Municipality of Gabrovo: the current state of the art

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Municipality of Gabrovo: the current state of the art

Gabrovo is a municipality in the North Central region of the Republic of Bulgaria and has almost 71 000 citizens. The political vision of Gabrovo Municipality is to achieve smart, sustainable and inclusive growth and competitiveness, addressing society’s principal challenges. The municipality has developed a main strategic document (Municipal Plan of Development of Gabrovo municipality 2014-2020) whose goals and priorities are related to local economic development and innovations support. Gabrovo has two primary aims in this area: to stimulate economic growth and to support the vitality and competitiveness of SMEs locally.

For more than a decade, Gabrovo Municipality has made systematic and focused efforts towards the preparation and implementation of various projects, creating conditions for sustainable economic growth. In order to achieve the above-mentioned goals and to improve the existing innovation ecosystem, Gabrovo Municipality has developed an Implementation Plan for innovations. This is focused on the two thematic areas which were specified for the North Central region in Bulgaria’s national Smart Specialisation Strategy (S3); “Mechatronics and pure technologies” and “Informatics and ICT”.

Organisational role in R&I system

Gabrovo Municipality is largely alone in working to animate its innovation ecosystem, due to a lack of intermediary organisations and branch organisations in the region to support economic development and innovations.

An Implementation plan for innovations on local level is being developed by Gabrovo Municipality to stimulate R&D and implementation of innovations in local businesses, based on a Smart Specialisation Strategy (S3). The implementation plan is a part of the Municipal Plan of Development of Gabrovo municipality 2014-2020. Its strategic goals are:

  • To stimulate R&D and innovation activities in companies;
  • To establish and coordinate a network for innovations among sub-regional innovation stakeholders with proactive participation from the Technical University.

An Action Plan has been designed for the creation of a new, demand-oriented SME support system to cover the territory of Gabrovo Municipality, also with potential for its scope to be expanded to a regional level. Its main goal is to increase the capacity and competitiveness of SMEs through provision of expert support for the development and implementation of projects in the manufacturing sectors of Gabrovo’s S3, where it holds competitive advantage. The main actions are:

  • Introduction of new support measures for better communication with local companies through development of a new digital business platform for innovations, including branding of the local economy and organisation of a campaign for its promotion abroad (participation in trade fairs, advertising in world-famous economic media, and participation in innovative pro-EU networks and business platforms);
  • Establishment of a new business support structure (a regional innovation centre/hub) though public-private partnership with broad participation of all interested stakeholders in Gabrovo’s innovation ecosystem (local companies, experts, the Technical University of Gabrovo, the Chamber of Commerce and Industry, the Gradishte Foundation, the District Information Centre, local and district governments, and so on);
  • Creation of a co-working space for young entrepreneurs and start-ups.

The new demand-oriented SME support system will transform the traditional industrial sectors of Gabrovo’s economy according to the new realities of Industry 4.0.

Economy and labour

Gabrovo is one of the most important economic centres in Bulgaria with long traditions in industry, a stable group of SMEs, a developed education system, a high concentration of qualified and highly-skilled workers, and availability of constructed facilities and VET establishments at secondary and tertiary level. In the last 20 years, Gabrovo has been undergoing dynamic regeneration in terms of its industrial development. The leading economic sectors are still being developed based on the educational traditions and owing to the qualified workforce.

The main sectors of the local economy are machine-building industries and production of tools and equipment, such as mechatronics, electronics, robotics, plastic manufacturing, textiles, and others. The investments in the companies are mainly focused on innovations, technical modernisation, and resource and energy efficiency.

3 608 companies operate in Gabrovo Municipality, 468 of which are in manufacturing. Manufacturing is the leading sector of the local economy, contributing almost 50% of the added value and workplaces in Gabrovo manufacturing companies. The structure of the local economy indicates the presence of a well-developed network of local suppliers. The leading sub-sectors are machine building, tool manufacture and plastics. More than 80% of the manufacturing companies are export-oriented. There is a large number of foreign investors in the region, with many factories having been active for more than 20 years.

Research & innovation Infrastructures

The local R&I infrastructure is very fragmented and exists in both the most innovative companies and in the University. Follow-up activities are necessary in order to achieve an integrated and interconnected innovation ecosystem, providing well developed infrastructure and high-quality services to companies at the local level, based on Public-Private Partnerships (PPPs) and Business-to-Business (B2B) transactions. An upgrade of the existing innovation eco-system is planned through the establishment of a new Competence Centre and a Regional Innovation Centre, which will develop those links and improve Gabrovo’s innovation ecosystem significantly.

Main Strategies

Gabrovo Municipality has developed an Implementation Plan for innovations at local level to stimulate R&D and the uptake of innovations by local businesses, based on its S3. Its main goal is to stimulate R&D and innovation activities in companies, with proactive participation from the Technical University of Gabrovo. The target group includes companies, the Technical University of Gabrovo, chambers of commerce and industry, regional innovation stakeholders, and NGOs.

Priority areas specialisations

  • Mechatronics and pure technologies;
  • Informatics and ICT

SWOT Analysis of the Region

Strengths:

  • Industrialised region with developed infrastructure and industrial zones (more than 50% of employed people in the industrial sector); 
  • Low taxes; 
  • Stable business community with a high degree of foreign investment ; 
  • Well-developed educational system and a Technical University; 
  • Human capital with high entrepreneurial spirit; 
  • Entrepreneurial courses and trainings at all levels of education; 
  • Proactive and prepared administration with political commitment and clear vision of how to support entrepreneurship; 
  • Established Innovation ecosystem; 
  • Busy Calendar of entrepreneurial events; 
  • Good international relations and membership in international networks.  

Weaknesses:

  • Infrastructure for innovations is very segmented, with unstable interconnections; 
  • Lack of intermediary organisations in the region to support innovations and development; 
  • Insufficient knowledge on the needs of the companies; 
  • Weak operational power of the Municipality; 
  • Lack of financial resources; 
  • Lack of structured innovation ecosystem; 
  • Lack of entrepreneurial culture; 
  • Small innovative companies struggle against “business as usual” attitudes; 
  • Low R&D intensity and productivity; 
  • Limited spin-off processes; 
  • Service portfolio to entrepreneurs and SMEs is very limited and needs new types of services to be implemented; 
  • Low level of stakeholder engagement; 
  • Insufficient interest of young people; 
  • Lack of coordination between the main actors; 
  • Disparities between the needs of local business and the training of students graduating from the Technical University of Gabrovo. 

Opportunities:

  • Gabrovo’s entrepreneurial image and traditions; 
  • Availability of qualified academia in the technological/engineering studies; 
  • Initiatives launched for the development of a local Smart Specialisation Strategy; 
  • Workers available within a short distance who can be attracted to the region; 
  • Full access to European expertise; 
  • Interest of foreign investors and existing foreign companies in the municipality; 
  • Good international economic positioning; 
  • Involvement in many different EU networks and projects; 
  • Successful cases of business in the field of R&I; 
  • Acceleration of business dynamics in knowledge-based sectors; 
  • Experience in assisting start-ups. 

Threats:

  • Demographic decline;  
  • Ageing population, leading workforce shortages; 
  • Brain drain through emigration of youth; 
  • Workers/experts uninterested in enlarging their competence; 
  • Entrepreneurs uninterested in enlarging their businesses or investing in new R&I solutions; 
  • Community actors uninterested in networking/communicating/supporting/exchanging;   
  • Centralised planning culture; 
  • Excessive bureaucracy. 

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