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Geopolitics meets growth

Central and Eastern Europe is no longer Europe’s peripheral backyard

February 26, 2025

7 min read

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February 26, 2025

By

7 min read

Photo by Valentyn Chernetskyi on Unsplash.

It’s a self-made renaissance—an economic and technological reinvention that goes far beyond the clichés of cheap assembly lines and outsourced call centres: Central and Eastern Europe is no longer just the world’s workshop for assembling cars and stitching shirts. From the gleaming tech hubs of Tallinn to the cutting-edge cybersecurity labs of Warsaw, the region is turning into a powerhouse of digital innovation.  

But have investors got the message? CEOs who still think of CEE and the Baltics merely as cost-saving outposts are missing the bigger picture. The region’s transformation is prompting a profound rethink of investment strategies—and those who fail to pivot risk being left behind.  

For decades, multinationals set up shop in CEE countries with one overriding goal: low production costs.

That old formula—cheap labour plus proximity to major Western European markets—drove a manufacturing boom from the 1990s to the early 2010s. Yet the region has evolved. Between 2015 and 2022, average wages in the Baltics and the Visegrád Group (Poland, Hungary, the Czech Republic, and Slovakia) rose by over 30 per cent.  

At the same time, digital infrastructure and tech-savvy workforces have climbed high on investors’ agendas. 

In Estonia, for instance, the government’s vaunted e-Residency programme has turned the country into a darling of global tech entrepreneurs. All public services are available online, and the country scores consistently well on the EU’s Digital Economy and Society Index (DESI).  

Polish cities such as Kraków and Wrocław, once best known for their medieval squares and cheap weekend flights, now bristle with R&D facilities run by global firms including Google, ABB, and Motorola.  

The shift to a service and innovation-led economy 

CEOs must note that while manufacturing remains a bedrock of many CEE economies, the real growth story is shifting toward services and innovation.  

Offshoring and nearshoring of IT services continue to gain momentum, aided by the region’s improving digital connectivity. Romania’s IT sector, for instance, now accounts for around seven per cent of GDP, up from only 1.3 per cent a decade ago.  

Lithuania, once overshadowed by its Baltic neighbours, has emerged as a fintech hotspot, attracting foreign direct investment in digital banking and e-commerce solutions. 

This service-oriented pivot is reshaping the region’s skill requirements—and supply. University enrolment in STEM fields has soared across CEE, while a wave of coding boot camps and private tech academies have sprouted from Budapest to Bucharest. 

According to Eurostat, the share of ICT specialists in total employment in CEE rose from 3.2 per cent in 2015 to nearly five per cent by 2023. Skilled engineers, data scientists, and software developers are no longer outliers; they are fueling the next generation of Central Europe’s growth. 

A new era of start-ups and scale-ups 

CEE’s innovation story is not merely about big Western firms relocating R&D. A dense ecosystem of start-ups and scale-ups has taken root, many of which have garnered international acclaim.  

Estonia, already known for birthing Skype and Wise, recorded a 140 per cent increase in venture-capital funding between 2018 and 2022, driven by local unicorns ranging from mobility platforms to cybersecurity firms.  

Poland, with a population of nearly 38 million, provides a vast market for domestic startups before they expand abroad. This critical mass has helped produce tech success stories like Allegro (an e-commerce giant) and DocPlanner (a digital health platform). 

The Baltics’ per-capita rate of successful start-ups rivals that of the Nordics, long Europe’s prime example of small-country innovation. Latvia is making strides in deep tech, with specialised hubs for drone technology and artificial intelligence.  

Lithuania, for its part, is plugging into the global fintech scene, harnessing the region’s penchant for lean, digital-forward solutions. Even smaller cities in Bulgaria, Croatia, and Serbia have carved out niches in gaming, blockchain, and mobile app development.  

This proliferation of diverse tech verticals means that the CEE region should feature prominently in the strategic planning of CEOs looking to future-proof their portfolios.  

E-government and the digital leap 

As governments in CEE and the Baltics leapfrog old systems and embrace digitalisation, many local firms enjoy a significant home advantage.  

Estonia’s e-governance model has often been cited as Europe’s digital gold standard. Not far behind, Latvia and Lithuania have streamlined everything from business registration to tax filings through secure online portals.  

Poland’s digital identity system, mObywatel, has connected millions of citizens to public e-services, while Romania’s Ministry of Digitalisation has rolled out a slate of initiatives to boost broadband connectivity in rural areas. 

