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Technological catch-up, structural transformation to boost productivity in Bulgaria: report

Xinhua, June 30, 2015 Adjust font size:

Accelerating technological catch-up and structural transformation could boost labor productivity growth in Bulgaria, a World Bank report said here on Tuesday.

Labor productivity growth in the Balkan country averaged 3.0 percent between 2000 and 2013, fueled mainly by exceptionally high foreign direct investment inflows, according to the report, titled "Productivity in Bulgaria: Trends and Options."

The World Bank noted that there are three ways to raise labor productivity: by investing in physical or human capital, empowering a given number of people to produce more (capital deepening); by innovating so that people can produce more or higher value goods (technological catch-up); and by facilitating a reallocation of workers so more people produce goods with a higher value (structural transformation).

In Bulgaria, most productivity growth was driven by capital deepening, the report said. "Going forward, accelerating technological catch-up and structural transformation could become important drivers of convergence," it said.

The shift towards more productive sectors has been weak in Bulgaria, as most of the employment gains since 2000 occurred in the relatively low-productivity sectors of industry and services, the report said.

Bulgaria lags significantly behind other European Union (EU) countries in terms of innovation, the report said.

Business R&D (research and development) spending was 0.4 percent of gross domestic product in 2013 in Bulgaria compared to 1.29 percent in the EU. Its share of innovating firms was the lowest in the EU in 2010, ranking low for both product and process innovation, the report added. Endit