1. Measuring the Innovation Potential of the Bulgarian Economy Establishing an IRC in Macedonia, Skopje, March 29, 2006 Ruslan Stefanov Economic Program Center for the Study of Democracy

2. Bulgarian National Innovation System  The National Innovation Strategy Financial Measures Non-Financial Measures  The National innovation Council Policy formulation Policy Coordination  Challenges Ahead

3. The Process Innovation.bg  The Objective  The Target Group  The Team Innovation Expert Council Consulting with various institutions  Value Added

4. Competitive advantages in the Bulgarian import and export (1999 – 2004) Source: BNB and Applied Research and Communications Fund

5. Иновации.бг  Gross innovation product  Entrepreneurship and innovation networks  Innovation investments and financing  Human capital for innovations  Information and communication infrastructure

6. Aggregate innovation product  Compared to EU-25 the share of the innovative enterprises in Bulgaria is four times lower  The technological and the scientific product remains relatively higher than the innovation product Excessive supply Low demand

7. Relative share of the innovative enterprises in Bulgaria and EU-15 Source: National Statistical Institute (NSI), 2004, Eurostat, NewCronos, 2001.

8. Innovation activity of the Bulgarian firms Source: Vitosha Research, 2004

9. Objectives of the innovation activities of innovative companies in Bulgaria (2003) and the EU-15 (2000) Resource: NSI, Eurostat, NewCronos, 2001

10. Comparing barriers to innovation in Bulgaria (2003) and EU-15 (2000) Source: NSI 2004, Eurostat, NewCronos 2001.

11. Number of EPO patent applications per million inhabitants in Bulgaria and EU-10 Source: Eurostat, 2005

12. S&E articles from Bulgaria, registered at the Institute of Scientific Information Source: National Science Foundation, Science & Engineering Indicators, 2004.

13. Relative performance of science systems in EU 8+2 (share of citations in the population) Source: National Science Foundation, Science & Engineering Indicators, 2004.

14. Entrepreneurship and innovation networks  Low entrepreneurship activity  Market-based, rather than innovation and technological networks  The domestic science and technology system is not efficiently used  Necessity of: Innovation policy that differentiates the various types of enterprises Promoting horizontal relations and cluster formation

15. Level of entrepreneurship ( number of enterprises per 1000 inhabitants in Bulgaria) Source: EBRD (2004)

16. SMEs structure dynamics in Bulgaria (1996-2003) Source: 2001 – 2003, NSI, (2004); 1996 – 2000, Report on Small and Medium-Sized Enterprises in Bulgaria (2003).

17. Partnership typology of the Bulgarian innovative enterprises in the development of innovative products and/or processes in 2003 (%) Source: Vitosha Research (2004)

18. Share of innovative enterprises in Bulgaria, which have indicated as “very important” to their joint innovation projects the listed partners Source: Vitosha Research (2004)

19. Innovation investments and financing  Not enough depth in the accumulated fixed capital in the economy – importance of the channels for transfer of foreign innovations  One of the lowest business R&D expenditures in Europe  Considerable structural misbalance: the public sectors dominates, without attracting enough funds  The credits for the private firms has increased 7 times, but their innovative activities are funded by the firm’s own revenues  Relying on market-oriented financing on competitive basis or on EU grants and programs

20. FDI intensity (FDI stock as % of GDP) Source: UNCTAD (2005).

21. R&D intensity (% of R&D expenditure in GDP) Source: NSI, Eurostat, 2004.

22. Misbalance: Structure of R&D expenditure by sectors of performance Source: NSI (2004), Eurostat (2005)

23. Misbalance: Structure of R&D expenditure by sources of funds Source: NSI, Eurostat, 2004.

24. Main sources of financing of the innovation activity of innovative enterprises in Bulgaria in 2003 (%) Source: Vitosha Research, 2004

25. Human capital for innovations  Good education level in the secondary and higher education Decrease in the quality of the secondary education Institutional variety in the higher education Lack of life-long learning education  Low business demand of R&D » Employment decrease and smaller interest in scientific career  Public funding for employment in the R&D sector – long-term unstable misbalance  Necessity of comprehensive long-term vision for the education development

26. Falling average performance of Bulgarian 8-graders Source: IEA, TIMSS

27. Life-long learning (share of population aged 25-64, taking part in education and training) Source: Eurostat (2004)

28. R&D personnel per 1000 persons of the workforce (1995-2002) Source: NSI, Eurostat (2004)

29. Information and Communication Infrastructure  Bulgarian firms, which use ICT are more innovative than the rest  The ICT density is constantly increasing and the more effective use of ICT proves to be key issue  The innovation policy should be directed towards the infrastructure and the improvement of the general ICT education level

30. Innovativeness of Bulgarian enterprises by level of ICT use Source: Vitosha Research, 2004

31. Thank you! The full text of the report can be found at: www.arcfund.org