Bulgaria

This paper investigates the drivers of growth and prosperity in a group of eleven European countries -- Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia,... Show More + Lithuania, Poland, Romania, Slovenia, and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and equity markets are somewhat behind. As in the rest of Europe, demographic developments will pose huge challenges for the sustainability of public finance in the EU11 economies. In the next several decades, the EU11 labor force is expected to contract more than labor forces in the rest of the European Union, making it even more urgent that countries in the region reform pension systems, change migration policy, and find incentives to attract talent to the region. Closing the gap with the rest of the European Union in educational attainment levels and improving education quality might significantly soften the constraints imposed by the demographic threats and produce sizable returns in terms of additional income convergence. Show Less -

This policy note provides a detailed assessment of Bulgaria's innovative capacity and offers policy recommendations to increase the impact of science and innovation.... Show More + Part one of the policy note provides an assessment of Bulgaria's innovation capacity in the public and private spheres. Specifically, the note examines: (i) recent trends in Bulgaria's export performance, benchmarking Bulgaria relative to comparator countries; (ii) the characteristics of innovation activities in Bulgaria's private sector, as seen by enterprise surveys; (iii) developments in technological invention and scientific production, by analyzing the statistics about patents granted in the US Patent and Trademark Office (USPTO) and the European Patent Office (EPO) as well as data on scientific publications. Part two provides recommendations that could facilitate the implementation of the NRP and the Scientific Research Strategy, including sectoral analysis to guide innovation policy in priority industries. The recommendations are divided into the following areas: (i) attaining the 1.5 percent Research and Development, or R&D and Gross Domestic Product, or GDP target under the Europe 2020 strategy; (ii) strengthening the institutional and policy framework for research and innovation; (iii) achieving better results from national funding instruments, the National Innovation Fund and the National Science Fund; (iv) increasing absorption of European Union (EU) funds targeting innovation; and (v) developing targeted innovation policies and instruments for priority sectors. Show Less -

Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations.... Show More + It measures and tracks changes in regulations affecting 10 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. In a series of annual reports Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. This economy profile presents the Doing Business indicators for Bulgaria. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator. The data in this report are current as of June 1, 2011 (except for the paying taxes indicators, which cover the period January- December 2010). The data not only highlight the extent of obstacles to doing business; they also help identify the source of those obstacles, supporting policy makers in designing regulatory reform. Show Less -

The present report on the Administrative and Regulatory Barriers to Business is part of an ongoing World Bank analytical and advisory support to the Government of Bulgaria... Show More + in the area of regulatory reform. Since 2006, the World Bank has provided analytical and advisory support to the government in this area. In 2007, the Bank reviewed administrative procedures in the tourism, food, and road transportation sectors, calling for reduction and simplification of certain burdensome administrative regimes and emphasizing superfluous regulation at the municipality level. This report aims to identify ways in which Bulgaria can further remove obstacles to business regulation, recognizing that achieving pre-crisis growth levels, raising labor productivity and improving the business environment will require continued reforms to eliminate administrative and regulatory barriers to business. The report serves three purposes, such as: 1) providing the economic backdrop and comparators of Bulgaria's regulatory environment; 2) reporting on survey results including assessments by and perceptions of senior managers of Bulgarian enterprises; and 3) identifying strategic reform recommendations, including regulatory changes, institutional upgrading and capacity building, and legislative amendments. Show Less -

The ex-post impact assessment of the Limiting Administrative Regulation and Administrative Control on Economic Activity Act (LARACEAA) is part of the World Bank's support... Show More + to the Government of Bulgaria through on-going analytical and advisory work in the area of regulatory reform. The purpose of the present ex-post impact assessment of the LARACEAA is to: (i) assess how the Act has been enforced, (ii) identify and estimate the impacts of the Act, and (iii) provide recommendations for amendments to the Act. Chapter one emphasizes the importance of the Act as part of the Bulgarian Government's role in advancing regulatory reform and improving the business environment; gives the scope of the assessment and presents the sources of information utilized; and delineates general limitations of the analysis. Chapter two outlines a policy framework by discussing coherence with the Governmental and European Union (EU) policies, as well as touching upon relevant documents on regulatory reform, followed by analysis of the goal and objectives of the Act, and identification of performance indicators for the measurement of the impact of the Act. Chapter three depicts the results of the ex-post impact assessment, while the final chapter four identifies the main problem; discusses underlying drivers and effects of the problem; and proposes recommendations for amendments to the Act. Show Less -

This country level trade brief summarizes insights from the world trade indicators database as well as analyzes national impacts and responses to the food crisis and... Show More + global recession. The trade at a glance tables for Bulgaria provide a snapshot of key aspects of trade policy and performance Show Less -

