Bulgaria's Hidden Growth Potential lies in Research, Innovation and Technology

June 21, 2010

SOFIA, JUNE 21, 2010 - Unleashing Bulgaria’s growth potential will require efforts from the government, private sector and academia to boost research, innovation and technology absorption which will lead to increased productivity and high value-added export industries. This is the focus of technical assistance (TA) provided by the World Bank to the Bulgarian government, the findings of which were discussed at today’s Forum entitled “Competitiveness through Research and Innovation: Strategies, Policies and Incentives”.

The event was opened by H.E. Traicho Traikov, Minister of Economy, Energy and Tourism and H.E. Sergei Ignatov, Minister, Ministry of Education, Youth and Science, and Mr. Peter Harrold, the World Bank’s Regional Director for Central Europe and the Baltic Countries.

Coordinated by the Ministry of Education, Youth, and Science and the Ministry of Economy, Energy and Tourism, the World Bank’s TA aims at helping with the formulation of a national strategy and defining instruments for science, technology, and innovation that can raise competitiveness and exports. Planned activities include a diagnostics mapping of Bulgaria’s specialization within the global trade system and scientific community, a review of public Research and Development (R&D) expenditures, an assessment of the bottlenecks to absorb relevant European Structural Funds, and technical advice to strengthen national instruments to promote commercialization of research and private innovation.

The Forum brought together representatives from the Government, academia and science, private sector, civil society and European Commission representatives to discuss Bulgaria’s strategy to intensify research and innovation. The topics of the Forum included:

  • Strategy for Increasing Competitiveness through Innovation 
  • Deploying National and European Resources to Meet EU 2020 Targets 
  • Connecting Public Research to Industry
  • Developing Capacity for Innovation

The initial findings of the analysis of Bulgaria’s performance in exports, innovation, science and technology prepared by the Bank reveal the following: 

Bulgarian private sector, which is the engine of growth, can contribute more by investing in R&D. Moving towards the 3% R&D to GDP goal of the EU, of which 2/3 from private sector, will prove a significant challenge. Bulgaria currently has R&D spending of 0.48% of GDP (vs. 1.85% in the EU-27) and only 34% of these resources are from business enterprise sector (compared to 55% in the EU-27).

Bulgaria’s strong export performance is concentrated in industries processing natural resources and labor-intensive manufacturing that have lower value added. Going forward, investments in knowledge-intensive products need to complement established industries. Currently, only 7% of Bulgarian exports are high-technology products. This is below the EU-27 average (20%) and also in the lower tier compared to the rest of Eastern Europe (Hungary-24%; Czech Republic-14%; Croatia-9%).

The number of patents granted at the European Patent Office is only about 0.6 per million inhabitants each year, which is low compared to Hungary (3.8), Croatia (3.1) and a fraction of innovation leaders like Finland (147). Besides the low supply of inventions, there are significant barriers to patenting: high costs, lack of intermediaries and incentives, and time consuming and cumbersome judicial processes. A consequence of this is that Bulgaria’s royalty and license fee receipts are far behind the EU average.

During the last decade, there was a slow but continuous improvement in the volume of Bulgaria’s scientific outputs, with over 21,000 published papers in high-visibility journals in 2001-09, as compared to 18,685 in 1991-2000 and 14,839 in 1981-1990. However, the number of scientific publications per capita is relatively low and the impact of Bulgaria’s publications has room to improve. On average, a publication by Bulgarian scientists gets cited by 6 other papers, which is about the same as in other Eastern European countries, whereas a publication by Finnish scientists are cited by 15 papers.

“Bulgaria has a unique opportunity to shift the economy to a “smart” and sustainable growth path, where science, technology and innovation play a central role, making the best of the existing EU funding,” said Peter Harrold, World Bank Country Director for Central Europe and Baltic Countries. “The World Bank will continue supporting Bulgaria, bringing the best of European and global knowledge to help the country become increasingly competitive and raising the living standards to those of the EU average.”