News

Petar Ganev

Stara Zagora is already working on the establishment of “Zagore” Industrial Zone. The latter is not a surprise, as it has been discussed intensely over the past year. Undoubtedly, this step is provoked by the positive development of Plovdiv, which is to a large extent the result of the positioning of “Thrace” Economic Zone as a leading investment destination in Bulgaria. The latter is particularly important – any efforts on the establishment of an industrial area should always be targeted at creating suitable conditions and positioning a settlement as an investment destination.

Plovdiv's positive experience in developing the “Thrace” Economic Zone has created expectations both for its expansion and the replication of this model in other regions. In terms of enlargement, for example, “Thrace” Economic Zone has already included the municipalities of Haskovo and Dimitrovgrad. Recently, in a presentation in the municipality of Haskovo, we answered the question why this was expected to happen. While Haskovo can hardly be positioned as a separate center (investment destination), it is relatively easy to include it in the portfolio of “Thrace” Economic Zone and to aquire certain investments that correspond to the profile of the local workforce.

Thus the first comprehensive attempt to replicate the model of Plovdiv will happen in Stara Zagora. The socio-economic profile of Stara Zagora virtually implies the decision to differentiate it as a separate investment destination and not simply as an "attachment" to the “Thrace” Economic Zone. Let's take a look at what these areas would look like, by presenting a general overview of the Plovdiv and Stara Zagora economic areas.

Our work on highlighting and analyzing the economic centers in Bulgaria allows us to separate the two economic areas by presenting the relevant center for the area and its periphery. Under “periphery”, we count these municipalities that daily “send” 10% of their workforce to the center.

The economic area of Plovdiv consists of the natural center (the municipality of Plovdiv) and its periphery includes the municipalities of Asenovgrad, Kaloyanovo, Krichim, Kuklen, Maritsa, Perushtitsa, Plovdiv, Rakovski, Rodopi, Sadovo, Saedinenie and Stamboliiski. Each of these municipalities sends daily more than 10% of its workers to the municipality of Plovdiv.

The economic area of Stara Zagora is a bit more complicated to differentiate. The reason is that there are several centers and fewer peripheral municipalities. As centers we can point out the municipalities of Stara Zagora, Kazanlak, Radnevo and Galabovo, while the municipalities of Opan, Maglizh, Pavel Banya and Nova Zagora are peripheral. It is interesting to note that Nova Zagora (because of daily labor migration to the municipality of Radnevo) is also entering this wide economic area, although it is part of another district (Sliven).

Map: The Economic Areas of Plovdiv and Stara Zagora

Source: IME
* In this map the municipalities of Haskovo and Dimitrovgrad are not included in the economic area of Plovdiv.

Although it looks like the area of Stara Zagora is similar in size, the socio-economic indicators show that Plovdiv is almost twice as significant. The population in the Plovdiv area is 568 thousand people (of which 343 thousand in the municipality of Plovdiv), while in the wide area of Stara Zagora live 322 thousand people (158 thousand in the municipality of Stara Zagora).

Table: Comparing The Economic Areas of Plovdiv and Stara Zagora

Source: IME
* In this map the municipalities of Haskovo and Dimitrovgrad are not included in the economic area of Plovdiv.

The difference in output also corresponds to their scale - BGN 13.1 billion in the Plovdiv economic area and BGN 7.1 billion in Stara Zagora, the latter being relatively evenly distributed in the four centers of the zone (the municipalities of Stara Zagora, Kazanlak, Radnevo and Galabovo). Cummulative FDI amounted to BGN 1.4 billion in the Plovdiv area and BGN 1.1 billion in Stara Zagora. The relatively smaller difference in FDI compared to the scale of production is due to the accumulated foreign capital in Galabovo (BGN 756 million of the BGN 1.1 billion in question). The expenditures on FTA, which also account for local investments and are largely influenced by  EU funds, reveal a difference similar to that in output - BGN 1.6 billion in the Plovdiv area compared to BGN 840 million in Stara Zagora.

A serious difference between the two areas is the greater employment in the mining industry in Stara Zagora – including over 5.5 thousand employed in the mining industry in the municipality of Radnevo. The employees in manufacturing are 61 thousand in the Plovdiv area (34 thousand in the municipality of Plovdiv) and 32 thousand in the Stara Zagora area (13.5 thousand in Stara Zagora). In terms of the ICT sector, the differences are even greater - 3 200 hired in the Plovdiv area compared to 650 in Stara Zagora.

Stara Zagora, however, does not give way to Plovdiv in terms of average wages. On the contrary, if the considerably higher salaries in the municipalities of Galabovo and Radnevo are taken into account, the average salary in Stara Zagora (BGN 786 per month) exceeds that in the Plovdiv area (BGN 771 per month). This should also be taken into account when positioning Stara Zagora as an investment destination, which at times may compete with Plovdiv to attract one or another foreign investor.

The main conclusions of this review are the following:

• Stara Zagora can replicate the model of Plovdiv and has the conditions to impose the “Zagore” Industrial Zone as one of the main investment destinations in the country. For this purpose, however, it is necessary to think outside the municipality of Stara Zagora and to work with the other centers of the broad economic zone around it - Kazanlak, Radnevo and Galabovo;
• The economic scale of the Stara Zagora area is about 50-60% of that of the Plovdiv area in terms of output, FTA investment and industrial employement. This, however, is more a reference to the population size of the area than any obstacle to its development. Stara Zagora is large enough to take in large investments, and this is the only important condition;
• Stara Zagora is relatively evenly developed between the four main centers and the specific profile of the municipalities of Radnevo and Galabovo should be taken into account. The accumulated foreign investments in Galabovo are a good example to be used in promoting the area;
• Stara Zagora has untapped potential to develop in the field of ICT and outsourcing, following the example of Plovdiv, which is important for the retention of highly qualified young people.

All that has been said so far only outlines the basic features of the two zones. In the coming months the IME will present an in-depth study of all economic zones in the country.