Economic Policy Review ISSN 1313 - 0544

How the Market Reacts to Stimuli and Obstacles

Author: Velin Peev / 09.04.2009
Rate This Article:

The fact that for quite a wile Greek companies are coming to do business in our country does not surprise anybody any longer. The geographic proximity is definitely the main factor. Of extreme importance, however, are also the good conditions for doing business, which Bulgaria began to offer in recent years, at least compared to Greece. The Greek businesses have several times lower cost in our country than they have at home. The low taxes on the businesses also make Bulgaria more attractive destination for investing. For verification, the Doing Business index prepared by the World Bank, comparing how easy it is to do business in the various countries, ranks Bulgaria 45th, while Greece is 96th. Bulgaria shows significant lead in five parameters, which the index uses to calculate the final ranking. The progress of Bulgaria could not be denied.  Naturally, however, there are quite a few more thing to improve - social security contributions, quasi-taxes and fees, corruption, bureaucracy.

There is one more reason to compare Bulgaria and Greece right now. Recently the media published statements by the leaders of Greek businesses (local companies and international companies with presence there), that if they were not thinking of moving their activities from Greece to Bulgaria, now the question is put forward for a serious discussion.  Naturally, the first reason is the one I described in the previous paragraph. Another are the protests in our southern neighbor, which recently not only became more frequent but worse - they became more rough. The blocking of borders with neighboring countries directly caused great losses to the Greek businesses (not to mention the demands for greater subsidies, costing the Greek and/or the European taxpayer also quite much).  The protest could not be called positive, because of the enormous degree to which it limited the economic activity and normal daily live of the people.  De facto, the protesters were blackmailing the civic and business public.

According to me the protests are an important and necessary element of democracy. It signals that something is wrong and something must be corrected. After the society gets the message it is normal that the spirits calm down. However, if the sensible boundary is being crossed and the business environment is already seriously damaged, the market would naturally react and would adapt. This is happening now with the Greek businesses. At present, we in Bulgaria are gaining from it. It depends on us if this positive trend would continue. Whether we welcome and stimulate the market or we obstruct it.

*Velin Peev is an intern at IME