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Angel Georgiev
Bulgarian economy under the conditions of Globalization and European Integration
Born on 9 April 1949 in the town of Yambol. He graduated from the'Karl Marx' Higher Institute of Economics. He is an Economist, Doctor of Economics He made a PhD at the Sankt Peterbourg Engineering Academy. He specialized in Moscow, London, Tokyo, Washington. At present he is a lecturer.
Dear participants at the round table, my task is fairly more modest. It has its working title and I have undertaken this commitment to try to present the Bulgarian economy in a more European context. Let us put the question forward in this way - does such a context exist at all?
It seems like this subject matter has started to exhaust itself and to overexpose itself, because a lot of people have started to express an opinion on it. Several alarming tendencies have appeared. According to me two of them are rather important.
The first one is that the politicians and the ordinary people do not have the same agenda. There is a gap of misunderstanding between these two groups and an outspoken lack of will for mutual understanding.
The second tendency is the lasting mistrust in the democratic institutions, in politics and governing. It feeds the population with European scepticism and turns into an independent problem.
The dissonance consists of the following.
In Europe there is a well developed civil society, while in Bulgaria the civil society is not strong enough; Europe is a society of the consensus, of the dialogue, while rather manipulative techniques and a straightforward vulgarity dominates here. The poorest and the most advanced in age nation in Europe encourages and launches, admits and tolerates unworthy political and governing practices.
It is normal under these conditions that the society seeks an outcome of the established situation. We mentioned already several serious forums which have taken place. They are aiming at clarifying the vision for the Bulgarian society and economics in its European future. What I mean:
- the research activities of the Institute of Economics to the Bulgarian Academy of Science on Bulgarian economics and the European Union and the strategy for a catching-up development;
- the annual reports of the Centre for Economic Development on competitiveness;
- the academic forum 'The European Future of Bulgaria', founded by a wide circle of Bulgarian intellectuals. I have in mind the efforts of the political forces to compete and prove to each other which of them is closer to the European vision. Finally, I want to mention the third report of the European Commission on the economic and social cooperation in Europe. Its final conclusion is that the Union faces many challenges - emergence of new technologies, a growing rate of the economic changes, a flow of immigrants to the European cities, decrease in the productivity in the Union and a necessity of achieving better prosperity.
The aim, which the European Union puts forward is to decrease the gap among the individual countries and regions and to accelerate growth. The aim is growth and cooperation at the same time. With the accession of the new member countries this aim is withdrawing. It becomes more difficult to establish good relations between the individual regions and to achieve productivity and growth. If this is the European agenda, what about Bulgaria?
First, let us start with the new technologies. Bulgaria has turned its back on them. Remember the quick-witted joke for the common between the scientific and technological revolution and the Danube River. Both come from the West and pass through Bulgaria. But here we stop.
To be more concrete and constructive we would remind that the structure of Bulgarian economy is already such that the new expensive and science consuming technologies can only be introduced in very few productions, the owners of which are able to pay enough. And one other thing - only for part of them, which are of perspective economic interest.
The restructuring of the property has led to incompatibility between the existing production and the so called high technologies, leading to an economic prosperity. What happened to the Disc Storage Driver Plant in Stara Zagora? They produce stoves, axes, scissors. What high technologies are we talking about?! Where did the competitive Bulgarian lasers -medical, military and others disappear? Where are the digital control lathes, where are the fork-lift trucks? What is the fate of the Bulgarian academies - The Bulgarian Academy of Science, the Agricultural Academy, the Medical Academy? What is the fate of the applied research centres, where these technologies used to emerge or adapt, where the competitive force of the Bulgarian production has been set great store on?
And finally, in this chain of ideas - how will the society trust the people, who have called themselves an elite, who easily, with no responsibility have deprived it from job positions and from things, with which every one has been proud of? The format of this meeting presupposes putting forward the question for the economic and political responsibility for what is taking place.
What would my conclusion be?
Along the line of the science, the technical progress, the education the agenda of Europe is not the agenda of Bulgaria. And still if such agenda exists, it exists in words, rather than in real action and is far from the objectives and the everyday life of European science. The fact, that Bulgarian researchers work also in leading European scientific and educational institutions, proves only that they cannot use their potential in Bulgaria and that the governing is not competent enough to set up an organization that is needed.
Secondly. Productivity has always been criteria precondition for efficiency, and success. The European society and the European economy are not satisfied with their own productivity. Europe is lagging behind from competitors and allies - the USA, Japan, and there is no even distribution of the total productivity within the continent. Here the leading countries are those situated in the NORTH, where nature is not that favourable, while those lagging behind are the southern ones - where the climate is very good.
What is the situation in our country? Efficiency and productivity have not been discussed frankly and professionally for years. The new governors have purposefully excluded these terms from their vocabulary . People who are aware of what is going on are isolated, rejected by the mass media. Their evaluations are 'a storm in a glass of water' - accessible, transparent and understandable in the extremely restricted professional community which often does not have the chance to become a public force.
