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Bulgaria - RIO Country Report

RIO Country Report Bulgaria 2015

The annual RIO Country Report offers an analysis of the R&I system in Bulgaria, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Bulgarian research and innovation system and assesses the policy response.

R&I Challenges
Overcoming the underfunding of the R&I system and reinforcing the science base
Challenge description: 

The Bulgarian research and innovation system has been characterized by a significant underfunding over a long period of time; in fact since the transition from a centrally planned economy to a free market economy. In June 2010, the Bulgarian government adopted a national R&D investment target of 1.5 % of GDP by 2020, but having in mind that such a target would require dramatic increases of the R&D expenditure over the next five years, the Horizon 2020 PSF panel (hereafter H2020 PSF 2015) discussed in its "Peer review of the Bulgarian research and innovation system 2015"  the possibility of setting a more realistic target of at least 1% of GDP. The declining trend in overall, but primarily public funding, of research in Bulgaria came to a halt in the mid-nineties. However, in the Bulgarian case, unlike that of other countries, it remained at the low level of R&D intensity of 0.5% of GDP in 2012 rising only slightly over the next couple of years. In 2013 it stood at 0.65% with a public funding contribution of only 0.24% of GDP. The recent trends in the R&I structural development are characterized by growing private R&D expenditure and in particular by increasing foreign R&D investments. As a result of the implemented EU operational programmes and instruments, the R&D performed by the business sector (as percentage of GERD) increased from 30% in 2009, to 50% in 2010, and further to 61% in 2013 (close to the EU28 average of 64%). However, the growth in BERD was concentrated practically solely in R&D services.

Bulgaria ranks among the poorer research performers in the EU, demonstrated by indicators such as the percentage of the top 10% most highly cited publications for the period 2000-2013 (5.71% compared to 7.83% of Hungary) and the total number of patent applications by the Patent Cooperation Treaty in 2012 (48 compared to 264 of Hungary).

Bulgaria’s performance in the Framework Programmes has also been inadequate, especially in relation to other “new” Member States of similar size. The total income since the beginning of Horizon 2020 has been €8.6m. In comparison, countries with smaller populations have been capable of attracting more H2020 funding: Croatia (€9m), Slovakia (€9m), Latvia (€9m). Participation in ERA-net joint calls is also lower than in comparable countries (e.g. Romania), and there is a general view that Bulgaria has been pulling out of co-operations (e.g. an ERIC infrastructure) rather than engaging in new European scale co-operations, due to a lack of national funding priority.

Simply increasing investment in size, however, cannot be expected to lead to competitive results, unless more focus is placed on incentives for excellence and internationalisation, in particular through a substantial increase in the part of public funding which is allocated competitively, transparently and based on merit. According to the World Bank Report “Input for Bulgaria’s Research and Innovation Strategies for Smart Specialization” (February 2013) , 'the current funding environment does not sufficiently encourage researchers and research organisations to increase the quality and impact of their research'. According to the PSF panel, a framework of restrictive public means contributes to an atmosphere of mistrust between stakeholders. The lesser the resources, the more likely there are to be discussions, dispute and criticism against those who have received some of those limited resources, the more so when there are no clear and transparent rules for allocation.

Policy Response: 

The low level of public funding of research and innovation is the most striking feature of the Bulgarian R&I system, and one which warrants immediate attention, but the quality and efficiency of such public funding is also of central concern. The first priority area, as detailed in the request from the Bulgarian authorities in their appeal to the EC for using the Policy Support Facility was for: “advice on the “Assessment of R&I funding and performing bodies and instruments”. In short, the request was for assisting in improving the quality and efficiency of the public research organisations and tailoring the normative base for effective monitoring of R&I programmes and project results.

The RIS3 approach tries to encompass the two system failures – weakness and fragmentation. It defines four thematic areas (two strongly technological and two technological with focus on employment), which allow for 1.) strategic focus of funding; and 2.) incentives for all participants to cooperate in these areas. The objective is to foster simultaneously consolidation and excellence, two mutually reinforcing mechanisms to develop the Bulgarian R&I system.

Policy assessment: 

It is essential for the Bulgarian public funding of research and innovation to catch up with what other countries similar to Bulgaria are  spending on R&I. The current very low level of public funding for research in Bulgaria is not sustainable for the necessary economic development and the social welfare of the country. Bulgaria has a historic opportunity to strengthen its economic potential by making a renewed, realistic, long term commitment to a clear increase in its R&D intensity to at least 1% of GDP by 2020 from the current level of 0.65% of GDP in 2013. Public funding should play a decisive role in achieving this target, well beyond the current public R&D intensity level of 0.24% of GDP.