All this effort is paying off. According to the European Investment Bank’s latest Digitalisation in Europe report, CEE countries are narrowing the gap with Western Europe, with the Baltics regularly scoring above the EU average on internet connectivity, human capital, and use of digital public services.  

Faster digitalisation lowers barriers to entry for new businesses, encourages the growth of local tech ecosystems, and provides fertile ground for collaborative research between universities and the private sector.  

For investors, it translates into opportunities in everything from next-generation manufacturing to telemedicine and edtech platforms. 

Reinventing the investment playbook 

Given these shifts, CEOs and investors should overhaul their traditional checklists. First, they need to factor in the region’s evolving cost structure. While wages in CEE remain well below those in Western Europe, labour costs are no longer the sole competitive advantage.  

The new draw is a pool of technologically adept workers who can drive innovation, not just follow scripts.

Second, re-evaluating partnerships on the ground is essential. Local venture funds and accelerator programmes can offer a pipeline of promising companies that might otherwise slip under the radar. 

Third, the region’s regulatory environment is steadily maturing. Despite occasional political hiccups in countries like Hungary, overall rule-of-law metrics and corporate governance standards are improving.  

Analysts at the European Bank for Reconstruction and Development (EBRD) highlight Poland and the Baltics as top performers, with stable policies that encourage both domestic and foreign private equity. Indeed, the gradual convergence of legal frameworks with EU norms creates a more predictable climate for investors—an essential element for long-term commitments in advanced tech sectors. 

Finally, sustainability and the green economy are growing priorities. CEE lags behind some Western countries in renewables adoption, but there is rising pressure from the European Commission, as well as local constituencies, to accelerate the transition. 

The good news is that the region’s industrial base, though carbon-heavy in places like Poland, offers a perfect testing ground for new energy technologies. Investors who can dovetail innovation in renewables, battery storage, and hydrogen fuel with existing manufacturing expertise will have a leg up. 

Time to innovate, time to invest 

Central and Eastern Europe and the Baltics are rewriting the script on what it means to be an ‘emerging market’. Entrepreneurs in the region are no longer content with providing low-end assembly or back-office services.  

Their products are cutting-edge, their ambitions global, and their local support systems robust. Sure, the region still grapples with concerns such as infrastructure gaps and episodes of political turbulence. But the overarching trend is of dynamic economies leveraging digital prowess to reinvent themselves. 

For CEOs with an eye on global expansion and transformation, the message is clear: take CEE and the Baltics seriously as a source of high-value innovation, not merely as a pool of cheap workers.  

The new frontier is about AI start-ups in Prague, fintech disruptors in Vilnius, and robotics labs in Cluj. Investment success will hinge on forging fresh local alliances, scouting for top-tier tech talent, and allocating capital not just to real estate and factories, but to R&D and agile service platforms. 

In the end, the region’s reinvention story is a wake-up call. Central and Eastern Europe is no longer Europe’s peripheral backyard. It is an emerging epicentre for technological breakthroughs and a vital node in a rapidly shifting global supply chain.  

CEOs ignore it at their peril. Embrace it, and they may find themselves at the cutting edge of Europe’s next great growth wave.

Photo by Valentyn Chernetskyi on Unsplash.

Craig Turp-Balazs

Craig Turp-Balazs

Craig Turp-Balazs is head of insight and analysis at Reinvantage.

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1. The Client

A global technology company operating across EMEA, with a regional HQ in Istanbul. The company manages 20+ markets, handling everything from brand campaigns to strategic partnerships.

Role we worked with: The EMEA Head of Marketing (supported by two regional managers).

2. The Challenge

Despite strong products and a respected global brand, the regional team was struggling with:

  • Misaligned strategy across markets → campaigns executed with inconsistent narratives.
  • Slowed growth → lead generation plateaued despite increasing spend.
  • Internal friction → marketing, sales, and product teams disagreed on KPIs and priorities.

Traditional fixes (more meetings, more reporting) only created more noise.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the regional HQ team.

