THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE'S "CONSULTATIVE COMMISSION FOR INDUSTRIAL CHANGE" ECONOMIC TRANSFORMATION PROCESS IN BULGARIA MITKO DIMITROV INSTITUTE OF ECONOMICS AT BAS "Bulgaria, Latvia, Lithuania and Slovakia – Comparison of industrial transition models". 6-7 October 2008 Sofia, Bulgaria
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THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE'S "CONSULTATIVE COMMISSION FOR INDUSTRIAL CHANGE"
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE'S "CONSULTATIVE COMMISSION FOR INDUSTRIAL CHANGE" ECONOMIC TRANSFORMATION PROCESS IN BULGARIA MITKO DIMITROV INSTITUTE OF ECONOMICS AT BAS "Bulgaria, Latvia, Lithuania and Slovakia – Comparison of industrial transition models". 6-7 October 2008 - PowerPoint PPT Presentation
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THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE'S"CONSULTATIVE COMMISSION FOR INDUSTRIAL CHANGE"
ECONOMIC TRANSFORMATION PROCESS IN BULGARIA
MITKO DIMITROVINSTITUTE OF ECONOMICS AT BAS
"Bulgaria, Latvia, Lithuania and Slovakia – Comparison of industrial transition models".6-7 October 2008
Sofia, Bulgaria
SPECIFIC POINTS OF DEPARTURE OF BULGARIAN ECONOMY
AT THE END OF 1980s HYPERTROPHIC DEVELOPMENT OF INDUSTRY INDUSTRY – OVER 60% OF GDP MANUFACTURING – OVER 60% OF EXPORT
BUT OVER 75% OF EXPORT IS TO COMECON INCLUDING OVER 55% TO USSR 8-10% OF EXPORT IS TO DEVELOPED COUNTRIES INSIGNIFICANT SHARE OF MANUFACTURING
SERIOUS CHALLENGES TO THE BULGARIAN INDUSTRY
FOR ITS SUCCESSFUL INCLUSION IN THE INTERNATIONAL DIVISION OF LABOR
HOW DID BULGARIA MANAGE THE TRANSITION TO MARKET ECONOMY?
TWO CLEAR PERIODS AFTER 19891989-1996 – LONGEST PERIOD OF DECLINE AND LOWEST REACHED GDP LEVEL – 68% AND OF INDUSTRY – 48% COMPARED WITH 19891997-2007 – ECONOMIC STABILITY AND GROWTHREASONS – DELAYED RESTRUCTURING OF ECONOMY
PROGRESS OF THE REFORMS IN THE NEW EU MEMBERS COUNTRIES
IN 1996 BULGARIA IS THE COUNTRY WITH LOWEST REFORMED ECONOMYAFTER 1997 BULGARIA IS THE COUNTRY WITH HIGHEST PROGRESS IN THE REFORM
FIRST PERIOD – 1989-1996
SIGNIFICANT DELAY IN THE PROCESS OF REFORMING THE ECONOMY
FOCUSES:CHANGE OF THE MEANING OF “CORPORATIZATION” OF THE STATE ENTERPRISESTHE STATE AS AN OWNER WAIVES THE CONTROL OVER THE MANAGERS „SOFT” BUDGET RESTRICTIONSLACK OF PRIVATIZATIONLACK OF FDI RESULT:MASSIVE DECAPITALIZATION OF THE STATE ENTERPRISESSIGNIFICANT DECLINE OF THE PRODUCTIONHIGH UNEMPLOYMENTMACROECONOMIC INSTABILITYSOCIAL AND POLITICAL INSTABILITY
SECOND PERIOD – 1997-2008
CURRENCY BOARD
ACCELERATING THE PROCESS OF REFORMING THE ECONOMY
ACCELERATED PRIVATIZATION
MASSIVE ENTERING OF FDI
MACROECONOMIC STABILITY
ACCELERATING THE ECONOMIC GROWTH
LOW UNEMPLOYMENT LEVEL
LABOR FORCE AND EMPLOYMENT
AREAS OF PROGRESS OF THE REFORMS IN BULGARIA
REFORMS ARE IMPORTANT FOR THE CHANGE OF THE ECONOMIC SYSTEMTHE ECONOMIC SYSTEM LOSES ITS EFFECTIVENESS AND DYNAMICS WHEN THESE CHANGES ARE COMBINED WITH DELAY OF THE REFORMS IN THE ENTERPRISE SECTOR
AREAS OF DELAY OF THE REFORMS IN BULGARIA
THE DELAY IS IN AREAS, WHICH ARE DIRECTLY CONNECTED WITH THE ENTERPRISE RESTRUCTURINGBIGGEST CONCERNING CEE AND THE EU STANDARTS IN THE STUDIED PERIOD THEY DO NOT REACH ANY PROGRESS
