country already participate in numerous programs of international cooperation. A significant volume of international cooperation is shown through the fact that in more than 35% of the scientific papers indexed in the WoS, at least one of the authors is a foreign author.

In the EC Framework Program 7 (FP7), in the period from 2007 – 2013, 319 institutions in the Republic of Serbia (of which 51 companies) participated in the implementation of 236 projects. From that number, the Republic of Serbia has been the coordinator of 42 projects. The areas in which our researchers were the most successful are information and communication technologies, food, agriculture, fishery and biotechnology, as well as environmental protection, including climate changes. The total value of contracted and completed projects is more than EUR 64 million. The Government of

68 the Republic of Serbia and the European Union signed an agreement on the participation of the Republic of Serbia in the Horizon 2020 program. According to the statistical data from October 2015, the financing of 75 projects with participation of 103 institutions from our country (out of which 28 partners from the industry) has been approved. The agreed budget for the approved projects amounted to EUR 16.2 million. During the first year of the program implementation, for the first time a researcher from the Republic of Serbia received a grant from the European Research Council intended for exceptional research ideas/projects that push the boundaries of research.

In addition, the Republic of Serbia participates in Eureka projects , COST actions (246), NATO program “Science in the service of peace and security” (22 projects), it cooperates with the European Organizations for Nuclear Research (CERN) and with the research center Dubna in the Russian Federation.

Republic of Serbia actively participates in all relevant regional initiatives:

– EU Strategy for the Danube Region - EUSDR, as the coordinator of the Priority Area 7 (“Knowledge Society”); – Central European Initiative (CEI) through participation in several programs: Know-how Exchange program, cooperative activities, as well as in the platform CEI–PRAISE Programme to Promote Research and Innovation through Centres of Scientific Excellence and Advanced Research Groups in Member Countries; – The Republic of Serbia is a co-founder of the Western Balkans Research and Innovation Center – (WISE) with its headquarters in Split.

In the context of the accession of the Republic of Serbia to the European Union, bilateral explanatory screenings for Chapter 25 “Science and Research” took place. The following items were presented: legal framework of the Republic of Serbia in this area, cooperation in the field of research and innovation, participation in the EU programs and other activities. It was agreed that the EU acqui will be accepted in this area. The readiness of the Republic of Serbia to accept and implement the recommendations of the roadmap of the European Research Area has been expressed.

Despite these results, the possibilities for further improvement are numerous. The areas in which our country has been less successful so far is the participation in the most prestigious part of the Framework Program of the European Union, in the funding of excellent science through the projects of the European Research Council, then, in the programs of mobility of researchers, as well as in the programs that required participation of the SMEs sector. Additional weaknesses identified in the previous period related to the problems of financing our experts nominated to various expert committees of the European Union, insufficient level of coordination in articulating the interests of our scientific community, relatively small number of researchers who are involved in international cooperation, the inability of national focal points to be exclusively dedicated to the activities related to Horizon 2020 due to the necessity to be involved in other activities of the Ministry, as well as the lack of body that would provide ongoing technical and other support to our researchers who participate in international programs.

7.1.1 SWOT analysis

[Source: The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation"]

SWOT analysis within the current scientific and innovation system of the Republic of Serbia –strengths, weaknesses, opportunities and threats

The analysis of the results clearly shows that the Republic of Serbia has significant potential in the field of science and research, which can be the basis of fu rther economic and social progress of the country. The highlights of the SWOT analysis of research and innovation system are:

Strengths: – significant increase in the number of scientific papers indexed in the WoS; – significant level of research excellence (physics, new materials and nanomaterials) and the application of research results (IT, biotechnology and agriculture); – increase in the number of researchers; – share of scientific papers resulting from international cooperation (35%); – the Innovation Fund is established.

Opportunities: – readiness of the research community to initiate changes; – defined program for HR development in science and innovation; – infrastructural support to innovation is established: the Innovation Fund, science technology parks, TT offices; – membership in HORIZON 2020.

Weaknesses: – low level of total (below 1% of GDP) and budget investments (below 0.5% of GDP) in research and innovation; – the absence of strategic management; – small number of researchers in the economy; – lack of mechanisms for cooperation between science and industry; – small number of patents and technical solutions

Threats: – departure of highly educated people from the country; – low level of economic development; – lack of research equipment; – low level of intersectoral coordination in the financing of research; – insufficient recognition of the need to build a national innovation system by institutions at all levels.

Governance and organisational structure of the NIS

Governance: policy making and implementation

Actors and roles: A. Existing structure

The Serbian research system consists of three operational levels: 1) the parliament and the national government level, represented by the committee for S&T development; 2) the ministry level responsible for the design and implementation of science and research programmes at national level; and 3) performers of R&D activities and intermediary organisations. The first, political level of research governance in Serbia is the National Parliament, the highest legislative authority in the country. The Parliamentary Committee for S&T Development reviews and proposes to the parliament the laws regulating the area of science, technology and innovation. Two parallel bodies concerning R&D have been established at the level of the Serbian government:  The Ministry of Education, Science and Technology Development (MESTD), and  the National Council for S&T Development. The Ministry of Education, Science and Technology Development (MESTD) governs the functioning and development of S&T in Serbia and is responsible for fulfilment of the country’s obligations in this area. According the Science Law, article 27, the Ministry shall: 1) put forward proposals to the Government for the policy in the field of scientific research activities; 2) oversee and encourage the development of scientific research activities in the Republic; 3) allocate funds through the budget of the Republic to scientific research organisations for implementation of the programmes set forth in Article 10 of this law, and control the legitimate spending thereof; 4) adopt bylaws, in accordance with this law; 5) adopt the act on fulfilment of conditions for the performance of scientific research activity of general interest, in accordance with this law; 6) adopt the act on selection, evaluation and funding of the programmes under Article 10 paragraph 2 items 1) – 3) of this law, as well as the act on funding of other programmes of general interest to the Republic, for each individual programme separately; 7) maintain the Register of Scientific Research Organisation and the Register of Researchers, which form part of the electronic database available to the public, in line with this law; 8) pursue the international scientific and technological cooperation, and attend to the networking and inclusion of scientific research organisations into the European and international research area; 9) perform supervision, pursuant to the law; 10) perform also other tasks, pursuant to the law. On the other hand, the main task of the National Council for S&T Development is to design and propose to the government a strategy for S&T development and to monitor its implementation. The National Council for S&T Development is defined by the Science Law:  Article 12: National Council for Scientific and Technological Development With the aim of improvement of the scientific and technological development, quality of scientific research work and development of scientific research activities in the Republic, the

National Council for Scientific and Technological Development shall be established (hereinafter: the National Council), as a supreme professional and advisory body within the system of scientific research activities in the Republic.  Article 13: Composition of the National Council The National Council shall consist of a chairman and 16 members from among the academicians, scientists, university professors and businessmen. The chairman and members of the National Council shall be appointed and dismissed by the Government, in accordance with this law. The Government shall appoint the chairman of the National Council from among full professors of university and scientific advisors, upon proposal put forward by the minister in charge of scientific research activities (hereinafter: the Minister). The Government shall appoint to the National Council: three members holding the scientific advisor title, who are employed with institutes, from the list of candidates proposed by the Serbian Association of Institutes, three members holding the full professor title, who are employed at universities, from the list of candidates proposed by the Conference of Universities, two members upon proposal of the Serbian Academy of Sciences and Arts, one member upon proposal of Matica Srpska, one member as the representative of the Diaspora, upon proposal of the Ministry for Diaspora, one member holding the scientific advisor or full professor title at a military scientific research institution of the Ministry of Defence and the Army of Serbia, upon proposal of the Ministry of Defence, five members from among distinguished businessmen, three of whom from the list of candidates proposed by the Serbian Chamber of Commerce, and two as the representatives of the Council of Foreign Investors. The number of candidates from the lists proposed by the Serbian Association of Institutes, the Conference of Universities and the Serbian Chamber of Commerce shall be at least twice as many as the number of candidates under paragraph 4 of this Article, who are appointed to the National Council by the Government. The organisations referred to in paragraph 4 of this Article shall submit the lists of nominated candidates to the ministry in charge of scientific research activities (hereinafter: the Ministry). When appointing the members to the National Council from among representatives of the organisations, which conduct scientific research activity, it is taken into account that all six scientific fields shall be evenly represented. The scientific fields referred to in paragraph 7 of this Article are: natural sciences and mathematics, technical and technological, medical, biotechnical, social sciences and humanities (hereinafter: the scientific fields). The National Council shall have a deputy chairman, elected from among its members, pursuant to the Rules of Procedure. The term of office of the members of the National Council shall be five years, with the possibility of re-election for one more term. The Government may dismiss any member of the National Council also prior to the end of the respective member's term of office, namely: 1) upon personal request of the respective member; 2) if the member fails to fulfil the duties of the member of the National Council, or if misconduct of the member harms the reputation of the office; 3) upon well-grounded request of an authorised proponent, i.e. a competent body of the Association of Institutes, the Conference of Universities, the Serbian Academy of Sciences and Arts, Matica Srpska, the Ministry for Diaspora, Ministry of Defence and Serbian Chamber of Commerce.  Article 14: Competences of the National Council The National Council shall: 1) oversee the situation and development of scientific research activities in the Republic of Serbia;

2) issue an opinion to the Minister on the draft strategy of scientific and technological development of the Republic of Serbia; 3) prepare and submit to the Government a report on the situation in the filed of science, at the end of March each year for the preceding year, including proposals and suggestions for the next year; 4) issue a previous opinion on the programmes of general interest to the Republic of Serbia established by the Minister; 5) issue a previous opinion on acts on selection, evaluation and funding of: the programme of basic research, the programme of research in the field of technological development and the programme of transfer of knowledge and technologies and encouraging the application of outcomes of scientific research work, which are passed by the Minister; 6) put forward proposals to the Minister for scientific fields, branches and disciplines for which the specialised scientific boards are set up; 7) issue a previous opinion on the act on procedures and methods for evaluation and quantitative expression of scientific research results of researchers, which is passed by the Minister; 8) appoint and dismiss members of the Commission for Acquiring Scientific Titles; 9) pass an act on evaluation of scientific research work and the procedure for accreditation of institutes, integrated universities, faculties and centres of excellence; 10) pass an act on criteria and requirements for awarding, ratification and revocation of the status of centre of excellence, scientific research work and funding of centre of excellence; 11) pass an act on awarding, ratification or revocation of the status of centre of excellence, on the basis of the decision of the Committee for Accreditation of Scientific Research Organisations; 12) decide in the second instance on appeals regarding the procedure for accreditation of scientific research organisations; 13) pursue the international scientific and technological cooperation, as well as the cooperation with respective body in the field of higher education, and with other bodies and organisations; 14) adopt its rules of procedure; 15) perform also other tasks, pursuant to this law and the rules of procedure. The acts referred to in paragraph 1 items 9) and 10) of this Article shall be published in the «Official Gazette of the Republic of Serbia».  Article 15: Work of the National Council The National Council shall conduct its work at sessions. The work of the National Council shall be public. For the performance of the tasks falling within its competences, the National Council may form commissions, committees and other professional and working bodies (hereinafter: the working bodies). The National Council shall submit to the Government a report on its work at least once a year. The method of work and decision making shall be regulated by the rules of procedure of the National Council. Whenever the National Council considers any issues which form part of the overall policy of the Republic in the field of science, and are also related to the fields of education, health, economy, art and culture, it shall bring its positions into line with those of the respective authorities, bodies and institutions, which are competent for the matters relevant to such fields. The operational level consists of intermediary and funding organisations.

Chambers of Commerce are on the operational level because of lack of legal and functional responsibilities in governance of R&I institutions – role of chambers of commerce is reduced to promotion and networking. The Innovation Law has defined the organizations for rendering infrastructural support to innovation activity: “A company established for the purpose of rendering infrastructural support and networking of research and development organizations, or innovation organizations and business entities, can be registered with the Ministry as: 1) business and technology incubator; 2) science and technology park; 3) organization for stimulation of innovation activities in the priority field of science and technology; 4) centre for transfer of technologies.” Business and Technology Incubator, as defined by the Innovation Law, is a company the basic business activity of which is to put at disposal, for a certain consideration, business premises, administrative, technical and other services to newly established companies, for a maximum period of five years from the date of their establishing. S&T Parks, as defined by the Innovation Law, is a company which within a defined space provides infrastructural and professional services to higher education establishments, scientific and research and innovation organizations, and also to high-technology and medium technology companies within a specific scientific, research and development or production group aiming at their networking and the fastest possible application of new technologies, creation and sales of new products and services on the market. The organization for encouragement of innovation activities in the priority sphere of science and technology, as defined by the Innovation Law, is a company established solely for the performance of activities related to the encouragement of innovation activities in the priority spheres of science and technology set under the strategic document. Centre for Transfer of Technologies, as defined by the Innovation Law, is a centre for transfer of technologies is a company set up only to perform the technology transfer for the purpose of application of technological innovations, which includes in particular a search for ideas and partners for the transfer of technologies, assessment of the commercial potential of such transfer, incentives for realization and commercialization of the technology transfer and rendering support at protection of intellectual property to the technology companies which develop, produce and sell innovative products, processes and services with a high level of know-how and new technologies. Research performers are public and private research organisations in government, higher education and the business enterprise sector. Innovation performers are private and public companies, entrepreneurs and inventors.

Organigram: Research and Innovation system in the Republic of Serbia

SDA ME

Parliament of the MCIEIT SPP

Republic of Serbia Political Level NCSTD

SASA MESTD CESTDIS IF SBs ABs CPS

OIPR OS OMPM QCA DO SORS CC PIU Operational Level

SPP STP BTI NFS SRPNSA SDA IF

HE-PuU PROs-SI PROs-RI RDIs SASA Research

Performers

HE-PrU PrRO CI

SMEs BEs Start-ups Ent Inv Innovation Performers NTBF Spin-offs IC

Legend: Political Level: Operational Level: Research Performers: CESTDIS – Committee on Education, Science, OIPR–Office for Intellectual Property Rights HE-PuU – Higher Education, Public Universities Technological Development and the SORS –Statistical Office of the Republic of PROs-SI – Public Research Organisations – Information Society Serbia Scientific Institutes MESTD – Ministry of Education, Science and DO – Donation Organisations for support of PROs-RI – Public Research Organisations – Technological Development S&T Development Research Institutes NCSTD –National Council for S&T OMPM – Office for Measurements and RDI – R&D Infrastructures Development Precious Metals SASA – Serbian Academy of Sciences and Arts ABs – Accreditation Boards QCA – Quality Certification Agencies HE-PrU – Higher Education, Private Universities SBs – S&T Boards CC – Chambers of Commerce PrRO – Private Research Organisations CPS – Center for the Promotion of Science BTI-Business&Technology Incubators CI – Corporate Institutes ME – Ministry of Economy STP – S&T Parks IF – Innovation Fund OS – Office for Standardization Innovation Performers: SDA – Serbian Development Agency SDA – Serbian Development Agency SMEs – Small and Medium Sized Companies MCIEIT – Ministerial Council for innovation SRPNSA – Serbian Radiation Protection and BEs – Big Enterprises entrepreneurship and IT Nuclear Safety Agency IC – Innovation Centres IF – Innovation Fund NTBF – New Technology Based Firms PIU – Projects Implementation Unit Ent – Entrepreneurs SPP – Secretariat for Public Policies Inv – Inventors NFS - Nuclear Facilities of Serbia Start-ups; Spin-offs

Ministry of Education, Science and Technological Development Although the substantial responsibility for the development of science and innovation have all the ministries in their domain, the main tasks in this field have been entrusted to the Ministry of Education, Science and Technological Development (MoESTD). According to the Law on Ministries, MoESTD performs state administration relating to the system, development and promotion of scientific research in the scientific, technological and economic development; proposing and implementing policies and strategies for scientific and technological development; determination and implementation of the scientific, technological and development research; training of personnel for scientific research; proposing and implementation of innovation policy; encouraging techno- entrepreneurship, transfer of knowledge and technology in the economy; development and improvement of the innovation system in the Republic of Serbia. Direct budget support for R&D infrastructure is carried through the project "Research and development in the public sector", which began in 2011. This support includes a number of investments in the revitalization of research and development in the public sector in Serbia, including the modernization of existing research capacities and infrastructure, creation of new research centers, housing for young scientists and modernization of academic computer network. Projects under this program shall be financed from the European Investment Bank (EIB) and the Development Bank of the Council of Europe (CEB), the Instrument for Pre-Accession Assistance of the European Union and by the Republic of Serbia. Significant infrastructure facilities completed: Technology Parks "Beograd" and "Novi Sad Phase 1", Central Building, University of Novi Sad and apartments for young researchers Blok 32 Novi Beograd, facilities in Petnica Science Center and Museum of Natural History Svilajnac. One of the most important sub-projects to be implemented within the framework of this project is the purchase of capital equipment for the purposes of scientific research organizations. Research teams (the project cycle 2011-2015.) have been approved to purchase 3,070 pieces of capital equipment with a total value of 53.2 million euros. So far, the total of 803 pieces of research equipment the value of which is 24 million euros has been delivered in scientific-research organizations and put into operation, while a part of equipment will be purchased and distributed during 2016. However, even then, the total funds for this project at the moment are not exploited and used to the way it was planned, but steps are launched in order to realise this investment. The Program of transfer of knowledge and technology and encouragement of the application of results of scientific research conducted by MoESTD provides support to finance the innovation projects of organizations registered for innovation activities that present finalization of the most successful technological researches to their commercialization at the market. In the period from 2011-2014, 217 projects of registered innovative organizations were financed. This program also co-financed 25 projects of private individuals / innovators in the implementation of innovative activities. It is observed revenue growth of all innovation organizations which are registered in the Register of innovative activities in the period from 2011 to 2014, which were supported by the Ministry through the funding of innovative projects.

Secretariat for Science and Technology of the APV The Science Law as well as the Innovation Law in the Republic of Serbia defined MESTD as the main and the only governing institution in the country, responsible for R&D and Innovation activities. Research governance was transferred to the level of Autonomous Province of Vojvodina (APV) to a limited extent, as it was defined by the “Law on regulation of jurisdictions of the APV”, adopted by the Parliament of the Republic of Serbia on November 30, 2009: 1) creation of the Strategy for technological development of the APV, which must be harmonized with national S&T strategy; 2) (co)funding of establishment of high-tech installation, building of homes for young scientists, and international S&T cooperation; 3) (co)funding of R&D activities; 4) definition and funding of programmes important for APV in the area of S&T; 5) project financing for R&D projects important for

APV; 6) financing of capital expenses and R&D infrastructure established by the APV; 7) establishment of the innovation fund in APV, based on local revenues; 8) establishment of local R&D centres and popularization of S&T activities in APV; 9) financing of Academy of Sciences and Arts of the APV. Some of these activities could be co-financed by the MESTD under the specific decision made by the Minister. Governing body responsible for realisation of above tasks is Secretariat for Science and Technology of the APV. The Provincial Secretariat for Science and Technological Development (PSSTD) is the administrative body responsible for governance of research policy in the Autonomous Province of Vojvodina. PSSTD has three sections: the Science and Technology Development Unit; the group for ICT support and the general office. PSSTD is responsible for an R&D community consisting of one public university in Novi Sad with 13 faculties and approximately 2,100 researchers, 3 R&D institutes, “Matica Srpska” and the provincial Academy of sciences and arts. Strategic R&D programmes governed by the PSSTD are: the Information-Control Network of Geospatial Systems in AP Vojvodina” (for agriculture, forestry, water economy, food industry, energy, survey and construction engineering, traffic control, environment protection, etc.); E-Government for AP Vojvodina (ICT support to the provincial government through the PAN Project); E-School in Vojvodina (ICT infrastructure for elementary and secondary level schools in APV); National Programme in Energy Efficiency; National Programme in Water Resources Management. Technology transfer programmes, cooperation with industry and other programmes include: joint projects with local industry co-financed by MES; the regional centre for energy efficiency in cooperation with the Secretariat for Energy; cooperation with the Chamber of Economy of AP Vojvodina; innovation centres in APV, incubators in APV, the High-Tech Park at the University of Novi Sad, the INNTEREG – Neighbourhood Programme Hungary – Romania- Serbia; projects in FP7. PSSTD is also responsible for building a digital networked library of PhD dissertations, MSc and graduate theses (through a contract between the Secretariat and University of Novi Sad, the Faculty of Natural Sciences and the Faculty of Technical Science); this project is a part of “Networked Digital Library of Theses and Dissertations” connecting over 180 libraries of universities, faculties and other educational institutions from all over the world.

Innovation Fund Innovation support Project in Serbia implemented by the Innovation Fund is aimed at private micro and small enterprises in the early stages of development, which have a technological innovation. Through four public calls, conducted from 2012 to 2014, funding for the total of 53 projects was approved, amounting to EUR 6 million under the Program of early development and Program of co- financing for innovations. It directly supported more than 300 jobs for employees with higher education, including 65 PhDs, with the involvement of over 20 research organizations. In the current implementation phase this project shows positive effects, observing the data on growth of revenue and export of the companies which were the beneficiaries of these projects.

Ministry of Economy The programmes that affect research and innovation in Serbia which are under jurisdiction of the Ministry of Economy are:  The introduction of the quality system, as innovation in the organization of business operations, is implemented through financial support provided by the Ministry of Economy.  Innovation vouchers, which represent a system of Government aid to small and medium-sized companies and is aimed at the development of cooperation between research organizations and SMEs, implemented by the Ministry of Economy.

There are no tax incentives for companies that implement activities of research and innovation, as well as credit support for innovation projects of companies.

Serbian Development Agency National Agency for Regional Development (NARD) has been dismissed on 31st of December 2015 as well as SIEPA (Serbia Investment and Export Promotion Agency). The new entity which has overtaken the duties of NARD and SIEPA, has been established and started to operate on 1st of January 2016, under the new name Serbian Development Agency (SDA). SDA is a government organization dedicated to facilitating and implementing direct investments, promoting and increasing exports, improving the competitiveness of Serbian economy, as well as reputation, and economic and regional development of the Republic of Serbia. [http://ras.gov.rs/]. As a newly established agency, RAS builds upon the knowledge of the former Serbia Investment and Export Promotion Agency (SIEPA) and National Agency for Regional Development (NARD) and brings improvements required to meet the needs of a modern economy. RAS will serve as a one-stop-shop for both domestic and international companies with a single goal of building a strong and sustainable economy, and increasing the quality of life for the people in Serbia.

Actors and roles: B. Structure proposed within new ST Strategy

[Source: The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation"]

Establishing a more efficient system of management of science and innovation in the Republic of Serbia In order for the research and innovative development to be significantly accelerated, it would be necessary for different participants in the process to achieve a certain level of cooperation and compliance at all levels of governance.

Measures to achieve this objective are as follows: a) Improving the institutional framework The institutional framework in the area of innovation activities should be improved in order to, inter alia, establish a body at the national level that would: consider and monitor scientific research and innovative development of the Republic of Serbia; identify basic problems of development in the economy and society and propose measures and instruments that would promote the spreading of knowledge networks and organizational application of scientific research results and innovative products, with the aim of creating an efficient, competitive and innovative economy; harmonizing positions around the strategic priorities and directions of economic and overall development of the Republic of Serbia; analysing and measuring the level of implementation of scientific research results in the development of knowledge and innovation based economy. The law regulating the innovation activities should regulate the activities, operation, composition and appointment of members of the above mentioned body, provided that the member of that body will not receive any remuneration for their work. b) Establishment of strategic management scientific research organizations Establishment of strategic management within each scientific research organization will start through (re)defining of their activities, by incorporating the innovations into the work of the high education institutions and institutes. During the first year of implementation of the Strategy, each scientific research institution will develop a program of development in compliance with the Strategy and it will include key performance indicators. The changes to the management system will include redefining the mandates of the University Senate, academic councils of faculties and scientific councils and managing boards of institutes. This will be preceded by corresponding amendments to the laws governing higher education, scientific research and innovation activity. c) Reforming the network of institutes For the implementation of scientific and R&D institutes it is necessary to determine the economic and social role of each institute and its activities in the global research and innovation context. Each institute will first carry out a self-evaluation process under a unique methodology in order to analyse: – organization and management; – research capacities (in terms of the number of researchers and/or relevance and excellence of their research); – scientific or market orientation; – the field of research activities; – capacity for innovation. After that, a detailed analysis of the entire network of institutes will follow up which will refer to their activities, expanded or redefined, their continued involvement in the work of the university, pooling of institutes according to their fields of work or further improvement of their independent functioning.

