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How Digital Transformations Impact Regional Ecosystem: The Case of Sofia

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Dr. Vassil Kirov’ BEYOND4.0 presentation at the “Regional Development and the Factors of Success: Education, Economy and Social Policy in the Regions” conference organized by the ISSK-BAS and Konrad Adenauer Stiftung.

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How Digital Transformations Impact Regional Ecosystem: The Case of Sofia

  1. 1. How Digital Transformations Impact Regional Ecosystem: The Case of Sofia Regional Development and the Factors of Success: Education, Economy and Social Policy in the Regions, ISSK-BAS and KAS Conference, Sofia, 25 October 2019 Prof. (Associate) Dr. Vassil Kirov
  2. 2. The Main Objective Is to find, describe and assess digitalization’s specific role in transformation, and its impact on Sofia regional ecosystem.
  3. 3. The Research Focus Focused on the economic impact of digital transformation on 6 regions. It assesses how digital transformations impact regional ecosystems, economies and societies, now and in the future. For six different regions, the social and economic impacts are analysed, building on possible future development paths
  4. 4. Addresses the general priorities of H2020 Programme (2018-2020) future of business models Studies the new technologies impact on future of the jobs welfare BEYOND4.0 project
  5. 5. The Regions/Industries Under Scrutiny… • Selection of regions and business ecosystems by partner
  6. 6. The Research 1. Will assess the inclusive-growth related impacts of digital transformation at ecosystem and regional level now and in the future 2. Will analyse how ecosystems and regions can respond and adapt to future changes and to investigate how inclusive-growth regional futures can be achieved
  7. 7. The Research 3. Will assess how the EU could help and support regions and regional eco-systems in adapting and changing course: what are the ingredients needed for a suitable EU strategy at regional level
  8. 8. Exploring the Digitalization-driven Restructuring • Digitalisation is not new as such, but what is new is its pace and scope… (Meil and Kirov, 2017) • Pessimistic vs Optimistic scenarios about job destruction / job creation / job change / job replacement (Frey & Osborne 2013 vs. Rifkin; Degryse 2016)
  9. 9. Exploring the Digitalization-driven Restructuring • Digitalization matters, but other factors also play a role (globalization, ageing, climate change and so on). • Technology is not deterministic but socially negotiated by key social actors at various levels: firms, industry, regional, national and EU. (Berting, 1993; Bijker et al., 2012; Child, 1972; Noble, 1984)
  10. 10. Theoretical Concepts Two central concepts - Entrepreneurial and Business ecosystems. The ecosystem perspective is used to analyse, interpret and explain how digital transformation in industry/services has taken shape and what its effects/impact have been, are and will plausibly be at regional level. The notion of entrepreneurial ecosystem, defined as “a set of interdependent actors and factors coordinated in such a way that they enable productive entrepreneurship within a particular territory” (Stam & Spigel, 2017).
  11. 11. Methodology 1. Quantitative methods. Identification of main variables for analysis and related indicators, based and building on Stam and Van de Ven (2018); Data retrieval: collection of relevant data, notably the aforementioned indicators, and as much data points over time to enable a time-series analysis by region; time series.
  12. 12. Methodology 2. Historical perspective - long-term analysis (together with UCL) – few decades. 3. Qualitative research - interviews, company based surveys, workshops with stakeholders (economic data, data on collaboration).
  13. 13. The Case of Sofia • Population of 1,325,429 (2018), NUTS 3 region • GDP (PPS) per capita - 15 181 Euro in 2018 (one of the lowest for a capital region in the EU, but well above other cities in the country) • Major economic transformation during the post-communist period (80% of the GDP of Sofia is provided by services in 2018) • Highest educational level in the country and 75% employment rate • Rapid growth of IT and outsourcing industries over the past few years (even if IT is path-dependent, TACTICS) • The first Bulgarian municipality to adopt and implement Strategy for Smart Specialization (2018), ICT being the one of its two focuses
  14. 14. The Incumbent Ecosystem - ICT (software industry) • Post-communist path dependence and integration in the GVC (Mako et al. 2010). • Best Performing Industry in BG – 600% Income Growth for 10 Years. • 14% of Sofia’s exports have been produced by the IT sector, itself with about 50 000 employees (2018). • EU based and other support instruments (VC, angels, accelerators, tech park). • Concentration of universities. • One of the most vibrant start-up and entrepreneurial ecosystems in Central and Eastern Europe.
  15. 15. Some First findings… • Digitalization (old and new) as a vector for the socially inclusive ecosystem development (but also strong impact on globalization, EU membership). • Long path-dependency and integration in GVC. • Recent strategic positioning and mobilisation of EU/national support instruments, still not sufficient to overcome policies gaps. • Difficulty to evaluate spill-over effects (on other sectors/regions). • An ecosystem beyond the ‘captured state’?
  16. 16. THANK YOU For more information: Http://beyond4-0.eu/ https://twitter.com/Beyond4_0

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