Innovation Europe > News > Innovation EU Vol1-1 > Cyprus

Combining a close-to-the-EU27 average level of performance with a high growth rate, Cyprus is a growth leader among the group of “moderate innovator” countries. Finance and support, linkages and entrepreneurship, and innovators are relatively strong dimensions of the country’s overall performance. Cyprus’s innovation system has developed in the last decade, the accession to the EU being the driving force behind an increased emphasis on R&D and innovation.

There is a visibly increasing interest and government effort to nurture the technology and innovation system. R&D support has been organised and improved significantly over the last five years. The main agency implementing research policy (the Research Promotion Foundation – RPF) is constantly improving its performance and increasing its budget, and the Planning Bureau, responsible for policy design, is also increasing its emphasis on R&D.

Innovation policies in Cyprus target mostly the utilisation of broader R&D results and incorporation of innovative processes and products, as well as new technology in the business activities. They rely almost exclusively on direct support; fiscal incentives would not be effective since tax rates are very low anyway. Support to entrepreneurship is designed and managed by the Ministry of Commerce, Industry and Tourism in the form of state grants for investment (including technological upgrading as a target) and incentives for youth and female entrepreneurship. The main instrument through which the government is expected to better stimulate investment in R&D and innovation is the substantial increase in the budget of the RPF’s DESMI. For 2008 the budget is €70m, compared to €17m in 2006. The design and launch of the current DESMI that for the first time links R&D and innovation implies a more coherent approach towards research and technological development, which is the key element in the context of the Cyprus competitiveness strategy.

Main innovation policy challenges

• Increase inputs and efficiency of business innovation.
• Increase the number of S&E graduates.
• Make innovation policy and support to innovation more effective.

Action

Despite progress, there are still major challenges ahead before attaining a globally competitive innovative economy. Policy support is composed of research grants and basic infrastructure with limited support to non-R&D innovation, such as industrial design, cluster policy and quality control. Earlier initiatives for incubators and a technology park are lingering and running out of steam. So, more effort is still needed; this includes in particular better co-ordination and a higher degree of involvement from the side of the Ministry of Commerce, Industry and Tourism.

The observed lack of broader co-ordination led to a decision to create two new co-ordination mechanisms: The National Council for Research and Innovation (NCRI), which will be the highest-level organisation with exclusive responsibility for the adoption of long-term strategies in research and innovation, and the Cypriot Science Council (CSC), which will be an advisory scientific board composed of 10-15 members of qualified scientists. The new, more effective governance was decided by the Council of Ministers at the end of 2007, but is still not operational.