The latest report on the innovation performance of the Bulgarian economy paints a mixed picture. Bulgarian enterprises are displaying few signs of innovation, links between research and innovation remain weak, and human and financial resources are lacking. On a more positive note, Bulgaria's gross innovation product has increased, and the entrepreneurship and business environment continues to improve.

The report, by the Applied Research and Communications Fund of Sofia, analyses the state of the national innovation system and makes recommendations for enhancing innovation performance. The report is known as Innovation.bg 2007.

Among the key conclusions in this year's report are:
- the market component of the Bulgarian innovation system is at an early stage of development, and innovation is not widespread in Bulgarian enterprises;
- innovation and research products are being developed independently of one another;
- the national innovation system is being developed and influenced predominantly by the integration and financing of European innovation networks;
- the major barriers to innovation in Bulgaria are the lack of financing and qualified personnel;
- performance has started to improve, and this turnaround is the perfect time for renewed efforts to boost performance further.

Three recommendations are targeted primarily at the Bulgarian Government. More political, administrative and financial resources should be channelled into formulating and implementing the national innovation policy, the paper states. More effort should also be made to improve coordination between strategic documents, policies and administrative and financial instruments.

Having noted the crucial role that EU funds play in driving Bulgarian innovation, the report calls on the Bulgarian authorities to direct these funds towards more complex, longer term projects at national and regional level, rather than use them for the shorter term direct financing of enterprises. These longer term projects should also be implemented in coordination with other EU programmes, such as the Seventh Framework Programme (FP7) for research and technological development, and the Competitiveness and Innovation Framework Programme (CIP).

A look at the statistics contained in the report illustrates the uphill struggle that Bulgaria still faces. Over 65% of companies did not carry out any innovation activity during 2006. The Applied Research and Communications Fund of Sofia calculates the average innovation index of Bulgarian enterprises as 10.2 (out of a maximum 100) for 2006, and claims that 'This reflects their lack of capacity to combine several types of innovation and the low degree of novelty of their innovation activities.'

The report adds that most innovations coming from Bulgarian companies are new only to the company or the Bulgarian market, and not to the international market.

But Bulgaria's gross innovation product did increase in 2006 (calculated by looking at innovation, research and technology performance), according to the report, while the entrepreneurship and business environment continues to improve. 'Lasting macroeconomic stability has provided conditions for company growth and the establishment of productive partnerships for innovation. Yet, certain microeconomic factors, such as high entry barriers, low competitiveness and unfair competition, high market concentration, low protection of property rights etc. continue to hinder the development of the Bulgarian innovation system and, thus the competitiveness of Bulgarian enterprises in the EU,' states the report.

The report was originally presented in December 2006, but has only recently become available in English.

Applied Research and Communications Fund (ARC Fund) - further information

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