Report on innovation system in Bulgaria

1. Abstract
In the current report, innovation in Bulgaria is being discussed. A brief outline of the national policies is provided and their effectiveness and application are outlined. Depicted are, as well, some regional efforts for boosting innovation. For preparing the study a survey was conducted between 73 entrepreneurs regarding their views on the state of innovation in the country. Also some companies using innovation for their growth are described as well as their business models

2. Introduction
2.1. Importance of innovation
Nowadays, there exist many publications and researches on the importance of innovation for the economic growth of a country [1-3]. Based on them, empiric evidences have been obtained that show the link between both[1] and it has been long proven that the former is a major force determining the development of the latter[2-3].

2.2.

Bulgaria innovation policy

The innovation policy of the country will not be described in detail since there exist already many evaluations done on the matter [4-5]. What is most important to mention is that the current system for support of R&D and innovation is coordinated centrally and there is a notable division between the administrative bodies responsible for policies concerning research and education and those concerning innovation. This, according to many, is a major reason for poor coordination. As a support to what was previously stated, in Bulgaria there are two highest policy-making bodies for research and innovation - the Standing Committee on Education, Science, Children, Youth and Sports and the Standing Committee on Economic Policy, Energy and Tourism at the National Assembly. Still, in reality, national policies on that matter are designed and carried out by the Ministry of Education, Youth and Science and the Ministry of Economy, Energy and Tourism. Moreover, research and innovation-related strategic documents are being endorsed by the Council of Ministers and there and at the different ministries, there are certain consultative councils which by law have varying degrees of impact on the national policies on research and innovation. Thus, as stated early there is generally a lack of coordination and consistency between main policy documents concerning R&D and innovation, many of which were prepared by different administrative bodies and under different economic, social and political circumstances. In this way they are not coherent with each other in terms of priorities and overall strategy on research and

innovation. Such documents are the National Reform Programme 2011/2015, the National Innovation Strategy, Regional Plans for Development and Regional Innovation Strategies, the Law on Scientific Research Promotion, the Law on Higher Education, the Law for the Bulgarian Academy of Sciences, etc. This weaknesses in the Bulgarian innovation policies have been already spotted by some of the administrative bodies as can be seen in one of the reports of Innovation.bg and Applied Research and Communications Fund done during the latest National Innovation Forum Innovations and Competitiveness[6].

2.3.

Funding and distribution of innovation

In the diagram below can be seen the R&D expenditure and the relative percentage of it taken from the whole GDP of in Bulgaria. As outlined in the National Reform Programme 2011/2015, the level of R&D expenditure is aimed at reaching 1,5% of the total GDP. Despite that in year 2011 the funding for research and development is larger than the previous year, its relative ratio to the GDP has decreased to 0.57 out of 0.6.

Figure 1: R&D expenditure 2000-2011

In order for a better picture on the matter to be obtained by the reader, the figure below is showing the sources and allocation of the funding for year 2011. It can be see that significant portion of the funding is coming from foreign financing while more than half of the financing is being directed to enterprises.

Figure 2: Sources and allocation of financing of R&D

It can be followed (Figure 3) that for long time the state has been the major sponsor and provider of funding for R&D related activities, but due to a significant increase from foreign investments in the period of 2009-2011, the latter actually is now the main source of funding for innovation driving. For the same period (2009-2011), funding from government has decreased with about 25%.

Figure 3: Sources of R&D expenditures 2000-2011

Below can be as well noticed the allocation of R&D resources obtain in terms of scientific field. Companies working in the field of medicine have obtained big part of the funding (two times larger than the runner-up Natural sciences). This data could be explained with the capital intensiveness of the sectors, requiring costly apparatus , meticulous internal procedures and etc.

Figure 4: Allocation of R&D resources according to scientific sectors

[1]INNOVATION: IS THE ENGINE FOR THE ECONOMIC GROWTH?,

[2] INNOVATION AS A DRIVER OF ECONOMIC GROWTH, http://www.scottishenterprise.com/~/media/SE/Resources/Documents/GHI/innovation-as-a-driver-of-economicgrowth.ashx [3] INNOVATION AND ECONOMIC GROWTH, Nathan Rosenberg, Professor of Economics (Emeritus), Stanford University, http://www.oecd.org/cfe/tourism/34267902.pdf , OECD, 2004 [4] Mini Country Report/Bulgaria, http://ec.europa.eu/enterprise/policies/innovation/files/countryreports/bulgaria_en.pdf [5] Bulgarian Innovation Policy: Options for the Next Decade, Innovation.bg, 2010, Annual report [6] Bulgarian Innovation Economy in 2012, Ruslan Stefanov, 18.12.2012, National Innovation Forum Innovations and Competitiveness, http://www.arcfund.net/fileSrc.php?id=21124