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The regions of Lovech and Pleven suffer from typical problems of Northwestern Bulgaria, including an aging and decreasing population, relatively weak investment activity, and a deteriorating educational structure. However, there are positive examples of rising economic development in some of the small municipalities in both regions in recent years.

• Large economic disparities

As is typical of Northern Bulgaria, the provinces of Pleven and Lovech include municipalities with significant differences in levels of economic development. Although economic activity is relatively high in some of them, most indicators are far from satisfactory. In Pleven, the municipality with the highest value added per person is Knezha – BGN 25,000 per person in 2021, or over three times more than the regional center Pleven, which registers BGN 6,500 per person. The main reason for this is the dynamics of international markets for agricultural products, particularly plant oils, which dominate the economy of the small municipality. In addition to these, municipalities such as Cherven Bryag and Dolna Mitropolia (BGN 4,400 per person) and Dolni Dabnik (BGN 4,000 per person) also have relatively high levels of development. In absolute terms, the largest economy is in the regional center Pleven – BGN 740 million, followed by Knezha (BGN 291 million) and Cherven Bryag – BGN 104 million. Knezha shows a visible upward trend compared to 2020, with value-added increasing by 75%, and Levski experiencing a significant growth of 88%. Cherven Bryag also has a modest growth (10%) due to local production and export recovery, but other municipalities in Pleven lose value added in 2021, despite the rapid overall growth in the country.

The economic structure of Lovech is similar, with Letnitsa (BGN 12,000 per person) and Troyan (BGN 7,400 per person) being the leaders in 2021, while the regional center Lovech has BGN 6,000 per person. In both leading small municipalities, the driving force of the local economy comes from the manufacturing industry. In Letnitsa, sports goods are leading, while textiles, pharmaceuticals, and wood processing take the forefront in Troyan. In nominal terms, the highest value added is in the regional center Lovech – BGN 245 million, but Troyan is close behind with BGN 209 million in 2021, with no other municipality having a local economy volume exceeding BGN 50 million. However, unlike Pleven, most municipalities in the Lovech region registered growth in value added in 2021. There are visible declines in Ugarchin (-40%) and Yablanitsa (-29%), while Apriltsi is the growth leader (20%), followed by the regional center (11%).

• Subdued Investment

With the lifting of restrictions and the normalization of economic life in the country in 2021, there is naturally an increase in investment activity in the non-financial sector in both regions. However, this does not mean that investment expenditures are evenly distributed among their various parts. In 2021, the leader in expenditures on long-term tangible assets in the Pleven region once again is the municipality of Knezha, with BGN 4.1 thousand per person in the population, followed by Belene (BGN 2.9 thousand per person) and the regional center (BGN 2.5 thousand per person). As expected, given the size of the local economies, the most investments were realized in the municipality of Pleven, with a value of BGN 289 million, as well as in Knezha - BGN 49 million and Cherven Bryag - BGN 25 million. Among the municipalities in the Lovech region, investment expenditures are lower in 2021, with Apriltsi leading with BGN 3.2 thousand per person, followed by Letnitsa and Troyan, with BGN 2 thousand per person. As Apriltsi registers over 500% growth on an annual basis, it is likely a one-time investment.

Regarding foreign investments, due to confidentiality, data is available for a relatively small number of municipalities in both regions. The leader here is Cherven Bryag with EUR 5.1 thousand per person in direct foreign investments (FDI), concentrated in the large lifting equipment plant in the municipality. In both regions, besides Cherven Bryag, only the municipality of Pleven has over a thousand euros per person. They are also the leaders in absolute values ​​- EUR 151 million FDI accumulated in Pleven and EUR 122 million in Cherven Bryag. Some municipalities perform well in the use of funds from European funds, with Troyan and Yablanitsa having over BGN 3 thousand per person, placing them among the leaders in the country.

• The recovery of the labor market

Following the general trend, all municipalities in both regions show visible improvements in the state of their local labor markets in 2021. The only municipalities where the share of employed persons among the population aged 15 and over has decreased in 2021 compared to 2020 are Pordim and Nikopol in the Pleven region, but the decrease there is symbolic. In most municipalities, the improvement is between 0.5 to 1 percentage point on an annual basis, and the most significant positive trend is in Cherven Bryag, where the increase is 2.1 percentage points. The differences in labor market activity within the regions are also significant - in Pleven region, the shares of employed persons range from 13% in Dolna Mitropolia to 40% in the regional center. The differences in Lovech are not as pronounced - between 18% employed in Teteven and 45% in Letnitsa, with the industrial municipality of Troyan performing better than the regional center here as well.