The whole process will be done in a transparent manner and in cooperation with the institute’s management. The analyses will be the basis for the development of the model of institutional funding. d) Policy mix peer review A policy mix peer review will be conducted with the purpose of improving the system and integration into the European Research Area. This evaluation involves a systematic review and evaluation of performance/functioning of the national system of research and innovation by international experts, in order to improve the content and implementation of the national policies in the area of research and innovation. The evaluation should provide insight into the practice of supporting research and innovation, program portfolios and instruments of incentives and support structures, the organization of financing and institutional structure, as well as the overall environment for research and innovation. Based on the results of the evaluation, recommendations will be defined for the improvement of integrated research and innovation policies. This activity will be carried out during 2016 in communication and coordination with the European Research Area Committee (ERAC).

Policy tools applied

Evaluations One among the key challenges R&D and Innovation system in the Republic of Serbia is faced with is the creation of the evaluation standards and principles as well as instruments and mechanisms for implementation in monitoring and evaluation of innovation support measures. The accreditation procedure is obligatory for R&D, HE and registered innovation organisation: under the HE Law (for teaching competence); under the Science Law( for R&D competence); under the Innovation Law (for innovation capacity). The permanent and transparent monitoring and evaluation practice in governance of innovation policy measures is urgently needed: there are no evaluation standards or institutions responsible for evaluation in the area of S&T and innovation in Serbia. Only ex-ante evaluations of innovation activities proposed under public calls for funding from the Ministry of Education, Science and Technology Development (MESTD), the Ministry of Economy (ME) and the National Agency for Regional Development (NARD) are regularly organised. Further monitoring of on- going activities, ex post and impact evaluation of innovation activities are organised as sporadic initiatives within EU sponsored projects. It is necessary to organise national programme for evaluation of innovation activities which are (co)financed from the public sources, with development of evaluation standards, identification and training of evaluators, establishment of legal framework for such activities, etc. The ME annually making reviews of SMEs and entrepreneurship and related programs against the Strategy for the Development of Competitive and Innovative Enterprises (reports for 2008, 2009, 2010 and 2011 are available in Serbian). The only ex-post and/or impact evaluation activity in the period 2011-2013 is recently (end of 2014) completed within the Improved SME Competitiveness and Innovation Project (ICIP), which is financed by the European Union and aims at improving the competitiveness of Serbian SMEs and increasing levels of innovation in SMEs. In total nine SME innovations and competitiveness support programmes have been evaluated that are implemented by the Government of Serbia and managed by the MFE, MESTD and NARD. The focus of the assessment was on the impact of observed nine programmes on the parties involved, specifically on the beneficiary enterprises and the innovation support organisations and consultants. Consequently, the methodology focused on effectiveness and efficiency of programmes, its management and capacities to operate the programmes, as well as on awareness of existing support measures; regarding the beneficiary enterprises, the methodology looked towards possible specialization of support measures profiles, on closing gaps in the innovation assistance process and meeting the needs of beneficiary enterprises.

Strategy setting Consultations, foresight exercises Foresight as a methodological tool for consultations within R&D community as well as for consultations with all other interested stakeholders and communities in economy and society is not implemented in Serbia yet. Orientation on foreign programmes and projects (EU, WB, OECD, etc.) for support of innovation activities in the Republic of Serbia should be, at least, acknowledged by the domestic governing institutions, but major intervention in national innovation performance have to be harmonisation of overall and specific goals and activities of these projects with national priorities, needs and challenges. The optimal reaction to changes which are necessary to be done in that direction is launching of the first national S&T foresight exercise. Main outcomes and results of such foresight should be identification of national innovation capacity and potentials, needs and challenges on the way toward creation of the national innovation system, selection of national priorities in R&D and Innovation, as well as creation of the first formal innovation policy document and establishment of the consultation and dialogue between RDI community and wider economy and society in Serbia.

Regional and/or National Research and Innovation Strategies on Smart Specialisation (RIS3) The Regional and/or National Research and Innovation Strategies on Smart Specialisation (RIS3) approach has not been implemented in creation of strategic policy documents in Serbia so far. The current approach in strategy and policy making process is traditionally based on expert opinion, without intersectoral dialogue, communication with wide public community for identification of bottom-up initiatives and priorities, scenario development, forecasting, and other future-oriented activities, which are commonly collected under foresight exercise umbrella. The only RIS3 exercise is performed in APV as the first attempt to use RIS3 methodology in the year 2014. The recent “Strategy of S&T Development of the Republic of Serbia 2010-2015” was prepared using the established top-down approach with contributions from informal panels for selected S&T fields. Other inputs were a strategic document prepared by the National Council for Scientific and Technological Development, as well as numerous meetings and round tables with domestic and foreign scientists, businessmen, statesmen, members of the civil society and many others. Public debate on the strategy was constructive and lasted from June 29th, 2009 until the end of November of 2009. Hundreds of comments were sent to the ministry by an online forum and e-mail from scientists, businessmen, foreign partners and science policy makers from all over the world. It was clearly expressed political will that the first foresight exercise in S&T in Serbia should be launched in future for creation of the (first) innovation policy in Serbia (during 2014), but this initiative failed.

Science Policy Advice The Association of R&D institutes is the so-called “scientific umbrella organisation”, which gathers all interested R&D organisations. The main task of this association is to promote the common interests and positions of R&D institutes in issues concerning R&D policy in Serbia, as well as to coordinate acquisition and use of large R&D equipment, installations and laboratories which can be used by a number of R&D institutes. Role of the Serbian Association of the Institutes is defined by the Science Law, Article 26: With the aim of pursuing common interests and scientific research cooperation, adjustment of procurements and use of scientific research equipment and laboratory facilities, procurement and use of scientific publications, interconnecting and cooperation with respective forms of associations in the higher education field, development of international cooperation, fostering of scientific criticism and evaluation of own scientific research work, the institutes may associate into the Serbian Association of Institutes (hereinafter: the Association). The Association shall have the status of a legal entity, in accordance with the law. The Association may be set up by all or the majority of institutes in the territory of the Republic, which are entered into the Register of Scientific Research Organisations. Within the Association, the institutes may associate, i.e. connect with each other also by the criterion of related scientific fields, pursuant to the statute of the Association. The Science and Technology Policy Research Centre (STPRC) is a think tank that was founded at the “Mihajlo Pupin” Institute in 1987 as a response to the growing awareness that a better understanding of the importance of S&T for overall development is essential for successful policy making for emerging technology fields. To increase the effectiveness of investment into R&D and innovation activities, the Centre's experts have focused on studying and synthesizing development strategies, policies, plans and programmes to meet the needs of governmental agencies, regional and local administration, companies, as well as the Institute’s own research agenda. The mission of the SCTPC is to contribute to a better understanding of the importance of science and technology for overall economic development and to help formulate appropriate strategies of scientific and technological development, from national down to firm and R&D organisation level.

Other Policies of relevance for research and innovation in Serbia

Intellectual property rights The legal framework for the protection of intellectual property rights in Serbia is complete and fully in accordance with international recommendations and practice. The Republic of Serbia has become the member of the European Patent Organization (EPO) on October 1, 2010.

Public procurement The new Serbian Law on Public Procurement came into effect in 2015, replacing the former legislations enacted in 2008 and 2016 ["Sl. glasnik RS", br. 124/2012, 14/2015 i 68/2015]. The legislative overhaul is part of the wider fight against corruption and strengthening of state finances, acknowledging that the added costs of non-competitive tenders may run to hundreds of millions of Euro. Efficiency, cost- effectiveness, competition, transparency, equality and environmental protection are the stated principles that should govern all public procurement procedures. The law introduces some new measures, such as the monitoring of public procurement over RSD 1 billion (ca. EUR 8.95 million) by “civil supervisors”, who are either experts in the domain of public procurement or associations dealing with the prevention of corruption or conflicts of interests. The law also sets out in detail the rules for public procurement of standardized goods and services (done solely by electronic means using the open procedure), as well as for electronic auctions. It also introduces a “competitive dialogue” procedure, applicable in cases where the subject matter of the procurement is of such complexity (e.g. in light of its technical specifications or legal or economic structure) that the contract cannot be awarded through regular procedures. The new legislation includes refinements of the many requirements applying at various stages of the public procurement procedure: notice, invitation and publication, tender documents, public procurement value, technical specifications, eligibility criteria, bidding process and awarding of contracts. Domestic bidders are still advantaged over foreign bidders, as are goods of domestic origin, subject however to the provisions of the Central Europe Free Trade Agreement and the Stabilization and Association Agreement (for EU bidders). Major implementation of public procurement in the area of science, technology and innovation is in the area of R&D infrastructure. Through investment in science infrastructure, as part of a EUR 400million programme financed by the European Investment Bank and the Council of Europe Development Bank, approximately 20 different projects are envisaged, from the construction of facilities for different purposes, the purchase of equipment and the formation of a unique database of scientific equipment to the formation of a consumables request and procurement system for the entire scientific community in the period 2011-2014. A large science equipment procurement project is ongoing and it is planned to be completed by the end of the year 2013. Through this project pieces of equipment worth more than EUR 100,000 and over 300 items of equipment worth between EUR 30 and 100 thousand are being procured, while a system for recording and cataloguing equipment has been created in the meantime. This system will make equipment available for reservation through a unique database visible on the Internet. The project to create a centralised system for requesting and procuring consumables has been completed and through it another tender for the procurement of consumables for the entire science community is already being conducted. In the first tender in 2012 over 34,000 different articles were bought through 196 lots, and the procedure is repeated approximately every three months. The principle is that the consumables request database constantly collects purchase requests and procurement is carried out four times a year.

Gender equality and gender mainstreaming in research Overall, the gender structure of employment in R&D sector is balanced, with 49.15% of women researchers in 2014, although women in business (34.63%) and high education sector (48.67%) are less present in comparison with gender structure of researchers in government laboratories and institutes (58.18%) (Statistical Office of the Republic of Serbia: yearly statistical bulletin on S&T activities in Serbia, 2014). The Republic of Serbia is a signatory of a number of important and binding international documents, which guarantee the equality of men and women and prohibit gender-based discrimination, notably the Council of Europe’s Social Charter and the European Convention on Human Rights and the United Nations Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). Domestic guarantees of gender equality are the Constitution of the Republic of Serbia and relevant laws and regulations:  Under Article 15 of the Constitution of the Republic of Serbia (adopted in 2006, November 08), the state shall guarantee equality between women and men and develop equal opportunities policies;  The Gender Equality Law (adopted in 2009; Official Gazette of the RS, No. 104/09) binds all public authorities to actively pursue equal opportunity policies, monitor the realisation of gender equality principles and supervise the exercise of international standards and constitutionally guaranteed rights within their remits. The Law addresses gender equality in employment, health care, family relations, education, culture, sports, political and public life and judicial protection;  The National Strategy for Improving the Position of Women and Promoting Gender Equality was adopted in February 13, 2009 (“Official Journal RS”, No. 15/09). The Strategy focuses on women’s participation in policy and decision-making; in the economy, education and health; Gender-sensitive statistics moves beyond simple disaggregation and presentation of existing data by sex, and recognises the need for monitoring the different problems and challenges faced by women and men in all walks of life. Participation of the under-represented sex in committees involved in recruitment/career progression and in establishing and evaluating is regulated by the Gender Equality Law (Official Gazette of the RS, No. 104/09) by the articles 21, 30, 32 and 38.

Optimal circulation, access to and transfer of scientific knowledge including via digital ERA Legal base for access and preservation of scientific information in the Republic of Serbia is the Science Law. The Article 10 predefined 14 programmes of general interest to the Republic with Programmes 8, 11, 12 and 13 related to the Action MS45: Programme of development of information society; Programme for the procurement of scientific and professional literature from abroad and for access to electronic scientific and professional databases; Programme for publishing of scientific publications and holding of scientific conferences; Programme for encouraging of activities of scientific, scientific and professional societies, associations and other organisations, which are in function of the improvement of scientific research work, promotion and popularisation of science and technology and concern for the preservation of scientific and technological heritage. The main policy document in this area was the “Strategy of S&T Development of the Republic of Serbia 2010-2015” (SSTDRS, 2010). Two among seven national priorities in the domain of S&T, defined in S&T Strategy are: ICT and Improvement of decision making processes and affirmation of national identity. The Strategy has proposed the building of special computing network, so called "NIONET", addressed to meet among the others and the demand for: Provision of supercomputing services to clients beyond science research and academic community (corporate sector, state administration etc.); and Warehousing of data and documents for permanent archiving (with the possibility of intelligent search) for the requirements of not only PROs but state administration, Government and public institutions,

84 public and private enterprises and other clients. The Strategy has defined implementation instruments and one among them is the "Program of knowledge transfer, which should make possible the development and operation of centres for transfer of know-how and networking, organization of training courses for new technologies, incentives for feasibility studies of introduction in our industry (in cooperation with the Fund for research and technology, banks and the Fund for development)". The major source of RTD information which offers wealth of information to researchers is KoBSON (www.kobson.nb.rs) i.e. consortia of libraries in Serbia which provides on-line retrieval of articles, journals and books, both domestic and foreign. Although this service is available to researchers in Serbia only since November 2001, it is improved year by year, and makes R&D work to be based on highly relevant and up-to-date S&T information from all world relevant journals and publishers and provides access to scientific and technological information worldwide. There is general assessment in R&D community in Serbia that Kobson is successful and crucial for R&D activities in country. Major document which regulates forms of electronic identity for researchers giving them transnational access to digital research services is the "Strategy for development of an Information Society in Serbia up to 2020" (Official Gazette of the RS, No. 51/2010). More specifically, chapter 3 regulates role of ICT's in education, science and culture: "Up to year 2020 all institutions in the areas of education, science and culture should use broadband communications through optical fibres, and should be equipped for fast access to the Internet, available to students, professors, researchers etc." Further, the Strategy defines academic computer network, main services and computer nodes in Serbia. Major institutional framework for further development of this network is AMRES, as academic network in Serbia (Official Gazette of the RS, No. 28/2010). AMRES is the national research and education network of Serbia, offering modern information-communication services and Internet connection to its users. It's considered to be the most advanced network in country, with over 150 connected institutes and more than 150,000 active users. Using the informatics and Internet infrastructure, and computer network, AMRES provides the education and research organizations and other members with access and use of the Internet and information services in the country, as well as the connection with national and international networks of such type. AMRES is a member of the following international associations: TERENA (Trans European Research and Education Network Association); CEENET (Central and Eastern European Network Association); GÉANT2 (pan-European Research and Education Network) - observer.

Business enterprises

Official statistics cover mainly (until 2014 only) R&D organisations which are registered under science and innovation laws. The biggest number of companies recognised as R&D intensive organisations through several surveys are not included in official R&D statistics. Therefore, all figures presented in official statistical publications, and consequently in this report, should be treated just as basic information and as a starting point for further analysis. According to official R&D statistics, the business enterprise sector employs only 14.54% of all R&D personnel and only 9.67% of all researchers in Serbia (head count, year 2014) [figures with official statistics which covers only R&D organisations which are registered under science and innovation laws, for the year 2013 are, as follows: 5.33% of all R&D personnel and only 3.34% of all researchers in Serbia, head count]. A crucial challenge for research governance in Serbia is the question how to increase R&D and innovation activities in the business enterprise sector (BES) in the country. Official figures showed that BERD share in GERD (BES as performing sector, not funding) was only 29.65% in 2014 [again, figure for 2013 is significantly different: 13.27%]. Recent official statistical R&D and innovation surveys in Serbia support findings with a different situation in BES, i.e. investments in R&D and Innovation in this sector are comparable to those by the MESTD. Further investigations in revealing of real situation in R&D and Innovation investments in BES are needed. In particular, identification of companies with significant R&D and innovation activities is necessary in order to organise more efficient governance of R&D system in Serbia. The example of the spin-off companies formed within Faculty of Engineering in University of Novi Sad supports this need for the reorganisation of research governance: there are 104 spin-off companies with 2,500 employees (more than 90% of employees are university graduates) and EUR 70 million of turnover in 2013. All these companies are in high-tech sectors, mostly in embedded software development, with more than 8% of all activities being classed as R&D. None of these companies are registered as R&D organisations; and only two are registered as innovation organisations under the innovation law.

Transnational R&D Cooperation Serbia makes significant effort to attract international technology companies who would be ready to realize a part of their development programmes in the country by investing in the existing research capacities or by creating new ones. The HORIZON2020 could be a catalyst for this cooperation, facilitating it by joint participation in project consortia; however government measures in the form of tax and budget subsidies focused on attracting technological companies are of extreme importance to achieving this goal. Positive examples of realised cooperation do exist, but are scarce. Microsoft, the global leader among high-tech companies, and at the same time a leader in investing in research and development (in 2007 – EUR 5.58 billion) opened one of its five development centres outside the USA in Serbia (Microsoft Development Centre Serbia (MDCS) started in 2005). According to Microsoft Serbia CEO, Microsoft Serbia has opened its first Innovation Centre in Serbia in 2012, which will, together with the existing Development Centre, improve the country's competitiveness in the regional and global IT markets. Also, Siemens acquired a team of local engineers and over time extended its development capacities in Serbia. Several local institutions and companies have successful cooperation programmes with international leaders (Faculty of Electrical Engineering, Belgrade, "Mihajlo Pupin" Institute, Institute of Field and Vegetable Crops, Novi Sad and others). However, this is still a very small portion of their total operations.

Important note: The establishment of spin-off companies by researchers employed in the SRO is not regulated by the applicable laws of the Law on Higher Education and the Law on Innovation. In addition, positive legislation does not define financing through venture capital funds (Venture Capital VC).

Indicators of innovation activities in the Republic of Serbia, 2012−2014 [Source: Statistical Office of the Republic of Serbia, STATISTICAL RELEASE IА01, number 276 - year LXV, 22/10/2015 Science, Technology and Innovation Statistics SRB276 IА01 221015, ISSN 0353-9555] The data presented in this statistical release are the result of the survey on innovation activities in enterprises, over 2012-2014. The survey was carried out on a sample of 3587 enterprises. Innovative enterprises are defined, for that purpose, as enterprises that introduced, in the reference period, a product/process innovation, organizational innovation or marketing innovation. The survey showed that the share of enterprises with at least one of the mentioned types of innovations was approximately 40%. The size of enterprises was key factor for their innovation activity. Among innovative enterprises there were more than 68% of large enterprises, somewhat more than a half of medium and more than 37% of small enterprises. Innovation activities were equally represented in manufacturing and service enterprises, of which over 40% introduced innovations. Enterprises by innovations, activities and size classes, 2012–2014 Total Innovators Non-innovative Share of enterprises innovators (%) Total 16659 6739 9920 40.5 Small enterprises 13863 5182 8681 37.4 Medium enterprises 2253 1187 1066 52.7 Large enterprises 543 370 173 68.1 Manufacturing enterprises 4865 1977 2888 40.6 Service enterprises 11794 4762 7032 40.4 Source: Statistical Office of the Republic of Serbia, STATISTICAL RELEASE IА01, number 276 - year LXV, 22/10/2015 Science, Technology and Innovation Statistics SRB276 IА01 221015, ISSN 0353-9555

The share of enterprises with product innovations and process innovations was almost the same, while the share of organizational and marketing innovators was up by a fifth. These two groups of innovations simultaneously existed in enterprises. Among innovative enterprises that had at the same time product/process innovations and organizational/marketing ones, manufacturing enterprises prevailed over service enterprises. About 40% of large enterprises introduced at the same time product/process innovations and organizational/marketing innovations, but the smaller the size was the lower was the share in medium and small enterprises.

Share of types of innovations by territory and size classes of enterprises (%) Territory Size class Innovative enterprises Non- Product/service Process Abandoned Organizational Marketing innovative innovations innovations innovations innovations innovations enterprises or on-going innovations REPUBLIC OF Total 20.4 20.2 10.9 24.9 23.8 59.5 SERBIA Small 18.5 17.4 9.6 21.9 21.2 62.8 Medium 27.8 31.2 13.4 37.9 35.8 46.5 Large 39.4 43.1 32.6 47.1 37.9 31.8 SERBIA – Total 20.7 19.5 10.6 25.0 22.9 60.2 North Small 18.9 16.5 9.2 22.6 20.0 63.4 Medium 28.1 33.9 14.2 36.3 37.9 46.4 Large 36.3 43.1 32.9 43.8 38.5 31.5 Belgrade Total 21.2 20.5 10.9 26.5 24.4 58.8 region

Territory Size class Innovative enterprises Non- Product/service Process Abandoned Organizational Marketing innovative innovations innovations innovations innovations innovations enterprises or on-going innovations Small 19.6 17.6 9.5 23.9 20.8 62.3 Medium 29.1 34.4 13.6 40.1 45.4 41.6 Large 33.2 43.0 36.1 42.7 40.8 32.0 Region Total 19.8 18.0 10.2 22.5 20.4 62.6 Vojvodina Small 17.9 14.6 8.8 20.3 18.8 65.2 Medium 26.7 33.1 15.0 30.5 26.6 53.6 Large 41.6 43.3 27.6 45.7 34.8 30.8 SERBIА – Total 19.9 21.6 11.5 24.7 25.8 58.0 SOUTH Small 17.3 19.7 10.6 20.2 24.0 61.4 Medium 27.1 26.6 12.2 40.7 32.3 46.8 Large 46.0 43.0 31.9 53.9 36.5 32.3 Region Total 20.3 22.4 11.4 24.2 25.1 57.0 Sumadija and West Serbia Small 17.8 20.2 10.4 20.3 23.5 59.7 Medium 27.0 29.1 11.5 37.7 29.6 49.3 Large 51.5 44.6 34.9 57.1 41.8 27.9 Region South Total 19.2 20.3 11.8 25.4 26.9 59.6 and East Serbia Small 16.5 18.8 10.8 20.0 24.8 64.2 Medium 27.2 22.9 13.1 45.2 36.3 43.0 Large 37.9 40.7 27.4 49.2 28.8 38.6 Source: Statistical Office of the Republic of Serbia, STATISTICAL RELEASE IА01, number 276 - year LXV, 22/10/2015 Science, Technology and Innovation Statistics SRB276 IА01 221015, ISSN 0353-9555 Enterprises by types of innovations and sections of activities

Innovators Total Product/service Organizational / Product/service Non- innovations Marketing innovations innovators innovators and Organizational / Marketing innovators Number % Number % Number % Number % % Total 6739 40.5 4790 28.8 5486 32.9 3537 21.2 59.5 A: Agriculture. Forestry and 109 22.9 89 18.7 81 17.0 61 12.8 77.1 fishing B: Mining 11 19.3 7 12.3 10 17.5 6 10.5 80.7 C: Manufacturing 1816 42.7 1455 34.2 1389 32.7 1028 24.2 57.3 D: Electricity. Gas and 42 53.2 29 36.7 37 46.8 25 31.6 46.8 steam. Air conditioning supply Е: Water supply. Sewerage 104 35.1 66 22.3 88 29.7 50 16.9 64.9 and waste management and remediation activities F: Construction 359 36.2 229 23.1 289 29.1 160 16.1 63.8

Innovators Total Product/service Organizational / Product/service Non- innovations Marketing innovations innovators innovators and Organizational / Marketing innovators Number % Number % Number % Number % % G: Whole sale and retail 1281 40.7 735 23.4 1123 35.7 577 18.3 59.3 trade; repair of motor vehicles and motorcycles H: Transportation and 226 31.7 166 23.3 181 25.4 122 17.1 68.3 storage I: Accommodation and food 175 46.2 132 34.8 154 40.6 111 29.3 53.8 service activities Ј: Information and 1204 47.6 773 30.5 978 38.6 546 21.6 52.4 communications К: Financial and insurance 107 36.3 75 25.4 96 32.5 65 22.0 63.7 activities L: Real estate activities 14 26.9 5 9.6 14 26.9 5 9.6 73.1 М: Professional. Scientific 1128 37.5 916 30.4 903 30.0 692 23.0 62.5 and technical activities N: Administrative and 165 43.4 113 29.7 143 37.6 90 23.7 56.6 support activities Q: Human health and social 0 0 0 0 0 0 0 0 0 work activities R: Arts. Entertainment and 0 0 0 0 0 0 0 0 0 recreation Source: Statistical Office of the Republic of Serbia, STATISTICAL RELEASE IА01, number 276 - year LXV, 22/10/2015 Science, Technology and Innovation Statistics SRB276 IА01 221015, ISSN 0353-9555 In the structure of innovative enterprises’ income, the share of income from sale of unchanged or slightly changed products was predominant and amounted to 35%, while that of sale of products/services new to the enterprises, and that of sale of products/services new to market were approximately 8%. 13% of enterprises – technological innovators were subsidized by state instances (financial support in the form of tax relief, grants, subsidized loans, loan guarantees). Market of sale of products/services over 2012–2014: Among enterprises that sell products/services, the most numerous were those selling on the local-regional market, followed by those selling on the national market. The share of innovators, versus that of non-innovators on the market of EU and EFTA countries was by 50% higher and on the markets of other countries even over 50%. Partners with which enterprises had agreed technological innovation co-operation: 17.5% of enterprises had contractual co-operations in technical innovations with other enterprises and institutions and they reported faculties and other tertiary education institutions as the most useful partners. Expenditures for innovation activities: Expenditures for innovation activities cover costs for the development of new products, costs for the introduction of a new product to the market, costs for significant improvement of existing products, services or processes, as well as costs for unfinished innovation projects. Expenditures for innovation activities encompass current costs (wages and salaries, equipment, materials, services, etc.), as well as investment costs. In the total expenditures for innovation activities of enterprises, the largest percentage share was recorded for the purchase of machinery, equipment and software, approximately 64%. Purchases and innovations in the public sector: Contracts with the public sector were signed by 22% enterprises, of which majority, 91% had contracts only with the public sector in the country and 8%, had simultaneously contracts with the public sector and abroad. 1% of enterprises had contracts only

89 with the public sector abroad. About 9% of enterprises introduced innovations which were contractual obligations. Significance of factors that were obstacles to innovation activities, 2012–2014: Majority of enterprises that were non-innovators had no motive for innovation activities (63%), while in 37% of enterprises there was a need, together with numerous obstacles. Enterprises reported shortage of own financial resources as the greatest obstacle to innovation activities, followed by difficult process of getting the donations and subsidies. Benefits from innovations of enterprises related to environment: Out of total number of innovative enterprises, 36% responded that the introduced innovations resulted in ecological benefit, mostly organizational innovations – about 32%, then innovations in production / processes – about 26%. The least was the benefit of marketing innovations – 15%. In 15% of enterprises, there are the procedures for identifying and decreasing the environment influences. In the leading group are huge enterprises with over 44%, then in medium, with somewhat less than 27%, and finally small enterprises with below 12%, in which the mentioned procedures exist. Employees with tertiary education or education after the completed faculty (master, specialist, Mr, PHD): In total population of enterprises, a fourth part are those with no employees who have completed tertiary education, which mostly refers to small enterprises. The greatest number of enterprises employees 10.4% of tertiary educated persons, while the greatest is the number of large enterprises, with 10.24% of employees who have completed tertiary education.

