Innovation needs a favourable environment. This includes access to knowledge, risk-tolerant funding and the ability to make and learn from mistakes.

State support is needed in areas where the market fails to address innovators’ needs. Specific tax regimes create incentives for both start-ups and existing businesses to innovate in areas of prior interest for the national economy.

Another example is the need to have a regulatory framework for the operation of crowdfunding, business angels and venture capital so that that it defends both investors and start-ups. Regulatory ‘sandboxes’ – controlled environments for testing innovations – are created to check how new technologies such as Artificial Intelligence and blockchain can be used to satisfy customers’ needs without exposing them to risks.

Aligning basic terms and learning from EU best practices, tools and regulatory approaches will allow businesses from the Eastern partner countries and EU countries to work on mutually understandable rules and facilitate the flow of risk investments and innovations. In EU4Digital Facility Phase 1, the ICT Innovation thematic area developed policy recommendations and action plans in five ICT innovation policy areas prioritised by the Eastern partner countries. In Phase 2, it will develop policy recommendations to enable the use of specific emerging technologies (e.g., European AI legal framework) in the region in alignment with EU policies.