Let us put forward a provocative question.
As agriculture has become a declared state priority, this is at least what the politicians claimed for, what happened to the Agricultural Academy? What is the technological aspect of the agricultural production? There is by all means sense to talk about the Bulgarian Academy of Science, of the Higher Educational establishments, but what is the sense of it actually, after the so called transition has created a vacuum of trust among the people. They do not trust each other any more. And why should they do it when the recent years proofed the opposite.
The decline in labour productivity capital and total expenditures formally at least coincides with Europe's agenda. But there are essential differences here too.
Europe maintains its ambitions to be and remain a centre of culture, civilization and science. In Bulgaria we are excited to speak about how others like us, but here no one wants to evaluate us.
Europe absorbs intellect and exports a competitive production, by winning new markets. It is not by chance that its economics is the most export orientated economics. The euphory of the dilettantes - wandering in economics poets, sportsmen, philosophers, actors has led to sad known facts - those that need a dentist are sent to a gynaecologist.
In Europe, comparative advantages and serious professionalism are sought and found through a magnifying glass. Well educated people march freely and proudly.
In our country, the low productivity is accompanied by technological backwardness, by primitivism, restriction within the national market, loss of international markets and prestige.
Let us discuss further the Bulgarian context of economy. We have to take several facts into consideration related to whether this which is happening is good or bad and whether we will become part of the European context.
First, over 800 thousand Bulgarians in an active age and in good health work in and for foreign economies. More than 700 thousand of them are people of higher education and qualification, acquired here. From this point of view it is not Europe and America that invest in our country, but the contrary. This can be seen from simple calculations.
Secondly, the demographic collapse is a problem predefining the economic logics. More than 2 million pensioners, high death rate, low birth rate, bad living conditions, minority problems, a significant contingency of children not involved in the educational system, mainly from the minorities. The insufficiently educated today Bulgarian will become in fact the most uneducated one in 15-20 years. The length of life is clear. It has decreased with 4-5 years. The health status is also clear - the Bulgarian people is old and ill, while the conducted health reform is more like a genocide actually.
Third. The environmental situation is more than alarming. The technological re-equipment of the production, the new technologies and the eco equipments happened to be a tough task for those carrying out the transition. But the environmental programs have been and are well used for the personal commercial purposes of the governors.
The ecologically substantiated economic effect is not on the agenda - it is not even mentioned. The technological subtlety of the eco damages and their long term effect are used skilfully for economic purposes, in stead of being solved in the context of the perspective economic development. At the same time Europe provides a green light both to a nature oriented production and a policy and types of economic development in unison with the harmonization of nature.
Is it possible that someone of today's politicians explains the economic implications of the sustainable economic development? There are surveys showing that an additional one per cent of sustainable growth is achieved by thirty per cent of additional investments. Isn't it the sustainable economic development an economic trap and a grip with which in fact the advanced countries control the technological lagging behind and do not admit their poorer neighbours come closer to them? How this modern and launched with pleasure concept is applied in the USA, Canada, Russia? Why these countries have rejected to sign the recent Kyoto agreements?
My conclusion is that a lot of elements from the economic development are taken for granted, without a critical analysis and an evaluation. That is why they are not applicable in our conditions and they will most probably not come into effect. The foreign experience is like the dress being worn - it is sewed for a certain person and it is suitable only for him. Here the analogy can turn out to be misleading, but the price to be paid will not be a misleading one.
Let us examine now in detail some figures in the conventional sense of economy. As you know this science has its own language - the economic statistics.
The Bulgarian economic statistics was claimed to be precise, authentical and reliable. Deliberately we will not take them into consideration now. We shall work, as they say, referring to the official statistics because of the simple fact that there is no other available.
The growth of the GDP in USD, as was already emphasized, for 2003 was estimated in comparable prices to around 5%. This is a good result in comparison to 2002 and 2001, but it is fairly under the level, necessary for the European community. The European train is moving rather fast than it is possible for us. There are two particular reasons for this - the rate of the dollar and the enlivenment of the national economy.
The first factor is not our achievement, we can not be proud of it.
The second factor - the enlivenment of economy is due to the good monetary policy which is also the result of the introduced currency board, and also of the almost doubled credits of the credit-investment policy of the commercial banks.
The country is in the conditions of a moderate inflation - around 5.6%, and step by step the liquidity crisis is being overcome, i.e. the insufficiency of money. It is a fact that the investment enlivenment, the prices of the movables already mark a certain growth of about 12%, and the deficit in the domestic commercial balance has reached almost 2,5 billion dollars. Without this deficit it would not have been possible to achieve an investment enlivenment. The economy consumes more raw materials, goods, energy, fuels. Another reason for the comparatively large negative balance is the high exchange rate of the Euro which to a certain degree is not our achievement either.
The currency reserves of the country have also increased essentially with more than 10 billion BGN. This means that there are reserves, that additionally more money can be circulated, the credits can increase and entrepreneurship can be stimulated.