Methodological remarks The survey on innovative enterprises was carried out on a representative sample. The sample was allocated to the territory of the Republic of Serbia up to the level of regions, proportionally to the number of enterprises. The sample size was 3587 small, medium and large enterprises. Large enterprises were fully covered. The sample frame covered active enterprises from the Statistical Business Register, containing 16659 enterprises. The obtained results were weighted and calculated on the level of the population of enterprises. The survey on enterprises was carried out on a stratified sample according to the size class of enterprises (small: from 10 to 49 employees, medium: from 50 to 249 employees and large: more than 250 employees) and according to activities (classes of activities according to CA 08). Sample realization was over 78%; approximately 17% of enterprises did not respond to the Survey, about 2% were not on the referent address, also 2% of selected enterprises were frozen or in bankruptcy and 1% due to other reasons. Information is collected via web questionnaire (16%), e-mail (7%) and printed questionnaire which was disseminated and collected by post (77%).

Research community

Research Organisations

Research organisations are grouped into four sectors: 1. The government sector (GS) – PRO: public research organisations (research institutes and research centres); 2. The higher education (HE) sector; 3. The business enterprise (BE) sector; and in the 4. Private non-profit (PNP) sector.

Another classification could be grouping of research organisations in: a. Public sector R&D organisations in the public sector form a block of research performers which comprises, besides public universities: the Serbian Academy of Sciences and Arts with its 10 scientific institutes; 29 other scientific institutes; 15 centres of scientific excellence, 35 research institutes, 81 innovative organisations, 11 business associations for support of innovation and 95 registered innovators. The research system also includes an S&T infrastructure that encompasses: the academic intranet, a gene bank, an accelerator, libraries of the institutes and faculties, the University Library and the National Library of Serbia, which boasts the KoBSON network that provides access to scientific and technological information worldwide. b. Private sector. R&D organisations in the private sector include 9 private universities with 45 faculties, research resources of foreign companies in Serbia and research and innovation resources of domestic firms. The efforts and results of small and medium-sized enterprises in the field of software engineering, new materials and biotechnology are particularly noteworthy.

There is no institutional, or block funding for R&D activities in Serbia. Institutional funding is available for public universities, but for teaching, not R&D activities.

Public research organisations

According to definitions in the science and innovation laws, a PRO could be organised as: 1. a national scientific institute or centre, as a public institution carrying out fundamental and applied research within the long term strategic science research programmes contracted with MES. The institute should carry doctoral studies in cooperation with other institutes and/or faculties. There are 29 scientific institutes; 2. the status of “centre of excellence” may be awarded to a science research organisation or its organisational unit if it has achieved outstanding results on the national and international level, assessed by international criteria. Centres of excellence should act as disseminators of excellence in their surrounding and so contribute to the development of society and economy in Serbia. There are 15 centres of excellence to date; 3. a research and development institute or centre doing applied or developmental research, and providing professional and other non-research services to the market. It could be either an institute in state (public) ownership (it could also be an institute in private ownership, belonging to the business R&D sector). There are 35 R&D institutes registered in MES register of PROs; 4. the Serbian Academy of Sciences and Arts with its 10 scientific institutes.

The fragmentation of community of PROs (only 9.6% of all PROs employed more than 100 researchers (37% of all researchers in PROs), and more than 90% of PROs employed less than 100 researchers) and subscale science research programmes are the main obstacles to the establishment of a national R&D and innovation system. According to the S&T strategy, reorganization of the science research network, including the transformation of the existing PROs, bundling together of subscale PROs, and establishment of new ones, would enable economies of scale and create conditions conducive to creating competitive and useable research outcomes at an effective operating cost. The rationalisation of the PROs network, coupled with a closer cooperation with the universities with the view to enhance the quality of study programmes should result in a more favourable environment for R&D activities. The existing public research institutes have to be transformed, their ownership structure must be defined, their organizational form adjusted, method of funding and work flow adapted better to their mission, type and programmes of research and functions. The privatisation process of R&D institutes should be encouraged if it is in the interest of the community as should the establishment of private enterprises for R&D. All forms of vertical and horizontal linkages need to be strengthened among educational, research and manufacturing organisations to facilitate their joint R&D work and irrespective of the type of ownership, or the country of origin. PROs and faculties have to be integrated into one science-educational system. Institutes must be accredited to organize doctoral studies and become places where doctoral dissertations could be written. Linkages between education and science are one of the cornerstones for implementation of the S&T Strategy.

The higher education sector

There are eight public universities with 100 faculties and eleven privately owned universities with 60+ faculties in Serbia. Also, there are 47 public (or state owned) high schools and 22 private owned high schools. The total number of students in Serbia reached 3.28% of the population in the academic year 2013, with 62.82% of all students enrolled at public universities and 20.36% at public higher schools. Significant numbers of all students are enrolled at private universities (12.67%) and private higher education schools (2.34%). Almost two thirds of all students are enrolled in SSH (Social Sciences and Humanities) disciplines (55.93% in 2013).

Change in orientation of human resources in Serbia could be proved by the statistics of specialists, masters and doctors of sciences / arts from year 2000 to year 2013. Share of masters and doctors of sciences / arts in SSH related disciplines has increased for one third in this period reaching more than a half of all masters in Serbia in SSH (58.65%) and one third of all doctors of sciences/arts in SSH (30.77%) in 2013. [Please note that national levels of university degrees (specialists, masters and doctors of sciences / arts are harmonised with ISCED classification levels and Frascati definitions of researchers].

The Ministry of Education and Science provides an up-to-date “Registry of Institutions – List of Higher Education Institutions” with links to all accredited HE institutions: public and private universities, faculties and higher education schools. The link to this registry is: http://www.mpn.gov.rs/ustanove/visoke.php.

The eight public universities are as follows: – University of Belgrade: http://www.bg.ac.rs/ – University of Arts, Belgrade: http://www.arts.bg.ac.rs/ – University of Novi Sad: http://www.uns.ac.rs/

– University of Niš: http://www.ni.ac.rs/ – University of Kragujevac: http://www.kg.ac.rs/ – University of Pristina settled in Kosovska Mitrovica: http://www.pr.ac.rs/ – University of Novi Pazar: http://www.np.ac.rs/ – University of defence: http://www.uo.mod.gov.rs/

University of Belgrade has ranked between 401 and 500 “Shanghai top 500 Universities” in 2012 for the first time since this ranking was established. In the year 2013 this position is improved, University of Belgrade has ranked between 301 and 400 “Shanghai top 500 Universities”. According to performance in academic ranking of world universities by subject fields, University of Belgrade has ranked between 101 and 150 in the field of Mathematics in 2013!

Although there is no official statistical data concerning the research performance of private faculties and private universities on national and international levels, findings of specific surveys of R&D activities in the higher education sector suggest that most of the private institutions are so-called “teaching” faculties. Research, leading to the generation of new knowledge and the 'third mission', contribution to local or regional wealth and economic development, are present in the majority of public higher education institutions.

The expenditure on R&D in the higher education sector increased both as a share of GDP as of GERD between 2006 (0.167% and 35.97%) and 2014 (0.353% and 45.97%) in Serbia.

R&D activities in the higher education sector are mostly financed from the government budget. In 2006 this share was 58.68% and 67.27% in 2014. While the business sector provided about one third of the total funding in 2006 (32.41%), its share went down to 3.39% in 2014. An increase of other sources (from 6.29% in 2006 to 25.36% in 2014) is noticeable such as the growing importance of the funding from abroad (up from 2.62% in 2006 to 11.27% in 2008, but decreased to 3.98% in 2014). The funding sources from abroad are mainly multilateral and bilateral S&T programmes, such as FP7 and CIP.

In order to improve the quality and excellence of knowledge production, accreditation process for all organizations, institutions and companies intended to apply for government support for R&D activities is obligatory under the Science Law and Innovation Law. Accreditation Board is responsible for evaluation of quality and efficiency of PROs (R&D institutes, public universities and faculties – only in domain of R&D activities, and centres of scientific excellence. Every four years is regular obligation of all PROs to pass accreditation procedure in order to achieve / maintain position as R&D organisation under Science and/or Innovation Laws. In case of negative evaluation, R&D organisation cannot be registered as PROs in MES register.

The Law on Higher Education (LHE), which fully implements the Bologna Declaration in Serbia, came into effect on 10 September 2005. Within two months after entering into force of the LHE, the Conference of Universities of Serbia and the Conference of Headmasters of Colleges were established. These conferences proposed the members of the National Council for Higher Education, which were approved by the Parliament of the Republic of Serbia. The National Council, in turn, under the proposal by the Conference of Universities of Serbia, elected members of the Accreditation and Quality Assurance Commission. The Council and the Commission, the two bodies independent and separate from the executive authorities, started drafting, immediately after their establishment, the norms and standards, to enable the soonest possible accreditation of higher education institutions and curricula

93 according to Bologna process. The main barriers were the Standards and Guidelines for Quality Assurance adopted in Bergen, at the proposal by ENQA, but this was also the experience of most European countries-signatories of the Bologna Declaration, and some extra work was needed to adjust and apply them to the system of higher education in Serbia, while preserving the cultural, linguistic and national specific features, (as the Bologna Declaration states). The Standards were approved on 20 October 2006, while in early December 2006 the Council and the Commission determined detailed procedure for accreditation and code of conduct of all the participants in the process, allowing for merit-based unbiased selection of higher education institutions and curricula and opening the competition to professionals educated and employed in the higher education system in Serbia across the European higher education area. The accreditation standards, in compliance with the law, were published in “The Official Gazette of the Republic of Serbia” and at the Internet site of the Ministry of Education and Sport (section with web pages of the National Council and Accreditation Commission). The Standards have been published both in Serbian and in English. In compliance with the LHE and the adopted Standards, the accreditation of colleges, bound by the law to enter first the accreditation process, started on 15 December 2006.

The autonomy of the higher education system in Serbia is granted by the HE Law. This autonomy, by law, refers to: (a) academic autonomy, comprising right of teachers to decide on what to teach, how to enrol students and how to organise the study process of, and how to internally organise the HE institution; and (b) political autonomy, which refers to the right to create statutes and other legal documents, and the power to appoint the heads of different units (rector, dean, head of department, etc.) and to deal with internal political conflicts, and c) "financial and managerial autonomy", which refers to having the freedom to decide on salaries, tuition fees, allocation of governmental funds, looking for additional funds, as well as to recruit teaching staff, researchers and other staff.

All three autonomies are fully recognised, implemented and in effect in the HES in Serbia. In addition, physical space of HE institution is under control of university and faculty management and no forces of the ministry of internal affairs are allowed to enter this territory without permission of the HE institution’s responsible staff.

Rectors/Deans in public universities must be elected among peers. There is no approval for Rectors/Deans election needed by other entities such as the Ministry of Education. The same holds true for all other elections for management posts and governing bodies in public HE institutions. The statutes in private HE institutions are similar to those in the public ones. Private HE institutions are fully accountable to their founders.

Both public and private HE institutions in Serbia are fully independent and in the capacity to autonomously design research agendas and topics of research specialisation, as well as in the management of research budgets and on hiring personnel.

The Law on Higher Education (LHE), which fully implements the Bologna Declaration in Serbia, came into effect on 10 September 2005. Links to some of the above mentioned bodies are as follows: – Conference of Universities of Serbia: http://www.konus.ac.rs/ – Commission for Accreditation and Quality Assurance: http://www.kapk.org/

The business enterprise (BE) sector

Official statistics cover only R&D organisations which are registered under science and innovation laws. A number of companies recognised as R&D intensive organisations through several surveys are not included in official R&D statistics. Therefore, all figures presented in official statistical publications, and consequently in this report, should be treated just as basic information and as a starting point for further analysis.

Registered innovation performers in the Register of innovation activities of the MESTD are (situation: May 2016, http://www.mpn.gov.rs/tehnoloski-razvoj-2/inovaciona-delatnost/registar-inovacione- delatnosti/): – Registered innovation organisations: 121; – Registered organisations for infrastructural support of the innovation activities: o Business / technological incubators: 8, o Science and Technology parks: 5 – Registered inventors – individuals: 187; – Registered high-tech companies: 1; – Registered medium-tech companies: 1.

A crucial challenge for research governance in Serbia is the question how to increase R&D and Innovation activities in Business Enterprise Sector (BES). According to official R&D statistics, the business enterprise sector employs only 1.94% of all R&D personnel and only 1.47% of all researchers in Serbia (head count, year 2014). A crucial challenge for research governance in Serbia is the question how to increase R&D and innovation activities in the business enterprise sector (BES) in the country. Official figures showed that BERD share in GERD was only 29.61% in 2014 (13.20% in 2013), compared with average of 62.07% in the EU. Recent official statistical R&D and innovation surveys in Serbia support findings with a different situation in BES, i.e. investments in R&D and Innovation in this sector are comparable to those by the MES. Further investigations in revealing of real situation in R&D and Innovation investments in BES are needed. In particular, identification of companies with significant R&D and innovation activities is necessary in order to organise more efficient governance of R&D system in Serbia. Policy instruments for knowledge circulation promotion could have limited effects for knowledge circulation because of insufficient integration of business sector and public R&D sector. The example of the spin-off companies formed within Faculty of Engineering in University of Novi Sad supports this need for the reorganisation of research governance: there are 104 spin-off companies with 2,500 employees (more than 90% of employees are university graduates) and EUR 70 million of turnover in 2013. All these companies are in high-tech sectors, mostly in embedded software development, with more than 8% of all activities being classed as R&D. None of these companies are registered as R&D organisations; and only two are registered as innovation organisations under the innovation law.

The attractiveness of R&D system in Serbia for private investments in R&D is insufficient because of the present structure and capacities of public R&D system. The legal framework is not favourable to private sector engagement in R&D and innovation activities because of the following:  Legal barriers to companies to apply for public funds for R&D and innovation activities: according to Innovation law, there is formal obligation for companies to be registered in the MESTD innovation register in order to be eligible for competition under public calls for co-financing of the

innovation grants. Direct consequence of this regulation is that less than 100 companies out of more than 100,000 companies in Serbia are registered in the MESTD innovation register, and only these companies could apply for innovation grants funded by the MESTD. Partly, this problem is resolved with funding from the Innovation fund which operates under the combination of national and international laws in order to comply between foreign donors request to be opened for all innovative companies in Serbia, and avoid national Innovation law which is highly restricted in that sense;  Legal framework for risk and venture capital investments in R&D and innovation activities is not transparent enough and fully adapted to the “rules of game” in market economy: practically, there is no law which regulates venture capital and other risk investments.

Key barriers in implementing demand-side policies in Serbia, besides the absence of an innovation policy are: (1) (traditional) separation between R&D sector and business sector; (2) legal obstacles (the rules defined in the Innovation law in sense of obligation for companies to be registered in the MESTD innovation register); (3) lack of public awareness of the need for such policies. Still, there are no national guidelines issued in any fields of demand-side innovation policy, neither indicators defined to capture the impact of demand-side innovation policies, nor specific national studies conducted in the topic of demand-side innovation policy issues.

Private non-profit (PNP) sector

The private non-profit sector is just in the process of formation in Serbia and in 2014 had a marginal share of GERD (0.03%).

Human resources

Labour market for researchers

The MESTD in 2010 launched a public call for funding of R&D programmes in the period 2011 – 2014 which is open to foreign researchers (MSTD-Act, 2010): “In the Ministry’s project can be engaged a foreign researcher, who within the last five years has accomplished the results that meet the minimal conditions for the management of projects by fields. The foreign researcher engaged in the project of the Ministry is entitled to travel expenses and residence in Serbia in line with the respective act of the Ministry (Article 7)”; and “A project involving at least one foreign researcher is awarded one point additionally, and if involving 2 and more foreign researchers is awarded 2 points in the total sum of 50 points (Article 17)”. Integration of foreign researchers into domestic R&D teams is very welcome and will be awarded in the selection procedure. The Serbian EURAXESS Services network is a portal which provides free and personalised assistance on the challenges faced by researchers and their families when relocating, as stated in The EURAXESS Services is committed to supporting Serbian researchers planning to develop career in the heart of the European Research Area, or researchers from the EU, willing of doing research in Serbia (http://www.euraxess.rs/sitegenius/index.php). Work permits are required for foreigners employed in Serbia and are issued for 3 to 12 months (no VISA required for EU citizens in Serbia). The average time for obtaining the work permit is two days. Work permits can be renewed without obstacles and the procedure is identical to the first application.

Practically, researchers and scientists in government laboratories and institutes are treated as civil servants, whose positions and a significant share (or the total amount) of income is regulated by

96 science law. The nationality of researchers and scientists is not an issue in the Science law; therefore it is up to an individual to accept the rules of this law if they wish to be part of the academic society in Serbia. The same holds for recruitment and competition procedures for all applicants for permanent positions in public universities and public research institutes. The R&D policy states that employing foreign nationals in academic positions in Serbia would mean that the overall economic and social conditions in the country are improved and that this could be an indicator of progress. Still, there are measures which have to be taken in order to facilitate and adapt the process of recognition and validation of professional qualifications and of foreign academic degrees and hence better support international applications for posts within national R&D system. These measures include changes in higher education law, concerning the process of validation of diplomas granted abroad, as well as changes in science law which will introduce procedures for recognition of academic qualifications granted abroad.

Human resources in R&D: 2010-2011

The number of researchers in Serbia is changing from year to year, due to permanent brain drain and the effect of incentives aimed at fighting emigration of researchers from Serbia abroad. R&D personnel made up 0.591% of the labour force in 2008, which is almost half of EU average of 1.03%. Overall, the gender structure of employment in R&D sector is balanced, with 49.35% of women researchers in 2011, although women in business (31.52%) and high education sector (47.78%) are less present in comparison with gender structure of researchers in government laboratories and institutes (55.86%). Ageing of the research population could become an issue with more than half of researchers being aged between 35 and 54 years (56.01%). According to the data of the Republic Statistics Office, in 2011 Serbia had 13,609 researchers in total, 11,615 of which were engaged in MES projects. The average age of the researchers was 44.3 years, which is above the average age of the population in the country, pointing to the need for taking action to provide for and nurture young researchers. The number of graduates in science and technology per 1 000 persons aged 20-29 years was 37.23 in 2008. According to official R&D statistics, the distribution of researchers is as follows: 21.52% are in GS, 1.21% in BES, and 77.20% in HES sector and 0.07% in PNP sector in Serbia (head count, year 2011). There is no official statistics which can indicate the share of permanent positions in HES and PROs occupied by foreigners.

Human resources in R&D: 2013-2014 [Source: The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation"]

In 2013, the Statistical Office of the Republic of Serbia recorded that Serbia has a total of 21,044 employees in research and development, accounting for 2.8 employees per thousand inhabitants. This is well below the European average where that number is greater than five (Eurostat). The number of women in this area is 10,793 or 51% of total employees, which is significantly above the European average, where the percentage is slightly above 25%. Among the total number of employees, researchers have 14,643, representing 2.0 researchers per thousand inhabitants. This frequency is well below the European average of 3 researchers per thousand inhabitants. Out of this number, 59%, or 8,620 researchers, are PhDs. Only 3% of researchers are located in the non-financial sector, which includes businesses and organizations with primary activity in production and sales of goods and services.

Out of the total number of researchers, about 85% are engaged in projects funded by MESTD (the government sector and higher education). One of the priorities of the Strategy for Development of a research system in the period of 2010-2015 was the increase in the total number of researchers, which included primarily the inclusion of young researchers and scholars on projects of MESTD and the increase in the number of researchers with PhDs. Total number of researchers engaged in projects funded by MESTD in 2014 was 13,323, of which 7,970 (62%) PhDs. Index increase in the number of researchers, according to SORS (2010-2013) was 115%, the index of increase in the number of researchers in projects of the Ministry was 140%, while the index of increase in the number of PhDs in the period 2010-2014 amounted to 154%.

In the period 2010-2015, the distribution of researchers by age in comparison to the period before 2010, changed and improved. The number of researchers under the age of 40 is significantly higher, and there is an increase in the number of PhDs under the age of 40.

Mobility is a very important segment in the process of development of each research. Consequently, the mobility of researchers is an important step in improving human capacity in our research area, and plays an important role in the desired rapid development of science in our country. The mobility of researchers may be geographical or cross-sectorial. Geographic mobility is realized within the country or transition from one state to another and may be incoming or outgoing.

Incoming mobility refers to the conditions under which foreign researchers could come, live and work in the Republic of Serbia and could return to their own or a third country, to continue their career. For incoming mobility there are a number of substantive and administrative obstacles: 1) virtually no basis for the financing of foreigners from the budget; 2) universities being disintegrated has a negative impact on incoming mobility due to (i) the absence of any effort to improve existing capacities in order to improve international cooperation, (ii) lack of uniform procedures for the recognition of diplomas, (iii) lack of a system for collecting information on international cooperation of the Faculty ; 3) stay of foreign researchers is not regulated in the legal aspect; 4) there is no system of research visa so that the researchers undergo the identical procedures, very lengthy and complicated, same as for all the foreigners.

The outgoing mobility refers to the departure of researchers to other institution and country and their return to the same or another institution. As for the outgoing mobility, the main problem is the visa for certain countries and regulating the return mobility or reintegration of returnees researchers. Lack of efficient mechanisms of reintegration is one of the main causes of devastating effect called "brain drain". A large number of researchers from Serbia is in the diaspora. Unfortunately, the link with the diaspora is weak and there are no official data (databases) concerning the number of researchers and their areas of activity abroad. Also, there are no precise data on the number of researchers who were on training abroad. The Ministry has in the past five years funded 102 post-doctoral trainings and about 4,000 participations in conferences in the country and abroad. Taking into account the total number of researchers in Serbia, this is not enough and we need to find ways to improve.

A special type of researchers' mobility is intersectoral mobility. It deals with problems of movement of researchers from academic institutions to industry and vice versa. This type of mobility is practically non-existent in our country.

From the analysis of the current situation the following specific challenges could be derived: to increase the number of researchers in the system, to increase the number of doctoral students, to encourage young people to stay in Serbia, to promote doctoral studies, to increase the mobility of researchers in the country and abroad, to exploit the potential of the diaspora, to ensure closer cooperation with industry, to increase the number of researchers in academic sector.

Integration into the ERA

[Source: The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation"]

Although there are programs to support international cooperation, science in Serbia is not fully integrated into the European Research Area and the insufficient number of scientists participates in international projects

Researchers from Serbia already participate in numerous programs of international cooperation. A significant volume of international cooperation is shown through the fact that in more than 35% of the scientific papers indexed in the WoS, at least one of the authors is a foreign author.

