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