Gold Magazine February - March 2013, Issue 23 | Page 65

government services for improved business performance where Cyprus ranks 82nd but Malta is 39th and Luxembourg is well ahead of both, in 16th place. The same pattern is noted when examining favouritism in decisions by governmental officials and wastefulness in government spending. It appears that providing more vigorous cooperation between the public and private sphere with less public spending is an ongoing challenge for Cyprus. It must be said, nevertheless, that direct cross-country comparisons in terms of institutional efficiency and measuring public spending output is a complex procedure. The coverage and scope of public services differ across countries, reflecting societal and financial priorities. These disparities require that public spending effectiveness be assessed by spending area, at least for the key components, including health care, education and social assistance. In other important institutional areas such as the protection of minority shareholders’ interests, Cyprus ranks 21st, depicting its sound services system. Equally important, Cyprus is attributed with a highly efficient legal framework in challenging regulations (18th place). Luxembourg also ranks high in this aspect (8th) while Malta lags behind in a low 68th place. Equally importantly, Cyprus achieves a good place in most higher education and training sub-pillars, namely the quality of its management schools and the quality of its educational system. The same applies for goods market efficiency where Cyprus is in the top fifty countries in most categories. It is ranked 19th in total tax rates, 16th on the extent and effect of taxation and 6th on trade tariffs. The same motif can be seen in the use of the Internet and financial market development, where Cyprus ranks 11th on the legal rights index and 35th on the availability of financial services. Luxembourg performs better throughout, while Malta is on an equal standing. A Problem of Innovation? In most categories (institutions, infrastructure, macroeconomic environment higher education and training, etc.) Cyprus has an inconsistent performance of high and low points. The only category in which Cyprus has a consistently low ranking throughout and performs poorly is innovation. Malta does slightly better but still faces considerable problems while Luxembourg is well ahead, with heavy investment in R&D spending and good university-industry collaboration in R&D. The only sector in Richard which Cyprus does well in terms of innovaCooper tion is PCT patent applications, a success owed largely to service providers able to efficiently accommodate clients. Notably, Cyprus is ranked 52nd for the availability of scientists and engineers for R&D, which is something of an oxymoron: while the human resource expertise is present, it remains largely unexploited. Innovation Promotion and Management: The Key to Growth and Development Cyprus lacks a consistent innovation policy. Its semi-government institutions, limited by resources as most organisations nowadays, are not able to meet the challenge of innovation promotion. It appears that in the majority of cases, we are followers and not leaders in innovation policy. Local R&D is due to the vigorous attempts of universities and private entities to participate in EU funding programmes and to private companies exploring new products and IN THE MAJORITY OF CASES, WE ARE FOLLOWERS AND NOT LEADERS IN INNOVATION POLICY services. Internal innovation is nonetheless very limited. Only a handful of enterprises actually invest in innovation and research, with most considering these as “soft issues” not to be dealt with in times of hardship. Innovation Union, a new initiative promoted by the EU, particularly stresses the need for a genuine single European market for innovation which would attract innovative companies and businesses. To achieve this, several measures are proposed in the fields of patent protection, standardization, public procurement and smart regulation. Innovation Union also aims to stimulate private sector investment and proposes, among other things, to increase European venture capital investments which are currently a quarter of those in the US. Moreover, throughout the Global Competitiveness Index it is evident that the countries which lag behind in innovation, lag behind generally. While small market size or less advanced institutionalisation may not seriously affect overall performance, a bad performance in innovation is a catalyst for unemployment, lack of private investme