ABSTRACT
This chapter deals with problems of innovative developments in industrial transformation in Central and Eastern Europe (CEE). It discusses different notions of 'knowledge' and 'innovation'. The notion of knowledge is closely related to the notion of innovation systems. The essential function of the enterprises in the innovation process is to create a demand for and to absorb new technological, organizational and social knowledge, turn it into new products and sell them. The chapter describes the aspects of the economic situation during the last six-eight years in comparison with other European countries. It focuses on institutional aspects and social and political conditions which can contribute to re-organizing the web in which a market economy has to be imbedded in order to be innovative. The coming integration of some of the CEE countries into the European Union could be used as a device for faster integration into networks and environments conducive to innovation.