In the EC Framework Program 7 (FP7) in the period from 2007 – 2013, 319 institutions in the Republic of Serbia (of which 51 companies) participated in the implementation of 236 projects. From that number, the Republic of Serbia has been the coordinator of 42 projects. The areas in which our researchers were the most successful are information and communication technologies, food, agriculture, fishery and biotechnology, as well as environmental protection, including climate changes. The total value of contracted and completed projects is more than EUR 64 million. The Government of the Republic of Serbia and the European Union signed an agreement on the participation of the Republic of Serbia in the Horizon 2020 program. According to the statistical data from October 2015, the financing of 75 projects with participation of 103 institutions from our country (out of which 28 partners from the industry) has been approved. The agreed budget for the approved projects amounted to EUR 16.2 million. During the first year of the program implementation, for the first time a researcher from the Republic of Serbia received a grant from the European Research Council intended for exceptional research ideas/projects that push the boundaries of research.

In addition, the Republic of Serbia participates in Eureka projects, COST actions (246), NATO program “Science in the service of peace and security” (22 projects), it cooperates with the European Organizations for Nuclear Research (CERN) and with the research center Dubna in the Russian Federation.

Republic of Serbia actively participates in all relevant regional initiatives: o EU Strategy for the Danube Region - EUSDR, as the coordinator of the Priority Area 7 (“Knowledge Society”); o Central European Initiative (CEI) through participation in several programs: Know-how Exchange program, cooperative activities, as well as in the platform CEI–PRAISE Programme to Promote Research and Innovation through Centres of Scientific Excellence and Advanced Research Groups in Member Countries; o The Republic of Serbia is a co-founder of the Western Balkans Research and Innovation Center – (WISE) with its headquarters in Split.

In the context of the accession of the Republic of Serbia to the European Union, bilateral explanatory screenings for Chapter 25 “Science and Research” took place. The following items were presented: legal framework of the Republic of Serbia in this area, cooperation in the field of research and innovation, participation in the EU programs and other activities. It was agreed that the EU acquit will be accepted in this area. The readiness of the Republic of Serbia to accept and implement the recommendations of the roadmap of the European Research Area has been expressed.

Innovation and research services

Knowledge transfer

Crucial steps forward in order to create environment which support technological entrepreneurship in Higher Education Sector (HES) and public R&D laboratories and institutes (PRO – Public Research Organisations) are changes in the HE law and innovation law which stimulate the legally approved creation of university and PROs spin-offs.

Best practice case and recommended way public-private knowledge transfer model is (public) University of Novi Sad with more than 100 spin-off companies created within last 10 years. University of Novi Sad has established the first Intellectual Property Liaison Office within university, in cooperation with national Intellectual Property Office, as the first such office within HE and in overall R&D sector in Serbia.

Organisations registered under Innovation law in the Register in Ministry of education, science and technological development are, as follows:  Innovation centres: 6;  Research and Development centres: 14;  Development and production centres: 57;  Business and Technology Incubators: 7;  Scientific and Technological Parks: 4;  Centres for Technology Transfer: 3.

Mobility of researchers is, at present, mostly in one-direction, away from PROs to private universities or private companies because of the much higher salaries they offer. There are no official obstacles for

100 such movement, but there is an official statement of the (public) University of Belgrade which declares any part-time engagement of their staff in private universities as not-acceptable which could cause termination of contract with University of Belgrade.

In the following text some of these institutions will be more deeply described.

Science Technology Park (STP) Belgrade STP Belgrade is established by the Government (represented by the Ministry of Education, Science and Technological Development), the City of Belgrade and the University of Belgrade, with the aim to create a favourable environment for developing links between industry and science & research organizations and universities, knowledge transfer, new technology development, innovation commercialization, networking and stimulating growth in the knowledge-based economy. STP Belgrade is becoming a new technology core of the city that brings together domestic and foreign high- tech development companies and promotes start-ups by creating a favourable environment to innovation, technology development and competitiveness.

The 16,446 m2 complex covers the land area of 6.6 hectares. The STP is located in a peaceful environment of Zvezdara forest in the central zone of Belgrade, 4.5 km away from the city centre and 22 km away from the international airport. The proximity of relevant institutions, technical faculties only 1 km away and Mihajlo Pupin Institute in the immediate vicinity, is of key importance for technological development and innovation.

STP Belgrade is primarily intended for growing high-tech development companies, small businesses and start-ups. STP Belgrade offers an attractive service package of infrastructure and business support services to its tenant companies, helping them accelerate their growth. We provide the ideal environment for all businesses wishing to be part of a dynamic and interactive community, which creates value-added development through the exchange of ideas, contacts and business opportunities.

Institutions at STP Belgrade are:  Serbian Innovation Fund – The Fund is creating and implementing financing programs for innovative projects from various scientific and technological sectors. With the support of high level peer reviewers and experts in the fields of science, technology transfer and commercialization of innovations, the Innovation Fund has awarded EUR 6 million for the financing of 55 grants for Innovation projects, funded by the EU Instrument for Pre-accession Assistance (IPA) and administered by the World Bank. http://www.innovationfund.rs  Business Technology Incubator of Technical Faculties Belgrade BITF during the eight years of operations, managed to encourage the establishment of more than 50 new small, innovative companies in the field of high technologies and to support their rapid development and thus create the conditions for employment of 300 highly educated young people and for the return of more than 25 of our experts from abroad, and over 70% of companies’ revenues in 2014 came from exports. The special value of BITF is that it was able to mobilize the innovative potential of young people at the University of Belgrade (over 600 students have passed training on starting a business). http://www.bitf.rs  PIU Research and Development – Managing the Project "Research and development" with the aim of modernizing the existing research and development infrastructure within the public sector in Serbia.

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STP Belgrade is implemented within the project Science Technology Park Belgrade-the New Export Instrument of Serbia, supported by the Swiss Government (Swiss Secretariat for Economic Affairs SECO) with the goal to increase exports of high-tech products and services from Serbia. Project objectives are: 1. To design STP as an export instrument 2. To enhance capacity building of STP 3. To promote export of high-tech products and services 4. To enhance globalization and networking.

STP Belgrade is primarily intended for innovative high-tech development companies in the following areas: information and communication technology, biomedicine, new materials and nanotechnology, environment protection and climate changes, energy and energy efficiency, agriculture and food. STP Belgrade also support small businesses and start-ups. Please check if the STP Belgrade has announced a public call to high-tech development companies for membership.

STP Belgrade focus is on technology development companies that have great potential to improve the competitiveness of the Serbian economy through innovation and value-added products and services. STP Belgrade welcomes other entities that contribute to the quality of services delivered by the STP to its tenant s, with the aim to support accelerated development.

STP Belgrade tenant companies are selected through the competitive public call for membership at STP Belgrade. The received applications are assessed by the Commission appointed by the founders of STP Belgrade, based on the following criteria: technological profile, innovation, export potential, job creation potential and revenue growth of the company. Results of the public call are published on the official website of the STP Belgrade. New tenants can move into the STP premises after signing a contract. The first public call for first tenants in the Science Technology Park Belgrade is about to be completed in March-April 2016.

Center for technology transfer – University of Belgrade Center for technology transfer (CTT) was founded by the decision of the University Council on October 26th 2010, with the purpose of identifying, protecting and commercializing the results of scientific, research and expert work and the protection of intellectual property of the University of Belgrade [http://www.ctt.bg.ac.rs/en/ ].

The primary goals and tasks of the Center are:  improving the possibilities for efficient and effective implementation of scientific and research results achieved at the University, with the goal of developing the economy and the society,  encouraging the transfer of knowledge between the University and the economy,  support for the placement of new technologies and innovations,  linking relevant subjects, establishing a network and collaboration with the aim of intensifying the technology transfer,  developing knowledge and skill in the protection and use of patents and other forms of intellectual property in the process of technology transfer,  strengthening the awareness about intellectual property and the capacity for technology transfer at the University,  providing general information on intellectual property,

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 expertise and support in drafting feasibility studies in the fields of economy and technology, as well as the assessment of the value and total potential in the use of patents,  help in establishing new innovation centers, incubators and business and technology parks which are founded by the University and the faculties that are part of the University.

The Serbian Intellectual Property Office is providing significant financial and expert support for the work of the Center, on the basis of a contract signed between the Intellectual Property Office and the University. The contract is part of the IPA national project “Support to the Education and Information Centre of the Serbian Intellectual Property Office” financed by the European Union. The project is directed by the Delegation of the European Union in the Republic of Serbia, and implemented by the European Patent Organization.

Center for technology transfer helps researchers in activities that form the foundation of successful technology transfer:  identifying research output of potential commercial value,  evaluating its commercial potential,  protecting research output with intellectual property right,  marketing inventions,  deal making with potential partners.

Identifying – One of the main goals of the Center for technology transfer is to support and encourage research which involves encouraging researchers to consider the commercial applications of research at an early stage and also working to identify novel, inventive and protectable aspects of research.

Evaluating – Before we spend money on patenting we need to establish clearly that a market exists. The money spent on patents is an investment from which a financial return is expected, but the forecast and realization of financial return is long and complex process, so we should consider current and potential market for the technology. Protecting – Protection from unauthorized use of the invention is very important. This is a complex and expensive process. The center will help researchers in finding the best ways to protect their invention, finding funding for patent costs and managing the process of obtaining a patent. Маrkеting – Marketing the invention phase involves searching and finding potential partners as well as distribution of marketing materials. Deal making – Negotiation and closing deals associated with licensing and spin-out activities are very important for further development and exploitation of invention and to optimize the overall benefit to the researchers, faculties, University and Center for technology transfer.

Technology transfer is the process by which basic science research and fundamental discoveries are developed into practical and commercially relevant applications and products or process by which patents and intellectual property raised from academic research are transferred to industry. There are many reasons why researchers would like to participate in the process of technology transfer. Only some of the most important are:  a chance to see their research used for the benefit of society,  exposure to the intellectual challenge of turning laboratory research into products,  making a positive economic impact on society,  feeling a sense of personal fulfilment,

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 achieving awards and prizes,  generating additional funding,  meeting the obligations of research contract,  attracting research sponsors,  creating educational opportunities for students,  linking students with future job opportunities.

Center for technology transfer promotes cooperation and links researchers and industry, provides connection between external need for technologies and our portfolio of inventions from the University, and generation of researches sponsored by industry. Cooperation with the Center can bring multiple benefits to industry and entrepreneurs: easy access to researches and technical solutions that are needed by industry, participation and collaboration in research projects that are directed towards strategic needs of industry and entrepreneurs and also the possibility of finding suitable staff. Through technology transfer innovations can be incorporated into products and services that have positive impact to society. By transferring knowledge from University to private sector commercial potential of research can be maximally utilized.

Center for technology transfer – University of Novi Sad The following structures/services are established at the University of Novi Sad with the aim to support knowledge transfer, research and innovation: 1. The University Center for Intellectual property (IP Center) - Faculty of Engineering (aka Technical Sciences) of the University in Novi Sad; 2. Center for competitiveness and clusters – Faculty of Engineering (aka Technical Sciences) of the University in Novi Sad; 3. UNESCO Chair for Entrepreneurial Studies (UCES) - University in Novi Sad; 4. Business Incubator Novi Sad – Faculty of Engineering (aka Technical Sciences) of the University in Novi Sad; 5. The Best Technology Innovation Competition – Faculty of Engineering (aka Technical Sciences) of the University of Novi Sad, with support from Ministry of Education, Science and Technological Development of the Republic of Serbia;

Business Service Office at the University of Novi Sad (BSO-NS) [http://www.bsons.uns.ac.rs/index.php?pageview=kpp ] should not be one more unit within the University of Novi Sad (UNS) which will be competitive with existing units with similar objectives (such as UNESCO Chair for Entrepreneurial study, Business incubator Novi Sad, Europe Enterprise Network, Competition for the best technological innovation, Technology Transfer Center, University Center for Intellectual Property, etc.), but the way for activities harmonization of the above-mentioned units. This office should make important link between researchers and expertise which exist at the UNS, as well as students (young innovators) from one side and potential investors, or sponsors, who have a need for these skills or knowledge from another side. BSO-NS should:  ensuring simple, fast and reliable connection between sponsors, UNS, research centers, business incubators and science-technology parks;  ensuring data base, which contains knowledge and resources that UNS and research centers/laboratories/groups offer to business sector as well as its regular updating;  development and maintenance of the platform for Innovation management;

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 establishing on-line web catalogue which contains research and innovation resources, including their promotion;  ensuring logistic support in development of business incubators and science-technology parks in the Western Balkan region;  forming specific and statistical reports which contains important information for help to the management of the UNS.

Activities of the BSO-NS can be identified as follows:  Collecting data related to the research and innovation potential of the University of Novi Sad, for this purpose it is necessary to have regular communication with representatives of the faculties responsible for this area as well as with representatives of the Provincial Secretariat for science and technological development;  Promotion of the University’s research and services using (and updating) catalogue of research and innovation potential of UNS;  Establishing and maintenance of the data base in the form of HTML catalogue, with on-line search and preparation of specific reports (on the administrator level and user level);  Providing unique approach to university’s resources, equipment, trainings, research results, patents and licences which can be offered to the industrial partners;  Establishing private-public partnerships and promotion of the modernized UNS services;  Development of partnership with enterprises and connecting researchers and students with partners from industrial sector;  Giving support and enforcing links with business incubators and science-technology parks within the Autonomous Province of Vojvodina;  Participation in the organization of the Best technology innovation competition;  Maintenance of the web platform for the innovation management;  Close collaboration with UNESCO chair for entrepreneurial study and with Europe Enterprise Network;  Participation in the improvement process of the University’s regulatory documents and procedures.

Services for Knowledge Based Economy in the Autonomous Province of Vojvodina [Source: Prof. Dr. Vojin Šenk: SUPPORTING INNOVATIONS IN SERBIA - SPIN-OUT COMPANIES, INCUBATORS, PARKS, ACTIVITIES, Conference proceeding XXI Scientific conference: "Technology, culture and development", 2014, Tivat, Montenegro, 2-4. September 2014, pp. 39-48, ISBN 978-86- 915151-3-3, COBIS.SR-ID 211849740 – extract of the article] The Integrated Regional Development Plan of Vojvodina (IRDP), adopted by Executive Council of the Autonomous Province (AP) of Vojvodina and approved by the Assembly of the AP Vojvodina back in 2004, was a framework for development of the AP Vojvodina from political, legal, institutional and organizational aspects. The IRDP was a multisectoral action plan with the main aim of supporting the socio-economic development process of the AP of Vojvodina by stimulation of significant segments through different integrated measures. One among the 14 IRDP measures was “Joint Fund for Building Business Incubators in Vojvodina (BBI)”. The BBI established two priorities:  Using internal potentials of APV, and  Improving the framework for economic development in the region.

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In particular, it foresaw to establish and maintain business incubators throughout Vojvodina and to promote good business ideas by a significant support to the socio-economic development process in the AP of Vojvodina, considering the development of new businesses as a key factor to future economic success of the region. The BBI measure especially supported:  The IRDP Strategy 1.1: “Development of SMEs”, and  The IRDP Strategy 2.3: “Improving the R&D to business cooperation“, by provision of basic facilities for business start-ups, building the entrepreneurial spirit by business idea competitions throughout Vojvodina, with the aim of developing business and entrepreneurial know how through training and consultancy.

The BBI direct target groups were the (potential) business start-ups in the AP of Vojvodina. In order to create a favourable environment for business start-ups, IRDP defined the following actions:  Support to the SME development process by building and maintaining business incubators in Novi Sad, Subotica and Zrenjanin;  Development of entrepreneurial spirit by business idea competition throughout Vojvodina;  Introduction of basic business know-how to new entrepreneurs by training and consultancy.

The AP of Vojvodina has to diversify and extend its business structure. This can only be achieved by extensions of existing companies or by settlement and creation of new businesses. Vojvodina used to be a far ahead region within Serbia and the BBI intended to re-stimulate the entrepreneurial spirit by offering business platforms and filtering out the best ideas.

IRDP was prepared with support of GTZ (now GIZ). It has financed a pilot project at the University of Novi Sad (NOSIC – Novi Sad Incubation Centre) aimed at stimulating the opening of a high-tech incubator at the University. The central point of the project was the competition for the best business idea at the University in 2003 that subsequently became the Best Technology Innovation Competition in Serbia that is running from 2005 till now (2014). The success of the project paved the way for establishing BINS, the Business & Technology Incubator in Novi Sad in 2010. by the City of Novi Sad, Vojvodina, Investment Promotion Agency, Faculty of Engineering and Informatika (municipal provider of ICT services). (More details: http://www.businessincubatorns.com/).

The role of University of Novi Sad, and its Faculty of Engineering

The leading partner in creating and developing the functioning of BINS has been and still is the Faculty of Engineering (aka Technical Sciences) – FTS. It is the largest single faculty in Serbia, and the key institution at the University of Novi Sad - UNS. The unique point of FTS is that it has tightly integrated industrial development with pure scientific research and education. It is best documented by contributing more than 90% of the 104 spin-out companies generated at the University of Novi Sad over the period of last 25 years, majority of them in the past few years. Those companies constitute a spontaneously born Science & Technology Park (STP) of the University of Novi Sad – partly situated at FTS. With a compound income of more than EUR 70 million in 2013, and an average yearly growth of 25%, its more than 2500 workforce selected among the best former students of FTS and other faculties of UNS, contribute significantly to the economic perspective of the city of Novi Sad and the wider region. Some of the aforementioned companies, like Schneider Electric DMS NS, RT-RK, Execom, Levi9, A51, Eipix etc. are already renowned worldwide.

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The spin-out process usually starts in FTS laboratories through an informal incubation process, and engage the best students in the final period of their education at all levels (bachelor, master and doctoral). Though the educational and R&D processes tightly knit significantly contribute to the quality of both, this self-born strategy brings huge problems as well, the lack of space and equipment being the most outstanding. Thus, the development plan of FTS stresses the need to erect some 29,000 m2 of new space intended for the Science & Technology Park of the University of Novi Sad. Its space structure is presented in the following table.

New building “Second Phase” of STP of University of Novi Sad – part at Faculty of Engineering - net area space structure Net area of new building m2 Science Laboratories of Faculty of Engineering 8,951.66 Science & Technology Park office space for renting 15,644.58 Science & Technology Park garage space for renting 3,556.96 Science & Technology Park basement – technical rooms 981.30 Total 29,134.50 During the past ten years the Faculty has developed into an institution with more than 12.000 students and 1,200 staff members, 88 study programmes and a huge overall number of research projects (1,139, of which more than 20 are international, including FP7 projects). Presently, the Faculty possesses 29,320 m2 or less than 3 m2 per student, which is below the state standards (4 m2), and below European standards as well (12 m2).

The new premises consist of two buildings, one for the Building for Laboratories of Department of Civil Engineering (2,113.00 m2), and the other for combined functions of the STP and the science laboratories mostly for ICT and electrical engineering departments of FTS (29,134.50 m2). STP would be ICT based because the majority of already incubated spin-outs are ICT based as well, because ICT offers possibilities for highest quality of R&D with the least amount of funding, and because its spatial needs are the lowest as well. This is the reason why electrical and computer engineering departments will be integrated with its functions.

ST Park of University of Novi Sad – part at Faculty of Engineering will have two beneficiaries:  Faculty of Technical Sciences and  Science and Technology Park Enterprise.

In one part of the building (8,951.66 m2), science laboratories of FTS will be built (SL-FTS), mostly for R&D in ICT sector and electrical engineering sector. It is planned that 500 researchers will be accommodating in this part of the building.

Excluding budgetary revenues for staff salaries, cooperation with industry and national scientific projects are the main source of income of FTS. Income from international scientific projects becomes increasingly important as well. This extra FTS income in 2013 was more than EUR 10 million.

Starting from the beginning of nineties FTS lead the University of Novi Sad in creating new high-tech companies. Provided figure 12 gives the number of start-ups by years, from 1991 till now. It can be observed that the average number of start-ups per year is close to 5, while in the last five years (excluding 2014) it is close to 8. Although this number is way greater than in other university centers in Serbia (e.g. Belgrade), it is still modest when compared with the potential for starting new

107 knowledge-based companies. The STP will, both, directly, by giving role models to researchers and students, and, indirectly, through the activities of the high-tech incubator hosted as the most important tenant, at least double this number, i.e. it is expected that between 15 and 20 new high- tech companies will be formed each year, after the park officially commences its daily activities.

Figure 11: FTS annual income from national and international scientific projects and cooperation with industry

Figure 12: Number of start-ups per year

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The total number of employees of the existing spin-out companies from the University of Novi Sad (great majority of them from FTS) is given in provided figure 13. A steady increase is readily observed, and can be extrapolated for the future as well.

Figure 13 presents the rise in the number of employees in high-tech start-ups of the University of Novi Sad - Faculty of Engineering. We can observe that the annual growth of this number is approximately growing. As our interest is to predict the impact of the Science & Technology Park on the growth of high-tech jobs, we must take the following into consideration. First, the existing companies, especially the large ones, predict exponential employment growth. Second, new companies are constantly being formed, and, as we have already commented, the impacts of the STP will double the trend. Third, the Faculty constantly increases the number of students enrolled into ICT related programs, creating more potential workforce. Fourth, there is a white plague and a huge brain drain from Serbia and partly from Novi Sad as well, which undermine these efforts towards increasing the number of people capable of working in the sector. Without STP, we could assume that the effects of this forces will level out the number of new employees in a couple of years, i.e. that we could extrapolate that the number of new jobs in ICT sector in Novi Sad would be fixed at about 500 per year from 2017 on. Assuming the rise of attractiveness of the ICT studies due to the existence of STP, easier starting of new student based enterprises as a result of the on-site incubator, and the rise in average salaries due to the change in the business model of those companies (greater impact of product selling against pure outsourcing of R&D activities), we can assume that the growth of the annual rise of the number of employees could be sustained for a couple of years more, say, for another three years (till 2020, the projected accession of Serbia to EU). It gives the annual rise of the number of employees of about 650, i.e. 150 more local jobs per year due to halting the brain drain process to about half of the present rate. Namely, since about 12.5% of people are finishing university studies in Serbia for the past 50 years, and there are about 6% of citizens of Serbia holding university degree, we can assume that the standard brain drain rate in Serbia is about 50%. The rise in the number of employees of the spinouts of the University of Novi Sad - Faculty of Engineering is closely correlated to the number of graduates per year, giving exactly this ratio (50%). Assuming that STP will support the retention rate to be 75% (and the brain drain to be 25%), we come to the aforementioned effect.

Analysis of the impact of this rise to the community will be showed with analysis of the average income. It is readily seen that the total income has a steady increase in a long period. This increase spills over to the wider community through the profit tax, through the income taxes and contributions, and through VAT on expenditures of the companies and their employees. If we analyse the income per capita of the total of employees, we see that, after the initial drop from EUR 45,000 to EUR 35,000 /year/capita, the value is fixed for some 7 years in a row. This is largely due to the fact that the structure of the spinout companies we focus at is at outsourcing (contracted R&D for mostly foreign partners) instead of at building their own IPR. STP is primarily intended to alter this deadlock. Focusing on innovation, on attracting equity investors (business angels, later VCs) due to the visible concentration of high-tech start-ups in a highly attractive niche, on promoting high-tech entrepreneurship among the young and potentially creative people, it is likely that the percentage, not just the sheer number of IPR based companies will significantly rise. That would increase the income per capita from around EUR 35000 per annum (around EUR 3000 per month) to at least double the amount, with at least one company in ten years able to earn more than EUR 1 million per year per employee. The impact of this result to the wider community cannot be exaggerated.

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Figure 13: Total number of employees

Figure 14: Total income - EUR

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Services for RTD information

Legal base for access and preservation of scientific information in the Republic of Serbia is the Science Law (Science Law, 2015) which regulates the system of scientific research activities in the Republic of Serbia. The Article 10 predefined 16 programmes of general interest to the Republic with Programmes 13, 14 and 15 related to the Action MS45 [Define and coordinate their policies on access to and preservation of scientific information]:  Programme 13: Programme for the procurement of scientific and professional literature from abroad and for access to electronic scientific and professional databases;  Programme 14: Programme for publishing of scientific publications and holding of scientific conferences;  Programme 15: Programme for encouraging of activities of scientific, scientific and professional societies, associations and other organisations, which are in function of the improvement of scientific research work, promotion and popularisation of science and technology and concern for the preservation of scientific and technological heritage.

Major document which regulates harmonised access and usage policies for research and education- related public e-infrastructures and for associated digital research services enabling consortia of different types of public and private partners is the "Strategy for development of an Information Society in Serbia up to 2020" (Official Gazette of the RS, No. 51/2010).