  • Day 1–3: Intake → Reviewed decks, campaign data, and plans.
  • Day 4: Sprint Session (90 mins) → Breakthroughs:
    • Sales and marketing had different definitions of “qualified lead.”
    • 40% of spend was going into low-potential markets.
    • The team assumed the problem was lack of budget, but it was actually lack of alignment.
  • Day 5–10: Synthesis → Insights distilled into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint uncovered that the issue wasn’t budget, but fragmentation.
Three sharp insights unlocked a way forward:

  1. Unified KPIs bridging marketing + sales.
  2. Market prioritisation → shifting budget to 5 high-potential markets.
  3. Simplified narrative → one EMEA core story, locally adaptable.
By just realigning resources and focus, the client could unlock an estimated £250,000 in efficiency gains within the next 12 months — far exceeding the Sprint’s value guarantee. The path to higher returns was already inside the business, hidden by misalignment.
5. From Sprint to Action (4 Pillars Applied)

With clarity secured, Reinvantage didn’t suggest “more projects.”

Instead, we used the Sprint findings to create laser-focused next steps — drawing only from the areas that would deliver the most impact:

  • Readiness → Alignment workshops for sales + marketing teams. New playbooks clarified “qualified lead” definitions and reduced internal disputes.
  • Foresight → A market-opportunity scan identified which 5 countries would deliver the highest ROI, removing the guesswork from allocation.
  • Growth → Guided the reallocation of €2M budget and designed a phased rollout strategy that protected risk while maximising return.
  • Positioning → Built a messaging framework balancing global consistency with local nuance, ensuring campaigns spoke with one clear voice.

Because the Sprint had stripped away noise, these actions weren’t generic consulting ideas — they were directly tied to the breakthroughs.

6. The Results
  • +28% increase in qualified leads across the region.
  • 30% faster campaign rollout due to streamlined approvals.
  • Budget efficiency gains → €2M redirected from low-return to high-potential markets.
  • Internal cohesion → marketing + sales now use a single shared dashboard.
The client came in believing they needed more budget.
The Sprint revealed that what they really needed was clarity and alignment.

With that clarity, the four pillars became not theory, but practical tools to deliver measurable impact.

The Sprint guaranteed at least £20,000 in value — but in this case, it helped unlock more than 10x that within six months.
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Case study: Regional VC fund & accelerator

1. The Client

A regional venture capital fund and accelerator focused on early-stage tech start-ups in the Baltics and Central Europe.

The fund had raised a new round and was under pressure to deliver stronger returns while also building its reputation as the go-to platform for founders.

Role we worked with: Managing Partner, supported by the Head of Portfolio Development.

2. The Challenge

Despite a promising portfolio, results were uneven.

Key issues:

  • Scattered portfolio support → no consistent playbook for start-ups, every partner did things differently.
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  • Stretched team → too many small bets, not enough clarity on which companies to double down on.

The leadership team knew something was off, but disagreed on whether the issue was pipeline quality, market conditions, or internal capacity.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the partners and portfolio team.

  • Day 1–3: Intake → Reviewed pitch decks, pipeline funnel data, and start-up performance reports.
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    • No shared definition of a “high-potential founder.”
    • Support resources were spread too thin across the portfolio.
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  • Day 5–10: Synthesis → Insights consolidated into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint revealed that the challenge wasn’t pipeline quality — it was lack of focus and positioning.

Three core insights provided the turning point:

  1. Portfolio Prioritisation Framework → defined clear criteria for where to double down.
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  3. Differentiated Narrative → repositioned the fund as “the accelerator of reinvention-ready founders.”
These shifts alone gave the fund a path to add an estimated £2M+ in portfolio value over the following 18 months, by concentrating capital and resources where they could move the needle most.
5. From Sprint to Action (4 Pillars Applied)

With clarity from the Sprint, Reinvantage created a tailored support plan:

  • Readiness → Coached partners on using the new prioritisation framework and trained the team on deploying the Founder Success Playbook.
  • Foresight → Ran scenario analysis on regional tech trends, helping the fund anticipate where capital would flow next.
  • Growth → Guided resource reallocation across the portfolio and supported new co-investor pitches for top-performing start-ups.
  • Positioning → Crafted a sharper brand story for the fund, positioning it as the reinvention partner for globally minded founders.
6. The Results
  • 10 portfolio companies onboarded to the new Playbook → greater consistency of support.
  • Raised follow-on capital for 3 top start-ups with the new prioritisation framework.
  • +26% increase in inbound deal flow from founders citing the fund’s new positioning.
  • Stronger internal cohesion → partners aligned on where to focus resources.
The client thought the problem was pipeline quality.
The Sprint showed it was actually lack of clarity and focus inside the firm.

By applying the four pillars, Reinvantage helped turn scattered effort into concentrated value creation.