Despite the negative fundamental reasons for their restriction the competitive possibilities of the domestic economy mark a slight enlivening. The basic reasons are the import of new machines and equipment (an import of around 4 billion dollars is made for the last year), the foreign investments mark an increase of 1.4 billion dollars. The foreign trade balance of tourism has reached 1,5 billion dollars. Let us compare the last two dimensions. Tourism is a genetic factor of growth of Bulgarian economy while the foreign investments depend also on other factors, rather political than economic ones.
In structural aspect the industry has increased by 17%. This fact could be interpreted also as a turn back to an approbated for Bulgaria national model of success - the industrialization. The consumption of foods, clothes and etc. is re-orientated to Bulgarian goods and services which is an additional motivation for the economy. As a whole the incomes and the consumption of the population have increased by around 30%. But this is not and can not be a reason for relief and justification. Our incomes are very low compared to those of the Europeans. The Bulgarians remain still the poorest, the oldest and most ill.
Unemployment has decreased according to the official statistics from 19% to 13%. There are however no grounds and rational reasons to consider that this tendency has the characteristics of stability. Is it normal that the PhDs in the technical and physical and mathematical sciences be 'men and women behind the stand' only because professions like optics and electronics are not in demand, and their age is 'inappropriate' - 50-60 years old. This fact shows a political and a managing helplessness and lack of commitment to the social problems. Management and politics, which do not value the human capital, are not effective.
Politics and governing accumulate mistrust and doubts in their loyalty due to the lack of independent critical thinking. The International Monetary Fund, on the one hand, recommends decrease of the credits, because there is a risk to the economy, and on the other - outstanding economists, former employees of this same Fund, as Joseph Stiglitz, Stanley and others, advise to be less disciplined. Actually what we need is an independent thinking and the moral stability both in thinking and in the actions at every level.
How to explain under these conditions the dissonance between the expectations of the people and the comparatively clear figures for a hopeful growth?
Technically we could report the influence of the export which is positive and well reflected by the figures, characterizing the development. But the people feel in their every day life the influence of the domestic consumption, not of the export. Adding to this reasoning the fact that the relative share of retired people and the young people without own income is high, we would come closer to the adequate explanation. This is still another argument for reconsidering the income policy to the direction of increase in the domestic consumption. Consequently this will give an additional impulse for the development. Thus we can also explain the existing dissonance between the social research, done by the Institute of Sociology, and the data from the official statistics. The link and the interaction between the rate of development, the speed, the growth, the structure of the economy and the resources available, are a subject of independent consideration and study.
The tendencies and the directions for development of the branch structure of production, the problems of interaction between the microstructures, the mezzo structures and the micro-structural changes need study and diagnostics, for which the inquiry studies and the sociological approaches will most probably appear to be extremely insufficient.
There is a requirement of the European community to build up the so called planned regions. They are six, as far as I know - Varna, Russe, Vidin, Sofia, Plovdiv, Bourgas. But this, unfortunately, is the occupation of 'players in the periphery', and not of professionals. That is why the ball gets crumpled in the centre of the terrain , and the result is a bad football match. The society feels this and reacts rather alarmingly, increasing the fears for its own European future.
The introduction of plan regions will redefine the role of the central power and will restrict the administrative chaos, as at same time it will increase the role of the organizational and procedure regulations. Now this is yet a utopia, but tomorrow is only after several hours.
In conclusion: The European Community is not a panacea for Bulgaria and for its economy. The accession means responsibility, discipline and quality, and the benefits come afterwards. We need also an economic growth, generated quite independently in order to have also independent value within the community. There is a great need for thorough assessments of the strong and weak sides, of the pluses and the minuses of the accession - one peculiar slot-analysis. If there is an agenda of the politicians, why don't we make the agenda of the common people?
Several driving forces of the success were identified during the transition period.
First, the asymmetry of the competitiveness, which discloses the vulnerability of our economic structures, regardless of the form of their property. The asymmetry presupposes also an unfavourable social choice. The one who is better informed decides better and takes decisions faster.
Secondly, the communication technologies and the network organization, allowing the spontaneous reorganization for the purposes of the economic growth.
And third, the systematic competition in taking decisions through information consideration and adequate response.
In the tendencies of development of these driving forces every manager has to adapt himself and his organization in the context of the European competitiveness. Let us not forget that the European community is a society of the competitiveness, a society of struggle in comparative privileges, and not a charity club. The key to success is awareness of the strong sides of the national economy, in the contemporary competitiveness mainly at a technological and a scientific level. Two sectors, with which Bulgaria could win, because significant investments have already been made in education and science, and the power and the business have an equal positive attitude to the new technologies. Comparatively high is the level of employment in the sphere of the so called three partite sector - the IT sector, the energy, the transport. The stimuli for the entrepreneurs in these sectors have been increasing. This, however, does not mean that the things will rearrange automatically. Active work is what is necessary here, particularly when turning knowledge into practice, in the transformation in technologies, by maintaining the rights to property. Issues which are a blank space still both in the governing and the law-regulation basis.
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