It would take Bulgaria 31 years to have its economy driven by innovation, Andrea Casini, CEO and deputy chairman of the managing board of UniCredit Bulbank said on Augst 4 2008 as quoted by Bulgarian news agency BTA.

According to Casini, in 2039 Bulgaria's businesses will start competing on the basis of new and unique products and not only price-wise.

Casini presented the findings of UniCredit Bulbank's analysis on production sectors in the European markets and Bulgaria's position as a EU member.
 
The analysis used the matrix of US economist Michael Porter which placed Bulgaria in a transitional stage between a developmental stage based on the factors of production and a stage based on efficiency. It would remain there until 2016, to move on (between 2017 and 2027) to a stage of efficiency when the production processes would be more efficient and focus would be on quality of products and services.

Between 2028 and 2038 the national economy would go through another transitional stage that would take it to the position of an innovation-driven economy from 2039 on, the analyses said.

The analysis was based on an economic theory whereby nations once acting as passive recipients of foreign investment thanks to the competitive price of labour, adopted the developmental model of the investor nations. In this way, over time, they would lose their competitive advantage in the production of some products and gain competitive advantages in others.

Based on this, Casini said, ten years from now the production of intermediate goods such as rubber and plastic goods or refined petrochemical products, would continue to dominate the product structure of the Bulgarian economy. At the same time, the production of high- and medium-tech goods, such as sets for the automotive industry, electrical, optical and transport equipment, would have an increasing share.

Bulgaria would have to develop new factors of competitive advantage because the low labour cost was transient: hopes to retain it for long were unjustified when there were nations such as China and India, said Casini. Also, cheap labour clashed with Bulgaria's aspiration to reach income levels and living standards of other EU member states.

Bulgaria was among the countries that has benefited most from the global eastward shift of capital flows, Casini said. He noted that Bulgaria had one of the highest foreign direct investment (as a share of the GDP) of all new EU members in Central and Eastern Europe.

This latter finding however came just a week after Economy and Energy Minister Petar Dimitrov said that FDIs in Bulgaria have fallen by 500 million euro in the first half of 2008.

According to Dimitrov, one of the reasons could be negative publicity concerning the European Commission's interim reports regarding Bulgaria's lack of progress in fighting organised crime and misappropriation of European Union funds.

According to Bulgarian National Bank, the net FDI inflow was 1.29 billion euro in January-May this year.