Knowledge-Based Economy and Social Capital in Central and East European Countries

Comparative analysis of the European Union (EU) and the Central and East European countries (CEECs) using economic indicators reveals a complex picture of similarities and differences. In some respects, the difference between the European south and north is greater than the difference between the EU and CEECs. The capabilities of human capital in CEECs are not far behind the EU and are above those of south Europe. Orientation toward an open economy (globalization) is present more in some CEECs than in most EU countries. CEECs, in general, invest less in research. Governments are still heavily involved in research funding in countries with a tradition in strong central planning systems and a large number of researchers. In other CEECs, business enterprises are becoming more involved in research funding but on average are still far below the European Union. The CEECs lag substantially behind EU countries in implementing new communication and information technology. These countries are not taking advantage of the new cycle of innovation. As a consequence, the technological gap is growing. The ability to implement and adapt to change depends on social capital. Some dimensions of the value system indicate the prevalence of a modernistic orientation in CEECs. But, because the communist system was dysfunctional, especially in relation to the market and democracy, social capital rapidly replaced the imperfection of the formal system and social networks. Trust became more important than the law and regulatory institutional systems.