The challenge for reinforcing the science base is not just publishing more, but expanding the scope and increasing the impact of the research and development output. Fostering performance-based research funding through focus on RIS3 areas (market-orientation) and impact metrics could guarantee the proper functioning of the R&I system and could provide the missing set of incentives for driving the necessary reforms in the research and higher education institutions. Fast investments (only into the limited number of institutions that produce research results and participate in international research projects) to ensure the build-up of a modern infrastructure are needed in supporting excellence and attracting talented researchers.

Improving the R&I governance
Challenge description: 

The Bulgarian R&I system is characterized by uncoordinated priorities and on-going concerns with regard to alleged malpractice. There is no obvious horizontal coordination in the system. The governance is divided between the Ministry of Education and Science (MES) responsible for the public research performing organisations and the Ministry of the Economy whose intention is to promote innovation within SMEs, to create at least one high-tech park (such as Sofia Tech Park) and to attract the research activities of foreign firms.

The R&I system is fragmented mainly due to the overall funding system, which stimulates whole institutions to compete against each other for institutional budgets, instead of competing within themes to support excellence and quality research results on a project basis. The current system of competitive allocation of resources is relatively recent and funding for research and innovation remains fragmented and unpredictable. Two funds were created in 2004, one for science and another for innovation. The Scientific Research Fund (SRF) sponsors basic and applied research activity and training of the public sector. The National Innovation Fund (NIF) finances applied research, development and innovation activities, including technology transfer. The two funds have relatively limited resources, varying annually and per session. Yet, they are managed independently and have autonomous objectives and targets, without any mechanism in place for coordination. The resources (approximately €15m budgeted for both funds in 2015) are dispersed for a large number of projects without clear focus and guarantees related to the impact for economy and society. The characteristics of the two funds in terms of their management models are diverse. While the NIF is a programme under BSMEPA (Bulgarian SME Promotion Agency), the SRF has a complex structure, almost similar to a funding agency, but without the capacity, procedures and competences of that type of organisations, typical for other Member States.

The SRF functions on an irregular basis, with unpredictable budgets per session and irregular calls for proposals. Hence, researchers are not able to plan and coordinate their research activities, especially with international partners. Reimbursements and payment mechanisms are similarly irregular with long time lags occurring between approval to expenditure and reimbursement. There is no multi-annual planning capacity. In addition, accusations of malpractice against the Fund and the lack of transparency have seriously damaged trust in the Fund within both national and international research communities. The NIF on the other hand appears only as a financial dimension within the SME Promotion Agency, which seems to have a clearer picture of its scope of action. But the NIF has also had sustained gaps in funding calls, making funding very hard to predict for SMEs and it also lacks a multi-annual planning capacity. In addition, the Bulgarian funding schemes neither complement nor prepare for the effective participation of Bulgarian scientists and innovation entrepreneurs in EU research and innovation programmes or in activities funded through the European Structural and Investment Funds (ESIF).

Policy Response: 

The Research and Innovation Strategy for Smart Specialisation (hereafter RIS3) process allows for three levels of governance and coordination, non-existent before. At the macro-level, the Council for Smart Growth was established with reputable representatives from the science and the business communities under the chairmanship of the Prime Minister. The intention is to ensure high-level political commitment. At mezzo-level two networks function as integrative facilities for innovation policies: 1) inter-ministerial structure under the Council of Ministers (administrative network), mirroring the Smart Growth Council; 2) a regional network for a place-based implementation of RIS3. In addition, an independent agency with a professional multi-level funding competence, namely, a Promotion Agency for Research and Innovation (PARI), is proposed to be established. At micro-level, the two operational programmes in the programming period 2014-2020 with priorities within the scope of thematic objective 1 “Strengthening research, technological development and innovation” of the Common Strategic Framework (OPIC and OPSEIG) synchronize their efforts within a Coordination Group.

An interdepartmental working group with representatives of the scientific community was established in 2014 with the aim to develop regulations for monitoring and evaluation of research carried out by universities and research organizations, as well as the activities of the Scientific Research Fund.

A Law on Amendments and Supplements on the Law on Promotion of Scientific Research in Bulgaria is under preparation. The amendments aim at: improving the functionality of the Research Activity Register and introducing regulations for monitoring and evaluation of the Scientific Research Fund activities and of research carried out by universities and research organizations, implementing a policy of open access to scientific results, improving the organisation, management, and result oriented funding of research; establishing a Research Promotion Agency as a tool for integrated policy in the national science and innovation system and for consolidation of science and innovation funding management.

