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Theme D: Bulgaria
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EU ACCESSION, INNOVATION AND LOCAL ECONOMIC DEVELOPMENT: THE CASE OF MAPPING AND REBUILDING THE LOCAL INNOVATION SYSTEM OF THE SOUTH-CENTRAL REGION IN BULGARIA
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I. Introduction
Knowledge has always been central to growth and development. The ability of companies, clusters, industries, cities and economies to commercialize effectively and quickly new ideas and meet adequate consumer demand is a central feature of today's market economy. The deep specialization and atomization of knowledge (i.e. more individuals hold more and more different parts of complementary knowledge) and the rapid build up of technologies for codifying, storing and transferring knowledge have centered economic interest on the study and use of knowledge as a growth instrument.
Transition countries have quickly realized the enormous potential for reform and growth that the knowledge economy framework holds. It seems to combine the essence of worldwide knowledge on how to grow and prosper. It contains the basic benchmarking criteria for a market economy (institutional set up and business environment), the market economy growth sap – innovation, the long-term knowledge carrier and well established growth factor – education and the most up to date infrastructure (neuron system) – information and communication technologies. To be successful in gearing their economies to knowledge competitiveness these countries need at least two things at the outset: (1) internationally comparable data/information/knowledge on their present position and (2) the know-how to grow their economies in line with best international practice. The challenge is how to run a process that allows the whole economy to live up to international competitiveness standards, while taking into account local peculiarities.
KE happens at companies and private sector organizations but for its wide inception the term is more important to be understood at decision-making level, i.e. how decision makers at each level and sector of power (be it public or private) understand and implicitly weave the KE milestones in their growth and development strategies. This requires building a flexible and inclusive transformation process that allows for freedom in individual business decisions and at the same time allows decision makes understand the importance of KE and how it relates to their specific activities.
As the selected case for a regional innovation system reform process demonstrates KE revolutions are unlikely to happen. But benefits are sure to materialize in countries that invest consistently in KE development for 2 – 3 decades. Keeping the process flexible to adapt to upcoming changes in competitiveness factors might be a good rule for a start. The case demonstrates the importance and guiding role of the private sector in a dynamic public-private partnership for reform. Identifying and uniting leaders and bridging organizations, persons and institutions (network hubs) might prove crucial to closing the KE gap. There are no universal KE transformation guidelines but the case presented below gives good orientation at where one might start and what are the challenges that would have to be confronted.
The case presents the 21/2 years' experience of an international public-private consortium in mapping and rebuilding/redefining the local innovation system of South-Central Planning Region of Bulgaria to prepare the region to compete in the international knowledge based economy. The exercise is part of the EU accession process and draws on international knowledge but relies substantially on local capacity and cooperation for setting up the local innovation infrastructure. These efforts aim at proposing knowledge based regional innovation strategy, which strikes the right balance between international and local experience, skills and knowledge in shaping local economic development.
The case gives insights into two important issues for KE communities:
(1) The pilot initiative for Bulgaria to analyze and map through an internationally recognized methodology the regional innovation system of South-Central Region. Knowledge gained: more than 400 active company cases, 49 research facilities and 18 intermediaries; what from the methodology is applicable and what not; deep knowledge on how the innovation system works.
(2) The process of building and managing consensus among the key regional actors in the field of innovation in South-Central Region. Managing change is a key challenge to any country but is even more so in transition environment. This part provides insights into the practical efforts needed to redefine the roles of local innovation actors and to reorganize existing intellectual assets to achieve international competitiveness levels. It encompasses changes in all four pillars of the knowledge economy though it concentrates on the innovation system.
The combination of process and substance in the case allows for drawing and sharing lessons on state, region, company and ARC Fund (process management) level.
II. Description of the Case
There are a lot of challenges for Bulgaria in its way towards knowledge-based economy but two seem to require more attention – education and innovation system (see Graph 1). While recently the Bulgarian government declared that reforming education would be a key priority for 2004, the innovation system remains deeply underdeveloped and in disarray, which might turn into a critical stumbling block in shaping Bulgaria's competitiveness on world markets.
Currently there seem to be two parallel innovation systems, which fail to synergize on scarce public and private resources. The old innovation infrastructure has not been reformed to address new and emerging needs of the economy and has remained primarily government financed without private support. Companies and newly emerging innovation structures on the other hand respond to international competitive pressure and trends and have established parallel innovation efforts, which usually are isolated and small scale. Market forces will surely find their way in imposing a new innovation system but this would likely take much more time, efforts and resources if the public and private sector are not working in a consensus.
Innovations happen at companies and clusters. And though the national innovation environment is key to having vibrant cities and regions, it is usually local networks, connected to international markets that that matter most in to the development sound innovation practices and systems. That is why when the EU announced in 2001 that it opens its regional innovation programs to accession countries ARC Fund seized this opportunity to initiate a process for analysis and reform of the innovation system in South-Central planning region in Bulgaria.
The South Central region of Bulgaria is one of the six "regions for planning" according to the Law on Regional Development. The South Central region, covering 27,553 km², represents approximately a quarter of the total surface of Bulgaria. The region has 2 million inhabitants and has borders with Greece and Turkey. Plovdiv, Pazardjik, Haskovo, Stara Zagora, Kurdjali, and Smolyan are the six administrative districts within the region, which are further divided into municipalities.
The project's life cycle spans from 2001 to 2004 and is being implemented by 5 core partners:
· Applied Research and Communications Fund (coordinator)
· Ministry of Regional Development and Public Works of the Republic of Bulgaria
· Commission for Technical and Social Cohesion of the South-Central Region (the body responsible for coordinating local economic development and cooperation in the region)
· tti Magdeburg Gmbh, Germany
· University of Thessaly, Greece
So far the partners have:
· Elaborated an economic profile of South-Central planning region from existing sources;
· Studied the innovation demand among 400 companies in the region;
· Mapped and analyzed the suppliers and intermediaries of innovation (universities, research organizations, business associations, industrial chambers, etc.);
· Developed ten industrial case studies on innovation potential in leading industries;
· Completed a knowledge sharing network of more than 500 organizations and 1,300 persons;
· Implemented an inclusive and open management structure that has ensured wide support for the initiatives from the private and public sector.
The final result of the project is expected to be knowledge based strategic document that maps regional innovation potential, traces best practice and proposes broad action guidelines for reforming the regional innovation system. .
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