German Companies doing Business in Post Communist Bulgaria: Legal & Economical Aspects

TABLE OF CONTENTS

STATUTORY DECLARATION

I. INTRODUCTION

II. COUNTRY PROFILE
A. Location, Climate, Demography
B. History
C. Government
D. Administrative Territorial Division
E. Economic Indicators
F. Infrastructure, Transport and Communication
G. Non-Governmental Organisations
H. Education
I. Language

III. THE YEARS OF COMMUNISM
A. The Early Stages of Communism and the Seizure of Power
B. The Transformation Process
C. The Communist Legacy

IV. FOREIGN DIRECT INVESTMENT
A. Motives and Determinants of FDI
B. Strategies of Investment Promotion Policies
C. The FDI Decision Sequence

V. BULGARIA’S FOREIGN INVESTMENT LEGISLATION

VI. BULGARIA’S BUSINESS ENVIRONMENT AND LEGAL FRAMEWORK
A. The Bulgarian Judiciary System
B. Statutory Regulations
C. Taxation

VII. SWOT ANALYSIS

A. SWOT Analysis Applied to Bulgaria

VIII. DISCUSSION
A. Note on Globalisation
B. Discussion cont.
C. Impacts of Bulgaria
D. Positive Outlook for German Businesses in Bulgaria
E. The Progression of Globalisation

IX. RECOMMENDATIONS

X. CONCLUSIONS
Appendix A1
Appendix A2
Appendix A3
Appendix A4
Appendix B1
BIBLIOGRAPHY

STATUTORY DECLARATION

I herewith formally declare that I myself have written the submitted master’s thesis independently. I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper.

I clearly marked and separately listed all the literature and all other sources which I employed producing this academic work, either literally or in content.

I am aware that the violation of this regulation will be penalised.

Berlin, ___ October 2003

Kjell Stein

Matriculation No.: 157377

I. INTRODUCTION

In this thesis, I will strive to understand how German companies can be successful in post-Communist Bulgaria and why they might want to move their operations to Bulgaria. The central objective of this thesis is to assess the post-Communist business environment for German companies in Bulgaria. Hence, I will closely examine the present legal and economical environment of Bulgaria and will demonstrate the realm of opportunities this country has to offer to Western European entrepreneurs. Indeed the thesis can be presented that: German companies may avoid the disadvantages of globalisation by moving operations to Bulgaria.

In order to highlight certain possibilities and achievements I will refer to German companies, which have already successfully built up operations in Bulgaria. One way to successfully analyse a certain industry, country or region is by applying a SWOT analysis. Especially the transition countries in Eastern Europe are interesting to analyse, because the region is faced with many opportunities as well as threats to the changing process. Consequently, reference will be made to the theoretical framework of a SWOT analysis. The SWOT analysis provides a broad overview of the situation of a country and should, therefore, be applied on the transforming countries such as Bulgaria. Further I will also deal with the question of Foreign Direct Investment, its main motives and Bulgarian legal framework.

Before I begin to analyse Bulgaria’s present economical, social and political situation, however, I believe it is necessary to provide a brief historical overview of the period, which preceded the imposition of communism, along with the performance of the Communist regime and its legacy. This seems especially vital since the Communist period shaped and controlled Bulgarian society for well over 40 years. As Emil Giatzidis states in his book An introduction to post-Communist Bulgaria: Political, economic and social transformation “Communist regimes had no civil society since Communist society was totally patronised and controlled by a party that was equivalent to the state.”^[1]

Therefore, in all cases of former Communist countries special attention should be given to the issue of economic consolidation, since, as Giatzidis further argues “the implementation of programmes to stabilise and more fundamentally to reform economies have posed formidable political challenges that have implications that go well beyond their immediate economic effect.”^[2]

This holds especially true for Bulgaria. It is these changes and the resulting challenges, which drove me to choose this topic.

Having worked and lived in Bulgaria for over three months in the year 2000 as well as other Eastern European countries at that time, my interest in Bulgaria and particularly in its economic development has grown ever since. It is fascinating to see how German companies operate successfully in such a challenging and often difficult post-Communist business environment.

Out of all former Communist block countries, I find Bulgaria to be the most interesting as well as for my purposes best suited country to look at “as it [holds] a set of characteristics different from those observed elsewhere in Central and Eastern Europe”^[3]. Its limited market size and strong relationship with Germany further increases my curiosity.

