POINT review of Industrial Transition of Bulgaria

Publication article | | STEFANOV, Ruslan; BOEKHOLT, Patries; PONTIKAKIS, Dimitris

The review of industrial transition in Bulgaria analyses the current situation and also sketches future directions for the development of industrial capabilities that, in the spirit of the European Green Deal, jointly tackle economic and societal challenges.

Abstract

This report documents the findings of a review of industrial transition of Bulgaria launched in 2019 in partnership with the Bulgarian Council of Ministers, which follows the POINT (Projecting Opportunities for INdustrial Transitions) methodology of the JRC. The review explores some of the policy pathways that Bulgaria might take as it seeks to digitalise its economy and derive multiple associated benefits in terms of pervasive productivity improvements and the creation of knowledge-intensive and therefore well-paid jobs for a broad cross section of the workforce.

The Bulgarian information and communication technologies (ICT) sector has been on a meteoric growth trajectory over the past decade fuelled by the export of software solutions. However, ICT is still insufficiently connected to other sectors nationally and faces important skills bottlenecks. An important premise of this exercise is that the emerging strengths of the domestic ICT sector can contribute to the digitalisation of manufacturing and in particular of the mechatronics sector. This is because the needs of one sector closely correspond to the abilities of the other. Bulgaria has production strengths in both ICT and mechatronics dating back to the 1980s, which provides the necessary depth of the system for transformation.   
Based on extensive research, consultations with key stakeholders, and drawing from international experience the review makes a number of suggestions for improvement in long-term policy orientation, coordination and implementation. Importantly, there are significant gaps in the education and training systems that prevent systematic investments in human capital. Recent cluster initiatives by the ICT and mechatronics sectors and a proliferation of start-ups in both sectors are encouraging signs but will require considerable additional support to further develop and deliver broad-based benefits for the Bulgarian economy and society. The European Green Deal and the EU Recovery Fund offer a unique opportunity to address the gaps in the system and enable long-term transformation. In the medium term, there are considerable opportunities for further growth by nurturing greater domestic ICT use, including by government.  

A government-orchestrated effort to strengthen the linkages between ICT and mechatronics could help develop world-class production capabilities and also create a platform for wider digitalisation in other areas such as clean technologies, telemedicine and tele-education. For this effort to be successful, policy makers should consider actions that: Elevate human capital investment into a major national goal; Ensure sufficient public investments and encourage business investment on digital innovation, worker training, and upgrading of productive capabilities; Use the occasion of the digital transition to revamp rules and the structure of information flows, in order to improve governance and enable whole-of-government mobilisation; Strengthen and extend mechanisms that allow for coordination and collaboration with the business sector, ensure that policies leverage private investment and facilitate a continuous dialog that informs government policies.

 

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