site.btaBulgaria Remains "Emerging Innovator" by EU Standards, Positive Signs Discernible – Report

Although Bulgaria is in the group of emerging innovators according to the European Innovation Scoreboard 2024, with an innovation index not showing much progress since 2017, the country has witnessed positive developments in innovation and entrepreneurship, according to the most recent Innovation.bg report published by the Applied Research and Communications Fund. The report was unveiled during the 20th National Innovation Forum in Sofia on Tuesday.

Some data

Bulgaria holds the respectable seventh place for development of public digital services in the EU, ahead of such countries as Germany, France, Austria, Spain, the Netherlands, Greece, Romania and Hungary, the report says.

It notes that services in Bulgaria are more mobile compatible than the average level in the EU, but the country lags behind other member states in assistance to consumers, transparency and personal data protection, for which it has the seventh-lowest rank, and in terms of development of public services for individuals, for which it stands ahead of only Croatia, Poland and Romania. The COVID pandemic and the emergence of widely accessible generative artificial intelligence are identified as important drivers of the development of information and communication technology.

The Innovation.bg report further notes that the availability of a digital strategy in small and medium-sized enterprises is not enough to improve the organizational performance if the strategy is not supported by relevant practices for talent management and organizational flexibility.

R&D spending

A little over 35,000 people in Bulgaria were engaged in research and development (R&D) in 2023, the data show. Business provides the largest share of job positions for researchers, accounting for 46% of the total, followed by institutions of higher education (29%) and research organizations (25%). R&D staff decreased by 2,000 (or 5%) in 2023 compared with 2022.

The R&D-staff-to-labour-force ratio in Bulgaria is 0.91%, higher than in some other new EU member states (Cyprus, Latvia, Malta, Slovakia and Romania) and higher than in Bulgaria's neighbours Serbia and Turkiye, but lower than the EU average of 1.53%.

R&D spending in Bulgaria in 2023 amounted to BGN 1.467 billion, increasing by 16% compared with 2022. R&D spending was 0.79% of the country's gross domestic product (GDP) last year, increasing by 0.04 percentage points year on year, but remaining below the peak levels of 0.95% in 2015 and 0.85% in 2020, the report says.

It notes that innovation activities are concentrated in a relatively small number of economic entities. The government instruments and measures in support of technological renovation, product innovation and business internationalization at emerging and existing small and medium-sized enterprises have no tangible effect at the macro level.

In the field of R&D funding, Bulgaria has amassed experience from participating in EU framework programmes, according to the Innovation.bg report. The experience amassed and the partnerships established have contributed to a considerable rise in EU projects with Bulgarian participation and in funding attracted for future framework programmes. Still, comparisons with other EU member states are not in Bulgaria's favour as it holds some of the lowest positions (between 20th and 23rd) for number of projects and raising of funding.

Patents

With 40 patent applications to the European Patent Office (EPO) in 2023 (six fewer than in 2022), Bulgaria ranks 32nd among the EPO countries and 26th among the EU countries, only ahead of Latvia. In terms of number of patent applications per 1 million population, Bulgaria is 24th.

Bulgarian inventors' applications to the country's Patent Office grew in 2023 to include 197 applications for invention patents (up by 15% compared with 2022) and 349 applications for utility models (up 1.6-fold). Still, the number of applications was under the peak level of 2020.

Bulgaria's Patent Office granted 114 patents to Bulgarian applicants in 2023, which was 30% more than in 2022. The increase was highest among natural persons, who received 41 patents, 58% more.

The Innovation.bg report also discusses Bulgaria's contribution to the international scientific output. In 2023, the country produced 2.67% of scientific research papers in Eastern Europe, 0.88% in the EU and 0.2% worldwide (according to the Scopus database). Bulgaria's performance at all three levels improved considerably compared with 2015.

Entrepreneurship

The data show positive developments in entrepreneurship. The annual number of newly registered companies is expected to top 40,000 in 2024 for the first time since the democratic changes of 1989. This corresponds to a remarkable first place for Bulgaria in the field of youth entrepreneurship according to Flash Eurobarometer 502.

About 89% of newly registered companies are controlled by Bulgarian nationals or by other companies registered in Bulgaria. Among foreigners, the most active new entrepreneurs in this country are from Ukraine, followed by companies with chief owners from Turkiye (12%), Italy (10%), Greece (9%), Germany and Romania (8%), among others. Nationals of 59 countries in all continents have registered businesses in Bulgaria so far in 2024. Russian investments continue to decrease, with new ones coming only from natural persons.

The report highlights the challenges facing potential foreign entrepreneurs with refugee status in Bulgaria. One such hurdle is related to setting up an accumulation account in a bank.

Overall, the annual number of new company registrations has grown by 60% in 10 years.

Concluding remarks

The European Innovation Scoreboard 2024 categorizes Bulgaria as an emerging innovator, with a summary innovation index at 50.6. This group of nations have shown almost no positive development in the field of innovation since 2017. Bulgaria has failed to achieve its goal of being upgraded to a moderate innovator and remains far below the 1.5% target for R&D spending as a share of GDP, with the average EU target standing at 3%, the Innovation.bg report says.