The countries in Central Eastern Europe (CEE) have strongly industrialised economies and attained income levels comparable to Southern and Southwestern Europe. However, the gap in per capita income with respect to the technological leaders in Northern and Western Europe persists. A "second transition", focusing on industrial and innovation policy, is necessary to reduce this gap. Upcoming technological innovations and EU climate action plans will have a strong impact on CEE countries. They must use these changes to attract and foster higher value-added elements of the production process and strengthen domestic technological competencies within their countries. Fostering these competencies will require active industry and innovation strategies that overcome the specific weaknesses of the current dependent" growth model and bring productivity closer to the levels seen in Scandinavia or Germany.