Now that global economic growth will fall deeply in 2020, a vital question arises—will R&D, VC, IP, and the political determination to foster innovation also slump? At the edge of a new lockdown, many entrepreneurs ask themselves: “Who will finance innovation now?” These are the questions for the 2020 edition of the Global Innovation Index by Cornell University, INSEAD, and the World Intellectual Property Organization.
The Global Innovation Index (GII) is one of those indicators that provide data about a country’s economic development and its efforts to stimulate innovation. It is an annual ranking of countries by their capacity for, and success in, innovation. The GII consists of two sub-indices – the Innovation Input Sub-Index and the Innovation Output Sub-Index – each built around pillars. The Innovation Input Sub-Index is based on elements of the national economy that help to foster innovation (education, political environment, investment levels, etc). The Innovation Output Sub-Index measures the result from innovative activity within an economy – this could be both knowledge and technology outputs or creative outputs (online creativity, intangible assets, creative goods, and services). The GII is considered to be one of the benchmarks for measuring innovation by the UN General Assembly. In this year’s edition, 131 countries are included in the ranking. These countries constitute about 97.4% of the world’s GDP in purchasing power. The good news is that Bulgaria is ranking high in terms of innovation. Yet, according to the data, the innovation sector continues to suffer due to the shrinking economy.
Global Innovation Trends
There is a lot of uncertainty when it comes to predicting the effects of the pandemic over the innovation sector. For one, the consequences for each startup are going to be individual, in accordance with its strategy for dealing with the crisis. Yet, there are some trends that are outlined in the report. Firstly, funds (both private and public) will be strained, a circumstance that will make receiving funding harder for most firms. In fact, funds have already begun shrinking and their amount is expected to decrease even more drastically in 2021. For an innovation process to take place, private funds are of big importance, so the behavior of venture capital firms is vital. On a global scale, venture capitals are becoming more risk-averse than before, due to the declining revenue registered in the past few months. This is likely to affect innovative ventures more and the sector may have to take longer to recover. What can give emerging businesses hope in this situation is the stability of the banking system, something atypical for the global financial crisis in 2008.
Bulgaria’s progress in the innovation sector is “above the expectations for level of development”, according to the official report released along with the GII data. Classified in the upper-middle-income group of countries, Bulgaria has been an innovation achiever since 2015. In its essence, this classification is a recognition of the country’s developing innovation ecosystem.
When it comes to the progress made with infrastructure and creative output, Bulgaria belongs to the 4th quartile (best performers) and is ranking 30th and 29th (out of 32 best performers), respectively. When it comes to the infrastructure category, three sub-pillars play an important role in determining the ranking – Information and communication technologies (ICTs), General infrastructure, and Ecological sustainability. Currently, Bulgaria is putting great efforts to improve its general infrastructure which may give an explanation regarding the high score here. The high ranking in terms of creative output can be contributed to Bulgaria’s innovation ecosystem activity during the past several years. For the category, the number of ingenious project ideas is crucial which may be why Bulgaria is 29th. Bulgaria’s other scores are also satisfactory. The only exception is the country’s ranking for the category “Market Sophistication” where it ranks 97th. This category focuses on the market conditions and the total level of transactions in a given country. Bulgaria is scoring higher than Romania, Greece, Serbia, and North Macedonia. Yet, compared to Switzerland, which is ranked as number one, all these countries have a long way to go before achieving such a result.