The major source of RTD information which offers wealth of information to researchers is KoBSON (www.kobson.nb.rs) i.e. consortia of libraries in Serbia which provides on-line retrieval of articles, journals and books, both domestic and foreign. Although this service is available to researchers in Serbia only since November 2001, it is improved year by year, and makes R&D work to be based on highly relevant and up-to-date S&T information from all world relevant journals and publishers and provides access to scientific and technological information worldwide. There is general assessment in R&D community in Serbia that Kobson is successful and crucial for R&D activities in country (Kosanović, B. (2008).

Major document which regulates forms of electronic identity for researchers giving them transnational access to digital research services is the "Strategy for development of an Information Society in Serbia up to 2020" (Official Gazette of the RS, No. 51/2010). More specifically, chapter 3 regulates role of ICT's in education, science and culture (page 12): "Up to year 2020 all institutions in the areas of education, science and culture should use broadband communications through optical fibers, and should be equipped for fast access to the Internet, available to students, professors, researchers etc." Further, the Strategy defines academic computer network, main services and computer nodes in Serbia. Major institutional framework for further development of this network is AMRES, as academic network in the Republic of Serbia (Official Gazette of the RS, No. 28/2010). Academic Network of Serbia (AMRES) is the national research and education network of Serbia, offering modern information- communication services and Internet connection to it's users. It's considered to be the most advanced network in country, with over 150 connected institutes and more than 150.000 active users. Using the informatics and Internet infrastructure, and computer network, AMRES provides the education and research organizations and other members with access and use of the Internet and information services in the country, as well as the connection with national and international networks of such type. AMRES is a member of the following international associations: TERENA (Trans European

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Research and Education Network Association); CEENET (Central and Eastern European Network Association); GÉANT2 (pan-European Research and Education Network) - observer.

Other important sources of scientific information in Serbia are:  System “E-theses" is assigned for search and download of doctoral dissertations (http://eteze.bg.ac.rs/ ). It is a part of the Digital repository – PHAIDRA, system for indexing and archiving of scientific and professional papers. According to copyright policy, repository contains only dissertations with signed statements in which candidate authorizes University to upload his dissertation in Digital repository, and indicates license conditions. Dissertations are searchable within “E-theses” or within the PHAIDRA. PHAIDRA (Permanent Hosting, Archiving and Indexing of Digital Resources and Assets) is system for permanent archiving, indexing and use of digital objects of the University of Belgrade (https://phaidrabg.bg.ac.rs/). Digital repository enables to archive systematically the results of the whole University, to secure them permanently and to make them accessible worldwide. Establishing of repository is realized as a part of Tempus project “New Library Services at Western Balkan Universities”. Program basis of the repository is PHAIDRA system of the University of Vienna;  COBISS.SI, COBISS.SR, COBISS.MK, COBISS.BH, COBISS.CG and COBISS.BG are designations for the autonomous library information systems with their own shared bibliographic databases COBIB that have been, or are being, set up in individual countries (Slovenia, Serbia, Macedonia, Bosnia and Herzegovina, Montenegro and Bulgaria) (http://www.cobiss.net/cobiss_platform.htm}. In Europe, information systems with the generic name CRIS (Current Research Information Systems) have been built for decades. Nowadays, the contents of the CRIS system are being extended to areas of financial resources for research, information about patents and innovations, use of research results, evaluation of research work, etc. The latest trends point towards adding descriptions of research results links to other (bibliographic) databases, and multimedia databases to the existing databases. Another important aspect of the development of CRIS is its move to the Internet. This contributed to an increased use of the system, and consequently, an increased amount of data, as data providers are more highly motivated to cooperate. In the past, the integration and expansion of CRIS was often made difficult by uncoordinated methodologies. For this reason, in recent times there has been a strong tendency to move towards standardisation. CERIF: a Common European Research Information Format is one of the universally accepted recommendations, which not only defines the structure of data concerning research projects, but includes recommendations related to research organisations, departments and researchers. In compliance with the CERIF recommendations, the web application E-CRIS was developed. The Institute of Information Science (IZUM, Slovenia) offered it to all users of COBISS applications free of charge in order to establish a register of researchers and organisations within the national library information systems, included in the COBISS.Net network. The register is essential for the creation of bibliographies for researchers and research organisations. The following entities are currently presented in E- CRIS.SR: 223 research organisations, 608 research groups, 10,397 researchers. The databases are interlinked and most data is available in both Serbian and English. It is possible to search by all key fields. E-CRIS.SR is also connected to the COBISS.SR information system, i.e. the bibliographic database COBIB.SR, which enables its users a direct insight into the researchers' bibliographies.

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Legal framework for innovation and R&D

Legal documents

1. The Law on Higher Education ("Official Gazette of RS", no. 76/2005, 100/2007 - authentic interpretation, 97/2008, 44/2010, 93/2012, 89/13 and 99/14) + Law on Amendments to the Law on Higher Education ( "Official Gazette of RS", No. 99/14) + Law amending the Law on higher education - an amendment to Article ("Official Gazette of RS", nos. 76/05, 100/07, 97/08, 44 / 10, 93/12, 89/13, 99/14 and 45/15). Main issues addressed – content of the law:  Rules on standards and procedures for external quality control of higher education institutions  Deadlines for submitting materials For external verification and accreditation  Rules on standards and procedures for accreditation of higher education institutions and study programs  Rules on standards and procedures for external quality control of higher education institutions and study programs  Amendment Rules on standards and procedures for accreditation of higher education institutions and study programs  The amendment regulation on standards for outdoor quality assessment of higher education institutions and study programs  Ordinance on standards for self-evaluation and quality assessment of higher education institutions  Rules and standards for initial accreditation of institutions and programs  ORDINANCE standards for self-evaluation of higher education institutions  Rules for accreditation  Rules For external verification of the quality of higher education institutions  Standards and amendments to standards for accreditation of doctoral studies of art  Standards and amendments to standards for accreditation of doctoral studies  Standards and amendments to standards for accreditation of doctoral studies program I and II levels  Standards and amendments to standards for the accreditation of institutions  Standards for self-evaluation of higher education institutions  Standards For external verification of the quality of higher education institutions  Rules Amending the Rules on standards and procedures for external quality control of higher education institutions

2. The law on public procurement, "Official Gazette of RS", no. 124 of 29 December 2012, 14 of 4 February 2015, 68 of 4 August 2015 Main issues addressed – content of the law:  Rules on regulating public procurement procedure within the Ministry of Education, Science and Technological Development

3. Law on Scientific Research ("Official Gazette of RS", no. 110/2005, 50/2006 - corr., 18/2010 and 112/2015)

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Main issues addressed – content of the law:  The draft Rules on categorization and ranking scientific journals  National Council for Scientific and Technological Development applied in accordance with the Law on Scientific Research the following regulations:  Regulation on the evaluation of scientific research institutes and accreditation process, integrated universities, colleges and centers of excellence ("Off. Gazette of RS", no. 69/2015);  Rules on the procedure and method of evaluation and quantitative expression of scientific research results of researchers ("Official Gazette of RS", no. 38/08);  Rulebook on the criteria for the granting, validation and revocation of the status of center of excellence, scientific research and funding for the center of excellence ("Official Gazette of RS", no. 60/08).  Rules on amendments to the Ordinance on the criteria for granting, certification and revocation of the status of center of excellence, scientific research and finance center of excellence ("Official Gazette of RS" no. 60/08)

4. Law on Innovation ("Official Gazette of RS", no. 110/05, 18/10 and 55/13) Main issues addressed – content of the law:  Rules on the method of implementation of the program of innovative activities for 2015 ("RS Official Gazette", No. 90/15)  Regulation on establishing a program of innovative activities for 2015 ("RS Official Gazette", No. 89/15)  Rules of Procedure records, content and presentation of the results of innovation and development projects ("RS Official Gazette", No. 1/14)  Ordinance on the form, content and manner of keeping the Register of innovative activities ("Official Gazette of RS", No. 16/2011)  Ordinance on the content and the deadline for submission of the annual report of the autonomous province and local self-government ("Official Gazette of RS", No. 1/14)  Ordinance on the content, the deadline for submission of the treatment in case of failure of the annual report of the subject innovation activity ("RS Official Gazette", No. 1/14)  Rules on the conditions of application and criteria for selection of implementers of projects funded from the budget and funds with majority state ownership ("RS Official Gazette", No. 1/14)  Rules on the manner of implementation of the Program of innovative activities in 2013  Act on the criteria for selection, evaluation and financing activities of professional societies of inventors in 2013  Rules on the conditions for the registration of innovative activities and to delete from the registry ("Official Gazette of RS", No. 16/2011)

5. Law on Serbian encyclopaedia, ("Official Gazette of RS", no. 110/05) Main issues addressed – content of the law:  Rules on the issue of textbooks in small editions ("Official Gazette of RS", No. 30/2010)  Rules on the content and manner of keeping the Register of publishers who have received permission for publishing textbooks and other teaching aids ("Official Gazette of RS", No. 21/2010)

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 Rules on the content and manner of keeping the Register of approved textbooks ("Official Gazette of RS", No. 21/2010)  Rules on authorization for the issue of textbooks - License ("RS Official Gazette", No. 6/2010)

6. Law on the Serbian Academy of Arts and Sciences ("Official Gazette of RS", No. 18/10)

7. The Law on the Dictionary of the Serbian Academy of Arts and Sciences ("Official Gazette of RS", no. 110/05)

8. The Law on Protection against Ionizing Radiation and Nuclear Safety ("Official Gazette of RS", No.36 / 09); Amendments Act ( "Official Gazette of RS", No. 93/12)

Laws on intellectual property

The legal framework for the protection of intellectual property rights in Serbia is complete and fully in accordance with international recommendations and practice. The main laws adopted in the recent period are: Patents

1. The Patent Law (“Official Gazette of the Republic of Serbia“, no. 99/11, dated December 27, 2011; in force since January 4, 2012)  Act on Special Powers for Efficient Protection of Intellectual Property ("Off. Gazette of RS", Nos. 46/06 and 104/09)  Act on Special Powers for Efficient Protection of Intellectual Property ("Off. Gazette of RS" No. 104/09) 2. Cooperation and Extension Agreement - Agreement between the Federal Government of the Federal Republic of Yugoslavia and the European Patent Organisation on Cooperation in the field of Patents — Co-operation and Extension Agreement ("Official Gazette of Serbia and Montenegro - International Agreements“, no. 14/2004 dated June 18, 2004; in force since November 1, 2004) 3. Law on the Ratification of the Strasbourg Agreement Concerning the International Patent Classification (Strasbourg, 1971, as amended in 1979) ("Official Gazette of the Republic of Serbia - International Agreements", no. 42/2009 dated June 2, 2009; in force since July 15, 2009) 4. Law on the Ratification of the Patent Law Treaty ("Official Gazette of the Republic of Serbia - International Agreements", no. 19/2010 dated March 23, 2010; in force since August 8, 2010) 5. Law on the Ratification of the Convention the Grant of European Patents (European Patent Convention) from October 5th, 1973, with the amendments of article 63 of the European Patent Convention from December 17, 1991, and amendments from November 29th, 2000 ("Official Gazette of the Republic of Serbia - International Agreements", no. 5/2010 dated June 9, 2010; in force since October 1, 2010) Trademarks

6. The Law on Trademarks (“Official Gazette RS”, No. 104/2009; 16/12/2009 and No. 10/2013; 30/01/2013) 7. The Methodology Applied by the Intellectual Property Office to the Procedure Relating to the Registration of Trade Marks and the Procedures Based on Registered Trade Marks Designs

8. Law on Legal Protection of Industrial Design (“Official Gazette RS”, No. 104/2009; 16/12/2009)

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Indications of Geographical Origin

9. Law on Indications of Geographical Origin (“Official Gazette RS”, No. 18/2010; 26/3/2010). Copyright and related rights

10. The Law on Copyright and Related Rights (Official gazette of RS 104/2009, 99/2011 from 27.12.2011 and 119/2012 ) Version in force 04.01.2012, Revised text of the Law 11. Law on the amendments of the law on Copyright and Related Rights (“Official Gazette RS”, No. 119/2012 since December 17, 2012) 12. The Law on Optical Discs (“Official Gazette RS”, No. 52/2011; since July 15, 2011; in force since July 23, 2011) 13. Regulations on the conditions to be fulfilled the copies of copyright protected works and subject matter of related rights which are deposited, entry in the register and deposition of copyright protected works and subject matter of related rights and the contents of the registration of deposited copyright protected works and subject matter of related rights with the competent authority (“Official Gazette RS”, No. 45/2010; since July 3, 2010; in force since July 11, 2010) International treaties (The texts of international treaties with comments and lists of states party to them have been taken from the book entitled "INTELLECTUAL PROPERTY Volume two: International Treaties", by Dr. Vesna Besarović, a full professor at the Belgrade Faculty of Law and Mr. Blagota Žarković, former Director of the Intellectual Property Office. Publisher: Dosije, Beograd. ISBN 86–81563–44–0): a. Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms (1971) b. The WIPO Copyright Treaty (1996) c. The WIPO Performances and Phonograms Treaty (1996) d. The Berne Convention for the Protection of Literary and Artistic Works (of 9 September 1886) e. Universal Copyright Convention (of 6 September 1952) f. The International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (“the Rome Convention”) - of 26 October 1961)

Topographies of Semiconducting Products

14. The Law on the legal protection of Topography of Semiconducting Products (“Official Gazette RS”, No. 55/13; 25/06/2013) 15. Regulation on the Procedure of protecting integrated circuit topographies (“Official Gazette SRJ”, No.44/98, 47/98) Trade secrets

16. The Law on the Protection of Trade Secrets ("Official Gazette RS" no. 72/2011, in force since 6.10.2011)

Other Laws

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17. The Law on Special Powers for the Purpose of Efficient Protection of Intellectual Property Rights ("Official Gazette of the RS", no. 46/06, 104/09) The Republic of Serbia has become the member of the European Patent Organization (EPO) on October 1, 2010.

Ministry of Education, Science and Technological Development of Republic of Serbia – strategic and legal documents – old / replaced documents:

1. “Strategy of Scientific and Technological Development of the Republic of Serbia 2010-2015”; 2. “Act on the selection, evaluation and financing of research for the project cycle 2011 – 2014”;

Ministry of Education, Science and Technological Development of Republic of Serbia – strategic and legal documents in power:

1. Strategy for the Development of Education in RS by 2020 The government has adopted, at the meeting on 25 October 2012, the Education Development Strategy in Serbia until 2020 (hereinafter: the Strategy). The strategy was published in the "Official Gazette of the Republic of Serbia", No. 107/12. Strategy is concerned with identifying the purpose, goals, directions, instruments and mechanisms of development of the education system in the Republic of Serbia until 2020.  Action Plan for the implementation of the Education Development Strategy in Serbia until 2020 specifies the individual activities (actions) defined the objectives and priorities of the Strategy, developed methods of implementation, deadlines, key holders and executors, instruments and indicators monitored (indicators) of progress, as well as procedures reporting and assessment of the effects of planned strategic measures.  Guide to the strategy - Europe 2020  Adult Education Development Strategy in Serbia

2. Strategy of Scientific and Technological Development of the Republic of Serbia for the period from 2016 to 2020 "Research for Innovation"

3. Strategy of the intellectual property development for the period of 2011 to 2015

Important note

The establishment of spin-off companies by researchers employed in the SRO is not regulated by the applicable laws of the Law on Higher Education and the Law on Innovation. In addition, positive legislation does not define financing through venture capital funds (Venture Capital VC).

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Strategies for developing the NIS

A. The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" On the proposal of the Ministry of Education, Science and Technological Development, the Government of the Republic of Serbia has adopted, at its meeting held on 03 March 2016, the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation". Science and innovation are key factors of competitiveness and sustainable development. The main preconditions for the creation of an innovative society of knowledge are the excellence and relevance of scientific and research results. Excellence is a measure of quality and international visibility of scientific and research results, and the relevance represents the impact of the scientific and research results on the economy and society. The Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2016 – 2020 – Research for Innovation (hereinafter: the Strategy) is a document which sets out measures and programs for the promotion of excellence in science and targeted research for the development of economy and society as a whole, in the next five years. The vision of the strategy is that within five years, science in the Republic of Serbia will be based on a competitive system that supports excellence in science and its relevance to economic development, competitiveness of the Serbian Economy, and development of society as a whole. The mission of the strategy is the establishment of an effective national research system integrated into the European Research Area which leans on the partnerships in the country and abroad, and which contributes to the economic growth, social and cultural progress, raising the standard of living and quality of life. Institutional and strategic framework of the Strategy is based on the acknowledgement of the role of science, technological development and innovation in the socio-economic and overall development of the country, with a clear emphasis on the quality of education and research staff and competitive research for innovation. The Strategy relies in part on the positive experiences of the Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2010 – 2015, and the current sectoral development strategies and other strategic development documents and policies, and it is associated with regional EU programs and strategies, in particular, in determining the development priorities (Strategy for Education Development in Serbia 2020, Strategy and Policy on Industry Development of the Republic of Serbia 2011 – 2020, Strategy for Support of Development of SMEs, Entrepreneurship and Competitiveness 2015 – 2020, Strategy for Agriculture and Rural Development 2014 – 2026, Strategy for Information Society Development in the Republic of Serbia until 2020, Strategy on Development of Intellectual Property for the period 2011 – 2015, Strategy for South East Europe 2020 (SEE 2020), Western Balkans Research and Innovation Strategy (WISE), Strategy for the Danube Region, Lisbon Strategy, Horizon 2020, etc. At the same time, the Strategy is a national road map for integration into the European Research Area, since it accepts and sets out measures for achieving priorities and objectives defined in the roadmap of the European Research Area. The essential novelty of this Strategy is that it focuses around the “research for innovation”, in the function of economic and overall social development of the country. In legal terms, the Strategy is in line with the Law on Scientific Research and the Law on Innovation and the bylaws adopted on the basis of those laws, as well as with the Law on Higher Education and other relevant systemic laws and regulations.

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General analysis of the situation in science, technological development and innovation activities in the Republic of Serbia, as well as the analysis of the implementation of the Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2010 – 2015 and its achieved targets and results shows that the Republic of Serbia has scientific and research potential and that, in times of economic recession and lack of material and financial resources, significant results were achieved in many areas, above all, in the excellence in scientific research and the number of scientific papers published in international journals and establishment of new technological enterprises that improve the position of Serbia in the global economy. The analysis of the implementation of the Strategy on Scientific and Technological Development of the Republic of Serbia for the period 2010 – 2015 and the achieved results, as well as on the state of science as a whole, is presented in Annex 1 – “SCIENCE AND INNOVATION IN THE REPUBLIC OF SERBIA TODAY”, and it contains the following conclusions: 1. The excellence of scientific research and their relevance to the economic and social development of the country and society as a whole are not sufficiently supported through the system of research funding; 2. There are no adequate financial instruments, nor the institutional framework for linking science with industry and the public sector; 3. The system of management of the scientific and innovation system is not sufficiently effective, and there is little coordination of work in the relevant institutions and different stakeholders; 4. There is a lack of adequate human resources in scientific research organizations, industry, public sector, and there are no long-term measures to address this problem; 5. Although there are programs to support international cooperation, science in the Republic of Serbia is not fully integrated into the European Research Area and the insufficient number of scientists participate in international projects. The economy and society must step into the new field of development, based on science and in an environment that stimulates economic and technological and socio-cultural innovation, so that the Republic of Serbia could improve its competitiveness on the global level. The overall objective of the Strategy is to improve the efficiency and effectiveness of the scientific research system which will allow: – the creation of new knowledge, development of new and improvement of the existing technologies, solving complex social and economic problems and the definition of the economic specialization of the country; – education of high quality research personnel that will be able to use their knowledge and scientific research activities in order to create new values, design and generate economic and overall social development. In order to achieve the defined vision and mission, this Strategy defines six specific objectives, as follows: 1. Encouraging excellence and relevance of scientific research in the Republic of Serbia; 2. Strengthening the connection between science, economy and society to encourage innovation; 3. Establishing an effective management system for science and innovation in the Republic of Serbia; 4. Ensuring excellence and the availability of human resources for science and economy and social affairs; 5. Improving international cooperation in the field of science and innovation; 6. Increasing investment in research and development through public funding and encouraging the investments of the business sector in research and development. The task of the ministry responsible for science and technological development (hereinafter: the Ministry) is to prepare and implement a set of measures that will create conditions for the realization of these objectives.

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Guidelines for implementation of the strategy

Previous practice has shown that the definition of a clear policy is as important as ensuring the conditions for its implementation in practice. A key prerequisite for the implementation process is the establishment of functional cooperation between ministries and other relevant bodies and institutions, as well as between the public and private sectors. The success of the Research for Innovation Strategy will depend on understanding and political support at the highest level, as well as on ensuring stable and relevant system of financing. For the successful implementation of the Strategy, it is necessary to provide the consensus of government bodies, scientific research organizations and relevant organizations and institutions, with the provision of financial mechanisms for institutional and material support for innovation and technology transfer, as well as better coordination at the regional, national and European level. In addition to state bodies, direct or indirect participants in the Strategy implementation process are: Serbian Academy of Sciences and Arts, Matica srpska, National Council for Scientific and Technological Development, the Committee for Accreditation of Scientific Research Organizations, the Committee for Acquiring Scientific Titles, Scientific Committees, the Committee for Ethics in Science, the National Council for Higher Education, institutes, institutions of higher education (universities and faculties), centers of excellence, the Innovation Fund, Project Implementation Unit for the project Research and Development in the Public Sector, Center for the Promotion of Science, Association of Institutes of Serbia, Conference of Universities of Serbia (KONUS), Science Center Petnica, republic and regional talent centers, scientific and professional associations, research and development centers, innovation centers, business and technology incubators, science technology parks, business and technology incubators, public enterprises, small and medium-sized enterprises, Chamber of Commerce of Serbia and regional chambers of commerce, financial institutions and other business and NGO organizations, institutions and bodies that are included in this process as users of the services.

B. Strategy and Policy for Development of Industry of the Republic of Serbia for the period from 2011 to 2020 Major issues tackled by the “Strategy and Policy for Development of Industry of the Republic of Serbia for the period from 2011 to 2020” relevant for developments of the national innovation system in Serbia are: - Innovation, research and development are key driver for industrial competitiveness, together with knowledge and entrepreneurship. In that sense, innovation are basis for transformation into knowledge based society, and innovation policy is a key strategic tool for competitiveness of the economy and stimulus for economic development; - In the period 2011-2020 technology policy in the area of integration of the R&D sector and economy should be focused on two priorities: o National technological platforms o New initiatives for successful transfer and dissemination of the knowledge.

Note: Extensive analysis of the creation, development and functioning of the National Innovation System in Serbia is provided in the following refences: - Kutlača Đuro, Semenčenko Dušica: “National Innovation System in Serbia: Past, Present, Future”, Publisher: University of Belgrade, Institute “Mihajlo Pupin” – Science and technology Policy

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Research Centre, ISBN 979-86-82183-14-3, UDK 005.591.6(497.11), 001.896:62(497,11), COBISS.SR-ID 216533516, pages: 151, Belgrade 2015 [book is in Serbian language] - Kutlaca, Djuro: "Southeast Europe: Albania, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Serbia, Slovenia", Chapter 10 in: UNESCO Science Report: Towards 2030, Paris, UNESCO, 2015, p. 273-295.

Regulations and strategies in preparation

A. Laws and bylaws for implementation of the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" Following the adoption of the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" by the Government of the Republic of Serbia in March 2016, the measures and activities, with deadlines, tasks and authorities and organizations responsible for the implementation of this strategy will be defined by the Action Plan for the implementation of the Strategy. The Action plan for implementing this strategy will be determined, within six months from the date of adoption of the Strategy, by the government.

The regulations which should secure implementation of the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" are the following laws and bylaws:  The Law on Innovation Activities,  Regulation on the evaluation of researchers,  The rulebook on categorization and ranking of scientific journals,  The Act of the evaluation, selection, financing and monitoring of projects in the new cycle of research.

B. Smart Specialisation Strategy The major document which should integrate government activities addressed to development and functioning of the national innovation system in Serbia is the Smart Specialisation Strategy. Development of the S3 strategy is not prescribed in the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" among the instruments and mechanism for the implementation of this Strategy. Nevertheless, the S3 is mentioned among activities within the part – goal of the Strategy: “The promotion of international cooperation in the field of science and innovation”, among the instruments which should secure achievement of this goal: “Strengthening participation in the European framework program for science and innovation Horizon 2020”, as one of the mechanisms: “Cooperation with the Joint Research Center will be expanded, especially in the development of smart specialization strategies”. Therefore, it is reasonable to expect activities of the responsible Ministry of Education, Science and Technological Development addressed to preparation and development of the S3 strategy for Serbia in the very near future.

