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COMPETITIVENESS THROUGH RESEARCH AND INNOVATION: STRATEGIES, POLICIES AND INCENTIVES 21 June 2010 Sofia, Bulgaria. Results of a diagnostics of Bulgaria’s exporting and innovation activities. John Gabriel Goddard Economist, World Bank. Goal of the presentation.

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Results of a diagnostics of Bulgaria’s exporting and innovation activities

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Results of a diagnostics of Bulgaria’s exporting and innovation activities

John Gabriel Goddard

Economist, World Bank

Goal of the presentation

The purpose of this presentation is to:

  • Share the results of a World Bank diagnostics that analyses Bulgaria’s specialization within the global trade system and innovation community

  • Propose recommendations to make public research and innovation more responsive to economic priorities and foster private R&D

  • Contribute to the formulation of a national science, technology and innovation strategy

Background and key questions

  • Bulgaria had experienced robust economic growth tied to the investment boom in construction, real estate and financial sectors

  • But growth did not automatically lead to improving innovation capacity, nor did R&D play a central role in the growth process

  • “Knowledge economy” indicators suggest Bulgaria is behind other EU countries, which could explain the growth ↔ innovation disconnect

Key questions:

What do recent trends tell us about Bulgarian export competitiveness?

What is the status of industry-science linkages?

How can productivity and exporting opportunities be advanced through innovation policies?

PART I. What do recent export trends tell us about Bulgaria’s industrial competitiveness?

Export intensity is increasing at a fast rate since 2000

Source: UN Comtrade

Where do Bulgaria’s exports in goods go to?

Higher diversification of export markets after 1990: currently the EU is the top destination but highest export growth in Russia

Export competitiveness is still concentrated in industries that were traditionally strong

Export growth is high in industries that process (imported) natural resources, labor-intensive manufacturing and agro-industry

Source: Staff estimates

Export dynamics point to growth potential in knowledge-intensive products

Export growth will need further investments by traditional champions and shifting resources to knowledge-intensive goods

Source: Staff estimates

There is room for Bulgaria’s export basket to diversify into more “sophisticated” products

Finland relies on natural resources, yet it’s exports have moved up the value chain

Bulgaria’s top exports are mostly

less sophisticated than the global average

Average “sophistication” of global exports

Part II. Opportunities for creating competitive advantages through science and innovation

Focus of Part II

Contrary to exports, innovation capacity declined substantially and has not recovered

Big drop in innovations protected by patents since 1990, especially in mature fields connected to traditional industries

As a result, Bulgaria’s intellectual property is weak and risks falling further behind

Bulgaria protects few innovations compared to EU-12, which as a whole is behind countries like Finland

Not just the number of patents matters: Patents with high “impact” are all pre-1990

Citations to Bulgarian patents suggest that without renewed R&D investment, the country’s “innovation stock” will fade

Patents with most citations granted at USPTO

One positive sign: most post-2000 inventions are connected to “new industries”

Inventions protected in the US used to be in fields connected to established industries, but have now diversified into new fields

Patents granted at USPTO

Another positive sign: More co-innovation with international partners, especially firms

The intellectual property that is protected is a result of international cooperation, with stronger public-private links

Based on patents granted at USPTO

One way for Bulgaria to rebuild its “innovation stock” is by raising scientific capacity

More publications are produced by Bulgaria’s researchers, but this has not closed the gap with EU leaders and neighbors

Besides enlarging the scientific system, promoting better quality of research

Bulgaria’s science currently has below average impact and visibility compared to EU countries

Source: Staff estimates

Intensifying links with European neighbors can support Bulgaria’ s scientific results

Since 1990, there has been increasing co-authorship with international partners in the EU and the US


  • There is potential to boost export-led growth through diversification into higher value-added production and knowledge-intensive industries

  • Reinforcing Bulgaria’s innovation capacity in the public and private sector can advance diversification and lead to improving competitiveness

  • Policy ingredients could include instruments that:

    • Foster business R&D and protection of IP

    • Strengthen industry-science links

    • International scientific cooperation with the EU

Thank you!



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