Unlike other Eastern European countries Bulgaria had never enjoyed a period of democratic politics prior to the Communist takeover at the end of the Second World War (similar to Russia prior 1917). This means that Bulgaria is lacking in the necessary democratic tradition and culture much needed to establish a well functioning market economy. In the interviews I held in Sofia at the end of August this year as well as in the year 2000, when working for a press and communications agency publishing image building reports, I often heard that one of the challenges the business community is facing is the “old way of thinking.”

It was the breakdown of the Iron Curtain, which resulted in the unprecedented event of almost thirty countries moving simultaneously in the direction of democracy and seeking to establish democratic political systems. This event obviously coincides with the replacement of a centrally planned system of economic production and distribution with a market-orientated economy.^[4] However, it doesn’t necessarily mean that the mentality of the people, being used to a system “of rigid organisation, a central hierarchy, military discipline and cell structures; to distrust autonomous action; to favour ‘entryism’, the infiltration of other, potentially friendly organisations like trade unions, and the creation of front organisations; to promote the cultivation of the disciplined cadre party, the group of battle-hardened activists, professional revolutionaries ready to accept whatever instructions they received …”^[5] would change over night when it often has not even changed within the last ten years.

Despite Bulgarians’ hesitance to welcome market economy in the early stages of the 1990’s with open arms,German companies, like many others around the Western World, are starting to carve out a business niche in which they can thrive. The following chapters will show thatBulgaria is indeed on the road to political, economic and social transformation.

The thesis will provide detailed advice to German companies wishing to invest and do business in post-Communist Bulgaria.

II. COUNTRY PROFILE

Abbildung in dieser Leseprobe nicht enthalten

A. Location, Climate, Demography

Bulgariais situated in the South-eastern part of the Balkan Peninsula bordering Romania to the North, the Black Sea to the East, Turkey and Greece to the South and Serbia Macedonia to the West. The countryis basically divided roughly into three parallel east-west zones: the Danubian tableland in the north, the Stara Planina (or Balkan) Mountains in the centre, and the Thracian Plain and the Rhodope and Pirin Mountains in the south and southwest. About one-third of the country lies at an altitude of 500 meters above sea level. The average elevation is 480 meters above sea level. The country has a population of 7,537,929 (July 2003)^[6], and a territory of 110,912 square km. Bulgaria ranks fifteenth in the size among the European countries. Its climate is continental-Mediterranean. Important to note is that Bulgaria is situated in the centre of a region, which is undergoing dynamic transition. Within 500 km of its capital Sofia, which has a population of 1.2 million, one finds a population of over 60 million concentrated throughout 10 countries. Most of these countries have only recently, like Bulgaria, embarked on their way to a market economy. According to the Bulgarian Investment Agency this is a large market with one of the most rapidly increasing market demands in Europe. All these regions are only several hours’ drive from any point in Bulgaria.^[7]

B. History

The Bulgarian State was established in AD 681 by Khan Asparouh. In AD 855, the brothers Cyril and Methodius, later canonized as saints, invented a Slavonic script (the Cyrillic alphabet is named after Cyril) which in the later half of the ninth century, during an age when previously only Latin and Greek had been used to write, gave a powerful impetus to the country’s cultural environment. Bulgaria converted to Eastern Orthodox Christianity in 864-866. Throughout its 13th-century history, Bulgaria has played a key role in the region. Its location makes the country a natural bridge between East and West, North and South. The road from London to Calcutta, from Antiquity to Modernity, ran across the Bulgarian lands.^[8]

By fighting alongside Serbs and Greeks during their nationalist uprisings, Bulgaria played an indirect, yet influential role in opposing Ottoman rule in the Balkans (the Ottoman Empire conquered the Balkans in the late fourteenth century which resulted in almost five centuries of Turkish domination over Bulgaria) at the beginning of the 19th century. But it was not before the War of Liberation (the Russian-Turkish War) that Bulgarian nationalism assumed political, rather than merely cultural, expression. In 1878/79 the Constituent Assembly, situated in Bulgaria’s ancient capital of Turnovo, adopted the first constitution of Bulgaria, which represented one of the most advanced and democratic Basic Laws laws in the world at that time.^[9] The first decades of the 20th century were years of economic effort and prosperity. Bulgarian goods and the Bulgarian currency, the ‘Golden Lev’, acquired a high value on the European markets. Trade relations with Austria, Germany, France and Great Britain strengthened over the years.^[10] The strongest ties, however, were established with Germany and Bulgaria found herself being on the “wrong side” in both World Wars. Bulgaria suffered the harsh consequences of the post-1918 peace and ironically only escaped a similar fate after the end of the Second World War due to the occupation of the Soviet Union. The following decades after 1945 were market by general stability and modest economic experimentation which under the rule of Todor Zhivkov’s Communist reign (from 1954 to 1989) brought considerable growth to Bulgaria until the 1980’s.^[11] The peaceful end of Todor Zhivkov’s regime in 1989 falls into the pattern of changes in Eastern Europe. Bulgaria took, at first only half-heartedly (since the former communists, renamed Bulgarian Socialists, dominated power during the first part of the 1990’s), the road to new democratic development, towards a free market economy.^[12]

