Business and institutional innovations might contribute to economy growth. That is the main message of the latest report of the European Bank for Reconstruction and Development /EBRD/, named Innovation in Transition. Sixteen thousand companies from 30 countries have been polled for it. As many as 300 Bulgarian firms have taken part in the research. The average economy growth over 2014 was 1.5 percent and 2015 is expected to be more difficult with 0.8 percent of forecast growth. What should we do? Should we wait for the unrest to be over? Economy experts suggest prophylaxis.

The demographic trends in both Bulgaria and most of Europe are not positive and that is why other premises for economy growth should be sought. According to EBRD analysts innovations are the thing that will increase production, despite the lack of high population growth. We should see “innovations” as a creative approach to business with different options in mind: from the creation of new products and services to the implementation of technologies, organizational and marketing strategies and practices, already existing in other states or companies. Despite all expectations, the report shows that innovations are predominant with low-tech companies. However, those are not an easy task.

According to Boyan Markovic, a leading EBRD economy expert for Southeast Europe:

“Innovation companies complain mainly about the lack of qualified manpower, the difficult access to credit funds and about corruption. Their colleagues, who do nothing to expand their markets or production, or to become more effective, usually face no such problems. Companies that manage to provide their funding tend to implement the greatest number of innovations. Those are export-oriented or foreign ones, also firms, part of the production chain.”

Analysts point out that many SEE countries use the same policies for the implementation of the new solutions and this is wrong. The same practice cannot work successfully in Bulgaria and Kazakhstan due to the quite different business environment. Despite the obvious ineffectiveness, the copy & paste principle acts at different levels, says Markovic: “We discover it at both the horizontal level – with the automatic copy & paste of something from one state to another and also at a vertical one – when institutions use the same policies for a long time without taking into consideration the changes that have occurred with time.”

The result is the ceasing of structural reforms in some SEE countries, Bulgaria among others, and the transition process is slowed down. This leads to a drop of innovations. According to Boyan Markovic:

“The state has to take a package of measures initially and after it starts to work with the proper results it should be replaced by another strategy – for instance efforts should be aimed at a concrete sector. It is also a good idea for the government to encourage the openness of economy, which means stimulation of export and foreign investments’ attraction.”

The Bulgarians tend to be skeptical when it comes to foreign investors. Those are most often victims of scapegoating, as they are blamed for taking out our national wealth abroad. Usually it comes to unprofitable contracts signed by the state and the investor. The energy sphere provides such examples. However, many foreign companies bring in knowledge, new technologies, they open new jobs and the guaranteeing of a nice business environment is something essential here.

The openness of the economy will solve other problems such as brain-drain, EBRD experts say.

English version: Zhivko Stanchev