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Purpose: The role of entrants and exits has enlarged indisputably over recent years. The basic explanation is connected to the deepening of innovation's influence on industrial growth. Furthermore, new businesses have to be more effective, and based on products, technological or organizational innovations, and exits have to be ineffective (respectively unprofitable), based on denoted products or technology. Design/methodology/approach: According to the above-mentioned prerequisites, policymakers need to manage the role (respectively the impact) that entrants (new start-up companies) and exits play in industrial growth. Nevertheless, this impact is not a cornerstone of the Bulgarian National Strategy, or the Europe 2020 Strategy. Findings: The paper tries to answer the following two questions: 1) Do new start-up companies and exits have any role and influence on economic growth in Bulgaria?, and 2) Does the role (respectively the impact) of entrants and exits in industrial growth change according to economic cycle? Research limitations/implications: In addition, according to the Lisbon Strategy, as well as the European Union's (EU) Strategy 2020, the current economic policy supports entrepreneurship and innovations. Thus, the establishment of innovative companies, as well as the development of innovative, incumbent business are core issues of EU economic policy for the past decade. Originality/value: The paper builds on the industrial dynamic methodology and on the understanding of how business decisions (entrepreneurship, innovations, and R&D) on micro level correspond to macro level (GDP growth and innovation policy).

This paper traces trends in industrial growth against the backdrop of the overall economic growth in Bulgaria under the influence of the ongoing economic reforms and evaluates them against the performance of macro-firm data. Bulgarian industry has lost many of its positions since of the beginning of 1990s. Structural reform during the transition period resulted in lost markets, lack of innovations, low product quality, and inefficient organizational and production structure. The analysis reveals that a phase of growth revival has begun in the overall economy since the beginning of the twenty-first century. Some industrial sectors demonstrate significant and stable growth based on technological innovation, increased labor productivity and efficiency, and increased investments. In this paper we claim that the problem is not deeply studied and only a few economists have done research on it since Bulgaria's accession to the European Union. The analysis reveals different factors influencing Bulgarian industrial growth before and after accession to the EU. The assessment of the endogenous and exogenous factors determines the key role of innovation, R&D, and human resource development, and presents the interrelation between innovations, investments, and industry growth. Section one of the paper is an Introduction. Section 2 briefly presents the state of art and methodology. Section 3 focuses on analysis of investment and innovations behavior in Bulgaria for the last eight years (2000 – 2008) on the basis of macro and firm-level data. Section 4 presents possible scenarios, and section 5 gives the conclusions of the study. Keywords: innovations, investment behavior, industrial growth Bulgarian economy