C. Government

According with the constitution adopted in July 1991 Bulgaria is a parliamentary republic democracy. The constitution of the Republic of Bulgaria is the supreme law of the country and no other law may contravene it. All international treaties are considered part of the domestic legislation. The National Assembly is a one-chamber parliament consisting of 240 Members who are directly elected every four years. The National Assembly is a permanent acting body, directed by a board of Chairmen including a Chairman of the National Assembly.^[13] Presently the former king, Simeon Saxe-Coburg-Gotha, serves as the Chairman of the Council of Ministers, which in turn acts as the principle executive body and is elected by the unicameral National Assembly. The head of state, currently President Georgi Parvanov, embodies the unity of the nation and represents the Republic of Bulgaria in its international relations. He is elected on the same note as the vice President by popular vote every five years.^[14]

D. Administrative Territorial Division

The territory of Bulgaria is divided into 278 municipalities, which are legal entities that have the right of ownership and independent municipal budgets, and 28 regions. The municipal council is the local government authority, which determines the policies for the development of the municipality. The regions are administrative-territorial units and implement the regional policy of the central government. A regional governor appointed by the Council of Ministers, carries out the management of the regional administration at the cost of the state budget.^[15]

E. Economic Indicators

Bulgaria has experienced macroeconomic stability and a rather strong growth since a crippling economic crisis in 1996/97 led to the fall of the then socialist government. With the introduction of the currency board, all constraints in trading with hard currency within the country were removed. Local banks can sell hard currency to physical and legal entities without limitations. The country’s currency, the Bulgarian Lev, is internally convertible.^[16] The Lev, formerly pegged to the Deutsche Mark, is now pegged to the Euro at the rate of Lev 1 per Euro 0.51129. A $300 million stand-by agreement negotiated with the IMF at the end of 2001 and signed in 2002 supports further policy reforms towards higher growth, employment and incomes. Among the remaining challenges is the maintenance of prudent fiscal policy to support the currency board, lowering Bulgaria’s debt burden and keeping the foreign trade imbalance sustainable. According to the CIA World Factbook, the IMF standby agreement will support the government efforts to overcome high rates of poverty (12.6% of population live below poverty), unemployment (18 to 20%) and inflation (5.9% based on consumer prices).^[17]

In 2001 exports of goods amounted to US$5.1bn and imports of goods (fob) to US$6.7bn. There was a current-account deficit of US$888m (6.5% of GDP).^[18]

Abbildung in dieser Leseprobe nicht enthalten

GDP: purchasing power parity $50.6 billion (2002)

GDP – real growth rate: 4.8% (2002)

GDP – per capita: $6,600 (2002)

GDP – composition by sector: agriculture 14.5%, Industry 27.8%, Services 57.7%

F. Infrastructure, Transport and Communication

Bulgaria has a relatively well developed domestic and international communications network and based on its geographical disposition, transport system, warehouses, customs system, experience and labour force she has a good potential for future logistic development. The country is served by five international airports and two commercial Black Sea ports. The two major East-West highways offer easy access to all regions and form part of the European transport corridor providing most direct overland routes from Western Europe to Turkey and the Middle East. With regards to the Communications and High Technologies sector in Bulgaria one can observe rapid development.

G. Non-Governmental Organisations

NGO’s, similar to Germany, play an exceptionally important role in Bulgaria’s public, political and business life. Bulgarian policy towards NGO’s is in line with international standards. The right to free association is completely guaranteed.

