Techno-economic transformation in Eastern Europe and the former Soviet Union-A neo-Schumpeterian perspective

This essay is an interpretative survey that explores the post-socialist transformation in Eastern Europe and the former Soviet Union (EE&fSU) from a neo-Schumpeterian perspective. It argues that we cannot understand the challenges of technological upgrading of the post-socialist region if we only adopt the lens of what can be termed transition economics. Instead, the post-socialist transformation is an open-ended process whose outcomes can be better understood as a disequilibriating evolutionary process involving the misalignment of different levels and parts of innovation systems. We develop a multi-level analytical framework and outline several major transformation processes involving dynamic interactive capabilities as the core precondition for technology catching up. Technology accumulation and innovation systems are hybrid systems whose dynamism rests on various governing principles. The swing from one pure mode of coordination (plan) to other (market) explains limited technological upgrading in both periods. Dynamic innovation systems are quintessentially hybrid systems. Crucial to this is an understanding of the role which the state plays, both as a contributor and as an obstacle to the transformation towards sustainable economic growth.