About DIGIT project

The Government of the Republic of Croatia and the International Bank for Reconstruction and Development (IBRD), as part of World Bank, have signed, on June 28, 2023, the Loan Agreement (Loan No. 9558-HR) in the amount of EUR 106 million for the Digital, Innovation, and Green Technology Project (DIGIT Project).

The DIGIT project will support a comprehensive structural reform of the research and innovation sector by financing interventions that will produce transformative effects on research excellence, increased productivity, and the achievement of a green, digital, and globally competitive economy.

Digital transformation refers to the integration of digital technologies to increase productivity and economic efficiency. Green transition relates to the implementation of solutions relevant to the transition towards a climate-neutral and environmentally friendly economy. Green and digital technologies and research represent a significant opportunity for growth and increased productivity within the service-oriented Croatian economy. These technologies drive markets towards less dependence on physical proximity, increased automation, and greater investment in intangible capital. Investments in digital and green technology have the potential to significantly boost Croatia’s prospects.

The DIGIT Project will facilitate the digital transformation and the green transition of the economy, increase resources for applied research and experimental development, and support the efforts of the Croatian government to strengthen its institutional capacity to deliver research and innovation policies. Activities under the DIGIT Project will finance research and innovation through Sub-grant schemes, with a focus on digital and green, and will complement and enhance the effectiveness of investments and build the capacities of institutions to deliver on this agenda. The DIGIT Project will also support reforms envisaged in the National Recovery and Resilience Plan 2021-2026 (NRRP), the Croatia Smart Specialization Strategy 2021-2029 (S3), Programme Competitiveness and Cohesion 2021-2027 (PCC), and activities important for the country’s accession to the Organization for Economic Co-operation and Development (OECD). The project will support the achievement of the goals defined in component C3.2 of the National Recovery and Resilience Plan (NRRP), which focuses on reforming research and innovation policies and strengthening research and development capacities in both the research and business sectors. It will also contribute to the goals of the Smart Specialisation Strategy (S3) through the modernization of research infrastructure, enhancement of research management and technology scouting, and fostering connections between academia and industry.

The DIGIT Project will provide financial support to select projects through a Sub-grant scheme. This scheme is designed to allocate targeted funds to foster innovation and development within the framework of the project’s goals through 2 components and 4 sub-components:

Component 1: Enabling institutional conditions for digital and green research and innovation

Component 1 provides technical assistance and financing to strengthen institutional capacities for research, development, and innovation (RDI) support, address information asymmetries for green and digital technology adoption, foster industry-science linkages, support the professionalization of research centers, and improve the research and technology infrastructure.

Sub-component 1.1: Strengthening the institutional infrastructure for research and innovation policy

This sub-component aims to improve the institutional capabilities and infrastructure for RDI. The activities under sub-component 1.1 will strengthen the MSEY’s ability to deliver on the green and digital mandates while furthering other strategic agendas and improving research excellence. Funding for key RDI projects will address financing gaps for infrastructure, create incentives for public research organizations (ROs) to implement reforms, improve general conditions for digital and green research, and help bridge the gap between research and the business sector.

Sub-component 1.2: Strengthening the effectiveness of research and innovation financing

This sub-component provides complementary resources to enhance the effectiveness of research and innovation financing. The activities under sub-component 1.2 aim to support policies and program management aspects that are necessary to boost the effectiveness of EU funds for research and innovation. These include soft support services for applicants, piloting new interventions and supporting the peer review process. Additionally, the sub-component will provide pre-screening toolkits for digital and green diagnostics in firms and technology scouting services to match business needs with technological possibilities at public ROs. This will complement and improve the effectiveness of EU-funded investments related to digital transformation and green transition. Finally, support will be provided to professionalize ROs, many of which were created through EU funds, to improve their business orientation and operational and management capacities.

Component 2: Programs for digital and green research and innovation

Component 2 provides sub-financing to cover the gaps in the program mix, as well as to improve the targeting of research and innovation support to digital and green technology.

Sub-component 2.1: Pre-commercial digital and green R&D support

Sub-component 2.1 will provide funding for pre-commercial digital and green research and development (R&D) and a mission-oriented challenge program. Sub-grants for pre-commercial digital and green R&D will be geared toward projects conducted in cooperation between ROs and firms. They will focus on R&D projects for green and digital solutions in the early technology readiness level (TRL) stages. The funding will target projects demonstrating the potential for inter-sectoral synergies (e.g., interdisciplinary consortia) and projects that address the green-digital intersect as they may yield heightened additionally. Examples could include applied research in energy storage, carbon capture systems, smart grid technologies, artificial intelligence, and machine learning in transportation, etc. This instrument will help by developing projects that may be further scaled through existing EU and national funds, and available commercial financing sources.

Sub-component 2.2: Synergies program

Sub-component 2.2 will provide funding to support high-quality projects that receive Horizon Europe Seals of Excellence. Sub-grants and matching sub-grants will be awarded to such projects to complement Horizon Europe, expand the number of beneficiaries, improve the quality and commercial prospects for domestic research and innovation, and garner more interest in the Horizon Europe program overall. This instrument fills a critical funding gap in the current Horizon Europe scheme since the program is extremely competitive and challenging to obtain for ROs and firms from new EU member states. Additionally, through this sub-component, the DIGIT Project will provide support to beneficiaries who received funding from the European Regional Development Fund (ERDF), Recovery and Resilience Facility (RRF) for R&D (sub-program Routes to Synergies). This sub-program aims to prepare consortia/beneficiaries for successful participation in Horizon Europe with an array of supporting activities that contribute to their coordination capacities, internationalization, valorization, and technology uptake.