H. Education

The literacy rate in Bulgaria is very high, 99% for men and 97% for women, and the country still boasts a strong education system. Particular strength includes computer programming and electronics. The country ranks second in the terms of its per capita number of IT specialist.^[19]

I. Language

Bulgarian is the official language using the Cyrilic alphabet for writing. Russian, previously a required subject in school and due to its similarity to Bulgarian, is also widely spoken. Nowadays English is the most studied and most commonly spoken language, followed by German and French.^[20] As Mr. Kirov states and I can only agree with him, it nowadays seems difficult to find any Bulgarian citizen under 30 who does not speak English plus a second foreign language, such as German, French, Spanish or Italian.^[21]

III. THE YEARS OF COMMUNISM

As stated in my introduction I believe it to be essential to take a closer look at the Communist period Bulgaria experienced in the second half of the 20th Century, in order to better analyse and understand the post-Communist business environment.

This period can be summarized in three stages: the early stages of Communism and the seizure of power, the transformation process during the Communist reign and finally its legacy.

A. The Early Stages of Communism and the Seizure of Power

A Communist-inspired coalition seized power on September 9, 1944, in conjunction with an invasion by the Soviet Red Army. In 1946 the monarchy was abolished and a people's republic was formed which was henceforth ruled by the Bulgarian Communist Party.^[22] The historical roots of Bulgarian communism can be traced back to the 1890’s. It was than, that the Russian-educated intellectual Dimitar Blagoev introduced the Communist ideology. However, not until the very end of the First World War was the communist idea widely spread nor well perceived. But after the war, the BCP (Bulgarian Communist Party) became the second strongest political force in the country. It is, therefore, not surprising that during the interwar period the Communists faced difficulties. Nevertheless, they were well organised and focused. And therefore as Crampton argues, the initial post-war period was, for a number of reasons, in favour of left-wing groups: “the Communists’ record of resistance was a fact which to many legitimised their participation in the government; the Soviet Union and the Red Army were widely respected, and a government with communist participation would be favourably regarded by Moscow making Soviet patronage more secure and effective; the notion of a planned economy was generally attractive to a generation that had only experienced the dismal failure of capitalism in the 1930’s and still faced considerable problems.”^[23] Thus Georgi Dimitrov could proclaim the Bulgarian People’s Republic.

B. The Transformation Process

By 1947, after several years of turmoil, Bulgarian political and economical life settled into the patterns set out by the new communist constitution (the Dimitrov Constitution). Dimitrov, Bulgaria’s Communist leader argued that “previous Bulgarian attempts at parliamentary democracy were disastrous and that only massive social and economic restructuring could ensure stability.”^[24] The country's industries were expropriated from their owners by the state. In 1950 a new agricultural collectivisation drive began, and the country's peasant farmers were forced into collective farms. In spite of their intense resistance, the process was finally complete in 1958. Under the successive rule of the Communist leaders Georgi Dimitrov, Vulko Chervenkov, and Todor Zhivkov who operated a totalitarian system, Bulgaria was transformed into a predominantly urban and industrial society. Furthermore, the complete suppression and destruction of civil society and its institutions followed. As Giatzidis states: “the values and principles represented by civil institutions were eliminated and replaced by the values and the ideology of the omnipotent state while the nomenclature of the new regime was formed by social categories hitherto excluded from political society (mainly peasants).”^[25] Consequently these values indispensable to democratic life: honesty, trust and responsibility were destroyed. It is these values, however, which are also much needed in a well functioning business environment and it is the destruction of the latter which makes business life in Bulgaria today challenging and somewhat difficult.

C. The Communist Legacy

Since the Communist regimes in the Balkan region were much more popular than those in Central Europe it seems rather difficult to condemn the system in the way we (West) Germans often do. In fact, many experts point out that Bulgaria’s economic achievements, at least until the 1980’s, were spectacular. Considering the pre-war agrarian living standards, for much of the peasantry that formed the new industrial work force , communism was not a wholly negative experience. The massive industrialisation, advances in agriculture, the elimination of illiteracy and urbanisation brought about a rapid rise in living standards.^[26] Bulgaria had not been occupied by Soviet troops like East Germany or other countries in Central Europe. Still Bulgaria retained close relations with Russia, enjoying certain economic preferences. What made communism more successful here than elsewhere in Europe? It is likely as Ditchev puts it, that communism in the Balkans served as “an overall role model offering simple and clear formulae for transition to modernity – from the village to the city, from family dependence to autonomy, from poverty to mass consumption … A vast majority of the population thus build their life on the Communist dream of collective salvation through sacrifice and discipline. People felt indebted to the party for having ‘given’ them work, residence permits, education and so on …”^[27]

