Structural Funds an important instrument for fostering R

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Structural Funds an important instrument for
fostering RD in Bulgarian ICT sector Georgi
Prangovsenior expertWarsaw, 16 October 2006
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Outline of presentation

• The Impact of ICT on Growth and Jobs
• Why RD in ICT?
• Bulgarian ICT Priorities
• ICT in Bulgarian Structural funds
• Future Prospects and Challenges for Bulgaria in EU

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• Impact of ICT on Growth and Jobs

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Macroeconomic Stability and Growth
Budget deficit (2000 - 2005E)
GDP growth Inflation, avg (2000 - 2005)
Sources National Statistics Institute, Ministry
of Finance, Eurostat
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Macroeconomic Environment Problems
Source NSI and own estimations
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Economic Growth in Bulgaria needs for more
dynamic
Greece
Slovenia
Portugal
Hungary
Slovakia
Estonia
Lithuania
Latvia
Bulgaria
Source Eurostat
Indicator GDP per capita (PPS, EU 25 100)
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Economic Impact of structural reforms

• Product, labour and financial market reforms and
  increased emphasis on knowledge and innovation
• Increased competition and higher investment lead
  to productivity gains through greater efficiency
• Higher growth and more jobs

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Product and Labour Market reforms and investment
in knowledge in EU area

• Product and labour market reforms in 1996- 2001
  ? Increase in GDP growth rate of almost ½
  percentage point
• Increased knowledge investment ? another ¼
  percentage point
• Over a ten-year period, this would imply an
  increase in the GDP level of up to 7 or 8

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The Role of ICT in Economy

• ICT investments lead to an overall increase in
  capital and labour efficiency
• ICT stimulate the competitive environment and the
  opportunities for SMEs
• ICT raise the companies efficiency
• ICT contribute directly as well as indirectly
  towards economic growth
• ICT are economically important because they
  facilitate the implementation of innovations and
  organizational changes in enterprises and change
  competitiveness and market structure

ICT use
ICT investment
ICT production
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Best International Practices

• Between 2000 and 2004 productivity growth in the
  EU is 1.1, 45 of which came from ICT
• Traditionally the ICT sector invests more in RD
  than the other sectors in the EU. ICT stands for
  25 of investment in science and RD in the EU,
  which is five times the value of ICT as part of
  GDP
• Sweden is most successful in turning its ICT
  investment into GDP growth 80 of this growth
  comes from ICT
• Ireland is among the first in labour efficiency
  growth with a 50 share from ICT

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• 2. Why RD in ICT?
• Bulgarian case

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Creation of knowledge and its spread to
enterprises

• Development of research activities is one of the
  priorities of the Bulgarian Government (National
  strategy for science researches 2005-2013)
• The total number of innovative of enterprises
  carrying out RD activities in the field of
  computer sciences, architecture and engineer
  sciences is 30.1 or 3.43 of the total number of
  enterprises
• This proves the need for active policy for
  stimulating the development of RD in ICT as a
  generator of new products and technologies for
  both the whole economy and the ICT industry

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Bulgarian ICT Industry
Source European IT Observatory
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Future Prospect for ICT in Bulgaria2003-2007
(EUR M)
Source European IT Observatory
Source European IT Observatory
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ICT and knowledge based economy

• Knowledge is the engine of economic and social
  development, and productivity, as well as the
  most important factor in resource creation and
  management
• The use of ICT transforms the way in which
  knowledge is integrated into economic activities,
  increases productivity, and stimulates education
• Information and knowledge, unlike capital and
  human resources, work for the public benefit
  they can be relocated and opened for use by the
  public

• Employment
• Added value
• Competitiveness
• Better access to information
• Effectiveness
• Flexibility
• Innovation potential
• Encouraging training and education
• Increasing productivity

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Knowledge-Based Economy The Bulgarian Agenda
Knowledge-Based Economy Index
Source World Bank, methodology for knowledge
assessment (??? 2004)
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Challenges ahead of Bulgaria towards knowledge
based economy

• Knowledge is the most important factor for the
  quality of life and has an even greater value in
  comparison to other resources such as land, human
  resources, information, etc.
• The most technologically advanced economies today
  are the knowledge-based ones. 70 to 80 of
  economic growth is the result of knowledge-based
  sectors
• Competitive advantage may be largely dependent on
  innovation and knowledge
• Greater interaction is needed, among people, as
  well as among the public and private sectors

• Employment
• Added value
• Competitiveness
• Better access to information
• Effectiveness
• Flexibility
• Innovation potential
• Encouraging training and education
• Increasing productivity

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• 3. Bulgarian ICT Priorities

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State Agency for IT and Communications

• Conducts the state management in the fields of
  IT, communications and Information Society in
  Bulgaria
• Supports the development of networks for security
  and defence
• Synchronizes and actively participates in ICT
  development in the public sector
• Coordinates Information Society activities
  regarding the current state and trends at
  international and national level

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Information Society Priorities

• Developing the ICT infrastructure and deploying
  e-services
• Encouraging public-private partnerships (PPP) for
  investment in ICT and innovation
• Building an effective information environment and
  interoperability standards
• Developing Research and Innovation infrastructure
  
• Promoting a full range of e-services for economic
  and social challenges
• Promoting e-Inclusion