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Policy measures

A. Existing and/or recent measures The R&D and Innovation activities in Serbia in the period 2011-2015 (first half of the 2016) are structured through the following major policy measures:

1. Policy measures for R&D activities launched by the Ministry of Education, Science and Technological Development (MESTD):  “Programme supporting Basic Research for the Research Cycle 2011-2015 (first half of the 2016)” ["BR Programme"]. The “BR Programme” has been established by the Minister of Education, Science and Technological Development as an obligation defined within Article 10, paragraphs 4, 27 and 105 of the Law on Scientific Research. The previous programme for support of basic research in Serbia has covered the period 2006-2010, ending by December 31st, 2011. The BR programme is a continuation of funding of basic research in Serbia for the period 2011-2015 (first half of the 2016). The priority research fields are defined within the “Strategy of S&T Development of the Republic of Serbia 2010-2015” [SSTDRS]. Procedures for selection, evaluation and funding are defined within the “Act on Selection, Evaluation and Funding of Programme of Basic Research for the Research Cycle for the Time Period 2011 – 2015”;  “Programme supporting Research in the Field of Technological Development for the Research Cycle 2011-2015 (first half of the 2016)” [“TD Programme”]. The “TD Programme” has been established by the Minister of Education, Science and Technological Development as an obligation defined within Article 10, paragraphs 4, 27 and 105 of the Law on Scientific Research. The previous programme for support of research in the field of Technological Development in Serbia has covered the period 2006-2010, ending by December 31st, 2011. The TD programme is a continuation of funding of basic research in Serbia for the period 2011-2015 (first half of the 2016”. The priority research fields are defined within the “Strategy of S&T Development of the Republic of Serbia 2010- 2015” [SSTDRS]. Procedures for selection, evaluation and funding are defined within the “Act on Selection, Evaluation and Funding of TD Programme for the Research Cycle for the Time Period 2011 – 2015”;  “Programme of Co-Funding of Integrated and Interdisciplinary Research for the Research Cycle 2011-2015 (first half of the 2016)” [“III Programme”] - the “IIR Programme” is a programme for supporting the integration of basic, applied and development research as well as for fully utilising R&D resources of the country, emphasising commercialisation of R&D activities and results;  “Programme of Providing and Maintaining Scientific Research Equipment and Scientific Research Facilities for the Research Cycle 2011-2015 (first half of the 2016)” [“SREF Programme”] - the “SREF Programme” is a programme for improving the material base of basic, applied and development research as well as for fully utilising R&D equipment and infrastructure in the country;  The Project of infrastructural investments, worth EUR 400 million has started in January 2011 and last until the end of 2015. Projects selected for this investment were those conducive to the development of priority disciplines, likely to ensure successful development and identification of scientific talent, prevent brain drain, and finally, projects which will make up for almost twenty years of scarce investment into scientific infrastructure. Main projects within the “Serbian R&D infrastructure investment initiative” are: (1) Serbian R&D infrastructure investment initiative comprises investments in upgrading existing capacities, for adaptation of existing buildings and laboratories and new capital equipment for research (app. €70m); (2) Development of Excellence centre and academic research centres (app. EUR 60 million); (3) Development of ICT infrastructure, for Campus for faculties of technical sciences of the University in Belgrade and

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Infrastructure for supercomputing initiative "Blue Danube" (app. EUR 30 million to EUR 80 million); (4) Creation of a knowledge-based economy through the construction of science parks in Belgrade, Novi Sad, Nis and Kragujevac (app. EUR 30 million); (5) Basic infrastructure projects, such as apartment buildings for researchers in Belgrade, Novi Sad, Nis and Kragujevac (app. EUR 80 million).

In addition to these initiatives, special programme for development of human capital in Serbia is launched (app. €33m) with four main investment activities: (1) Human resources programme (programme for the return of Serbian researchers from the Diaspora). One of the projects is to have the researchers back for a period of time is to provide them with working conditions, means, necessary equipment and adequate accommodation. The networking of researchers in Serbia with their colleagues Serbian nationals in other countries has also been planned, along with visits of the eminent Serbian researchers and incentives for foreign based researchers to establish their own enterprises in Serbia; (2) The "Petnica" research centre is a unique institution with a history of 26 years and about 14,000 young trainees, many of whom are proponents of R&D in Serbia today. In the next three years the works on additional capacities of "Petnica" should be completed for both accommodation and modern laboratories (app. EUR 7.6 million); (3) Mathematical high school campus; (4) New Science and innovation centre in Belgrade (for popularizing science among the youth and public at large): one of the core projects within the initiative to build a new scientific infrastructure is the Centre for promotion and popularization of science in Belgrade (app. EUR 20 million).

1. Policy measures for Innovation activities:  Programme for Supporting SMEs and Entrepreneurs to Strengthen Innovation Activities (responsible institution is the National Agency for the Regional Development) - the Programme for Supporting SMEs and Entrepreneurs to Strengthen Innovation Activities, launched every year since 2011 until 2015 by the National Agency for the Regional Development, was more oriented to support non-technological innovation activities. The focus is on service and organisational innovations as well as efficient adoption of quality standards;  The MINI GRANTS and MATCHING GRANTS Programs – First public call for the MINI GRANTS programme is launched in December 2011; First public call for the MATCHING GRANTS programme is launched in spring 2012 (responsible institution is the Innovation Fund). Both programs have been developed with international advisors and according to World Bank international best practices. Both programmes are still in force, but changes are under way in cooperation with World Bank and EU as donating organisations.

The Innovation Fund in cooperation with the World Bank is implementing the “Innovation Serbia Project” which is financed by the European Union through the Instrument for Pre-Accession Assistance (IPA) 2011 funds for Serbia. Within this project, through two funding Programs – Mini Grants Program and Matching Grants Program – all available funds in total of EUR 6 million are contracted through the four public calls in the past three years.

MINI GRANTS financing Program is aimed to support an early-stage, private, micro- and small- enterprises, which possess a technological innovation that have a potential for creation of a new intellectual property (IP), and clear market need. The purpose of the MINI GRANTS Program support is to stimulate creation of innovative enterprises based on knowledge via private sector

123 start-ups or via spin-offs by providing financing for market-oriented innovative technologies and services with high commercialization potential. MINI GRANTS project must be designed for completion within 12 months and it can comprise any fields of science and technology in all industrial sectors. The applicant must be a private sector, micro- or small- company, incorporated in Serbia for no longer than two (2) years at the time of application, with the majority of applicant ownership Serbian.

The MINI GRANTS Programme launched by the Innovation Fund is meant to award selected innovation projects with substantially larger amounts of money per grant in comparison with all past and on-going innovation projects, i.e. up to EUR 80,000. [Innovation projects granted by the Ministry of Finance and Economy (MFE) and the National Agency for the Regional Development (NARD) could be up to EUR 1,000-EUR 2,000; the MESTD grant for the innovation project could be up to app. EUR 20,000]. The MINI GRANTS Programme overcomes the legal obstacle that resulted from the rules defined in the innovation law. This implies, in particular, the obligation for companies to be registered in the MESTD innovation register in order to be eligible for the competition under public calls launched by the MESTD. As this programme is administered by an agency independent from the MESTD, the applicant companies have no obligation for such a registration (these procedures could be changed within process of re-definition of this programme). The Mini Grants Program provides unconditional grants up to EUR 80,000 to innovative start-ups with a mandatory 15% of co-financing from the company.

The pre-evaluation of the Applications for the MINI GRANTS Program includes a technical peer- review. Based on the results of peer–review the independent Investment Committee (IC) will pre- select Applications for financing under the IF’s MINI GRANTS Program. As a formal step in the application process, the IF Program Managers will meet with top management and with key operational- and business- executives from the Applicant companies that have been pre-selected by the IC. The IF on-site visits to the Applicants will take place during the 2 weeks after the IC pre- selection results are received by IF. Materials submitted in the Application will be discussed during the on-site visit, including but not limited to the content of the Project Proposal. Following the on- site visit, the IF Program Manager will complete the on-site visit report which will be used in the financing decision. The final decision for financing under the MINI GRANTS Program is made by the independent Investment Committee (IC) with the consent of the IF Board of Directors. The IC is responsible for selecting Awardees for financing based on the complete Application, the result of the peer review and the results of the on-site visit. Following the decision to award financing, the Applicant will be offered to sign the Financing Agreement.

Eligible entities which could apply, under equal conditions, to the open competition for the funds from the Innovation Fund of the Republic of Serbia, designated for the realisation of projects within the MATCHING GRANTS Program are, as follows:

o The Applicant is a legal business unit, incorporated under Serbian Company Law (“Official Gazette no 125/2004”), registered at Serbian Business Registration Agency (SBRA) and located in Serbia; o Applicant is a private sector, micro- or small- company.

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After the Application is submitted, the Innovation Fund Program Managers will do a desk review of the eligibility and completeness of the submitted Application as well as initial due diligence and screening of the submitted documents where applicable including, but not limited to, company ownership documentation, proof of the IP- and know-how- rights, proof of the co-financing, and obligations under agreements with third parties.

The Applications will be evaluated based on the following criteria:

o Management and key personnel credentials and ability of the company to deliver; o Level and type of the co-financing; o Innovative technology, product or service; clear IP position and potential; o Clear market need, competitive (preferably global) position and commercialization potential; o Potential for revenue within two to three (2-3) years after the project start; o Viable implementation methodology and capabilities; o Technology and implementation risk management.

Only Project Proposals satisfying all above mentioned criteria will be recommended for financing.

MATCHING GRANTS Program aims to expand collaboration opportunities for Serbian innovative micro, small and medium sized companies with strategic partners (e.g. private sector industry, R&D organizations and venture capital/private equity funds) with the goal to increase private sector investment in technology development and commercialization projects for new and improved products/services. The MATCHING GRANTS Program is designed to help companies struggling to address the significant financial investment associated with the development cycle and the high cost of translating research into a commercially viable product. In addition the MATCHING GRANTS Program will help companies to develop their R&D activities, establish collaborations with strategic private sector and R&D partners, attract investors, and to bring their innovation to the market. Applicants are private, micro, small and medium sized enterprises incorporated in Serbia that have a technological innovation or potential for creation of new intellectual property (IP) with competitive global/domestic position and a clear market need.

The Matching Grants Program is a conditional grant with a 5% royalty component, with project of up to EUR 300,000 and a mandatory 30% co-financing from the company.

The pre-evaluation of the Applications for the MATCHING GRANTS Program includes technical peer-review by independent international reviewers. Based on the results of the peer–review the IF’s independent Investment Committee will pre-select Applications for further consideration for financing under the IF’s MATCHING GRANTS Program. As a formal step in the application process, the IF Program Managers will meet with top management and key operational- and business- executives from the Applicant companies that have been pre-selected by the IF’s independent Investment Committee. The Applicant shall, upon the IF’s request, take all measures to enable the representatives of the IF to visit any part of the company’s premises for the purposes related to the Application. The IF on-site visits to the Applicants will take place within approximately two (2) weeks after the IC pre-selection results are received by the IF. Materials submitted in the Application will be discussed during the on-site visit, including but not limited to the content of the Project Proposal. Following the on-site visit, the IF Program Manager will complete the on-site visit

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report which will be used by IF’s independent Investment Committee along with other information in the financing decision. The final decision for financing under the MATCHING GRANTS Program is made by the IF’s independent Investment Committee with the consent of the IF Board of Directors. The IF’s independent Investment Committee is responsible for selecting Awardees for financing based on the complete Application, the result of the peer review and the results of the IF onsite visit. Following the decision to award financing, the Applicant will be offered to sign the Financing Agreement;

 The Programme for co-financing of the Innovation projects – Public calls for this programme were launched in 2013, and 2015 (responsible institution is the MESTD). The MESTD grant for the innovation project could be up to app. EUR 20,000. This programme has been established by the MESTD as obligation defined by the Articles 36 of the Innovation Law ("Official Gazette of RS", nos. 110/05 and 18/10).The total budget spent by the MESTD for innovation activities was EUR 1.4 million in 2009. The MESTD planned budget was nothing for innovation activities in 2011, therefore public call for innovation projects launched in December 2013 was an invitation for innovation projects funded with EUR 1.79 million from the budget allocated for the years 2012 and 2013. Actual allocations for innovation projects realised by the MESTD in previous period are the following: o November 2008 - November 2009: EUR 3.5 million; o April 2010 - April 2011: EUR 1.2 milion; o June 2012 - June 2013: EUR 1.7 million. o In 2015: app. EUR 0.5 million.  The only tax incentive related to R&D and innovation activities in Serbia is addressed to organisations registered for R&D activities as non-profit organisations. These organisations are not obliged to pay taxes for R&D services they provide to clients under non-profit contracts.

B. New measures Following the adoption of the Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation" by the Government of the Republic of Serbia in March 2016, all policy measures, and in particular the ones related to direct funding of innovation and research by public sources i.e. the responsible Ministry of Education, Science and Technological Development, will / should be re-defined in forthcoming several months:

i. Changing the model of financing scientific research Reform aims to improve the system of financing scientific research activities, to ensure stable funding and that budget funds are used in an efficient and optimal manner. Changing the financing system will include the enhancement of existing ways of financing the project and development of a new model of financing, and will be implemented in two phases: o The first phase will enhance the existing project finance model - Implementation in 2016 A new system of allocation of funds in financing a projects will be introduces, and increase the funds intended for the material costs of research. Out of the total funds for the realization of projects, at least 20% will be allocated to finance direct material costs of research, which will enable better, more extensive and more comprehensive research.

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The existing model of project financing will be improved so as to increase competitiveness and to introduce additional criteria that will evaluate the scope and quality of research, scientific and interdisciplinary cooperation, cooperation with business and social activities. In selecting projects, in their periodic evaluation and the final assessment a set quantitative performance indicators will be used. Selection of projects for funding and monitoring during implementation will be carried out transparently, and the research results will be available to local and international public. The duration of projects, the criteria for evaluation and selection procedures will be determined by Law and the relevant by-laws. o In the second stage, from 2016 - 2019, a combined model of financing will be developed "the project - institutional funding model", the implementation of which should begin in 2019 The second phase of changing the financing model will include the development of a model aligned with the reform of the research system. The ultimate goal of reforming the financing of scientific research is to establish a balanced combination of project and institutional funding. Institutional funding will have two components: the base, which will provide stable financing; and development, which will depend on the degree of fulfilment of performance parameters. Implementation of the new model will follow after a detailed performed analysis and simulation of systems, with the adoption of appropriate amendments to laws and by-laws which will regulate the matter of a new financing model. ii. The establishment of the Fund for the promotion of research The goal will be to form the Fund for the promotion of research, with the aim to provide support to (co-) funding of research and development and training of human resources in science. The fund will be established with the participation of budget and donor funds. iii. The development of scientific research infrastructure Investments in research and development infrastructure will be implemented through a clear and transparent mechanism to ensure the implementation of strategic objectives and prevent further fragmentation of research infrastructure. Redefine the objectives of the project "Research and development in the public sector" and ensure efficient and rational use of unspent funds from the loan (EIB and CEB), as well as new resources provided from the budget, donations and other sources. Center for stem cell, Nanocentar and other centers the construction of which started and which have research potential and connect several research institutions, will be finished and put into operation. Further development will be oriented towards centers of excellence that will be equipped with infrastructure so that they can be an integral part of the European network of centers of excellence. Research equipment will be made available to small and medium-sized enterprises (SMEs) and other customers, especially, the "start-up" companies-participants in the process of technological innovation and development. The strategic plan for the development of scientific infrastructure in the Republic of Serbia (Scientific Infrastructure Roadmap) will be developed, as well as access to the use of larger equipment systems at the regional level in the Western Balkans. iv. Promoting science and innovation

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Calls for research projects will include actions related to the dissemination of scientific and technological culture. Web portals projects will contain information that will inform the general public about the benefits of the research conducted. The competition for the best technological innovation will be improved, through defining procedures and determining clear criteria and standards for the selection, evaluation and rewarding of the best annual technological innovation. The competition for the best technological innovation will include several countries of the Western Balkans, and the supporting activities will include a competition of university students ("University student Innovator") and high school students ("High school innovator"). v. Encouraging the application of the results of scientific research There shall be a mechanism of budget or co-financed support to scientific research results which have the potential for commercial use, which are in an advanced stage of development of products, technologies or services. Priority will be given to those scientific results which have reached a higher level of technological readiness for implementation. vi. Strengthening the work of the Innovation Fund Improving the links between research organizations and business entities will be carried out through the work and activities of the Innovation Fund. Activities of the Innovation Fund in encouraging innovative activities through financing projects of companies and research organizations in the Republic of Serbia will be improved through the provision of funds by following mechanisms: - budget support, - through cooperation with international financial institutions, organizations, donors and private sector participation. vii. Further development of the Innovation Project The success of the Project to support Innovation in the Republic of Serbia has confirmed the need for this form of support for innovation to continue, because it directly leads to the creation of new intellectual property with real market value, which is reflected in the successful commercialization of new products, services and technologies, as well as creating a significant number of sustainable jobs for persons with higher education. Also, these programs allow one more model of inclusion of researchers and research organizations in the innovation process and the establishment of international cooperation with partners and customers. The program will strengthen early phase development for private micro and small enterprises which have a technological innovation in the Republic of Serbia. For the implementation of the Program of co-financing innovations, additional resources will be provided, encouraging the existing companies in the Republic of Serbia to continue the investment in research and development and build their growth and competitiveness in the international market on innovative products, services and technologies. viii. The establishment of joint innovation projects of private sector and research organizations Mechanism will be established to provide incentives ("Collaborative Grant Scheme") for intensive project cooperation between the private sector and the scientific research community in order to create a new market-oriented product, services and technologies that have the potential for commercialization. This funding mechanism will include commercial projects and precompetitive (ie. early) technology. The implementation of these joint projects will be carried out by consortia made up of at least one Serbian company from the private sector as a leader of the consortium and at least one registered scientific research organization, acting as a partner. The co-financing of projects by the user will be required at at least 30% of the total project budget. Project selection process will be competitive, open to

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the public and will be conducted by the International Review modelled after the Mini Grants Program and the Matching Grants Program. ix. Improving the transfer of knowledge and technology To ensure even closer cooperation between the research organizations and the private sector, a centralized office for technology transfer under the Innovation Fund will be established. The Office shall, with the support of international experts connect scientific and research organizations and university technology transfer offices with investors and buyers from the private sector, in order to allow the transfer of intellectual property from the academic sphere into practical use in the economy. These processes will ensure the creation of value for scientific and research organizations through new models for the implementation of existing and newly developed technologies, income from licensing, expanding the range of services that can be provided to the private sector (ordered researches, tests, etc.) and further encouragement of researchers to carry out their primary activity. There will be financial support for the development of projects with commercial and technological potential, requiring additional study in order to raise their level of readiness for commercialization. Also, the work of centralized technology transfer offices will enable the further strengthening of the capacity of the existing technology transfer offices at universities, which will lead to better evaluation and a greater visibility of the results of applied research in research organizations. In order to improve the relevance of research in the Republic of Serbia and to raise the level of technological readiness (TRL), in order to get close to market conditions and enable commercialization and application in the economy, Program for proof of concept (Proof of Concept - POC) will be developed and implemented in the second year of the Strategy. Public universities in the Republic of Serbia will develop Implementation Guide for "PoC" program and will pilot it to selected research groups, with additionally valued intellectual property, as well as strategies for commercialization. x. Encouraging the establishment of the company based on scientific research ("spin-off") It is necessary to develop financial instruments available for the early development of innovative companies, such as special funds and programs that promote the establishment and rapid development of these companies. This program will constitute a complementary measure to the existing instruments and funding programs, by increasing the number of innovative young companies in the Republic of Serbia that could be eligible candidates for further support, growth and development. The formation and development of spin-off companies will be an important element in retaining young people, because these companies (spin-off), most often, follow an idea that was generated in the process of working in a research institution and may be the new generator of employment and increase of the share of small business in the economy. xi. The establishment of public-private partnerships In order to facilitate the realization of advanced results and to create new models of development in the context of the relevance of science and research in the Republic of Serbia, it is necessary to expand the range of available support mechanisms and incentives. Public- private partnerships are a form of cooperation between the public sector and private companies and investors, in order to reduce the risk and increase the potential benefits to society as a whole, through the achievement of measurable and clearly defined socio- economic (and other) benefits. Through public-private partnerships the contribution of the private sector in financing innovation, scientific and technological research and development will rise. In terms of science, research and innovation in the Republic of Serbia an aspect of such cooperation has already been initiated through the Program for Enterprise Development and

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Innovation of the Western Balkans (WB EDIF). Within this program, the component of the Fund for innovative enterprises (ENIF) will be supported, in order to utilize the synergy of regional integration and regional development initiatives in the field of research and scientific and technological development. Fund for innovative companies is the first venture capital fund to finance innovative small and medium-sized enterprises in the initial stage of development. It is necessary to provide continued support of Government in this mechanism, which will have complementary results with further training of the beneficiaries of the Fund for innovative companies that are developing and using EU funds. The first beneficiaries of the Fund for innovative companies are from the Republic of Serbia and are already in the process of meeting the requirements needed to access this form of support. xii. Scientific - Technological Parks In the process of early development there will be support for the establishment and development of S&T parks at the university centers that will enable the creation of jobs to high added value and high-quality employment; the creation of new jobs / company, based, mainly, on high technology, so-called high-tech-intensive companies / operations; and technology transfer from resources, knowledge bases into the business sector. xiii. The establishment of research and development clusters and networks of competitiveness R&D clusters will be set up, including scientific research institutions, universities and institutes, commercial organizations, public companies, relevant government institutions, with the aim to carry out coordinated research and improve the work within a specific sector. In order to strengthen the cooperation, the networking between research, development and production (large, medium and small) enterprises will be introduced, which is especially important if one bears in mind that the Serbian economy is dominated by small and medium- sized enterprises which are finding it hard to organize a special research resources, which negatively affects their innovative capacity. Using the best practices in the EU, there will be an initiative for the formation of clusters of competitiveness that will enable close cooperation between the participants in the chain of value creation within and between sectors, as well as innovations of higher and high added value.