Basically communism was an even greater success than the German and Italian dictatorships were which during the 1930’s influenced many Balkan countries, among them Bulgaria. During the communist era the party leader combined patriarch, Communist and nationalist traits. Todor Zhivkov was informally called ‘Pa’ and Enver Hoxza became ‘Uncle Enver’. Ditchev argues that “the price of this consensus, with few if any dissidents, was external projection of aggression targeting the figure of the enemy which seemed to fit the regional cultural pattern.”^[28]

However, at the end of the 1970’s and especially in the 1980’s the economic growth rate started to slow down and it became apparent that the economy was in a deep crisis. Between 1976 and 1989, Bulgaria’s official data reports that Bulgaria’s NMP dropped from 6.10 to 3.10 (see Table below). Western economists estimate that in that timeframe Bulgaria’s GNP actually dropped from 1.2 to –1.8, a much more drastic economic downfall than the Communist government wanted to acknowledge.

Annual average growth, 1953-60 to 1986-89

Abbildung in dieser Leseprobe nicht enthalten

Source for table: Wyzan, Michael L., Stabilisation and anti-inflation policy in Iliana Zloch-Christy (ed.), Bulgaria in a Time of Change. Economic and Political Dimension, Aldershot, Singapore and Sydney, Avebury, 1996, p.80.

Abbildung in dieser Leseprobe nicht enthalten

In the 1980s, Bulgaria’s foreign debts rose dramatically and the economy began to suffer from energy shortages due to the suspension by the Soviet Union of gas and oil supplies at privileged prices. It suddenly became apparent to Bulgaria and much of Eastern Europe how much their countries had relied on Soviet handouts. Without them, the economic communist bubble burst like a balloon. In order to make up for the shortages, Bulgaria began to borrow money and thus a huge increase in its external debt occurred. Bulgaria’s foreign debt rose from $2 billion in 1984 to $10 billion in 1989; it increased by $8 billion in just five years. Bulgaria came second to Hungary among the CMEA countries with the heaviest debt. Bulgaria’s low level of exports to the West put her into an even worse situation. Finally, transport failures, an acute shortage of consumer goods, including such basic foodstuffs as cheese, cooking oil, sugar and coffee, and other failures, generated mistrust of the government. This sharp decrease in the production of consumer goods and the poor distribution system caused a shocking decline of living standards.

Obviously, according to Giatzidis “by the mid-1980’s the pressing needs and problems created by the scarcity of both labour and capital, which had plagued the growth of the pre-war economy, had returned.”^[29]

Abbildung in dieser Leseprobe nicht enthalten

Source for Graph: Emil Giatzidis, p. 36

The economy was crippling and Western experts assessed Bulgaria’s economic position at the end of the 1980’s as follows:^[30]

- Gross foreign debt of $10 billion.
- Deterioration of international trade structure, especially in foreign currency receipts from exports, with an increased need for hard currency to service foreign debt.
- A negative nominal growth of 0.4% in the economy as a whole in 1989 – which meant a real shrinkage of 8 to 12%, depending on inflation estimated.
- A decline in industrial production in 1989 to nominal growth of only 1.1%, signifying a real shrinkage in most branches.
- A further decline in agricultural production in 1989, despite good weather and extremely low figures the previous year.
- Low profitability of large firms in large sectors of the economy.

Besides the catastrophic economic development the country also suffered from an ecological disaster. “Under the Communist regime, a production-at-all-costs economy promoted short-term output goals at the expense of nature and of human health. The system of party domination, bureaucratic and personal discretion and public corruption aggravated the problem. Finally, the hollowness of apparent legal protections left the environment almost totally defenceless against degradation.”^[31]

All in all, the Communist period left Bulgaria with distorted internal and economic structures e.g. ownership structures were unclear and inefficient. The country had low labour efficiency and productivity and faced large hidden unemployment. The limited centuries-old work ethic and lax labour discipline and the isolation from competitive world markets and heavy burden of debt contributed to Bulgaria’s economic collapse.^[32]

Nowadays post-Communist Bulgaria, while still struggling to some extent to purge itself of the negative impacts of communism, has great potential in fact to be an economic leader in the region.^[33] But in order to do so Bulgaria needs to increase its investment rate by 20%.^[34] The following chapter will deal with and analyse the role of Foreign Direct Investment in Bulgaria.

IV. FOREIGN DIRECT INVESTMENT

In order to further understand what the advantages of investing in Bulgaria for German companies might be, this chapter will analyse the general decision whether, where, and how to undertake FDI. For a start, a host government’s attitude towards FDI should be an important variable for businesses when deciding where to locate foreign production facilities and where to make foreign direct investment. Investing in countries like Bulgaria that have permissive policies towards FDI is clearly preferable to investing in countries that restrict FDI. However, this is not the only important motivator for FDI.

