1. The InnovationBG index – measuring the level of innovation activity in Bulgaria

2. Why index?  The necessity – to present in the most realistic way the state of the national innovation system in Bulgaria, its potential and its dynamics of development.  The idea – to track the links in the dynamics between the resources/investments and the results of the innovation process and to make evaluation and recommendations for optimization.  The target group – the policymakers and the decisionmakers in the private and the public sector

3. The Bulgarian economy – high growth... Source: EUROSTAT Indicator: GDP – real annual growth

4. ...but insufficient Indicator: GDP per capita (EU 25 = 100)Source: EUROSTAT Explanation: the higher of the income per capita the more demanding are the consumers at local level – it stimulates the innovative behavior of the entrepreneurs

5. Sectors in growth Indicator: Real annual growth of the Gross Value Added (%) Source: EUROSTAT

6. Sub-sectors of growth Indicator: Index of the employment and production in the processing industry against the level of technological intensity (year 2000 = 100) Source: NSI, OESD

7. Structure of growth Indicator: Structure of the employment and production of the processing industry by level of the technological intensity Source: NSI, OESD

8. Quest of higher growth…  Now: there are comparative advantages in the low-technological sub-sectors » low growth potential  necessity: faster orientation to the sub-sectors of high- technological growth  solution: flexible and dynamic national innovation system  Focus on: production of medicines (drugs), agro-chemicals, accumulators etc.

9. Ranking of Bulgaria according to the international Index of the national innovation capacity - year 2003 Source: Michael Porter and Scot Stern 0510152025303540 Finland Ireland Estonia Latvia Slovenia Czech Republic Lithuania Greece Portugal Poland Slovakia Hungary Bulgaria Romania Highest rank of EU country # 2 # 53 in the list

10. Position and trend of the innovation capacity of Bulgaria in the context of Europe year 2003. Source: European Innovation Scoreboard stagnation Lagging advancing Catching up Average change of the trend (%)

11. The index  Innovation product – it is widely accepted that the patents are the most correct single indicator of the potential and function of the national innovation system. The enterprises improve their competitiveness by utilizing patented products and processes in their production and their supply to the market or by increase of the income of sells or licensing other companies on the technology market. The scientific publications are important product for the long-term run of the national innovation system. They illustrate the state of the science in the country and compared with the patents shows the utilization of the innovation potential of the country.

12. Innovation product: EPO patents Indicator: Number of submitted applications for patents/mln population at the European Patent Office Source: EUROSTAT

13. Innovation product: USPTO patents (Bulgaria) Indicator: Number of submitted applications for patents/mln population at the US Patent Office Source: Eurostat

14. Scientific product Indicator: Number of articles in the engineering sciences per mln. population (1999 – 2001) Source: NSF

15. Technology market Indicator: share of companies, purchased technologies on the local and the international market in year 2004 Source: ARC Fund, Vitosha Research

16. Scientific product - usefulness Indicator: index of the quotations in the field of the engineering sciences (2001) Source: NSF

17. Innovation product  About two times lower innovation product that the product of the new member states and the countries form the Central Europe  The scientific product has better position  Scientific specialization: Chemistry and Mathematics  In focus: specialization in applied Biology and Medicine

18. The index  Human capital – the quality of the human capital, its improvement and growth and its adaptability to the new trends is a precondition for creation of local as well as for adoption of foreign innovations. There are 4 key forms for creation of the human capital: education system, entrepreneurship, science and management. The lack of the any of these forms leads to barriers before the development of important segments of the national innovation system and may lead to deviations.

