"• The components of any national innovation system (NSI) – institutions and organisations – need appropriate alignment to enhance innovation and the dynamic development of any country. Many authors have claimed that the countries of Central and Eastern Europe (CEE) have recently slowed down in their development. The reasons include weak reforms and deficiencies of their NSI, pointing to NSI rigidity, misalignment of institutions, overly strong FDI-dependence, and poor governance quality. This article combines the concepts of NSI and the dynamic capabilities of governments as coordinators of the knowledge economy conditions in the NSI. By using selected empirical examples from CEE on micro-level stimuli for knowledge production and diffusion (which both are the core processes of the NSI), the article outlines the challenges for CEE countries' governments, including, (among others) operating through demand as well as supply-side factors on the NSI, enhancing interactivity (in ‘real time'), aligning incentives for different types of NSI actors, aligning micro, meso, and macro levels (local, regional, national, and global systems of innovation), and acquiring policy capabilities to make connections through policy learning."

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