Policy assessment: 

There is an urgent need to enhance the coordination mechanisms and implementation capacity in Bulgarian research and innovation policy. The recent establishment of the Council for Smart Growth (CSG) and the planned Promotion Agency for Research and Innovations are important steps to address these challenges. The CSG initiative offers a new opportunity for the Bulgarian authorities to revitalize research and innovation policies as well as to reorganize the fragmented landscape of R&I and related sectoral policies – such as higher education and industrial policies including ICT. The implementation of the smart specialisation strategy and of the national funding programmes should ensure synergies and alignment of priorities.

The PSF panel recommends that Bulgaria strengthens its EU funding capacities by establishing a Sciences/ EU Funding Liaison Office in Brussels and a full-time professional National Contact Point (NCP) Network. Both actions will contribute to reinforcing the capacities of national researchers and teams to successfully take part in EU funding programmes.

Fostering innovation and science – business cooperation
Challenge description: 

According to the Innovation Union Scoreboard 2015  Bulgaria belongs to the group of modest innovators (together with Latvia and Romania), whose level of innovation performance is less than 50% of the EU average. The Global Competitiveness Report 2014-2015 of the World Economic Forum ranks Bulgaria 113th out of 144 countries after assessing the university-industry collaboration in R&D and 108th based upon capacity for innovation. According to the same report, the country is at the 48th place in Patent Cooperation Treaty (PCT) patents (applications/million population). The respective figures from the Global Competitiveness Report 2015-2016  are 112th out of 140 (university-industry collaboration in R&D), 79th with respect to capacity for innovation and 45th in terms of PCT patent applications. In practice ‘islands’ of excellence exist, but the system lacks sufficient capacity and key linkages.

The Bulgarian National Research Innovation System (NRIS) is characterized by a separation of the publically funded research and development segment on one hand, and the private sector innovation segment on the other. The lack of complementarity between the activities of the beneficiaries and stakeholders of the two segments is one of the main challenges of the innovation system. According to the World Bank Report “Input for Bulgaria’s Research and Innovation Strategies for Smart Specialization” (February 2013), “Science policy and funding instruments in Bulgaria have been designed with the idea of the “supply-push” model, in which scientists are at the origin of the project, the main barrier is selling the new idea on the market and the technological sophistication and risks tend to be high to medium. In this context, the priority is to give scientists the resources to develop their projects until the applications are clear, under the assumption that a private partner can be attracted later on.” The low level of R&D spending, in particular in the enterprise sector, along with the quality gaps and almost non-existent linkages between research and the needs of the productive sector are key reasons for Bulgaria’s comparatively poor record of innovation. The private sector is dominated by SMEs (the largest share of which in trade), which are at difficulty to allocate funds to R&D and which are finding themselves without the necessary technologies and capabilities to innovate.

Bulgaria faces a series of obstacles in increasing entrepreneurial activity in the Public Research Organisations (PROs) with regard to legal ambiguity and apparent contradiction in the status and activities of its research organisations. PROs such as the Bulgarian Academy of Sciences (BAS) and the public universities are by definition ‘non-profit organisations’. As they are increasingly encouraged to embrace a model of entrepreneurship and become partners in the Open Innovation system, PROs find themselves acting more as commercial entities – licensing their research results to the private sector for money bearing royalties, starting and taking an ownership stake in commercial spin-off companies, negotiating and signing contract agreement to provide research services.

Failure to set up institutional level legislation to protect and transfer research results has a negative effect on the commercialisation of research in Bulgaria. The most obvious in the slow progress towards implementation of the "Commission Recommendation on the management of intellectual property in knowledge transfer activities and Code of Practice for universities and other public research organisations" . This recommendation is designed to help with the identification, protection and efficient transfer of intellectual property of all types, created in PROs, to the private sector. Only the Bulgarian Academy of Sciences (BAS) appears to have set up and implemented an institutional IP Policy. Without this institutional framework entrepreneurial researchers will continue to commercialise research privately. This informal approach not only fails to benefit the PRO, it also tends to keep commercialisation activity artificially low, as Bulgarian researchers do not want to draw attention to their ‘grey’ activities and also lack the necessary support to realise the full potential of their inventions.

Policy Response: 

In order to rectify the trends of low innovation and to improve the competitiveness of the country, an Innovation Strategy for Smart Specialisation of the Republic of Bulgaria 2014-2020 (RIS3) was adopted. Its objective is to move Bulgaria from the group of “modest innovators” to the group of “moderate innovators” by 2020. The strategy provides for annual monitoring, and twice during the period for evaluation by independent experts of the effectiveness of measures aimed at achieving the objectives formulated in the Strategy.

During the period 2015-2017, €5.11m will be directed each year through the National Innovation Fund to support for the innovation environment. In November-December 2014, 80 projects in two successive sessions of the Fund were approved. The subsidy disbursed amounted to €3.42m .