19. Human capital: employment for innovation Indicator: Personnel in the RTD per 1 000 people of the labour force (1995 - 2002) Source: NSI, Eurostat

20. Human capital: education Indicator: Comparative share of the population at age between 25 and 64 years with university degree (2002) Source: Eurostat

21. Human Capital: degree of education Indicator: Ph Ds per 1 000 people at age of 25 to 29 years (2001) Source: NSI, Eurostat

22. Human Capital: education for innovation Indicator: number of people, accomplished university degree in scientific and technological areas of education per 1000 people at age of 20 to 29 years Source: NSI, Eurostat

23. Human Capital  Good average level of education (problematic quality)  Low demand of RTD in the business circles » decrease of the employment and lower interest in the highest levels of education  Structural problem of the RTD employment: predominant public sector  In focus: high interest in technical scientific areas of the university education

24. The index  Investments – the innovations need number of types of investment, but there are tree major types: physical, human and innovation (applied scientific). In the typical industrial sectors the capability of development, adapting and adopting innovation depends on the amount of the capital in its three forms, e.g. starting from the presence of certain level of technical, human and managerial quality of the companies. The different types of investments are in co-relation with the stage of the development of the company and the economy, as well as, with the horizon of planning.

25. Investments for innovations Indicator: share of the iRTD expenditures of the GDP Source: NSI, Eurostat

26. Investments: disbalance Indicator: structure of the R&D expenditures by sources of financing (2001, 2002) Sources: NSI, Eurostat EU

27. Investments: disbalance Indicator: structure of the R&D expenditures by institutional sectors Sources: NSI, Eurostat

28. Investments or expenditures Indicator: structure of the expenditures for R&D by economical elements (1995, 2000, 2001 и 2002) Sources: NSI, Eurostat

29. Investments  Small complexity of the accumulated capital in the country  One of the lowest business expenditures for R&D in Europe  Serious structural problem: domination of the public sector and lack of attractiveness for the business  In focus: utilization of the EU programs for research and development in order to stimulate the potential of the business in R&D activities

30. The index  Entrepreneurship – the creative entrepreneurship is the driving force of the national innovation system – the constant aim at satisfaction of the consumers’ demand with new, better ideas. The innovative enterprises are the ‘black box’ of the innovation system, in which the innovations happen. Their activities depend on all the factors, listed in the index and their study gives better explanation for the structure and the characteristics of the national innovation system

31. Innovative enterprises Sources: ARCFund, Vitosha Research, Eurostat Indicator: share of the companies, which have supplied to the market new products in the recent 3 years Innovators noninnovat ors Innovators EU

32. е-Bulgaria (Index for development of the information society) Source: ARCFund, 2004

33. Share of the companies in Bulgaria, who innovate of those who: Sorces: ARCFund, Vitosha Reserch, 2004 Use computers Do not use computers Do not use internet The average age of the computers in the production is less than 2 years Use internet All companies

34. Horizon of the planning at the Bulgarian companies Source: ARCFund, Vitosha Research 31% 37% 10% 1% 14% 5% 2% To 6 monthsTo 1 yearTo 3 yearsTo 5 yearsTo 10 years> 10 yearsDon’t know

35. The index  Co-relation – it is a measure for the presence and the quality of the links between the participants in the national innovation system, and between it and the surrounding environment. In fact each of the listed elements of the index is useless without a link with the others – the presence of highly qualified human resources does not lead to higher innovation product of the country, if there is a lack of links with the entrepreneurial skills and/or the investment capital. The infrastructure is the hardware of the innovation system, and the culture of communication and the gained knowledge are the software. Only the proper combination between the two elements results in proper return of investment. For the countries in catch up position in the innovation development the quality of the links with the world innovation society has a great importance.

36. Entrepreneurship, innovative enterprises and co-relation  Low innovative enterprises  Low but improving level of co-relation  Weak e-link: education  In focus: growth of the international certification, but compared to low basis

37. The index  Innovation environment and policy – the innovative enterprises work and develop new products in particular institutional and economic environment and the national policies influence on their decisions for the type and the volume of the investments. It is hard to evaluate the effect of the national policies on the innovation system. The imperative of the law and the effective application of the market stimuli characterize very important feature in the entrepreneurial behavior – the aim at creative innovations. In this respect of greatest importance are the policies for innovations, the competitors and the intellectual properties rights, the presence of open economy. The main problems of the innovative companies in general are the financing, level of the development of the financial intermediation, and the presence of variety of instruments for financing of innovative projects.

38. Environment and policies  The ground has been laid  It is a time for more active measures to be taken  Orientation towards knowledge-based innovation policy  In focus: improvement of the links between the institutions, responsible for the innovation policy