Economic Policy Review ISSN 1313 - 0544

Foreign Direct Investment In Post-Totalitarian Bulgaria

Author: Nikolay Gertchev * / 29.01.2007
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The purpose of this note is to examine the evolution of Foreign Direct Investment (FDI) in the Bulgarian economy since the dismantlement of the totalitarian communist State. With the recognition and protection of private property that one could expect to result from this change of political regime, investments from abroad should have quickly become a reality. The fact, however, is that FDIs in Bulgaria began to expand only in the late 1990s, i.e. almost a decade after the disappearance of the totalitarian State. On the other hand, their progression has been remarkable since they began to grow. The average FDI flows for the period 1997-2004 amounted for 42 % of the gross fixed capital formation, which is by far the highest ratio of the whole CEE region (UNCTAD 2006a, 2006b). The following two tables illustrate this recent tendency and provide some additional information as to the allocation and origin of FDIs.

Table 1. FDI in Bulgaria by host industry (stocks in million euros)

Industry

1999

2000

2001

2002

2003

2004*

2005*

Total

2173,8

2900,9

3323,6

3902,3

4946,2

6768,7

8530,7

Transport, storage and communication

261,8

215,4

264,3

469,0

569,7

1207,5

2229,3

Manufacturing

1049,7

1227,4

1454,7

1481,9

1754,0

1900,2

1747,0

Financial intermediation

212,6

530,6

508,1

662,2

925,5

1351,6

1744,0

Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods

216,1

435,0

582,9

633,6

871,5

1203,8

1093,2

Real estate, renting and business activities

104,8

202,4

196,5

251,1

416,2

531,4

769,5

Construction

41,8

78,7

82,9

104,3

75,9

164,2

279,3

Non-classified

46,0

26,1

26,4

2,6

26,5

83,4

271,0

Hotels and restaurants

32,1

57,3

62,6

78,2

84,9

108,3

141,7

Mining and quarrying

29,5

25,4

33,3

27,6

51,3

65,7

91,2

Other community, social and personal service activities

9,5

16,3

22,6

39,4

55,1

54,0

66,8

Electricity, gas and water supply

162,4

67,7

71,0

133,5

73,7

47,3

64,6

Agriculture, hunting and forestry

5,3

16,6

16,6

17,2

40,7

46,3

29,5

Fishing

0,7

1,0

0,2

0,3

0,3

2,9

3,0

Education

0,2

0,3

0,8

0,5

0,2

0,7

0,7

Health and social work

1,4

0,7

0,7

0,9

0,7

1,5