MANAGEMENT AND RESTRUCTURING OF ENTERPRISES MODERATE POLICY OF SUBSIDIZING SOME ENTERPRISES INSUFFICIENTLY GOOD PRACTICES CONCERNING THE BANCRUPCIES OF STATE ENTERPRISES INSUFFICIENT CONDITIONS FOR IMPROVING THE COMPETITIVENESS AND CORPORATE GOVERNANCE IMPROVING THE CORPORATE GOVERNANCE OF THE REMAINING STATE ENTERPRISES, ESPECIALLY OF THE NATURAL MONOPOLIES MASS AND WORKERS-MANAGERS PRIVATIZATION – PROTECTION OF THE MINORITY OWNERS
PROTECTION OF COMPETITION IMPROVING THE ACTIONS AGAINST MANIFESTATIONS OF MARKET POWER SUBSTANTIAL REDUCTION OF THE BARIERS FOR ENTRY MAINTAINING COMPETITIVE ENVIRONMENT FOR FIRMS ACTIVITY PROTECTION OF THE AGRICULTURAL PRODUCERS FROM THE NON-ECONOMIC
FORMS OF IMPACTS
SECURITIES MARKETS AND DEVELOPMENT OF NON-BANK FINANCIAL INSTITUTIONS
STOCK EXCHANGE THERE IS NO EFFECTIVE MARKET OF CORPORATE CONTROL SOURCE OF INVESTMENTS, ESPECIALLY FOR PRIVATE ENTERPRISES
INSTITUTIONAL INVESTORS DO NOT PLAY ACTIVE ROLE IN THE CORPORATE GOVERNANCE ARE NOT IMPORTANT PARTICIPANTS IN THE TRADING AND INVESTMENTS
UNREFORMED AREAS – RESTRAINTS TO: THE DEVELOPMENT OF ENTERPRISES AS MARKET SUBJECTS CORPORATE GOVERNFNCE AND MANAGEMENT EFFECTIVENESS MORE AND VARIOUS SOURCES OF INVESTMENT IMPROVING THE COMPETITIVENESS
PRIVATIZED ASSETS AS A PERCENTAGE OF TO BE PRIVATIZED ASSETS OF THE STATE ENTERPRISES 1995-2004
FOREIGN DIRECT INVESTMENTS (NET, IN MILLIONS USD)
SHARP ACCELERATION OF THE FDI INFLOW AFTER 1997 1997-2002 – ANNUAL AMOUNT OF FDI IS BIGGER THAN TOTALLY FOR 1990-1996 THE MACROECONOMIC STABILITY AND THE COMING EU MEMBERSHIP ACCELERATE THE FDI INFLOW 2006-2008 ANNUAL AMOUNT OF FDI PER CAPITA EXCEEDS 1000 USD
2003 2006 Mining and quarrying of energy producing materials 1.9
53.7
1.3
41.0
Food products, beverages and tobacco 16.7 13.6 Textiles and textile products 8.3 6.6 Leather and leather products 1 0.7 Pulp, paper and paper products; publishing and printing 3.9 3.1 Chemicals, products and man-made fibres 6.1 4.7 Electricity, gas and water supply 15.8 11 Wood and wood products 1.7
13.5
1.5
13.0
Machinery and equipment n.e.c. 6 5.8 Electrical and optical equipment 4.4 4.2 Transport equipment 1.4 1.5 Mining and quarrying, except energy producing materials 2.3
32.8
3.7
46.0
Coke, refined petroleum products 10.7 13 Rubber and plastic products 2.4 2.8 Other non-metallic mineral products 3.9 5.4 Basic metals and fabricated metal products 11.3 18.3 Manufacturing n.e.c. 2.2 2.8 Total 100.0
100
.0 100.0
100
.0
CHANGES IN THE IMPORT STRUCTURE
2.6 7.2
44.8
26.2
7.6 8.4
3.2 2.4 6.5
18.9
35.7
17.3 15.5
6.8 0.9
13.5
32.9
18 16.7
8.3 9.7
Agriculture Metals Ма, Ме and Еl Energy Chemistry Cellulose-paper Industry, Light and Food Industry
Construction materials, Wood, Glass, Porcelain
1989 1996 2006
CHANGES IN THE EXPORT STRUCTURE 2.
2
2.1
4
60.2
10.5
1.6
12.3
7.1
2.4 17
8.4
14.7
28.1
6.6 16.4
6.4
3.3
29
16
16.6 22
.3
6.1
5.5
1.2
Agriculture Energy,Metals
Light Manufact. Chemistry Constr.,Wood,Glass,
Paper…
Food Other
1989 1996 2006
CONCLUSIONS:
THE PROBLEMS OF THE ECONOMIC DEVELOPMENT TILL 1997 WERE RESULT OF THE ABDICATING OF THE STATE FROM ITS OBLIGATION TO CARRY OUT A PRO-REFORMATION INDUSTRIAL POLICY
THE ACCELERATION OF THE REFORMS AFTER 1997 LED TO MACROECONOMIC STABILITY, CONSIDERABLY HIGH RATES OF GROWTH, RESTRUCTURING AND RESTORATION OF THE INDUSTRY, INCREASE OF THE NUMBER OF EMPLOYED AND DECREASE OF THE UNEMPLOYMENT TO NORMAL LIMITS
THE FURTHER MORE SUCCESSFUL DEVELOPMENT OF THE BULGARIAN ECONOMY CAN CONTINUE, IF THE REFORMS ARE CONCLUDED, ESPECIALLY IN THE AREAS, WHICH IMPROVE THE ENVIRONMENT FOR FUNCTIONING OF THE BUSINESS AND WHICH SUPPORT THE IMPROVEMENT OF ITS GOVERNANCE