Opportunities for Increasing the Innovation Potential of Bulgaria concerning Foreign Direct Investments and European Structural Funds

The paper discusses the role of FDI and the financial support from European Structural Funds (ESF) for increasing the innovation potential of the Bulgarian economy. The first part studies the degree to which the FDI inflow in Bulgaria contributes to the development of the innovative branches and services. The second part analyzes the financial support of ESF for creating the infrastructure of socially and economically significant projects, which would increase the innovation ability of the Bulgarian economy. It is assumed that the renovation of the economic and social environment could attract new quality FDI. As sources of external financing, FDI and ESF support the development of economic and social activities, which allow increase of the innovation potential of the Bulgarian companies. The evolution of some new productions and services allows suggesting that the FDI increase encourages their development. The study outlines that in order to attract quality FDI and to increase the use of ESF financial support, Bulgaria should identify reasonable economic goals, improve management and effectiveness of the production and services. Investments in smart comparative advantages allow creating a solid fundament of the knowledge economy.