Bulgaria's institutions and policies : integrating into Pan-European markets
AbstractThis paper analyzes the process of institutional transformation in Bulgaria and assesses the extent to which it has established institutions and policies fostering domestic economic activity and integration into global markets. After a brief review of characteristics and achieved progress in first-generation reforms, that is, removal of central control over prices, liberalization of foreign trade and exchange rate regimes, the paper first assesses in the comparative perspective the progress made in the quality of governance and structural reforms. It then takes a look at the extent to which this has impacted foreign direct investment inflows and was translated into improved business environment in its domestic and external dimensions. The external dimension relates to backbone services facilitating trade and Bulgaria's trade policies. As far as the latter are concerned, the discussion highlights tensions that emerge from duality-regional versus multilateral-in Bulgaria's trade policy. Despite significant progress in implementation of structural reforms and converging to the EU acquis communautaire that has led to a significant enhancement in the quality of governance and market supporting institutions,"macro"institutional improvements are yet to be fully transplanted to a micro-level, as three areas appear to remain a binding constraint: First and foremost is the low quality of the judicial system and, by the same token, weaknesses in the enforcement of property rights and contracts. Second, backbone services facilitating trade remain a barrier. Bulgaria ranks low relative to the levels of efficiency achieved on average by both EU-8 and the EU-15 countries in management of ports, information technology infrastructure, and customs. Third, there are recurrent complaints among businesses of government bureaucracy, poor infrastructure, and frequent changes in the legal framework including taxation. As a result, the regulatory burden remains huge. There are still redundant and excessive sector-specific regulatory regimes. Bulgaria's markets for industrial goods are fully contestable for pan-Europe (EU-25, European Free Trade Association, Romania, and Turkey), exposing local producers to duty-free competition from imports. With relatively high most favored-nation tariff rates, the level of reverse discrimination significantly increased over the past couple of years. While this has not resulted in perceptible trade diversion, organizational arrangements preventing that to happen unnecessarily increase administrative intervention in the economy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3864.
Date of creation: 01 Mar 2006
Date of revision:
Governance Indicators; National Governance; Economic Policy; Institutions and Governance; Economic Theory&Research; Financial Crisis Management&Restructuring;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-05 (All new papers)
- NEP-CWA-2006-03-05 (Central & Western Asia)
- NEP-FMK-2006-03-05 (Financial Markets)
- NEP-TRA-2006-03-05 (Transition Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kaminski, Bartlomiej, 2001. "How accession to the European Union has affected external trade and foreign direct investment in Central European economies," Policy Research Working Paper Series 2578, The World Bank.
- Hubert Janicki & Phanindra Wunnava, 2004. "Determinants of foreign direct investment: empirical evidence from EU accession candidates," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 505-509.
- Won Chang & Winters, L. Alan, 1999.
"How regional blocs affect excluded countries - the price effects of MERCOSUR,"
Policy Research Working Paper Series
2157, The World Bank.
- Won Chang & L. Alan Winters, 2002. "How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR," American Economic Review, American Economic Association, vol. 92(4), pages 889-904, September.
- Chang, Won & Winters, L. Alan, 1999. "How Regional Blocs Affect Excluded Countries: The Price Effects of MERCOSUR," CEPR Discussion Papers 2179, C.E.P.R. Discussion Papers.
- Wilson, John S. & Mann, Catherine L. & Otsuki, Tsunehiro, 2004. "Assessing the potential benefit of trade facilitation : A global perspective," Policy Research Working Paper Series 3224, The World Bank.
- Frank Barry, 2003. "Economic Integration and Convergence Processes in the EU Cohesion Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 41(5), pages 897-921, December.
- Schiff, Maurice & Winters, L. Alan, 1997.
"Regional integration as diplomacy,"
Policy Research Working Paper Series
1801, The World Bank.
- Yuko Kinoshita & Nauro F. Campos, 2003.
"Why Does FDI Go Where it Goes? New Evidence from the Transition Economies,"
IMF Working Papers
03/228, International Monetary Fund.
- Yuko Kinoshita & Nauro F. Campos, 2003. "Why Does Fdi Go Where It Goes? New Evidence From The Transition Economies," William Davidson Institute Working Papers Series 2003-573, William Davidson Institute at the University of Michigan.
- Campos, Nauro F & Kinoshita, Yuko, 2003. "Why Does FDI Go Where it Goes? New Evidence from the Transitional Economies," CEPR Discussion Papers 3984, C.E.P.R. Discussion Papers.
- Fischer, Stanley & Sahay, Ratna & Vegh, Carlos, 1998.
"How far is Eastern Europe from Brussels?,"
20059, University Library of Munich, Germany.
- Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
- Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172, March.
- Bernard Hoekman & Aaditya Mattoo, 2000. "Services, economic development and the next round of negotiations on services," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(2), pages 283-296.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.