The positive dynamics are also evident in unemployment, with only Belene experiencing an increase in 2021 in Pleven, while Iskar (-6.1 percentage points) and Cherven Bryag (-5.7 percentage points) recover the fastest. None of the municipalities in Lovech register an increase in the unemployed, and the fastest decline is in Letnitsa (-6.8 percentage points). The differences between municipalities remain significant, with unemployment in the Pleven regional center at 6.7%, but in five of the small municipalities, it remains above 15%, and in Nikopol – as high as 26%. In Lovech, Troyan performs the best (7%), while Ugarchin (29%) performs the worst.

In the year of the population census, we have information about the overall employment in the municipalities. The distribution is similar to that of the employed - employment of the population aged 15 and over in the Lovech region is highest in the municipalities of Troyan (46%) and Lovech (42%), and lowest in Ugarchin (25%) and Letnitsa (27%), with the discrepancy in the latter being a result of high daily labor migration towards it. Employment in Pleven is significantly higher at 49%. Cherven Bryag and Belene also perform relatively well at 38% and 39% respectively. In absolute values, the largest labor market in the Pleven region is in the regional center with 48 thousand employed, as well as in Cherven Bryag (7.4 thousand employed) and Levski (4.8 thousand employed). In the other region, Lovetch municipality leads with 14.5 thousand employed, but Troyan, in second place, is relatively close with 11.1 thousand employed.

The different levels of economic development in the municipalities also contribute to the significant differences in wages among them. While in the leading municipalities in both regions - Letnitsa and Knezha - the gross monthly wages exceed 1600 leva, in some of the more lagging ones - Iskar, Teteven, Ugarchin - they have not yet reached 1000 leva. Among the regional centers, which concentrate employment, Lovech (1277 leva per month) performs better compared to Pleven (1240 leva per month).

• Educational Issues

The census allows us to examine the educational structure of the population at the municipal level, which is directly related to the potential for the development of local economies and the investment appeal. From the perspective of higher education in Pleven, there are no significant differences - all municipalities are located in the range of 9% to 15%, except for Pleven itself, where the share of individuals with higher education is 29% among the population aged seven and above. The differences are even smaller in secondary education, where in all municipalities except Nikopol, their share is between 50-57%. It is noteworthy that in Lovech, there are three municipalities - the regional center, Troyan, and Apriltsi - where the share of individuals with higher education is over 20% among the population aged seven and above, and in none of them is the share below 10%. Almost everywhere in both regions, except in the Lovech municipality, the share of people with primary and lower education is over 20%, but this mainly reflects the age range of the census data, which includes students in the breakdowns by education. Some municipalities also have a visible problem with literacy - the share of illiterate individuals is particularly high in Yablanitsa (9%), Letnitsa (4.5%), Ugarchin, and Lukovit (3%), which further limits the opportunities for labor market expansion in these areas.

From the perspective of school education, the results in both regions are low - in the high school graduation exams in Bulgarian language and literature, only the Lovech municipality approaches the national average values with an average grade of "Good" 4.17. Troyan and Pleven achieve a similar result of "Good" 3.85, but all other municipalities have grades close to "Average" 3.00. The results are similarly low in external assessments after the seventh grade.

• Demographic Challenges

Northwest Bulgaria is the region with the deepest demographic problems and rapid aging in the country, and the municipalities of Pleven and Lovech are no exception. However, within the regions, there are varying rates of population decline. While municipalities like Belene, Nikopol, and Pordim have lost approximately ¼ of their residents within a decade, those with the highest level of economic development experience a significantly lower decline. Examples of this are Letnitsa (4% decline over a decade) and Knezha (-6%). The regional center of Pleven has lost 14% of its population, and Lovech - 22%.

The factors driving the demographic dynamics in the municipalities of both regions are diverse. In the past two years, there is not a single municipality where the natural population growth is positive. In the weakest performing municipalities - Pordim, Nikopol, Gulyantsi, and Apriltsi, the coefficient approaches or even exceeds -30‰, and in most municipalities, it is beyond -20‰. The trends in mechanical population growth are more varied, with the reversal of migration trends in 2020 affecting small municipalities in Lovech and Pleven. Even here, the regional centers are losing population, but their periphery is experiencing significant growth, which continues in some cases (Apriltsi, Letnitsa) even in 2021.

It is also important to note that the Lovech and Pleven regions are among the significantly aging areas in the country, with some municipalities (Gulyantsi, Dolna Mitropolia, Iskar, Dolni Dabnik, Apriltsi, Ugarchin) having a share of people over 65 years old exceeding 30% of the population, and in most municipalities, it approaches this value. This limits further their development potential in terms of severely restricted access to the workforce.

Author: Adrian Nikolov