Rising Innovative City-Regions in a Transitional Economy: A Case Study of ICT Industry in Cluj-Napoca, Romania

Abstract

We use Cluj-Napoca, Romania as a case, to study the rising innovative city-regions in the transitional economies, their role in the global innovation networks, and the development of domestic innovation capability. We have the following main findings: First, while Romania as an economy is still categorized as a factor-driven economy, sectors of some city-regions in the country, such as ICT sector of has started to move towards the innovation-driven economy closely articulated in the global innovation network, especially in Europe’s innovation network of software development. Second, while the region is characterized by the relatively strong global pipelines, i.e., linkages with outside players, it had weak local buzz, i.e., local networks. Third, multinational corporations that have generally been attracted to the region owe a large debt to the overseas-returnee community who are interested in linking Cluj-Napoca to the global innovation network. Local companies have equally benefited from the returning IT talents. One particular challenge is that although start-ups were emerging in Cluj-Napoca, the city-region was not effective at retaining these start-ups by providing opportunities for their further growth. Fourth, like any other city-region, Cluj-Napoca has been under the institutional influence at multiple levels, from the European Union (EU), the national government, the regional government, the county government, to the municipal government. However, close university-industry connection remains a challenge. We recommend the city-region to consider a variety approaches to enhance the local buzz, specifically the social networks and innovation milieu of the city-region. Moreover, it needs to pull more resources for start-ups and deals with the retention of the start-ups.