Transcript Challenges and Implementation of the Knowledge

Challenges and
Opportunities for
the Knowledge Economy
in Bulgaria
by Sophia Kassidova
Deputy Minister of Economy
World Bank KE Conference, Paris 19-22 Feb 2002
Bulgaria - Stability and Growth
 Political stability: consensus on EU and NATO membership
 Macroeconomic stability
 currency board since 01/07/1997: BGN 1=EUR 0.5113
 low interest rates: base interest rate around 4.5%
 low inflation: 4.8% in 2001 (preliminary data)
 Dynamic economic growth: 5.8% in 2000 and 4.9% for 2001 (estimate,
source: Ministry of Economy)
 IMF Program
 World Bank Country Assistance Strategy 2001--2004
 National Anti-corruption Strategy and Programme for its Implementation
 Strategy for Energy Sector Development
Ministry of Economy
Macroeconomic Indicators
GDP
(BGN bn)
1996
1997
1998
1999
2000 2001E 2002F
14.86
17.62
21.58
22.78
25.45
28.46
30.78
4.9
Real GDP growth
(%)
-10.9
-7.0
3.5
2.4
5.8
4.5
4.0
Annual inflation
(year-end, %)
310.8
578.6
1.0
6.2
11.4
4.5
3.5
Budget deficit
(% GDP)
-10.4
-3.0
1.0
-1.0
-1.1
-0.9
-0.8
Source: Ministry of Finance
GDP Growth: Bulgaria/CEE Countries
Bulgaria
10
8
6
4
2
0
-2
-4
-6
-8
6.0
4.9
5.8
3.5
8.0
2.4
4.5
Pessimistic prognosis
4.0
4.0
Optimistic prognosis
-6.9
1997
1998
1999
2000
2001E
2002F
2002F-05F
GDP Growth in CEE Countries in 2001 (%)
6
5.8
5.3
4.6
5
4.1
4
4.0
3.1
3
2.2
2
1.6
1
0
Bulgaria
Hungary
Slovenia
Croatia
Poland
Czech
Republic
Slovakia
Romania
Total Tax Burden (% GDP)
38
36.4
36
34
34.2
32
32.7
32.8
32.9
32.5
30
28
31.6
29.5
1997
1998
Reported (% of GDP)
Source: Ministry of Finance
1999
2000
2001E
Estimated in the budget framework (% of GDP)
2002F
Personal Income Tax Rates/Brackets
45%
40%
35%
30%
29%
28%
25%
24%
20%
18%
15%
10%
1999
Source: Ministry of Finance
2000
2001
2002
Highest
High
Low
Lowest
Background

Tradition of excellence in ICT production.
Specialization under COMECON (50%) - PCs,
processors, peripherals, teleprocessing systems and
devices, etc.

In 1989 share of electronics and telecoms -- 25% of
industrial production. Sector employed 130,000
people, incl. 8,000 highly qualified engineers.

Bulgaria’s ICT industry suffered seriously after 1990.

Macroeconomic stabilization since 1997 made ICT
one of the most dynamic sectors of economy.
ICT Infrastructure
•
•
•
•
•
Strengths
Telephone penetration rate: 36 phone lines per 100
people
Households with installed telephone lines: 75%
Mobile telephones: 20% of population and
exponentially growing
Cable TV penetration: 48% of population
ISP is liberalized and competitive
Weaknesses
• Households with PCs: 8.5%
• Regional disparities (i.e. less access in rural areas)
• Telecom monopoly
Internet Access Dynamics
11%
10,4
9%
8,4
7%
6,8
5%
5,5
3%
3,3
2,2
1%
1,9
1,0
-1%
June, 1997
February, 1998
September,
1998
September,
1999
April, 2000
Septemebr,
2000
June, 2001
October, 2001
Internet Affordability (in $)
$2,50
2,0
$2,00
1,65
$1,50
1,25
1,2
$1,00
0,95
0,8
0,59
$0,50
0,31
0,4
0,2
0,25
0,24
0,14
0,15
$0,00
1997
1998
1999
2000 Q1,Q2
Full dial-up access within an hourly limit
2000 Q3,Q4
2001
2002 Q1
Full dial-up access with additional hours
Where Internet is Used ?
Yes
No
DK/NA
Home
30,2
64,6
5,2
Friends, relatives
19,8
74,0
6,3
School, university
16,7
75,0
8,3
Work
41,7
53,1
5,2
Public places
46,9
49,0
4,2
Bulgaria - Education
Bulgaria’s
secondary education is
among the best in the world: 5th in
the world in sciences, 11th in
mathematics (World Bank and The
Economist ranking)
Bulgarians
rank second in
international IQ tests (MENSA
International)
Bulgarians
are among the top
university students worldwide (2nd
in the world in SAT scores)
Many
Drain
students abroad – Brain
ICT in Education
• Growing penetration of ICT in schools - no. of
PCs at secondary schools doubled in 2001.
Currently - 5,643 computers and 989 computer
labs in 1016 secondary schools
• Some 20,000 computers at 48 universities.
Average of 11 students per PC
• All universities have access to Internet. 45 (out
of 48) have Internet sites
• 6,485 students in ICT + 221 doctoral degree
students
Recent Developments in Knowledge
Economy
•
•
•
•
ICT employment in 2000 increased by 100% yoy
Global crises in IT markets in 2001 did not
significantly affect employment and IT business
in Bulgaria
Outsourcing, incl. by major IT firms is
predominant type of IT business
First signs of following patterns similar to
Southeast Asia in assembling and hardware
production
Challenges and Potential for Development
• Small level of PC and Internet penetration
• Low purchasing power
• Banking and financial intermediation needs to
increase
• Insufficient venture capital
• Public spending for R&D is increasing – 3.8% in
2001, 4.1% in 2002
…... Potential for Development
• Qualified workforce
• UNDP 2001 TAI (Technology Achievement Index)
measures Bulgaria as a potential technology leader
• Regulatory framework is largely harmonized with the
EU one
• E-signature law is in place
…... Potential for Development
• ICT is a tool to overcome the gap with developed
economies
• ICT keeps the economy open and globally integrated
• Political will to support the sector
Future Steps
• Е-government -- efficient and unbiased public
administration is conducive favorable business
climate
• Tax concessions for big FDI in the sector
• Finalize structural reforms
Future Steps
• Technology and Innovation National Strategy
under preparation
• Accelerating penetration of ICT in all spheres of
the economy and society
• ICT as a tool to bring innovation curricula and
teaching and research methods