State audit finds Latvian innovation support policy lacking

Latvia, in its investments of European Union (EU) funds into cooperation between enterprises and scientists, focuses on the number of supported enterprises, not on achieving specific objectives, the State Audit Office (VK) has concluded October 19 after an audit on innovation support policy.

In Latvia, innovation development depends heavily on the funding of EU funds. In the previous programming period of EU funds (2014-2020), 681 million euros of public co-financing has been used in support of innovations in Latvia, however, the objectives set out in the Guidelines for National Industrial Policy 2014-2020 – to improve competitiveness and productivity of enterprises – have not been achieved.

The audit concluded that the activities of the Ministry of Education and Science and the Ministry of Economy in planning the policy have not been sufficient to have a significant impact on these objectives, and the previously identified problems are still not addressed.

This risks also not achieving the expected economic development in the 2021-2027 programming period when €721 million has been allocated to support innovation.

The auditors note that, for example, support for cooperation between scientific institutions and merchants, development of new products up to the prototype, support of scientific staff, support for technology transfer, promotion of international research, etc. is a step in the right direction.

However, without closing the gaps that the problems are not prioritized, the planned indicators of support measures are poorly linked to policy objectives, and we Latvia risks not achieving either the development of innovation in the planned amount or the economic development objectives.

The audit states that in both the previous EU fund period and the next period until 2027, ministries' planning documents “the main problems hindering the development of innovation remain unchanged.”

The State Audit Office believes that responsible ministries should develop rules for the implementation of measures financed by EU funds in a timely and qualitative manner, so as not to cause disruption of support measures for scientific institutions and enterprises, as well as generally reduce dependence on EU funds.

“Investments in research and development in Latvia should increase and reach 1.5% of gross domestic product in 2027, however, without resolving the weaknesses identified in the audit in the planning and implementation of innovation development policy, increasing the amount of funding alone will not ensure better results – increase in productivity, competitiveness or exportability and related increase in the welfare of the population,” said Inese Kalvāne, member of the VK board.

“We have called on Economics Ministry and Education and Science Minsitry to continue working together and improve policy planning by developing and really launching its new implementation monitoring system, thinking more not only about improving the implementation of innovation support measures but also evaluating results in order to clearly see the impact of investments on the development of the national economy, society, and innovative enterprise community,” said Inese Kalvāne.

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