The Sprint guaranteed at least £20,000 in value; here it set the stage for multi-million-pound upside in portfolio growth.
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Case study: International impact Organisation

1. The Client

A large international impact organisation focused on entrepreneurship and economic empowerment.
The organisation runs multi-country programmes across Eastern Europe and Central Asia, often in partnership with global donors and corporate sponsors.

Role we worked with: Senior Programme Director, responsible for regional coordination.

2. The Challenge

The organisation had launched a flagship regional initiative supporting women entrepreneurs, but the programme was underperforming.

Key issues:

  • Fragmented delivery → each country office interpreted the programme differently.
  • Donor frustration → reporting lacked consistency and clear impact metrics.
  • Lost momentum → staff energy was spent on administration rather than scaling success stories.

Traditional programme reviews had produced long reports, but no real alignment or action.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the regional leadership team and representatives from two country offices.

  • Day 1–3: Intake → Reviewed donor reports, programme KPIs, and field feedback.
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    • Staff were duplicating efforts across countries, wasting time and resources.
    • The initiative lacked a clear theory of change — everyone described its purpose differently.
  • Day 5–10: Synthesis → Insights distilled into a Clarity Brief + Insight Canvas.
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The Sprint revealed that the issue wasn’t donor pressure or programme design — it was a lack of shared framework and alignment.

Three critical insights reshaped the path forward:

  1. One Unified Theory of Change → agreed narrative for why the programme exists.
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By eliminating duplicated reporting and clarifying what success looks like, the client saw they could save the equivalent of £100,000 in staff time annually — while also unlocking stronger donor confidence and follow-on funding opportunities.
5. From Sprint to Action (4 Pillars Applied)

Armed with Sprint clarity, Reinvantage proposed a laser-focused support plan:

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  • Positioning → Crafted a regional success narrative and storytelling toolkit, helping them showcase results consistently across markets.
6. The Results
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  • Secured new funding commitment → one major donor increased their contribution by 20%.
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The client thought it needed better donor management.
The Sprint revealed it needed a shared foundation across its teams.

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1. The Client

A national digital development agency tasked with driving the government’s digital transformation agenda, including e-services, citizen portals, and smart city pilots.

Role we worked with: Director of Digital Transformation, supported by IT and service delivery leads from three ministries.

2. The Challenge

The agency had strong political backing but faced hurdles in implementation.

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  • Siloed projects → each ministry developed digital tools independently, leading to duplication.
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  • Funding pressure → international partners demanded clearer impact in the short term.

The agency wanted to accelerate momentum but struggled to get alignment across ministries.

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We ran a 14-day Immersive Reinvention Sprint with the agency’s leadership and digital focal points from three ministries.

  • Day 1–3: Intake → Reviewed strategy docs, donor reports, and citizen feedback data.
  • Day 4: Immersive Sprint Session (half-day) → Breakthroughs:
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    • 20% of budget was going into overlapping pilot projects.
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  • Day 5–14: Synthesis → Insights consolidated into a Clarity Brief + Insight Canvas.
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The Sprint revealed that the biggest blocker wasn’t lack of funding, but lack of shared priorities.

Three practical insights stood out:

  1. One Definition of Digital Service → agreed across ministries.
  2. Quick-Win Prioritisation → focus on top 3 citizen pain points (ID renewal, business registration, healthcare booking).
  3. Shared Resource Map → pool budgets to eliminate duplication.
These changes alone allowed the agency to unlock £75,000 in immediate savings and deliver 2–3 visible improvements in the next quarter — meeting donor expectations and building citizen trust.
5. From Sprint to Action (4 Pillars Applied)

Based on the Sprint clarity, Reinvantage proposed a modest, targeted package of support:

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  • Foresight → Analysed citizen feedback trends to shape the quick-win roadmap.
  • Growth → Supported the reallocation of funds to joint projects, reducing overlap.
  • Positioning → Crafted a communication plan highlighting early digital wins to donors and citizens.
6. The Results
  • 2 pilot services integrated into the central portal (ID renewal + healthcare booking).
  • Budget savings of £75,000 from eliminating overlapping projects.
  • Citizen satisfaction up modestly → call centre complaints on digital services dropped by 12%.
  • Donor confidence improved → short-term impact report received positive feedback.
The client thought it needed more funding and bigger projects.
The Sprint revealed it first needed clarity and alignment.

By applying the four pillars to a targeted scope, Reinvantage helped deliver visible results within a single quarter — proving progress to citizens and donors and laying the groundwork for deeper transformation.