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Тhe English version of the website, dedicated to IME’s study, "Regional Profiles: Indicators of Development",has just been launched.

You can download the full report here, or you can check out the English version of the website by selecting the button in the top right corner of each page.

All statistical data, district profiles, methodological notes, news and thematic analyses are available in English as well.

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The goal of IME's team is to make all data and analyses understandable and useful for foreign investors, entrepreneurs and other stakeholders.

The availability of detailed information about the characteristics, condition and prospects of the regions of our country are an important prerequisite for the promotion of investment and the increase of transparency and accountability of public policies at the local level.

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

The author is Stoyan Hristov, an intern in IME.

One of the main issues of Bulgaria’s economy undoubtedly is the huge and growing gap between the economic development of the southern and northern regions. The problem was stated a few days ago by Simeon Dyankov, the minister of finance, during “Next year’s business plan” conference. The minister said that the main reason for this gap is the road infrastructure, and especially the lack of connections between the road networks of the two separate parts of the country.

Data on Bulgaria’s regions allow us to outline the most important trends. Obviously, the northern regions fall behind the southern ones on a number of economic indicators. According to the study “Regional Profiles: Indicators of Development” by IME, the northern regions score lower in terms of GDP per capita and employment. The average GDP per capita in Northern Bulgaria is about 6 thousand leva, while in the southern regions it is about 4 thousand leva higher. The difference is quite obvious; the real question here is whether the state of the road network is the only reason, or even the main reason for the growing gap in the wellbeing between the two parts of the country.

Source: www.regionalprofiles.bg

We are faced with the question how we can really assess the state of road networks. Different approaches to that exist, such as the degree of interconnection between the northern and southern regions and the quality of the roads themselves. If we use the density of the road network as an indicator[1], however, it turns out that Northern Bulgaria has an 18.57 kilometers of roads per 100 square kilometers, which is 3.81 kilometers more than in the southern part of the country. That is to say that the state of the road network in the northern regions – as assessed by this indicator – is not worse than that in the southern regions of the country.

The study by IME allows us to compare Northern and Southern Bulgaria using 8 main categories of indicators[2] – economy, business environment, infrastructure, demographics, education, healthcare, social environment and environment. The study shows that the northern regions score worse in 6 of the categories, namely when it comes to the level of economic development, infrastructure, population dynamics as well as the quality of the social environment, education and healthcare. Big differences can be seen not only in the economic scores but also in those regarding demographic factors and education. The only spheres in which the North scores better are business environment and natural environment.

Source: www.regionalprofiles.bg

The bad interconnection between the road networks of Northern and Southern Bulgaria is a possible reason for some of the differences between the two parts of the country, as Simeon Dyankov claims, but it definitely is not the only one or the most important one. A good road network is a prerequisite for business development, but it would not bring any positive results in regions where demographic factors are negative and education is at a very low level. Business environment and the actions of local governments can also make a big difference and help less-developed regions grow.

[1] Road network density – the sum of the length of highways, first, second and third class roads

[2] The state of the indicators is assessed on a five-degree scale, where 1 is “weak” and 5 is “very good”

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

Below we have reprinted and translated one of IME’s articles for local media related to the “Regional Profiles: Indicators of Development 2012”. The author of the article is Petar Ganev. It was first published in Trud newspaper on November 12^th, 2012.

The study “Regional Profiles: Indicators of Development 2012”, published by the Institute for Market Economics and presented by Trud newspaper on Friday, shows a rather diverse picture of the country on the basis of the socioeconomic state and development of the regions. Some districts attract investment and offer workplaces, others do not; some people feel so safe in their city that they do not even insure their cars, others are used to the idea that their apartment needs additional protection; some people feel happy in their region, others cannot wait to get out of it in search of better opportunities.

Many of the trends can be identified intuitively, but during the work on the study we discovered some interesting facts, which I think I should shed more light on. Along with those facts we also discovered certain discrepancies in the data, which are very hard to explain. The connection between incomes, happiness and human mobility proved to be a true challenge to decipher. The main factors that bring higher satisfaction with life turned out to be housing conditions, the state of the environment, security and the social environment (that is, communication with neighbors, friends, acquaintances, etc.). Low income and joblessness (or bad working conditions) are the most common dissatisfaction factors. This leads to a higher satisfaction level in underdeveloped, but more tranquil and less polluted districts, such as Smolyan and Kardzali.