Support for increasing the innovation activities of undertakings is also envisaged under Operational Programme “Innovations and Competitiveness” 2014-2020 (OPIC). Within OPIC, a procedure with a budget of €40m for promoting innovation activities of undertakings and a procedure with a budget of €150m for enhancing the production capacity of undertakings are planned for 2015. In parallel, the implementation of projects to improve the innovation infrastructure (setting up and development of technology transfer offices, technology centres, development of “Sofia Tech Park”) and increasing innovation activities in companies under Operational Programme "Development of the Competitiveness of the Bulgarian Economy" 2007-2013" (OPDCBE 2007-2013) continues.

Policy assessment: 

It is necessary to stimulate both the supply and demand sides in the innovation system and to create professional support services that encourage their interaction. A refocus away from ‘supply driven’ innovation towards ‘demand driven’ innovation is needed. This is likely to mean a strong refocus of policy support instruments and in particular introducing more measures that will stimulate a need for knowledge generation and transfer from PROs to companies. This should include flexible schemes to transfer knowledge though employment of skilled individuals. For those research groups who’s science does out-strip the existing absorption capacity of domestic companies there is a need to focus on entering global supply chains and, if appropriate, to encourage the formation of spin-off companies. The present focus on stimulating business R&D through tax incentives should be widened to include 'proof of concept' funds, innovation vouchers that can be ‘spent’ with a public sector R&D partner, matching grant schemes for companies tailored to the needs of different target groups, e.g. sector, age and growth potential, and schemes to transfer knowledge through flexible human resource capital deployment, e.g. Innovation Assistants and Knowledge Transfer Partnerships.

Chapters
1. Overview of the R&I system

Bulgaria’s research and innovation system faces serious challenges. Inefficiencies and fragmentation in the allocation of funds for R&I, coupled with insufficient and falling public funding, impede any build-up of R&I capacities in Bulgaria. Low salary levels and outdated research infrastructures fail to retain young and qualified domestic researchers and to attract foreign ones, leading to a continuous brain drain and an ageing R&D staff. Consequently, the key performance indicators exhibit levels far below EU averages or global competition.

2. Recent developments in research and innovation policy and systems

Key developments of the Bulgarian national R&I system in 2015 included:

  • Peer-review of the Bulgarian R&I system within the framework of the Horizon 2020 Policy Support Facility;
  • Adoption of Action Plan 2015-2017 of the National Development Programme: Bulgaria 2020;
  • Adoption of the Strategy for the Development of Higher Education;
  • Regulation for Monitoring and Evaluation of Research Activities Carried out by Higher Education Institutions and Science Organizations, as well as the Activities of the Scientific Research Fund;
  • Launch of the National Open Data Portal;
  • Update for 2015 of Europa 2020: National Reform Programme;
  • Finalising the Innovation Strategy for Smart Specialisation.
3. Public and private funding of R&I and expenditure

The Bulgarian research and innovation system has been characterized by a significant underfunding over a long period of time; in fact since the transition from a centrally planned economy to a free market economy. The declining trend in overall, but primarily public funding, of research in Bulgaria came to a halt in the mid-nineties but remained at a low level of R&D intensity. The recent trends in the R&I structural development are characterized by growing private R&D expenditure and in particular by increasing foreign R&D investments. As a result of the implementation of EU operational programmes and instruments, the R&D performed by the business sector (as percentage of GERD) increased from 30% in 2009, to 50% in 2010, and further to 61% in 2013 (close to the EU28 average of 64%). However, the growth in BERD was concentrated practically solely in R&D services.

4. Quality of science base and priorities of the European Research Area

Bulgaria ranks among the poorer research performers in the EU. Its performance in the Framework Programmes has also been inadequate, especially in relation to other “new” Member States of similar size. The current funding environment does not sufficiently encourage researchers and research organisations to increase the quality and impact of their research.  

5. Framework conditions for R&I and science-business cooperation

The low level of R&D spending, in particular in the enterprise sector, along with the quality gaps and almost non-existent linkages between research and the needs of the productive sector are key reasons for Bulgaria’s comparatively poor record of innovation. Bulgaria faces a series of obstacles in increasing entrepreneurial activity in the Public Research Organisations (PROs) with regard to legal ambiguity and apparent contradiction in the status and activities of its research organisations.
 

6. Conclusions

The identified challenges of the Bulgarian research and innovation system are summarised and main weaknesses as well as the major opportunities are pointed out.

Geo coverage
Report year
2015
Country Report file
Official publication date
Tuesday, 3 May, 2016
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