This policy note provides a detailedassessment of Bulgaria's innovative capacity and offerspolicy recommendations to increase the impact of science andinnovation. Part one of the policy note provides anassessment of Bulgaria's innovation capacity in thepublic and private spheres. Specifically, the note examines:(i) recent trends in Bulgaria's export performance,benchmarking Bulgaria relative to comparator countries; (ii)the characteristics of innovation activities inBulgaria's private sector, as seen by enterprisesurveys; (iii) developments in technological invention andscientific production, by analyzing the statistics aboutpatents granted in the US Patent and Trademark Office(USPTO) and the European Patent Office (EPO) as well as dataon scientific publications. Part two providesrecommendations that could facilitate the implementation ofthe NRP and the Scientific Research Strategy, includingsectoral analysis to guide innovation policy in priorityindustries. The recommendations are divided into thefollowing areas: (i) attaining the 1.5 percent Research andDevelopment, or R&D and Gross Domestic Product, or GDPtarget under the Europe 2020 strategy; (ii) strengtheningthe institutional and policy framework for research andinnovation; (iii) achieving better results from nationalfunding instruments, the National Innovation Fund and theNational Science Fund; (iv) increasing absorption ofEuropean Union (EU) funds targeting innovation; and (v)developing targeted innovation policies and instruments forpriority sectors.