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References

Main sources:

[1] The Strategy of Scientific and Technological Development of Republic of Serbia for the period from 2016 to 2020 - "Research for Innovation", Ministry of Education, Science and Technological Development, March 2016, http://translate.google.com/translate?prev=_t&ie=UTF- 8&sl=sr&tl=en&u=http://www.mpn.gov.rs/ [2] SSTDRS (2010): “Strategy of Scientific and Technological Development of the Republic of Serbia 2010-2015”, adopted by the Government of the Republic of Serbia on February 25, 2010 [3] Djuro Kutlaca: "Erawatch Country Reports 2011: Serbia", European Commission Joint Research Centre Institute for Prospective Technological Studies, JRC77778 EUR 25702 EN, ISBN 978-92-79- 28101-3 (pdf), ISSN 1831-9424 (online), doi:10.2791/46778, Luxembourg: Publications Office of the European Union, Printed in Spain, 2013 [4] Djuro Kutlaca: "Erawatch Country Reports 2013: Serbia", European Commission Joint Research Centre Institute for Prospective Technological Studies, JRC91226, EUR 26768 EN, ISBN 978-92-79- 39503-1 (PDF), ISSN 1831-9424 (online), doi:10.2791/1012, Luxembourg: Publications Office of the European Union, 2014 [5] Kutlaca Djuro, Semenenko Dušica: "National Innovation System in Serbia: Past, Present, Future", Publisher: University of Belgrade, Institute "Mihajlo Pupin" - Science and technology Policy Research Centre, ISBN 979-86-82183-14-3, UDK 005.591.6(497.11), 001.896:62(497,11), COBISS.SR-ID 216533516, pages: 151, Belgrade 2015 [book is in Serbian language] http://www.pupin.rs/cirnt/wp-content/uploads/2012/12/NIS2-P1-color.pdf [6] Kutlaca, Djuro: "Southeast Europe: Albania, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Serbia, Slovenia", Chapter 10 in: UNESCO Science Report: Towards 2030, Paris, UNESCO, 2015, p. 273-295, http://en.unesco.org/unesco_science_report

Literature / Documents:

[1] Act (2010): “Act on the selection, evaluation and financing of research for the project cycle 2011 – 2014”, and the “Programme for the research cycle 2011-2014”, May 03, 2010 [2] HE Law (2012): “Law on Higher Education”, “Official Gazette of the Republic of Serbia", no. 76/2005, 100/2007 - authentic interpretation, 97/2008, 44/2010, 93/2012, 89/13 and 99/14) + Law on Amendments to the Law on Higher Education ( "Official Gazette of RS", No. 99/14) + Law amending the Law on higher education - an amendment to Article ( "Official Gazette of RS", nos. 76/05, 100/07 - authentic interpretation, 97/08, 44 / 10, 93/12, 89/13, 99/14 and 45/15-authentic interpretation) (in Serbian language) [3] Djuro Kutlaca, Dragan Babic, Lazar Živkovic, Dijana Štrbac: "Analysis of quantitative and qualitative indicators of SEE countries scientific output", SCIENTOMETRICS: Volume 102, Issue 1 (2015), Page 247-265, DOI 10.1007/s11192-014-1290-y, Published online April 2014, pp.1-19, Print ISSN 0138- 9130, Online ISSN 1588-2861, Springer-Verlag GmbH Heidelberg, Tiergartenstrasse 17, 69121 Heidelberg, Germany. [4] Dragan Babic, Djuro Kutlaca, Lazar Živkovic, Dijana Štrbac, Dušica Semencenko: "Evaluation of the quality of scientific performance of the selected countries of Southeast Europe", SCIENTOMETRICS: Volume 106, Issue 1 (2016), Page 405-434, DOI 10.1007/s11192-015-1649-8, Published online 20 August 2015, pp.1-30, Print ISSN 0138-9130, Online ISSN 1588-2861, Springer Netherlands [5] Innovation Law (2010): “Law on Innovation Activities”, “Official Gazette of the Republic of Serbia", no. 110/05, 18/10 and 55/13 (in Serbian language)

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[6] IPR Law (2011): “Law on Patents”, “Official Gazette of the Republic of Serbia", no. 99/11 (in Serbian language) Act on Special Powers for Efficient Protection of Intellectual Property, ("Off. Gazette of RS", Nos. 46/06 and 104/09) Law on Copyright and Related Rights ("Off. Gazette of RS", no. 104/2009, 99/2011 and 119/2012) Law on Legal Protection of Industrial Design ("Off. Gazette of RS" No. 104/09) The Law on Protection of Topographies of semiconductor products (Official Gazette of RS, No. 55/2013) Trademark Law ("Off. Gazette of RS", no. 104/09 and 10/13) The Law on Protection of Trade Secrets ("Off. Gazette of RS", No. 72/11) The Law on Optical Discs ("Off. Gazette of RS", No. 52/11) Law on Indications of Geographical Origin (“Official Gazette RS”, No. 18/2010; 26/3/2010) [7] Science Law (2010): “Law on Scientific and Research Activities”, "Official Gazette of the Republic of Serbia ", no. 110/2005, 50/2006 - corr., 18/2010 and 112/2015 [8] Innovation Union Scoreboard 2015, European Commission, 2015 – 94 pp – 210 x 297 mm, ISSN 2363-3107, ISBN 978-92-79-44089-2, doi: 10.2769/247779; http://ec.europa.eu/growth/tools- databases/newsroom/cf/itemdetail.cfm?item_id=8264&lang=en&title=Innovation-Union- Scoreboard-2015- ] [9] KOBSON, National Library of Serbia, http://kobson.nb.rs/nauka_u_srbiji/nasi_u_wos.3.html , February 2016 [10] Vojin Šenk: SUPPORTING INNOVATIONS IN SERBIA - SPIN-OUT COMPANIES, INCUBATORS, PARKS, ACTIVITIES, Conference proceeding XXI Scientific conference: "Technology, culture and development", 2014, Tivat, Montenegro, 2-4. September 2014, pp. 39-48, ISBN 978-86-915151-3- 3, COBIS.SR-ID 211849740 [11] Statistical Bulletins: Scientific Research Activity in the Republic of Serbia, Statistical Office of the Republic of Serbia [12] STATISTICAL RELEASE IА01, number 276 - year LXV, 22/10/2015 Science, Technology and Innovation Statistics SRB276 IА01 221015, Statistical Office of the Republic of Serbia, ISSN 0353- 9555 [13] Statistical Yearbooks, Statistical Office of the Republic of Serbia, http://webrzs.stat.gov.rs/WebSite/ [14] The Intellectual Property Office of the Republic of Serbia, http://www.zis.gov.rs/home.59.html

Data sources:

[1] EUROSTAT, http://ec.europa.eu/eurostat/data/database [2] UNESCO Institute for statistics, http://data.uis.unesco.org/ [3] World Bank data, http://data.worldbank.org/ [4] OECD data, https://data.oecd.org/ [5] Statistical Office of the Republic of Serbia, http://webrzs.stat.gov.rs/WebSite/ [6] The Intellectual Property Office of the Republic of Serbia, http://www.zis.gov.rs/home.59.html [7] Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia, http://www.pupin.rs/cirnt/cirnt/

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Methodological framework:

[1] OECD (2005), "The Measurement of Scientific and Technical Activities, OECD Proposed Guidelines for Collecting and Interpreting Innovation Data - Oslo Manual", Third edition, Paris. [2] OECD (2015), "The Measurement of Scientific and Technical Activities, Guidelines for Collecting and Reporting Data on Research and Experimental Development - Frascati Manual 2015", Paris. [3] Albuquerque, E. (1997): "National systems of innovation: notes about a rudimentary and tentative "typology"", SPRU, Sussex University, Brighton. [4] Dosi, G. at all (1988): "Technical Change and Economic Theory", London, Pinter [5] Edquist, C. and Johnson, B. (1997): "Institutions and Organizations in Systems of Innovation", in Edqust, C. (ed.): "Systems of Innovation", London, Pinter [6] Freeman, Christopher (1987), "Technology and Economic Performance: Lessons From Japan", Pinter, London, 1987. [7] Galli, Riccardo and Teubal, Morris (1997), "Paradigmatic Shifts in National Innovation Systems", Chapter in: "Systems of Innovation - Technologies, Institutions and Organizations", edited by Charles Edquist, Pinter, London. [8] Klein, S.J. and N.Rosenberg (1986), "An overview of innovation", in R.Landau and N.Rosenberg (eds.) "The Poitive Sum Strategy - Harnessing Technology for Economic Growth", National Academy Press, Washington, p.289. [9] Kuhlman, S. (2003), "Future governance of innovation policy in Europe", chapter in EC (2003) (Future directions of innovation policy in Europe"). [10] Lundvall, B. A. (ed.) (1992): ”National Systems of Innovation: Towards a Theory of Innovation and Interactive Learning”, London, Pinter

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List of Abbreviations

BERD Business Expenditures for Research and Development BR Programme Programme supporting Basic Research for the Research Cycle 2011- 2014 CERN European Organisation for Nuclear Research ERA European Research Area COST European Cooperation in Science and Technology ERA-NET European Research Area Network ERP Fund European Recovery Programme Fund ESA European Space Agency ESFRI European Strategy Forum on Research Infrastructures FP European Framework Programme for Research and Technology Development EU European Union FDI Foreign Direct Investments FP Framework Programme FP7 7th Framework Programme GBAORD Government Budget Appropriations or Outlays on R&D GDP Gross Domestic Product GERD Gross Domestic Expenditure on R&D GOVERD Government Intramural Expenditure on R&D GUF General University Funds HEI Higher education institutions HERD Higher Education Expenditure on R&D HES Higher education sector IIR Programme Programme of Co-Funding of Integrated and Interdisciplinary Research for the Research Cycle 2011-2014 IF Innovation Fund IP Intellectual Property IPR Intellectual Property Rights MESTD The Ministry of Education, Science and Technology Development of the Government of the Republic of Serbia ME The Ministry of Economy MF The Ministry of Finance

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NARD National Agency for the Regional Development NIS National Innovation System OECD Organisation for Economic Co-operation and Development PRO Public Research Organisations R&D Research and development RI Research Infrastructures RS Republic of Serbia RSD Republic of Serbia Dinars RTDI Research Technological Development and Innovation SDA Serbian Development Agency SF Structural Funds SME Small and Medium Sized Enterprise S&T Science and Technology SORS Statistical Office of the Republic of Serbia SREF Programme Programme of Providing and Maintaining Scientific Research Equipment and Scientific Research Facilities for the Research Cycle 2011-2014 TD Programme Programme supporting Research in the Field of Technological Development for the Research Cycle 2011-2014 UNESCO United Nations Educational, Scientific and Cultural Organization VC Venture Capital WB World Bankl

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Annexes – Tables and Figures

Indicator GERD as a percentage of GDP (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 0.09 0.15 ...... Bosnia and Herzegovina ...... 0.02 0.02 0.03 0.02 0.03 0.02 0.02 .. .. 0.27 0.33 Bulgaria 0.49 0.44 0.47 0.47 0.48 0.45 0.45 0.44 0.46 0.51 0.59 0.55 0.62 0.65 Croatia 1.04 0.92 0.95 0.95 1.03 0.86 0.74 0.79 0.88 0.84 0.74 0.75 0.75 0.81 Estonia 0.6 0.7 0.72 0.77 0.85 0.92 1.12 1.07 1.26 1.4 1.58 2.34 2.16 1.74 Finland 3.25 3.2 3.26 3.3 3.31 3.33 3.34 3.35 3.55 3.75 3.73 3.64 3.42 3.31 Greece .. 0.56 .. 0.55 0.53 0.58 0.56 0.58 0.66 0.63 0.6 0.67 0.69 0.8 Hungary 0.79 0.92 0.99 0.92 0.87 0.93 0.99 0.97 0.99 1.14 1.15 1.2 1.27 1.41 Montenegro ...... 0.8 1.02 0.92 1.24 1.15 ...... 0.41 .. 0.38 Poland 0.64 0.62 0.56 0.54 0.56 0.57 0.55 0.56 0.6 0.67 0.72 0.75 0.89 0.87 Romania 0.37 0.39 0.38 0.39 0.39 0.41 0.45 0.52 0.58 0.47 0.46 0.5 0.49 0.39 Serbia 0.9 0.32 0.68 0.52 0.3 0.42 0.47 0.35 0.37 0.87 0.74 0.72 0.91 0.73 Slovenia 1.36 1.47 1.44 1.25 1.37 1.41 1.53 1.42 1.63 1.82 2.06 2.43 2.58 2.59 The former Yugoslav 0.42 0.29 0.24 0.21 0.23 0.23 0.19 0.17 0.22 0.2 0.22 0.22 0.33 0.44 Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator GERD per capita (in current PPP$) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 6.6 13.4 ......

Bosnia and Herzegovina ...... 1 0.9 1.7 1.4 2 1.6 1.8 .. .. 25.3 31.2

Bulgaria 32.3 31.3 36.2 39.8 43.4 45.2 51.2 56.7 66.4 73.6 86 83.6 97.2 102.4

Croatia 115.4 108.8 122 131.2 152.8 134.9 128 152.6 184.7 167.5 144.6 154 157.9 173.2

Estonia 58.2 73.6 84.4 101.5 124.9 152.9 215.2 232.8 282.9 281.7 333.5 552.3 533.4 448.6

Finland 859.2 880.5 925.8 951.3 1030.6 1067.6 1152.2 1254.8 1409 1407.1 1425.8 1462.6 1372.2 1315.9

Greece .. 115.6 .. 128.9 133 145.9 157.6 167.7 204.7 190.6 172.4 178.1 175.1 205.7

Hungary 95.6 124.7 146.8 144 142.1 160 183.9 185.9 204.8 237.4 246.9 269.9 285.5 327.4

Montenegro ...... 58.1 79.5 77.4 130.2 142.8 ...... 57.3 .. 53.2

Poland 67.7 67.9 64.3 64.5 72.1 77.5 83.1 94 107.7 126.2 148.4 165.7 202.7 205

Romania 21.2 25.4 26.5 29.7 33.9 38.9 51.5 68.6 90 72.5 74.7 87.1 89.2 74.8

Serbia 41.2 16 37 30.4 20 29.9 37.4 29.6 35.8 82.4 70.7 73 93.1 75.9

Slovenia 242.6 276.3 290.6 261.8 311.4 338 397.1 394.3 479 499 566.6 689 731.5 744.8

The former Yugoslav 26.2 18.4 15.6 14.1 16.8 18.7 17.7 16.5 24.1 22.3 25.2 25.9 38.8 55 Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator GERD – performed by business enterprise (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ......

Bosnia and Herzegovina ...... 58.8 58.4

Bulgaria 21.4 20.5 18.5 20 23.7 21.5 25.5 31.2 31 30 50.3 53.2 60.5 61.1

Croatia 45.1 41.6 42.7 39.1 41.6 41.2 36.7 40.6 44.3 40.4 44.1 44.7 45.8 50.1

Estonia 22.5 33.6 30.7 33.9 39 45.1 44.4 47.2 43.2 44.7 50.2 63.2 57.5 47.7

Finland 70.9 71.1 69.9 70.5 70.1 70.8 71.3 72.3 74.3 71.4 69.6 70.5 68.7 68.9

Greece .. 32.7 .. 32.1 31.1 31 30 28.6 ...... 34.9 34.3 33.3

Hungary 44.3 40.1 35.5 36.7 41.1 43.2 48.3 50.3 52.6 57.2 59.8 62.4 65.6 69.4

Montenegro ...... 8.4 7 7.6 5.3 5.2 ...... 22.3 .. 49.3

Poland 36.1 35.8 20.3 27.4 28.7 31.8 31.5 30.4 30.9 28.5 26.6 30.1 37.2 43.6

Romania 69.4 61.6 60.3 58.2 55.3 49.7 48.5 41.6 30 40.2 38.3 36 39 30.7

Serbia 6.4 13.2 5.4 13.9 14.6 11.6 10.7 2.5 13.2 14.3 11.6 9.4 25 13.3

Slovenia 56.3 57.8 59.7 63.9 67 58.8 60.2 59.8 64.6 64.6 67.8 73.9 75.7 76.5

The former Yugoslav 5.7 6.2 2.6 1.3 6 12.1 12.3 23.1 28.5 21.1 11.5 15.6 .. .. Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator GERD – performed by government (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 73.7 52.1 ......

Bosnia and Herzegovina ...... 2.6 7.1 7.1 6.1 12.6 ...... 14.2 5.8

Bulgaria 68.6 67.1 71.4 70.1 67 66.8 64.1 58.5 58.3 55.2 37.3 35.8 30 29.7

Croatia 21.5 22.7 22.2 22 20.9 24 26.5 25.5 25.2 27.2 27.5 27.4 27.6 25.5

Estonia 23.1 14.1 17 15.8 13.3 11.3 13.1 8.7 11.8 11 10.6 8.1 9.3 8.9

Finland 10.6 10.2 10.4 9.7 9.5 9.6 9.3 8.5 8 9.1 9.2 8.8 9 8.9

Greece .. 22.1 .. 20.3 19.8 20.3 20.8 20.9 ...... 23.8 24.8 28

Hungary 26.1 25.9 32.9 31.3 29.5 28 25.4 24.2 23.4 20.1 18.5 15.8 14.4 14.9

Montenegro ...... 14.9 13.7 16.8 12.5 14.9 ...... 49.7 .. 16

Poland 32.2 31.3 45.5 40.7 39 36.4 37 35.4 35.3 34.3 35.9 34.5 28 26.8

Romania 18.8 27.1 24.2 32.1 34.1 34.2 32.3 33.9 41 34.9 36.8 40.7 40.9 49.2

Serbia 54.9 43.1 42.7 60.3 50 46 53.4 54.2 56.1 30.9 36.6 33.8 28.8 33.4

Slovenia 25.9 24.3 23.1 22.1 19.8 24.2 24.5 24.5 21.9 20.8 18.2 14.3 13.1 13

The former Yugoslav 34.1 51.5 56.5 62.3 48.2 46.2 47.9 47.6 40 46.4 43.8 24.3 .. .. Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator GERD – performed by higher education (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 26.3 47.9 ......

Bosnia and Herzegovina ...... 78.8 69.3 79.9 77.9 68.7 ...... 26.7 35.6

Bulgaria 9.9 12.3 10 9.7 9.3 10.5 9.6 9.7 9.6 14 11.8 10.2 8 8.6

Croatia 33.4 35.8 35.1 38.9 37.4 34.6 36.6 33.7 30.3 32.3 28.2 27.8 26.5 24.4

Estonia 52.4 50.5 47.9 47.3 45.5 41.4 40.6 41.8 42.9 42.2 38 27.8 32.1 42.3

Finland 17.8 18.1 19.2 19.2 19.8 19 18.7 18.7 17.2 18.9 20.4 20 21.6 21.5

Greece .. 44.9 .. 46.7 48.2 47.5 47.8 49.2 ...... 40.2 39.9 37.4

Hungary 24 25.7 25.2 26.7 24.6 25.1 24.4 23.3 22 20.9 19.9 20.2 18.4 14.4

Montenegro ...... 76.7 79.3 75.6 82.2 80 ...... 26.2 .. 32

Poland 31.5 32.7 33.9 31.7 32 31.6 31 33.9 33.6 37.1 37.2 35.1 34.4 29.3

Romania 11.8 11.3 15.6 9.4 10.1 13.7 17.7 24.1 28.9 24.7 24.5 22.9 19.7 19.7

Serbia 38.7 43.6 52 25.8 35.5 42.4 35.9 43.3 30.7 54.8 51.7 56.7 46.2 53.3

Slovenia 16.6 16.2 15.5 13.7 12.9 16.7 15.1 15.6 13.4 14.6 13.9 11.8 11.1 10.4

The former Yugoslav 60.2 42.4 40.9 36.4 45.8 41.6 39.8 29.3 31.4 32.5 44.7 60.2 .. .. Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator GERD – performed by private non-profit (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ......

Bosnia and Herzegovina ...... 0.4 0.9 1.1 ...... 0.2 0.1

Bulgaria 0.2 0.2 .. 0.3 0.5 1.2 0.9 0.7 1 0.8 0.7 0.7 1.4 0.6

Croatia ...... 0.1 0.1 0.1 0.1 0.1 0.1 0.2 .. ..

Estonia 1.9 1.8 4.5 3.1 2.3 2.2 1.8 2.4 2.1 2.2 1.2 0.9 1.1 1.1

Finland 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.5 0.6 0.7 0.7 0.7 0.7

Greece .. 0.4 .. 0.9 0.9 1.3 1.3 1.3 ...... 1 1 1.2

Hungary ......

Montenegro ...... 1.9 .. 2.7

Poland 0.1 0.2 0.3 0.2 0.4 0.3 0.4 0.3 0.1 0.1 0.3 0.2 0.4 0.3

Romania ...... 0.3 0.4 2.4 1.5 0.3 0.2 0.2 0.4 0.4 0.4 0.4

Serbia ...... 0.1 0.1 ..

Slovenia 1.2 1.7 1.7 0.3 0.3 0.2 0.2 0.1 0.1 0.1 0.1 0.1 .. ..

The former Yugoslav ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator GERD – financed by business enterprise (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 1.5 3.3 ......

Bosnia and Herzegovina ...... 1.2 1.8

Bulgaria 24.4 27.1 24.8 26.8 28.2 27.8 30.6 34.2 30.6 30.2 16.7 16.9 20.8 19.5

Croatia 40.2 43.1 45.7 42 43 34.3 34.6 35.5 40.8 39.8 38.8 38.2 38.2 42.8

Estonia 24.2 32.9 29.1 32.9 36.5 38.5 38.1 41.6 39.8 38.5 43.6 55 51.3 42.1

Finland 70.2 70.8 69.5 70 69.3 66.9 66.6 68.2 70.3 68.1 66.1 67 63.1 60.8

Greece .. 33 .. 28.2 .. 31.1 .. .. 29.2 33.5 36.5 32.7 31 30.3

Hungary 37.8 34.8 29.7 30.7 37.1 39.4 43.3 43.9 48.3 46.4 47.4 47.5 46.9 46.8

Montenegro ...... 22.3 .. 42.3

Poland 29.5 30.8 30.1 30.3 30.5 33.4 33.1 34.3 30.5 27.1 24.4 28.1 32.3 37.3

Romania 49 47.6 41.6 45.4 44 37.2 30.4 26.9 23.3 34.8 32.3 37.4 34.4 31

Serbia ...... 10.2 7.8 8.3 8.6 9.1 5.8 7.5

Slovenia 53.3 54.7 60 52.2 58.5 54.8 59.3 58.3 62.8 58 58.4 61.2 62.2 63.8

The former Yugoslav 7.7 10 7.8 ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator GERD – financed by government (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 79.7 80.8 ......

Bosnia and Herzegovina ...... 24.8 25.3

Bulgaria 69.2 66.2 69.8 66.9 65.8 63.9 61.9 56.7 61.2 60.5 43.2 38.8 31.5 31.6

Croatia 54.5 55.8 46.4 55.9 46.6 58.1 55.8 50.4 49.3 51.2 49.2 48.2 45.5 39.7

Estonia 59.2 52 53.9 48.6 44.2 43.5 44.6 45.6 50 48.8 44.1 32.8 38.3 47.2

Finland 26.2 25.5 26.1 25.7 26.3 25.7 25.1 24.1 21.8 24 25.7 25 26.7 26

Greece .. 46.6 .. 46.4 .. 46.8 .. .. 62.2 54.7 48.3 49.2 50.4 52.3

Hungary 49.5 53.6 58.5 58 51.8 49.4 44.8 44.4 41.8 42 39.3 38.1 36.9 35.9

Montenegro ...... 44.6 .. 31.7

Poland 66.5 64.8 61.9 62.7 61.7 57.7 57.5 58.6 59.8 60.4 60.9 55.8 51.3 47.2

Romania 40.8 43 48.4 47.6 49 53.5 64.1 67.1 70.1 54.9 54.4 49.1 49.9 52.3

Serbia ...... 63.5 60.1 62.9 59.4 63.4 51.3 59.5

Slovenia 40 37.1 35.6 37.5 30 37.2 34.4 35.6 31.3 35.7 35.3 31.5 28.7 26.9

The former Yugoslav 79.8 70.3 76.3 ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator GERD – financed by higher education (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 6.8 8.6 ......

Bosnia and Herzegovina ......

Bulgaria 0.9 0.7 0.2 0.4 0.3 0.4 0.7 1 0.4 0.7 0.5 0.2 0.2 0.1

Croatia .. .. 6.4 .. 7.8 4.9 2.5 3 1.9 1.9 2 1.7 1.7 1.7

Estonia 1.8 2 2.4 2.9 1.7 0.8 0.9 0.9 0.5 0.7 0.6 0.3 0.3 0.3

Finland 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.2 0.1 0.2 0.1 0.2 0.2

Greece .. 1.6 .. 2.6 .. 1.7 .. .. 2 2.1 2.3 2.3 2 2.6

Hungary ......

Montenegro ...... 17.9 .. 3.5

Poland 1.7 1.6 2.9 2.1 2.4 2.9 2.2 0.2 4.1 6.7 2.5 2.4 2.6 2.1

Romania 5.2 1.2 3 1.5 1.5 4 1.2 1.4 2.6 1.9 2.2 1.2 1 1.1

Serbia ...... 19.1 22.3 20.9 28.4 21.8 33.7 25.1

Slovenia 0.4 0.7 0.6 0.4 0.3 0.7 0.3 0.4 0.3 0.3 0.3 0.2 0.4 0.3

The former Yugoslav 3.6 6.9 7.3 ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator GERD – financed by private non-profit (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ......

Bosnia and Herzegovina ......

Bulgaria 0.3 0.3 0.2 0.2 0.2 0.3 0.4 0.5 0.9 0.2 0.1 0.2 1.3 0.5

Croatia ...... 0.2 0.2 0.2 0.1 0.2 0.2 0.3 0.3

Estonia 2.2 0.5 0.3 0.4 0.6 0.2 0.1 0.2 0.3 0.7 0.2 0.1 0.1 0.1

Finland 0.7 1 1 0.9 1 1 1 1 1 1.1 1.1 1.3 1.3 1.4

Greece .. 0.4 .. 1.2 .. 1.5 .. .. 0.9 0.9 1 1 0.9 0.9

Hungary 0.3 0.4 0.3 0.4 0.6 0.3 0.6 0.6 0.6 0.7 0.9 1 0.9 0.8

Montenegro ......

Poland 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.3 0.3 0.2 0.4 0.2

Romania 0.1 ...... 0.2 .. .. 0.1 .. 0.2 0.2 ..

Serbia ...... 0.5 0.7 0.8 .. 0.1 0.1 ..

Slovenia .. 0.4 .. 0.1 0.1 .. 0.2 ...... 0.1 .. 0.1 ..

The former Yugoslav 2 3.3 ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator GERD – financed by Abroad (%) Time 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Country Albania ...... 12 7.4 ......