Personal satisfaction with life, however, has nothing to do with human mobility. When it comes to emigration from a certain region, the most important reasons are better opportunities (for education, work and income) in other settlements. To cut the long story short, people feel satisfied when their environment is clean and tranquil, but in the long term they seek possibilities for development and higher incomes. This explains the observed migration towards the capital – a much more polluted and less secure place, but one that offers more work opportunities and higher wages.

A comparison between Sofia and Smolyan is very indicative in this respect – harmful emissions in the capital’s atmosphere are 270 times higher than those in Smolyan. The possibility of a crime being committed against every person in Sofia is four times higher than the one in Smolyan. At the same time, the chance of staying jobless is three times higher in Sofia then in Smolyan. GDP per capita is also three times higher in the capital then in the Rhodope district. Having this in mind, in recent years while one person moves from Sofia to Smolyan, four people move from Smolyan to Sofia.

Gabrovo stood out as one of the most interesting regions. As it was expected, it scored well in the economic, business and environmental spheres. It managed to utilize a substantial amount of European funds. Demographics, however, proved to be a serious issue – the dependency ratio (that is, the ratio between elderly people and children) is the worst in the country, surpassing even the one in Vidin. These negative processes are already affecting employment and unemployment in the region and present a serious challenge before the economic development of Gabrovo.

Kardzali is also an interesting example, since it is an economically underdeveloped region, where most of the population lives in villages. Despite these circumstances, in the past 10 years the economy of Kardzali has been showing positive development – in year 2000 this is the poorest district, while now it surpasses Vidin, Razgrad, Silistra, Montana and Sliven. The region scores surprisingly well in the field of high-school education – its children have very high marks on the matriculation exams, while there is a very small share of school dropouts and a small share of repeaters. Good high-school education however does not show yet a clear impact on the qualification of the workforce and the number of higher education graduates in the district.

Varna and Burgas, as expected, fell into the group of regions with good socio-economic development, however, they are still far behind the capital. It was expected that the cities by the seaside will have a well-developed services branch; this fact, however, seems to be linked exclusively to the development of tourism. Other services, like different types of outsourcing (IT support, for example) can be found exclusively in the capital. The big variety of young and well-educated specialists and operational airports make our “seaside capitals” a very good choice for developing such services, which can in turn have a serious impact on employment and untie its dynamics from purely seasonal factors.

Regarding the so-called data discrepancies, I can show you two interesting examples. According to the data provided by NSI, GDP per capita in Pernik has almost doubled in 2008, and the next year it falls to its usual level. In this case, most probably, we are faced with an error in the data of the national statistics, which makes us question the quality of data on local level in general. Another interesting fact is that the number of people with healthcare insurance in Kardzali surpasses the total population of the district. An even more interesting fact is that the healthcare administration in Kardzali learned that from our team. In this case it is likely that there is no mistake. For some reason, in 2009 30 thousand new citizens with healthcare insurance appeared in the district. This, however, leaves unanswered the question what led to this anomaly, which cannot be witnessed anywhere else in the country.

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

| Scanned copies of publications in printed media |

National and internet media

• BNT
• bTV
• 24 hours newspaper
• 24 hours newspaper (2)
• 24 hours newspaper (3)
• Sega newspaper
• Standart newspaper
• Monitor newspaper
• Presa newspaper
• Telegraph newspaper
• Capital Daily
• Blitz information agency
• Darik Radio
• К2 radio
• capital.bg
• dnevnik.bg
• investor.bg
• econ.bg
• vesti.bg
• darikfinance.bg
• money.bg
• economy.bg
• expert.bg
• Infobusiness
• profit.bg
• offnews.bg
• trud.bg
• 3e-news.net
• duma.bg

