site.btaBulgaria Lags Behind in Innovation, Analysis Shows

Bulgaria is stagnating in terms of innovation, reads an analysis of the Bulgarian Industrial Association (BIA) about Bulgaria's position in the Global Innovation Index 2024 and whether that position not changing from 2023 is good news or real lagging behind, BIA said in a press release Wednesday. In the Global Innovation Index 2024, Bulgaria remains at 38th place, but unlike most countries that improve their performance in the different dimensions of the index, Bulgaria, like in 2023, reports a deterioration in its performance, the analysis reads.

The Global Innovation Index measures the current state of innovation globally, and through its in-depth methodology provides insight into development trends both globally and for each individual country, the BIA said.

The innovation economies in the top 3 by region remain unchanged from last year: the US is the leader in North America, Brazil in South America and the Caribbean, Switzerland in Europe, South Africa in Sub-Saharan Africa, Israel in North Africa and West Asia, India in Central and South Asia, and Singapore in Southeast and East Asia and Oceania. 
However, there are changes in the ranking of innovation economies by income groups. In the group of high-income countries, the positions are maintained: Switzerland is first, followed by Sweden and the US. There are changes in the middle-income group, with China retaining its leading position, Malaysia again in second place, and Turkiye displacing Bulgaria from third place. The Philippines managed to enter the top 3 of countries with lower average incomes.

Globally, there has been a decline in investment in innovation for 2023, in contrast to the 2020-2022 period  when there was an annual increase. Technology and deployment continue to advance at a very rapid pace, as does the socioeconomic impact of innovation, BIA's analysis reads. However, the progress of green technologies is moving in the opposite direction, slowing down and declining.

The innovation environment in Bulgaria

In the Index's Institutions innovation pillar, Bulgaria drops 27 positions from 66th place last year to 83rd place this year. In terms of the efficiency of institutions, Bulgaria already performs worse than countries such as Ghana, Tanzania, Kazakhstan, Serbia and North Macedonia, the authors of the BIA analysis point out. In the Human Capital and Research pillar, Bulgaria climbs four positions to 62nd place, but in terms of the indicators included in this pillar, it reports a weaker performance (as an overall score) compared to 2023. This can be clearly seen in the indicators that take into account education, where, although spending per teacher per pupil increased, students' PISA scores continued to deteriorate, the analysis reads.

In the Infrastructure pillar, Bulgaria climbs six positions to 22nd place, but again underperforms compared to the previous year, and the country's score is downgraded to 54.4 (out of 100). In terms of ICT, access to such technologies is rated higher (94.3) compared to last year, but despite this Bulgaria drops from 24th position to 51st, which according to BIA directly shows how slow the digital transformation in the country is compared to other countries and that Bulgaria will continue to lag behind.

In the Market Sophistication pillar, Bulgaria makes minimal progress and receives a marginally higher score than the previous year, managing to climb ten positions in the rankings to take 50th place. Lending-related indicators show that the country enters the top 25 in financing for start-ups and growing companies without improving its performance, but on the other hand domestic private sector lending as a percentage of GDP receives a significantly lower score than in 2023. The downgrades are seen in terms of trade, diversification and market scale.

In terms of the development of the business environment, a decline is recorded and the Business Sophistication pillar is no longer noted as a strength of Bulgaria, unlike in previous years, the analysis reads further. There is a deterioration in the business environment development for the whole EU, but for Bulgaria the deterioration is more significant. According to BIA, this is directly related to the lack of a regular government and a long-term strategy for the development of the country's economy, as well as the lack of urgent comprehensive reforms in Bulgaria's education system. There has been a serious decline in the assessment of the financing of development by enterprises. The trend of weak science-business linkage continues and low innovation connectivity is deepening, with the country dropping from 38th to 55th position in the past year. A drastic decline has been observed in the development of clusters, with Bulgaria now outside the top 50 and occupying the 58th position. In terms of number of joint venture deals and strategic alliances, the country loses 29 positions since 2023 and ends up at 76th place.

In the Knowledge and Technology Outputs pillar, Bulgaria's position compared to 2022 is improving (reaching the 30th position), but the score is decreasing, which confirms the downward trend in the country's innovation development, the BIA noted. Bulgaria marginally improves its score and its position in terms of knowledge impact, thanks to the significantly improved performance of high-tech manufacturing as a percentage of total output, where the country enters the top 40. The score would have been even better if the country had improved labour productivity, which, however, remains almost the same compared to 2023.

In the Creative Outputs pillar, Bulgaria shows the best development, entering the top 30. This area is also where the innovation ecosystem is strongest, namely the indicators for intangible assets, where the country climbs to 22nd position, thanks to the high score for industrial design (12th position). However, Bulgaria loses positions and performance in terms of intensity of intangible assets and registered brands. From 42nd position Bulgaria climbs to 12th in the Creative Goods and Services category due to the improved performance in the indicators for exports of cultural and creative services (percentage of total exports) as well as production of national feature films.

BIA's analysis focuses on the theme of Artificial Intelligence, Space Technology and Applied Mathematics. These areas have been selected as they are key and future-defining.
"In this environment of acute realignment and a race to better position countries in high value-added global supply chains, every year of stagnation is tantamount to falling seriously behind. In this sense, Bulgaria continues to lose valuable time that at some point will not be made up. The Global Innovation Index and the indices related to the global positioning of Bulgarian science clearly outline the problems and obstacles to the development of the innovation ecosystem in Bulgaria, namely a deepening crisis at the institutional level, the lack of adequate national resources to support innovation, a deeply outdated and unreformed education system," the BIA analysis further states.