Transcript 1989-1996 - EESC European Economic and Social Committee

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
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 1989
1989-1996 – LONGEST PERIOD OF DECLINE AND LOWEST REACHED GDP LEVEL
– 68% AND OF INDUSTRY – 48% COMPARED WITH 1989
1997-2007 – ECONOMIC STABILITY AND GROWTH
REASONS – DELAYED RESTRUCTURING OF ECONOMY
PROGRESS OF THE REFORMS IN THE NEW EU MEMBERS COUNTRIES
IN 1996 BULGARIA IS THE COUNTRY WITH LOWEST REFORMED ECONOMY
AFTER 1997 BULGARIA IS THE COUNTRY WITH HIGHEST PROGRESS IN THE
REFORM
FIRST PERIOD – 1989-1996
SIGNIFICANT DELAY IN THE PROCESS OF REFORMING THE ECONOMY
Large Small Enterprise Price
privat privat restruct. liberalis.
BG
CZ
EST
HU
LA
LI
PO
RO
SLK
SLN
2.00
4.00
4.00
4.00
3.00
3.00
3.00
2.67
3.00
2.67
3.00
4.33
4.33
4.00
4.00
4.00
4.33
3.00
4.33
4.33
2.00
3.00
3.00
3.00
3.00
3.00
3.00
2.00
3.00
2.67
2.67
4.00
4.33
4.33
4.33
4.00
4.00
4.00
4.00
3.67
Trade
Banking non-bank
Compet.
infrastr.
&
reform financial
Policy
reform
Forex
…
institutions
4.00
2.00
2.00
2.00
1.67
4.33
2.67
3.00
2.67
2.33
4.00
2.00
3.00
2.00
2.33
4.33
3.00
3.00
3.00
3.00
4.00
2.00
3.00
2.00
2.33
4.00
2.00
3.00
2.00
2.00
4.33
2.67
3.00
3.00
2.67
3.00
1.00
3.00
2.00
1.00
4.33
3.00
2.67
2.67
1.67
4.33
2.00
3.00
2.67
2.00
FOCUSES:
CHANGE OF THE MEANING OF “CORPORATIZATION” OF THE STATE
ENTERPRISES
THE STATE AS AN OWNER WAIVES THE CONTROL OVER THE MANAGERS
„SOFT” BUDGET RESTRICTIONS
LACK OF PRIVATIZATION
LACK OF FDI
RESULT:
MASSIVE DECAPITALIZATION OF THE STATE ENTERPRISES
SIGNIFICANT DECLINE OF THE PRODUCTION
HIGH UNEMPLOYMENT
MACROECONOMIC INSTABILITY
SOCIAL 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 SYSTEM
THE 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 RESTRUCTURING
BIGGEST 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)
FDI
8,154 7,937
7,333
4,003
2,879
2,070
483
507
537
802
998
803
876
1990-96 1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
 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
STRUCTURAL CHANGES
GDP Structure
41.0
13.0
46.0
2006
1.3
13.6
6.6
0.7
3.1
4.7
11
1.5
5.8
4.2
1.5
3.7
13
2.8
5.4
18.3
2.8
100.0
100.0
13.5
32.8
100.0
Mining and quarrying of energy producing materials
Food products, beverages and tobacco
Textiles and textile products
Leather and leather products
Pulp, paper and paper products; publishing and printing
Chemicals, products and man-made fibres
Electricity, gas and water supply
Wood and wood products
Machinery and equipment n.e.c.
Electrical and optical equipment
Transport equipment
Mining and quarrying, except energy producing materials
Coke, refined petroleum products
Rubber and plastic products
Other non-metallic mineral products
Basic metals and fabricated metal products
Manufacturing n.e.c.
Total
2003
1.9
16.7
8.3
1
3.9
6.1
15.8
1.7
6
4.4
1.4
2.3
10.7
2.4
3.9
11.3
2.2
100.0
53.7
CHANGES IN THE INDUSTRY STRUCTURE
CHANGES IN THE IMPORT STRUCTURE
1989
1996
2006
44.8
35.7
32.9
26.2
18.9
18
17.316.7
15.5
13.5
2.6 2.4 0.9
Agriculture
7.6
7.2 6.5
Metals
8.4
9.7
8.3
3.2
Ма, Ме and Еl
Energy
Chemistry
Cellulose-paper
Industry, Light
and Food Industry
6.8
Construction
materials,
Wood, Glass,
Porcelain
CHANGES IN THE EXPORT STRUCTURE
1996
2006
Manufact.
Chemistry
1.6
6.6
6.1
28.1
22.3
10.5
14.7
16.6
4
8.4
16
Light
Constr.,
Wood,
Glass,
Paper…
7.1
6.4
1.2
Energy,
Metals
12.3
16.4
5.5
Agriculture
2.1
17
2.2
2.4
3.3
29
60.2
1989
Food
Other
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
THANK YOU!