International networks

• 4liberty.eu
• Stockholm Network

Local media

• BNR (Shumen)
• BNR (Blagoevgrad)
• Focus radio (Pazardzik)
• Darik Radio (Varna)
• Darik Radio (Габрово)
• Darik Radio (Габрово) – 2
• Darik Radio (Варна) - 2
• Darik Radio (Stara Zagora)
• Darik Radio (Dobrich)
• Darik Radio (Shumen)
• Darik Radio (Rousse)
• novjivot.info (Kardzali)
• nostop.bg (Pazardzik)
• moreto.net (Varna)
• targovishtebg.com (Targovishte)
• gabrovonews.bg (Gabrovo)
• plovdiv24.bg (Plovdiv)
• akcent.bg (Rousse)
• ruseinfo.net (Rousse)
• ruse24.bg (Rousse)
• topnovini.bg (Shumen)
• shum.bg (Shumen)
• perniktoday.net (Pernik)
• burgasnovinite.bg (Bourgas)
• burgasutre.bg (Bourgas)
• briagnews.bg (Pleven)
• zovnews.com (Vratsa)

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

The study “Regional Profiles: Indicators for Development 2012” was presented on November 8^th 2012 at the Press Club of BTA. About 30 journalists were present at the event. Each of those who attended the event received a paperback copy of the study.

Right before the end of the press conference the website of the study was launched. Until the end of the day the results of the study were covered by a number of top-ranking media, including:

• Bulgarian national television
• bTV
• 24 Hours newspaper
• Sega newspaper
• Standart newspaper
• Monitor newspaper
• 24 Hours newspaper (2)
• Darik radio
• capital.bg
• dnevnik.bg
• investor.bg
• econ.bg
• vesti.bg
• darikfinance.bg
• money.bg
• economy.bg
• trud.bg
• Infobusiness and others

The project “Regional Profiles: Indicators of Development” is carried out with the financial support of the America for Bulgaria Foundation.

Materials of the press conference, dedicated to the survey

We present you the materials which were handed out at the press conference, dedicated to the presentation of “Regional Profiles: Indicators for Development 2012”.

In these materials you can find information on the basic results of the analyses, conducted as part of the project, as well as IME’s recommendations for improvement of regional competiveness.

• The handout is available in pdf as well as docx format.
• The presentation used to present the project is available in pdf format.
• The districts’ performance grades in each of the 8 categories – economy, infrastructure, business climate, education, etc. are available here.

General conclusions:

1. Until 2008, all districts demonstrated growth, but the rich ones developed faster than the poor ones; i.e. the gap between them increased and a group of regions that developed much faster than the others emerged;
2. The gap has increased in the period of economic boom as well as in the period of crisis;
3. The number of districts with poor socioeconomic profiles or showing negative trends is much bigger than the number of those with good socioeconomic profiles and positive trends;
4. Demographic developments have an extremely strong – and usually negative – impact on the economic development of the regions;
5. The high sense of security and the good quality of the environment increase personal satisfaction with life, while work conditions, income levels and the quality of infrastructure bring dissatisfaction;
6. In spite of rather prolonged negative developments in the poorest regions, the majority of the population in them features rather low mobility;
7. Proximity to Sofia (the capital) doesn’t have a singular effect on all the neighboring regions and does not automatically bring any advantage;
8. The central government still plays a major role in local policies; this can be attributed to the unwillingness to delegate more powers to the local authorities;
9. Even though local policies are restricted by law, they can have a paramount impact on the living conditions and business environment on regional level;
10. Data is extremely scarce on a regional level, and sometimes its quality is questionable, which casts doubt on the ability of the government (both central and local) to take informed decisions.

Recommendations:

• A policy cannot have the same effect on all regions, therefore a higher degree of decentralization of the decision-making process is necessary;
• Real financial independence of the regions is needed; this will allow for differentiated local policies;
• Parliament should not be able to define the limits of local taxes – the decision and the responsibility for them should be delegated entirely to the local authorities;
• The regions should benefit from economic development – i.e. they should be entitled to a part of the revenues from as many taxes as possible, especially those connected with local economic activity (for instance, a part of the revenue from VAT, income taxes, corporate profit taxes etc.);
• Powers of regional authorities with regard to raising revenues and allocating expenditures should be balanced in such a way that they can become more independent from central government transfers;
• Powers of municipal authorities regarding local economic and social policies should be increased.

For more information:

The full English version of the study "Regional Profiles: Indicators of Development 2012" will be available in the beginning of December 2012.

The goal of IME's team is to make all data and analyses understandable and useful for foreign investors, entrepreneurs and other stakeholders.

The availability of detailed information about the characteristics, condition and prospects of the regions of our country are an important prerequisite for the promotion of investment and the increase of transparency and accountability of public policies at the local level.