[...]

^[1] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 6.

^[2] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 6.

^[3] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 2.

^[4] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 1.

^[5] George Schöpflin, Politics in Eastern Europe 1945-1992, Oxford and Cambridge, Blackwell, 1993, p. 47.

^[6] CIA - The World Factbook 2003 – “Bulgaria”, http://www.cia.gov/cia/publications/factbook/geos/bu.html (September 10, 2003).

^[7] Bulgarian Foreign Investment Agency, “Facts and Figures”, http://www.bfia.org/5014 (August 27, 2003).

^[8] Bulgarian Foreign Investment Agency, “Bulgaria”, http://www.bfia.org/17 (August 27, 2003).

^[9] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 12.

^[10] Bulgarian Foreign Investment Agency, “Facts and Figures”, http://www.bfia.org/5015 (August 27, 2003).

^[11] The Oxford Business Group, “Countries: Bulgaria: Country Profile“, http://www.oxfordbusinessgroup.com/country.asp?country=23 (September 20, 2003).

^[12] Bulgarian Investment Agency, “Facts and Figures”, http://www.bfia.org/5015 (August 27, 2003).

^[13] Bulgarian Foreign Investment Agency, “Government“, http://www.bfia.org/5016 (August 27, 2003).

^[14] The Oxford Business Group, “Bulgaria: Country Profile“, http://www.oxfordbusinessgroup.com/country.asp?country=23 (September 20, 2003).

^[15] Bulgarian Foreign Investment Agency, “Administrative Territorial Division”, http://www.bfia.org/5017 (August 27, 2003).

^[16] Bulgarian Foreign Investment Agency, “Currency and Exchange Control“, http://www.bfia.org/5018 (August 27, 2003).

^[17] CIA - The World Factbook 2003 – “Bulgaria”, http://www.cia.gov/cia/publications/factbook/geos/bu.html (September 10, 2003).

^[18] Aigonline “Bulgaria“, http://home.aigonline.com/country_view/0,4605,1312,00.html (4 September, 2003).

^[19] Bulgaria Online, “Bulgaria Emergies as IT Leader in SE Europe”, http//:www.onlinebg.com/ASPwwwbgweb2.asp?mode=article&artdate=2003/10/9&a…. (October 2, 2003).

^[20] Econ.bg, “About Bulgaria“, http://www.econ.bg/view_hl.html?id=5&lang=2 (September 3, 2003).

^[21] Tosho Kirov, Director cooperation with German speaking countries Bulgarian Industrial Association, interviewed by Kjell Stein, 8 September 2003, e-mail: kirov@bia-bg.com.

^[22] http://hcs.harvard.edu/~bulgaria/bulgaria.html (September 22, 2003).

^[23] Richard J. Crampton, A short History of Modern Bulgaria, Cambridge, London and New York, Cambridge University Press, 1987, p. 146.

^[24] Bulgarian Free Books, http://bulrefsite.entrewave.com/view/bulrefsite/s129p143.htm (September 18, 2003).

^[25] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 21.

^[26] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 35.

^[27] Ivaylo Ditchev, ‘Balkan vicious circles’ in Ivaylo Ditchev (ed.), Balkan Transition. Proceedings of the International Conference, December 1996, Sofia, Bulgaria, Sofia, Access/BCN.

^[28] Ivaylo Ditchev, ‚Balkan vicious circles’ in Ivaylo Ditchev (ed.), Balkan Transition. Proceedings of the International Conference, December 1996, Sofia, Bulgaria, Sofia, Access/BCN.

^[29] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 37.

^[30] Eurostat, Country Profile. Bulgaria 1991, Brussels, Statistisches Bundesamt, 1991, p. 12.

^[31] James Friedberg and Branimir Zaimov, Politics, environment and the rule of law in Bulgaria in Transition. Environmental Consequences of Political and Economic Transformation, Aldershot, Brookfield, Singapore and Sydney, Ashgate, 1998, p. 83.

^[32] Emil Giatzidis, An introduction to post-Communist Bulgaria: Political, economic and social transformation, Manchester University Press, 2002, p. 79.

^[33] Brendan Howe, “Business Environment”, the Sofia Echo, Issue 35: 29 to 4, http://www.sofiaecho.com/overview.php (September 2, 2003).

^[34] “Bulgaria’s Economy on the Path to the EU”, http://samvak.tripod.com/pp79.html (September 5, 2003).