In the first eight months of 2016 the Bulgarians living and working abroad transferred over EUR 500 million to their country. On the other hand the total amount of foreign direct investments to Bulgaria in the first half of the year amounted to EUR 779 million. It turned out that the Bulgarian diaspore was the biggest foreign investor in Bulgaria with 64% of the total volume of FDI.

These figures can be interpreted in different ways and we can draw both positive and negative conclusions. Firstly, the amount of foreign direct investments in that country is quite low and insufficient - nearly EUR 1 billion per year, whereas the country's annual gross domestic product fluctuates around EUR 50 billion. In other words, the FDIs have very insignificant contribution to the development of the Bulgarian economy and the well-being of the Bulgarian people. Optimists would say something is better than nothing, which is quite reasonable, taking into account the potential of the local business, the low capitalization of the Bulgarian economy and the country's low competitiveness on the international markets. Business in Bulgaria is mainly formed of small and medium enterprises and its financial potential is quite modest. There isn't enough money for new investments and business culture is underdeveloped. That is why the Bulgarian authorities make efforts to encourage more foreign companies to invest in that country, because most of those firms have enough financial resource and can invest abroad. Moreover, they still find enough competitive advantages in Bulgaria, in order to invest there. Firstly, the cost of labor in Bulgaria is still lowest in the whole European Union. The foreign investors could find until recently enough qualified personnel in Bulgaria, who had the skills to work in various industries. However, most of those highly qualified people chose to work abroad and became Bulgaria's biggest foreign investor.

The Bulgarians living abroad earn more money than their relatives in Bulgaria. That is why most of them help their parents and children and wire money to their country. This money helps many people in Bulgaria live a decent life, pay their monthly bills, buy clothes, second-hand cars, etc.

The share of money transferred by Bulgarian emigrants in the total volume of foreign direct investments is quite impressive. A quick estimate shows that in the first eight months of 2016 each Bulgarian emigrant sent EUR 500 on average to that country. Bulgarians living in the USA, Spain and Greece are that country's biggest foreign investors.

The main drawback of the money sent by Bulgarian emigrants is that this financing is usually used for consumption, rather than for investment in production facilities. In other words, the forecasted 3% growth of Bulgaria's gross domestic product will be mainly due to higher local consumption. The problem is that consumption does not create the necessary conditions for permanent growth and usually has short-term effect.

Many experts and politicians have been asking themselves recently whether Bulgaria wins or loses from the export of labor force. The people who live and work abroad send some money to their country on a regular basis, but Bulgaria has been losing its most valuable asset, which hampers business activity and economic growth. Moreover, the lack of qualified personnel can't be fully compensated by import of foreign labor force.

English version: Kostadin Atanasov