Abstract

Theoretical and policy making aspects of interaction between innovation and economic development have been carried out. It has been proven that for small scale open economies the governance plays a major role in transformation of new knowledge into new products and services for the market. In this respect it has offered an analytical scheme consisting of five sectors: R&D, education, business, nonprofit and state, each of them having its international equivalents. Legal, institutional and financial environment exercise essential influence on the efficiency of their interaction. This analytical scheme is proved by experience of EU, and is applied for analyses of interaction between innovation and economic development in Bulgaria. Priorities for national innovation policy are identified, based on a survey of 50 respondents.