Economic Policy Review ISSN 1313 - 0544

Regional Profiles: Policy Proposals 2015

31.03.2015
Rate This Article:

Since 2012 the Institute for Market Economics (IME) analyzes the social and economic development of Bulgaria’s regions. For your consideration, we present “Regional Profiles: Policy Proposals 2015”.

| download the policy paper |

Summary

The regional development data for the past ten years highlights the need for drastic change of the regional development philosophy. Although policy makers are starkly aware of many of the current problems, the approach for dealing with them remains decidedly administrative and centralized, which diminishes the efficiency of most policy measures.

Furthermore – to this day Bulgarian regions remain hostages to political interests and to a large degree are deprived of the opportunity to resist the negative demographic, sociological and economic tendencies taking place within their boundaries.

The problems of local communities can be best recognized at the local level.

At the same time a big part of EU funds are spent on projects and activities that are not directly related to the problems of local communities. In the long term the local executive bodies’ insufficient resources and lack of fiscal independence is bound to accelerate communities’ degradation and undermine the democratic process.

The recommendations, outlined in “Regional Profiles: Policy Proposals 2015”, are a result of IME’s three years work in the field of regional development.

  • The recommendations on regional finances aim to restore the link between “political representation” and “taxation” at the local level, as well as to provide local autorities woth real financial incentives for attracting investments and creating jobs. The leading amongst them is the idea for automatically redirecting one fifth of income tax revenue to municipalities on the principle “money follows the ID card”.
  • The recommendations on labor market flexibility will help decrease the negative effects of various administrative decisions on the working population and companies in the poorest regions of the country. Amongst them are the introduction of flexible tools that can help seasonal employment and improve the evaluation of nation-wide legislation such as increasing the insurance weight or the minimum wage on the local level.
  • The recommendations on business environment and investments will help to increase the involvement of local authorities with local socio-economic processes. Local investment strategies must emphasize on the training and education of the labor force, and the efforts must be redirected from utilization of EU funds to creating a better environment for private capital.

| download the policy paper |

For more information:

  • Business environment and investments: Desislava Nikolova, senior economist at IME, dnikolova@ime.bg, (02) 952 62 66
  • Local finances: Petar Ganev, senior economist at IME, ganev@ime.bg, (02) 952 62 66
  • Labor market: Yavor Aleksiev, IME economist, yavor@ime.bg, (02) 952 62 66