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Critical Success Factors for attracting RD
investments in ICT
Government
Private sector
Research Institutions
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The main players in RD in the field of ICT

• The Institutes of the Bulgarian Academy of
  Sciences
• The Bulgarian Technical Universities
• SMEs in the field of technology transfer and
  innovation in close cooperation with research
  institutions
• Foreign high tech companies (EPIQ, Belgium - EPIQ
  Electronic Assembly, SAP, Germany - SAP Labs
  Bulgaria, Siemens, and other)

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• 4. ICT in the Bulgarian Structural funds

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Bulgarian Strategic Documents 2007 - 2013

• Sustaining real convergence
• Real convergence is not automatic, it depends on
  establishing a sound policy framework
• EU Funds can accelerate convergence if the
  preconditions are right placed
• Key challenges (i) reform public sector, (ii)
  reform labor markets, (iii) create a flexible
  business environment
• National Strategic Documents 2007-2013
• National Reform Programme
• National Development Plan
• National Strategic Reference Framework
• Operational Programmes

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The National Strategic Reference Framework (NSRF)

• Lays down general provisions of the European
  Regional Development Fund, the European Social
  Fund and the Cohesion Fund
• Provides a description of Bulgarias developing
  strategy and the major development policy
  objectives
• Describes the administrative structure and
  mechanisms for successful implementation of
  Cohesion Policy of the EU
• Describes the role of  Structural Funds during
  the period 2007-2013 in supporting the wider
  strategy

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NSRF Priorities

• Improving physical infrastructure
• Increasing quality of human capital with a
  focusing on employment
• Fostering entrepreneurship, favourable business
  environment and good governance
• Supporting balanced territorial development

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Operational Programmes 2007-2013

• The NSRFs priorities are organised, presented,
  and formulated in the following OP
• Development of the Competitiveness of the
  Bulgarian Economy
• Human Resources Development
• Transport
• Environment
• Regional Development
• Administrative capacity
• Technical Assistance

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OP Development of the Competitiveness of the
Bulgarian Economy Priorities
220m 18 733 m 60 134 m 11 85 m
7 48 m 4 1222 m 100

• Development of a Knowledge-based Economy and
  Innovation Activities
• Business Development
• Improvement of the access to finance for micro,
  small and medium-sized enterprises
• Strengthening the international market positions
  of Bulgarian economy
• Technical assistance
• Total

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Stimulation of creation and development of
innovative enterprises

• Promoting RD and innovation cooperations between
  technical universities, research institutes and
  SMEs
• Involving SMEs into the system of technological
  parks, research centres, technology transfer
  offices
• Supporting enterprises which perform innovative,
  RD-based activities
• Implementing RD-result improvements of national
  and international level
• Marketing of new products and technologies
• Supporting the establishment and strengthening of
  technology start-ups

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Operational Programme Development Priorities
INTERVATION ORDER

• Urban Regenerations and Development
• Local and Regional Connectivity
• Sustainable Tourism Development
• Encouraging Regional and Local Development
• Technical Assistance

Quality of life and competitiveness
Connectivity
Diversification
Integration
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Operational Programme Development Priorities

• Urban Regeneration and Development
• Local and Regional Connectivity
• Sustainable Tourism Development
• Encouraging Regional and Local Development
• Technical assistance
• Total

857m 40 642 m 30 300 m 14 257 m
12 85 m 4 2141 m 100
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Local and Urban Connectivity Priority

• Measure 2.1 Sustainable Urban Transportation -
  40
• Measure 2.2 Regional Road Infrastructure 50
• Measure 2.3 Intra-regional Transport Services
  5
• Measure 2.4 ICT Networks and Services 5 or 32
  m

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• 5. Future Prospects and Challenges for Bulgaria
  in EU

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Future prospects
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European Information Society Policy

• to create an open and competitive single market
  for information society and media services within
  the EU
• to increase EU investment in research on ICT by
  80
• to promote an inclusive European Information
  Society

i2010 priorities
Information Space
Innovation and Investment
Goals
Inclusive Information Society
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Key factors for ICT competitiveness Challenges

• Effective use of the European Structural Funds in
  2007-2013
• Active participation in the Community programmes
  and initiatives (7-th Framework Programme, CIP
  and etc.)
• Investment in ICT RD and wider ICT take-up in
  the public and private sector
• Building up a stable ground for effective
  mobility of young researchers in ICT area
• Involving experts who are able to capitalise on
  past experience and new knowledge
• Strengthening innovation in ICT
• Better coordination and cooperation between more
  and less developed EU regions

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Future Prospects for Growth in the ICT Sector

• Establishment of a venture capital fund targeted
  at SMEs with an ICT profile
• Establishment of regional, national and
  international ultra-high speed network
  infrastructure
• Improvement of the cooperation between academic
  institutions and the private sector
• Encouragement of applied research and development
  
• Greater efforts to develop and maintain human
  resources
• Make Bulgaria a center for ICT entrepreneurial
  activities in the region

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ICT State Policy Results

• More effective institutions (combat corruption,
  modernisation (eGovernment), value for money and
  etc.)
• Higher share of ICT investment on total
  investment
• Enhanced investments in RD activities both the
  whole economy and the ICT sector
• Successful PPP models
• Competitive, export-oriented ICT industry
• Well-developed ICT infrastructure
• From passive to active labour market

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• Thank you for your attention!