Bulgaria’s Competitive advantages in the Balkans

Foreign investments form 80% of Bulgaria’s GDP: economist Kaloyan Staykov

Photo: BGNES

Bulgaria is a good place for investments compared to the other Balkan countries, the senior economist at the Institute of Market Economics Kaloyan Staykov told Radio Bulgaria. When investors make a comprehensive assessment of the country, they are very well-informed about all positive and negative factors in the local business environment.

Foreign investments are generally measured with two indicators, Kaloyan Staykov explains. These are the flows of foreign investments-something which is subject to comments in the media. The other, more important indicator is the amount of foreign investments. When we want to find out whether and how much a given economy or industry attracts the interest of the foreign investors we should rather analyze the amount of investments, because it is the more stable indicator and takes greater account of the investor interest. If we look at this volume we will see that Bulgaria’s performance in the EU is good. It is among the EU countries where the investments/GDP ratio is over 80%.

How much the potential investors in the Balkans are influenced by factors such as population number, size of markets and territory?

It depends a lot on the industries. For instance, if a small country has a very well-educated population and people with good command of foreign languages, the so called outsourcing is much possible there as compared to a country with low-educated population. Infrastructure is another factor which influences the process – it depends on the distance from the residential areas, how quickly the workforce travels to work, what is the density of the population, etc. The decisions of each investor are based on the specifics of the business. As for the labor market, this is one of the most interesting topics. The labor market was not recovering quickly enough until 2014 and suddenly, in 2015 and 2016 Bulgaria started to experience big shortage of manpower. The labor market changes much quicker in the small and open economies like Bulgaria and this dynamics in fact means that the business should be much more flexible when it makes investment decisions.

Do investors import enough new know-how or they mainly export old technologies?

The two things walk hand in hand. For example, if we speak of a potential investment of Volkswagen in Bulgaria, it means that the new investor exports to Bulgaria production that is no longer profitable in other European countries. Meanwhile, this company imports know how (how these automobiles are produced). It also imports business ethics, etc, something we cannot get without this investment.

Let us say I am an investor from a medium-sized enterprise and manufacture parts for the automotive industry. What would you tell me, in order to persuade me that Bulgaria is a good place for investments?

Low costs continue to be a serious advantage in Bulgaria, economist Kaloyan Staykov contends. Meanwhile, the workforce in Bulgaria is relatively well-educated, but I would repeat it once again-it all depends on the sector. The company must find this workforce, but now it is not as accessible as it was several years ago. The low taxes and easy administration are also among the advantages for the foreign investors in Bulgaria. However, there are additional advantages in different sectors of the economy such as long-time relations and experience in manufacture and trade with large international companies.

English version: Kostadin Atanasov

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