Bosnia and Herzegovina ...... 48.7 53.9

Bulgaria 5.3 5.7 5 5.8 5.5 7.6 6.5 7.6 6.8 8.4 39.6 43.9 46.3 48.3

Croatia 5.3 1.1 1.5 2.2 2.6 2.6 6.8 10.9 7.9 7 9.9 11.6 14.4 15.5

Estonia 12.7 12.5 14.3 15.2 17 17.1 16.3 11.7 9.4 11.3 11.4 11.9 10 10.3

Finland 2.7 2.5 3.1 3.1 3.2 6.3 7.1 6.5 6.6 6.6 6.9 6.5 8.8 11.5

Greece .. 18.4 .. 21.6 .. 19 .. .. 5.7 8.7 11.9 14.8 15.8 14

Hungary 10.6 9.2 10.4 10.7 10.4 10.7 11.3 11.1 9.3 10.9 12.4 13.5 15.4 16.6

Montenegro ...... 15.3 .. 22.5

Poland 1.8 2.4 4.8 4.6 5.2 5.7 7 6.7 5.4 5.5 11.8 13.4 13.3 13.1

Romania 4.9 8.2 7 5.5 5.5 5.3 4.1 4.5 4 8.3 11.1 12.1 14.4 15.5

Serbia ...... 6.7 9 7.2 3.6 5.5 9.2 7.8

Slovenia 6.2 7.2 3.7 9.9 11.1 7.3 5.8 5.8 5.6 6 6 7 8.6 8.9

The former Yugoslav 7 9.4 8.6 ...... Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

Indicator Researchers (FTE) by sector of employment, 2013 (%) (%) Y2013 Business enterprise Government Higher education Private non-profit Country Albania 58.0 42.0 Bosnia and Herzegovina 12.2 10.5 77.4 Bulgaria 22.5 43.2 33.0 1.3 Croatia 16.2 29.8 54.0 Estonia 31.4 12.5 54.4 1.7 Finland 56.8 11.4 30.8 1.0 Greece 13.9 19.9 65.2 1.0 Hungary 57.2 19.1 23.7 Montenegro 21.3 24.0 51.0 3.7 Poland 28.8 19.0 52.0 0.2 Romania 28.5 35.2 35.9 0.4 Serbia 3.0 25.1 71.9 .. Slovenia 53.6 21.0 25.3 0.2 The former Yugoslav 9.3 24.5 66.1 .. Republic of Macedonia Source: Data extracted on 09 Feb 2016 11:39 UTC (GMT) from UIS.Stat

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Indicator Publications by selected field of science, 2014 (%) Y2014 Country Bosnia and Albania Bulgaria Croatia Estonia Finland Greece Field of Science Herzegovina Engineering 3.27% 21.08% 7.49% 14.19% 10.43% 12.39% 13.19% Chemistry 2.08% 2.70% 13.82% 6.71% 6.88% 6.33% 5.74% Physics 0.30% 3.54% 15.50% 8.46% 10.43% 8.20% 7.31% Materials science 1.79% 2.02% 4.56% 3.60% 5.76% 4.50% 3.31% Computer sciences 2.98% 5.06% 3.82% 2.67% 5.10% 6.35% 8.14% Mathematics 3.87% 5.06% 6.05% 3.62% 2.05% 2.62% 3.11% Business economics 5.65% 2.87% 1.38% 4.31% 3.13% 3.49% 3.04% Telecommunications 0.30% 1.35% 0.58% 0.67% 0.42% 2.32% 2.81% General internal medicine 2.08% 4.89% 0.86% 3.20% 0.77% 1.38% 2.39% Agriculture 2.98% 3.20% 1.53% 2.38% 2.63% 1.52% 1.36% Other FoS 74.70% 48.23% 44.42% 50.18% 52.41% 50.89% 49.60%

Y2014 Country Hungary Montenegro Poland Romania Serbia Slovenia Macedonia Field of Science Engineering 8.28% 21.31% 12.84% 17.28% 13.14% 12.52% 10.63% Chemistry 9.42% 3.78% 12.26% 8.42% 8.93% 10.21% 4.21% Physics 10.96% 3.78% 12.32% 8.45% 9.05% 10.84% 2.20% Materials science 3.48% 3.78% 7.31% 10.07% 5.48% 8.26% 1.63% Computer sciences 4.93% 2.06% 6.33% 4.96% 4.74% 5.47% 5.46% Mathematics 4.61% 5.50% 4.92% 5.71% 5.30% 5.51% 1.92% Business economics 2.43% 1.72% 1.51% 8.64% 1.48% 2.44% 2.11% Telecommunications 0.64% 4.12% 0.97% 1.58% 0.86% 0.57% 2.01% General internal medicine 4.00% 6.87% 1.11% 0.67% 6.03% 1.07% 0.86% Agriculture 1.82% 4.12% 2.19% 0.58% 2.92% 2.23% 1.34% Other FoS 49.43% 42.96% 38.24% 33.64% 42.06% 40.87% 67.62% Source: Thomson Reuters (Scientific) Inc. Web of Science database, compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia; February 2016

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Figure A1: Resident patent applications per field of technology, data for Serbia for period 1977-2012

Resident Patent Applications per Field of Technology, Serbia: 1977-2012 Civil engineering Other consumer goods 600 Furniture, games Transport Mechanical elements Thermal processes and apparatus Other special machines 500 Textile and paper machines Engines, pumps, turbines Machine tools Handling Environmental technology 400 Chemical engineering Micro-structural and nano-technology Surface technology, coating Materials, metallurgy Basic materials chemistry 300 Food chemistry Macromolecular chemistry, polymers Pharmaceuticals Biotechnology Organic fine chemistry 200 Medical technology Control Analysis of biological materials Measurement Optics Semiconductors 100 IT methods for management Computer technology Basic communication processes Digital communication Telecommunications 0 Audio-visual technology

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Y1977 Y1978 Y1979 Y1980 Y1981 Y1982 Y1983 Y1984 Y1985 Y1986 Y1987 Y1988 Y1989 Y1990 Y1991 Y1992 Y1993 Y1994 Y1995 Y1996 Y1997 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004 Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011 Y2012 Source: The Intellectual Property Office of the Republic of Serbia, data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia Figure A2: Non-resident patent applications per field of technology, data for Serbia for 1977-2012

Non-Resident Patent Applications per Field of Technology, Serbia: 1977-2012 Civil engineering 1600 Other consumer goods Furniture, games Transport Mechanical elements 1400 Thermal processes and apparatus Other special machines Textile and paper machines Engines, pumps, turbines 1200 Machine tools Handling Environmental technology Chemical engineering 1000 Micro-structural and nano-technology Surface technology, coating Materials, metallurgy Basic materials chemistry 800 Food chemistry Macromolecular chemistry, polymers Pharmaceuticals Biotechnology 600 Organic fine chemistry Medical technology Control Analysis of biological materials 400 Measurement Optics Semiconductors IT methods for management 200 Computer technology Basic communication processes Digital communication Telecommunications 0 Audio-visual technology

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Y1995 Y2002 Y1977 Y1978 Y1979 Y1980 Y1981 Y1982 Y1983 Y1984 Y1985 Y1986 Y1987 Y1988 Y1989 Y1990 Y1991 Y1992 Y1993 Y1994 Y1996 Y1997 Y1998 Y1999 Y2000 Y2001 Y2003 Y2004 Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011 Y2012 Source: The Intellectual Property Office of the Republic of Serbia, data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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Figure A3: R&D system in Serbia: Number of employees (head count) and researchers (head count, FTE), 1980-2014 Serbia - R&D system 40000

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Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: Scientific Research Activity in the Republic of Serbia, data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia Legend: RDU – Government Sector (GS); RDI – Business Enterprise Sector (BES); HEO – Higher Education Sector (HES)

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Figure A5: R&D system in Serbia: Employees (head count) by activity (%), 1980-2014 Employees in R&D system in Serbia

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Human resources for R&D

Human Resources in the R&D sector in Serbia, by sector of performance and by year: Total employment, Researchers and Supporting staff (university degree) are presented in the following table.

Employment total Employment total - Employment total - Employment total - Employment total - Year GS BES HES PNP 2007 18153 33.46% 1.94% 64.50% 0.09% 2008 19321 29.85% 6.96% 63.11% 0.09% 2008 20067 28.98% 10.23% 60.70% 0.09% 2009 19341 27.58% 6.17% 66.23% 0.02% 2010 19742 27.81% 2.62% 69.44% 0.14% 2011 19646 29.01% 3.95% 66.94% 0.09% 2012 21044 26.62% 5.33% 68.01% 0.04% 2013 21880 21.79% 14.54% 63.63% 0.04% 2014 18153 33.46% 1.94% 64.50% 0.09% Employment total - Employment total - Employment total - Employment total - Employment total - Year FTE GS - FTE BES - FTE HES - FTE PNP - FTE 2007 15921.05 37.80% 1.79% 60.30% 0.11% 2008 17373.80 32.39% 6.60% 60.95% 0.06% 2008 18106.61 31.33% 10.25% 58.35% 0.07% 2009 17273.90 30.33% 5.77% 63.88% 0.02% 2010 17488.59 30.60% 2.60% 66.72% 0.08% 2011 17730.00 31.43% 4.05% 64.42% 0.10% 2012 18142.74 30.54% 4.35% 65.09% 0.03% 2013 19446.18 24.26% 15.70% 60.01% 0.02% 2014 15921.05 37.80% 1.79% 60.30% 0.11% Year Researchers total Researchers - GS Researchers - BES Researchers - HES Researchers - PNP 2007 10580 21.66% 1.47% 76.70% 0.16% 2008 11534 23.74% 3.23% 72.93% 0.10% 2008 12006 23.17% 5.55% 71.18% 0.10% 2009 12637 21.10% 2.40% 76.51% 0.00% 2010 13609 21.52% 1.21% 77.20% 0.07% 2011 13249 23.27% 2.14% 74.56% 0.03% 2012 14643 21.40% 3.34% 75.22% 0.04% 2013 15163 19.26% 9.67% 71.02% 0.05% 2014 10580 21.66% 1.47% 76.70% 0.16% Researchers total - Researchers - GS - Researchers - BES - Researchers - HES - Researchers - PNP - Year FTE FTE FTE FTE FTE 2007 8806.1 25.44% 1.23% 73.14% 0.19% 2008 9978.2 26.81% 3.08% 70.05% 0.06% 2008 10443.9 26.03% 5.75% 68.17% 0.05% 2009 10985.0 23.98% 2.29% 73.72% 0.00% 2010 11719.9 24.48% 1.27% 74.23% 0.02% 2011 11802.0 25.76% 2.34% 71.87% 0.03% 2012 12342.3 25.09% 3.01% 71.87% 0.02% 2013 13026.3 22.06% 10.91% 67.00% 0.03% 2014 8806.1 25.44% 1.23% 73.14% 0.19% Supporting staff - Supporting staff - Supporting staff - Supporting staff - Supporting staff - university degree university degree - university degree - university degree - university degree - Year GS BES HES PNP 2007 2408 52.99% 2.82% 44.19% 0.00% 2008 2327 32.87% 14.87% 52.08% 0.17%

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2008 2337 32.65% 21.91% 45.27% 0.17% 2009 1615 43.10% 13.19% 43.47% 0.25% 2010 1431 42.00% 8.60% 48.57% 0.84% 2011 1475 42.64% 9.90% 47.12% 0.34% 2012 1509 37.11% 16.24% 46.52% 0.13% 2013 1716 13.69% 47.03% 39.22% 0.06% 2014 2408 52.99% 2.82% 44.19% 0.00% Supporting staff - Supporting staff - Supporting staff - Supporting staff - Supporting staff - university degree - university degree - university degree - university degree - university degree - Year FTE GS - FTE BES - FTE HES - FTE PNP - FTE 2007 2203.6 57.80% 2.55% 39.65% 0.00% 2008 2200.8 34.16% 13.28% 52.37% 0.18% 2008 2207.3 33.97% 20.99% 44.86% 0.18% 2009 1513.0 45.41% 11.05% 43.28% 0.26% 2010 1339.5 44.00% 8.30% 47.08% 0.61% 2011 1369.0 45.14% 9.79% 44.70% 0.37% 2012 1333.5 41.40% 13.09% 45.41% 0.10% 2013 1613.7 14.53% 47.91% 37.53% 0.02% 2014 2203.6 57.80% 2.55% 39.65% 0.00% Source: Figures for Human Resources in the R&D sector in Serbia are calculated by the author of this report. Calculations are based on data provided by the Statistical Office of the Republic of Serbia (SORS) within regular yearly statistical reports on S&T activities in Serbia, and using methodology proposed in Frascati Manual defined by the OECD.

Expenditures on R&D

Expenditures on R&D in Serbia are presented in the following table. Year GERD/GDP GOVERD BERD HERD GBOARD /GDP 2006 0.467% 53.32% 10.71% 35.97% 0.250% 2007 0.620% 41.29% 2.58% 56.13% 0.394% 2008 0.710% 40.42% 9.01% 50.56% 0.427% 2009 0.866% 30.83% 14.32% 54.85% 0.545% 2010 0.744% 36.69% 11.69% 51.62% 0.442% 2011 0.724% 33.84% 9.39% 56.77% 0.460% 2012 0.907% 28.78% 24.92% 46.31% 0.465% 2013 0.727% 33.29% 13.20% 53.51% 0.432% 2014 0.770% 24.42% 29.61% 45.97% 0.412% Source: Figures for GERD, GOVERD, BERD, HERD and GBAORD in Serbia are calculated by the author of this report. Calculations are based on data provided by the Statistical Office of the Republic of Serbia (SORS) within regular yearly statistical reports on S&T activities in Serbia, and using methodology proposed in Frascati Manual defined by the OECD. Proper use of Frascati Manual by the Statistical Office of the Republic of Serbia is used for calculation of GBOARD only in 2014.

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Table: Distribution of students enrolled in tertiary education by fields of education, 2007-2013.g. First stage studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 145493 161038 174777 184237 184106 193255 195686 Education 9995 11616 13592 15158 14386 15073 13875 Arts and Humanities 14893 16007 19657 20322 18937 22260 21159 Social sciences, business and law 55184 65006 71281 74872 73679 74548 74405 Natural sciences, mathematics and computing 14854 17357 17228 18243 19061 19677 22711 Engineering, manufacturing and construction 26240 26752 26926 27957 29438 31883 31758 Agriculture and veterinary 4240 4927 5179 5724 5687 5722 6204 Health and welfare 6427 5251 4550 5559 5819 6209 6480 Services 13660 14122 16364 16402 17099 17883 19094

Master and integrated studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 10908 17466 23838 29471 33351 37133 38397 Education 175 263 504 986 1358 1650 2560 Arts and Humanities 310 876 1465 1842 2167 2858 3109 Social sciences, business and law 1361 2929 4722 5715 6673 7383 7723 Natural sciences, mathematics and computing 495 755 1234 2433 2848 2850 2824 Engineering, manufacturing and construction 746 1452 2870 3202 4021 4774 4989 Agriculture and veterinary 346 1258 1412 1524 1607 2106 2187 Health and welfare 7321 9507 10916 12861 13612 14040 12903 Services 154 426 715 908 1065 1472 2102

Former programme 2007 2008 2009 2010 2011 2012 2013 TOTAL 80133 54512 24057 9617 8654 2276 1044 Education 4580 2626 1045 464 141 0 107 Arts and Humanities 8229 6659 1574 492 2904 0 0 Social sciences, business and law 38035 26165 12010 5580 3984 1678 614 Natural sciences, mathematics and computing 6199 3968 1624 1076 858 100 8 Engineering, manufacturing and construction 7605 4671 1663 326 335 167 0 Agriculture and veterinary 3499 1767 792 48 0 0 0 Health and welfare 7456 5031 3509 881 0 331 147 Services 4530 3625 1840 750 432 0 168

Doctorate academic studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 1064 2924 4100 5206 5550 6281 7721 Education 8 84 109 156 203 235 248 Arts and Humanities 35 423 553 1147 1098 714 1243 Social sciences, business and law 44 476 620 747 929 850 1064 Natural sciences, mathematics and computing 330 568 799 847 1021 1525 1669 Engineering, manufacturing and construction 356 522 813 1043 1079 1392 1590 Agriculture and veterinary 26 69 257 226 261 232 395 Health and welfare 255 735 851 918 818 1134 1298 Services 10 47 98 122 141 199 214 Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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Table: Distribution of students enrolled in tertiary education by institutions, 2007-2013.g. First stage studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 145493 161038 174777 184237 184106 193255 195686 Public faculties 74082 86763 102711 108985 111104 121205 122924 Private faculties 15986 25973 26667 27652 24974 24798 24803 Public higher schools 45285 41751 38266 39954 39688 38990 39835 Private higher schools 8131 5007 4751 5847 5613 5042 4574 Police Academy 1688 1077 1575 1322 2115 2218 2086 Faculties outsied universities 321 467 807 477 612 1002 1464

Master and integrated studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 10908 17466 23838 29471 33351 37133 38397 Public faculties 9864 15561 21111 25219 27889 31084 31307 Private faculties 1044 1746 1920 2556 3109 2836 2581 Public higher schools 0 50 635 1236 1916 2379 3441 Private higher schools 0 0 55 132 105 238 202 Police Academy 0 103 101 212 187 261 444 Faculties outsied universities 0 6 16 116 145 335 422

Former programme 2007 2008 2009 2010 2011 2012 2013 TOTAL 80133 54512 24057 9617 8654 2276 1044 Public faculties 62619 42779 19111 7020 6367 1333 347 Private faculties 16651 10773 4136 2048 2287 943 529 Public higher schools 0 0 0 0 0 0 0 Private higher schools 0 0 0 0 0 0 0 Police Academy 863 960 810 549 0 0 168 Faculties outsied universities 0 0 0 0 0 0 0

Doctorate academic studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 1064 2924 4100 5206 5550 6281 7721 Public faculties 1051 2818 3974 4941 5310 5997 7317 Private faculties 13 106 126 265 240 280 395 Public higher schools 0 0 0 0 0 0 0 Private higher schools 0 0 0 0 0 0 0 Police Academy 0 0 0 0 0 0 0 Faculties outsied universities 0 0 0 0 0 4 9 Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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Table: Distribution of students enrolled in tertiary education by regions, 2007-2013.g. First stage studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 145493 161038 174777 184237 184106 193255 195686 SERBIA – NORTH 111430 121209 133059 139205 137493 145146 147301 Belgrade region 76921 82371 90971 95399 93314 100832 104749 Vojvodina Region 34509 38838 42088 43806 44179 44314 42552 SERBIA – SOUTH 34063 39829 41718 45032 46613 48109 48385 Region Šumadija and West Serbia 19414 22251 22357 24156 24994 25284 24906 Region South and East Serbia 14649 17578 19361 20876 21619 22825 23479

Master and integrated studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 10908 17466 23838 29471 33351 37133 38397 SERBIA – NORTH 9293 14763 20017 24137 26298 28619 28991 Belgrade region 6299 10631 12880 16161 16795 19146 19491 Vojvodina Region 2994 4132 7137 7976 9503 9473 9500 SERBIA – SOUTH 1615 2703 3821 5334 7053 8514 9406 Region Šumadija and West Serbia 720 1259 1587 2680 3476 4090 4525 Region South and East Serbia 895 1444 2234 2654 3577 4424 4881

Former programme 2007 2008 2009 2010 2011 2012 2013 TOTAL 80133 54512 24057 9617 8654 2276 1044 SERBIA – NORTH 56438 37887 14264 5265 6690 1415 1044 Belgrade region 37598 26612 11266 3798 5456 141 388 Vojvodina Region 18840 11275 2998 1467 1234 1274 656 SERBIA – SOUTH 23695 16625 9793 4352 1964 861 0 Region Šumadija and West Serbia 10056 6868 4695 1944 817 446 0 Region South and East Serbia 13639 9757 5098 2408 1147 415 0

Doctorate academic studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 1064 2924 4100 5206 5550 6281 7721 SERBIA – NORTH 861 1788 2858 3886 4109 4880 6208 Belgrade region 405 1088 1951 2806 2967 3401 4549 Vojvodina Region 456 700 907 1080 1142 1479 1659 SERBIA – SOUTH 203 1136 1242 1320 1441 1401 1513 Region Šumadija and West Serbia 63 533 612 752 757 706 780 Region South and East Serbia 140 603 630 568 684 695 733 Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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Table: Distribution of graduated students by fields of education, 2007-2013.g. First stage studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 11380 17050 15306 15243 15502 16502 18223 Education 1300 2296 1888 1661 2032 2081 1979 Arts and Humanities 250 506 582 936 815 1160 1149 Social sciences, business and law 4320 7448 4903 4476 4816 5392 5761 Natural sciences, mathematics and computing 553 915 1212 1245 1186 1465 1696 Engineering, manufacturing and construction 1948 2591 3158 3232 3055 2889 3390 Agriculture and veterinary 184 291 188 209 245 144 505 Health and welfare 1238 1337 1610 1457 1362 1546 1757 Services 1587 1666 1765 2027 1991 1825 1986

Master and integrated studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 14383 1850 12715 24415 27319 27557 29911 Education 1530 60 1145 2122 2327 1851 2484 Arts and Humanities 2170 200 1378 3896 4061 3055 4093 Social sciences, business and law 5230 600 5816 7838 9455 9879 10966 Natural sciences, mathematics and computing 1614 208 803 2445 2591 3112 3209 Engineering, manufacturing and construction 2132 375 2087 3638 4413 4296 4497 Agriculture and veterinary 282 71 104 641 501 692 653 Health and welfare 381 278 347 2259 2271 2560 1987 Services 1044 58 1035 1576 1700 2112 2022

Former programme 2007 2008 2009 2010 2011 2012 2013 TOTAL 9983 23126 14967 5908 4141 2988 1853 Education 754 2300 1062 238 286 116 82 Arts and Humanities 885 3003 2263 476 262 183 149 Social sciences, business and law 4336 9299 5289 3378 2293 1615 1082 Natural sciences, mathematics and computing 514 1928 1367 482 173 154 96 Engineering, manufacturing and construction 901 2933 1503 324 152 128 83 Agriculture and veterinary 394 853 796 315 337 239 35 Health and welfare 1908 1988 1889 362 302 289 149 Services 291 822 798 333 336 264 177

Doctorate academic studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 206 572 557 596 561 750 741 Education 1 18 8 8 7 6 25 Arts and Humanities 0 36 40 33 31 17 65 Social sciences, business and law 16 140 133 119 116 122 138 Natural sciences, mathematics and computing 45 106 66 93 109 120 145 Engineering, manufacturing and construction 42 98 104 112 105 160 179 Agriculture and veterinary 27 38 39 66 38 59 13 Health and welfare 58 105 140 132 120 232 156 Services 17 31 27 33 35 34 20 Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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Table: Distribution of graduated students by institutions, 2007-2013.g. First stage studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 11380 17050 15306 15243 15502 16502 18223 Public faculties 112 1888 3004 3658 4099 5118 5862 Private faculties 26 446 989 2138 1858 1490 1543 Public higher schools 8476 10334 9981 8302 8666 8494 9330 Private higher schools 2436 4065 1101 966 653 1195 1165 Police Academy 330 317 231 101 126 82 77 Faculties outsied universities 0 0 0 78 100 123 246

Master and integrated studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 14383 1850 12715 24415 27319 27557 29911 Public faculties 11509 1738 9120 20111 21600 21279 22435 Private faculties 2719 112 3273 3674 4582 4565 5541 Public higher schools 0 0 14 216 526 1172 1459 Private higher schools 0 0 0 23 48 133 182 Police Academy 155 0 308 391 404 357 208 Faculties outsied universities 0 0 0 0 159 51 86

Former programme 2007 2008 2009 2010 2011 2012 2013 TOTAL 9983 23126 14967 5908 4141 2988 1853 Public faculties 7851 18775 12221 3661 2531 1706 992 Private faculties 2132 4213 2746 2247 1610 1282 861 Public higher schools 0 0 0 0 0 0 0 Private higher schools 0 0 0 0 0 0 0 Police Academy 0 138 0 0 0 0 0 Faculties outsied universities 0 0 0 0 0 0 0

Doctorate academic studies 2007 2008 2009 2010 2011 2012 2013 TOTAL 206 572 557 596 561 750 741 Public faculties 201 540 478 554 501 698 706 Private faculties 5 32 79 42 53 52 35 Public higher schools 0 0 0 0 0 0 0 Private higher schools 0 0 0 0 0 0 0 Police Academy 0 0 0 0 7 0 0 Faculties outsied universities 0 0 0 0 0 0 0 Source: Statistical Office of the Republic of Serbia, Statistical Bulletins: data compiled by the Science and Technology Policy Research Centre of the Mihajlo Pupin Institute, Belgrade, Serbia

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