This report describes developments in the banking sector. The banking sector has remained stable throughout the ongoing financial crisis, although profitability is declining.... Show More + Indicators suggest that banks are generally sound. It next describes the state of funding of bank operations, including wholesale bank funding. In response to financial stress, The Bulgarian National Bank's (BNB) actions have helped to ensure financial stability in the banking sector. In order to boost confidence, deposit insurance has increased. External funding dynamics are generally good. Foreign currency mismatches are substantial, and the corporate sector has high direct foreign currency exposure, mostly in euros. Short-term external debt (deposits and borrowings) of banks almost doubled within a year in 2008, and account for close to 80 percent of banks' external debt. Regarding recent trends in credit to the enterprise sector, going forward, demand for banking credit, and especially investment finance, will fall, in line with the economic downturn. In equity market developments, Bulgaria's stock market plunged, with adverse consequences for pension funds. Global deleveraging by foreign institutional investors led to a withdrawal of their holdings from the Sofia stock exchange, leading to a collapse of stock market prices. The report concludes with several policy recommendations. Show Less -

The Government of Bulgaria requested the World Bank to analyze the legal, institutional and administrative framework for setting state fees and provide recommendations... Show More + based on good international practice. How big is the problem compared to the many other issues the government wants to reform in order to improve the business climate in Bulgaria? So far there are no comprehensive studies of the level of administrative fees in the European Union (EU) area. Such studies would be of great value to assess the magnitude of the problem. There are, however, several arguments in support of reforming the regime of state fees in Bulgaria now. Firstly, business associations in Bulgaria agree also confirmed by a recent unpublished government report - that state fees at the central level became an uncontrolled area in which authorities apply their own judgment and interests without considering the impact on businesses often to the disadvantage of the private sector. Secondly, if the Government of Bulgaria (GoB) does not curb the current regime system, then the trend of increasing state fees will continue or might even gain speed. Again, this will have a negative impact on the cost of doing business. Thirdly, a number of identified state fees are so high that they seriously harm competition by functioning as a barrier to firm entry. Fourthly, the EU requires Member States to implement a specific regime for administrative fees in the services sector by the end of 2009 and Bulgaria does not comply with that yet. A recent World Bank report for Bulgaria Investment Climate Assessment (2008) called for overall reduction of the administrative cost for businesses because Bulgaria is not competitive in this area compared to other Central and Eastern European countries. The report recommended that a strategic policy document is prepared to embrace the administration practice and provide an instrument for classification of the tariffs for the central administration service fees targeting universal reduction of the administrative cost. It also proposed that a special methodology for the classification of the tariffs for the central administrative service fees is developed. The present report is intended to support reform of the regime of state fees. Show Less -

This paper presents new evidence on the causal links between changes in the business environment and firm productivity growth. It contributes to the literature in three... Show More + important aspects. First, it constructs a unique database merging information from two large firm-level databases. The samples of both databases are merged on four criteria-country, sub-national location, firm size, and year-producing a panel of 22,004 firms in eight economies of Eastern Europe and the former Soviet Union: Bulgaria, Croatia, Czech Republic, Estonia,, Poland, Romania, Serbia, and Ukraine. Second, the paper addresses shortcomings of earlier studies, namely reverse causation, multicollinearity, and unreliable productivity estimates. Firm productivity growth is estimated drawing on corporate financial data from manufacturing firms included in the AMADEUS database. Changes in the business environment are estimated from the World Bank Enterprise Surveys conducted in 2002 and 2005. Multicollinearity problems in the full model regression are mitigated by constructing a set of six aggregate indicators of the business environment (using principal component analysis). The paper finds that, over the period 2001 to 2004, an increase of one standard deviation in infrastructure quality, financial development, governance, labor market flexibility, labor quality, and market competition raises the total factor productivity of the average firm by 9.8, 7.8, 3.2, 3.4, 5.8, and 3 percent, respectively. Lastly, the paper decomposes firm productivity growth and ranks the relative impact of changes in these six aspects of the business environment by country, by firm size, and by industry. Show Less -

Doing Business 2010 is the seventh in a series of annual reports investigating regulations that enhance business activity and those that constrain it. Doing Business... Show More + presents quantitative indicators on business regulations and the protection of property rights that can be compared across 183 economies, from Afghanistan to Zimbabwe, over time. This paper presents the summary Doing Business indicators for Bulgaria. The paper includes the following headings: introduction and aggregate rankings, starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, closing a business, and Doing Business 2010 reform. Show Less -