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EU accession and foreign-owned firms in Bulgaria

Author

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  • Zadia M. Feliciano
  • Nadia Doytch

Abstract

Bulgaria signed the European Union accession treaty in 2005. Accession caused an increase in the volume of inward foreign direct investment flows (IFDI). We analyse World Bank BEEPS firm-level data for 2007 to understand the characteristics and performance of foreign firms in Bulgaria. Regression analysis reveals that foreign firms are larger, have lower capital-to-labour ratios, are more likely to export and are more likely to locate in Sofia. However, foreign firms have had limited success in Bulgaria. They do not exhibit higher sales growth and, in manufacturing, carried out lower capital investment in machinery than domestic firms. The numbers of visits from tax officials is the same for domestic and foreign firms in manufacturing, and lower for foreign firms in the service sector. However, firms with higher exports-to-sales ratios and higher absolute sales were subjected to a higher number of visits from tax officials. These findings suggest that a range of institutional challenges remain for foreign firms in Bulgaria.

Suggested Citation

  • Zadia M. Feliciano & Nadia Doytch, 2017. "EU accession and foreign-owned firms in Bulgaria," Post-Communist Economies, Taylor & Francis Journals, vol. 29(3), pages 392-404, July.
    • Handle: RePEc:taf:pocoec:v:29:y:2017:i:3:p:392-404
    DOI: 10.1080/14631377.2017.1317425
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    References listed on IDEAS

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    1. Diana Bozhilova, 2010. "When Foreign Direct Investment is Good for Development: Bulgaria’s accession, industrial restructuring and regional FDI," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 33, Hellenic Observatory, LSE.
    2. Aristidis Bitzenis & John Marangos, 2008. "The Role of Risk as an FDI Barrier to Entry during Transition: The Case of Bulgaria," Journal of Economic Issues, Taylor & Francis Journals, vol. 42(2), pages 499-508, June.
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    Cited by:

    1. Gaygysyz Ashyrov & Jaan Masso, 2020. "Does corruption affect local and foreign-owned companies differently? Evidence from the BEEPS survey," Post-Communist Economies, Taylor & Francis Journals, vol. 32(3), pages 306-329, April.
    2. Mehmet Demiral, 2016. "Has EU Accession Caused Structural Change in New Entrants? Intersectoral Linkage Analyses on Bulgaria and Romania," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 671-681.
    3. Nadia Doytch, 2021. "Who Gains from Services FDI—Host or Home Economies? An Analysis of Disaggregated Services FDI Inflows and Outflows of 24 European Economies," Foreign Trade Review, , vol. 56(3), pages 257-288, August.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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