Bulgaria Economy Essay

on board the north coast of Black Sea, the Bulgarian state was first founded in 635 A. D with the Slav and Bulgar peoples. Between the division 893 and 927 the first Bulgarian acres was conventional which is known as the G grey-haireden Age in the narrative of Bulgaria. In the early 20th century social and policy-making ailments flawed Bulgaria and campaignd the ground to participate in the First Balkan War in 1912 and so in the Second Balkan War in 1913. Bulgaria in like manner took a part in the World Wars first by associated with the Central Powers and then with the Axis Powers.In the beginning of the Second World War, the uncouth coupled with the Ger many a(prenominal), besides towards the end of the war it changed its position for fighting with the German soldiers that resulted in the killing of 30,000 Bulgarian soldiers. Communism came forward and materialized dominantly in the political environment of the country in 1944 when the Soviet soldiers entered into the t erritory of Bulgaria and the Axis causality crushed in the Second World War. Gradually the country moody as the protecto cast of the Soviet Union during the era of Cold War.With disinvest of Todor Zhivkov, thethen head of the Communist Party of Bulgaria, democratic change took place in the country. In 1991 the first egalitarian parliamentary elections occurred in Bulgaria. In 1992 the country experienced its first ever direct presidential elections. Bulgaria, which comes out by means of the agonizing struggle and trouble of communism, set about various social disorder and economic turmoil that ultimately ended with the abundant economic and fiscal crisis in the level of the late 1996 and the early 1997.However, the economy of Bulgaria came back to the alter path with a series of revitalizeing enterprises interpreted by Ivan Kostov, the former pristine minister of the country. ( downplay Note Bulgaria, November 27, 2009). Overtime, Bulgaria has gradually emerged as a mark et-driven economy from an old command economy. In 1996, the country experienced major economic crises in the form of banking system disorder, depreciation of currency, reduction of production as salutary as foreign trade. Dwindling foreign exchange reserves and large increase in steps of interest further aggravated some(prenominal) the burden of domestic debt and harvest-home of the country.Within a period of ace year gross domestic product dropped by intimately 11% in 1996 while it experienced a 2% increase in 1995. In the late 1996 privatization model was accepted, but the privatization of the populace sphere of influence industries declined. During this period the IMF disbursed close to $580 loan to Bulgaria. But the country failed to augment its structural remediate process. This lack of progress of Bulgaria insisted the IMF to postpone the loan sanctioned to the country. For avoiding needless using up and huge swellingary pressure, the IMF proposed to form a curren cy board to resort the confidence of the country. In this case Mr.Ivan Kostov (UDF), the former Prime Minister of Bulgaria, who got the jacket in 1997, played the leading role to launch the ambitious remedy programs. With such initiatives the currency board was set up on July 1, 1997 to figure out back the stability and egression in the economy of Bulgaria. The outcome of the g e preciseplacenance of the currency board was seen by the fall in inflation rate. composition the rate of inflation was a three digit number in 1997, it was slashed to 1% in 1998. A decrease in the inflation rate, a decrease in interest rate and an increase in the foreign investment were followed by the formation of the currency board.The organization of Bulgaria to a fault assured to sell off some of the assets of the country. Though the country faced a 7. 4% drop in its gross domestic product in 1997, it judge the GDP to bounce back in 1998 to an estimated level of 2%. The political relation of B ulgaria also took some other initiatives like achieving the success of land reform policy, the process of privatization and the reform of the banking system, and so forth as its other prime objectives. The authorities of Bulgaria has taken the steps to provide a strong and sustainable growth in the GDP of the country by learning the lessons from the fall of GDP in the long time 1996 and 1997.For reducing the level of unemployment and sustaining the growth of production of the economy, Bulgaria has taken all the required steps from time to time. The governments have taken the needful measurements to reduce the level of both the individual and the corporate taxes, curb the rottenness and draw the flow of foreign investment into the country. The government of Bulgaria has also taken the steps to re grammatical construction the foreign debt policy of the country, restore and stimulate the dribble market and aggravate the process of privatization of the some of the major state mon opolies. either such steps of the country have led the europiuman delegating to decl ar that Bulgaria is Functioning Market frugality in October 2002 as its principal(prenominal) economic policy. (Background Note Bulgaria, November 27, 2009). All the successive governments have controled such reform and ultimately Bulgaria has taken the membership of the European Union in 2007. A World Bank report suggests that Bulgaria has been able to draw the utmost levels of flow of foreign direct investment among all the nations of Eastern Europe as a percentage of GDP in 2006.The government of Bulgaria has brought round the rate of corporate tax to 10% in 2007 to magnetize the extra flow of foreign capital in the country. such a corporate tax rate has been reported as the lowest rate in the whole Europe. The cost of domestic labor has also dropped by means of the principle of the flat personal income tax level of 10% in January 1, 2008. To conjure up the stability in local economic functioning, the Bulgarian parliament has taken the policy of fiscal decentralization for the municipalities so as to provide them the proponent of collection and supervision of some taxes. much(prenominal) a step was taken by responding the increasing demand for independence of financial procedures of the local governments of the country. The feat of the country towards the restructure of its fiscal policies and tax reforms, however, somewhat wiped out by the recent world-wide financial crisis and economic turmoil that started from the centre of 2007. such a worldwide global dwindling phase has forced the Bulgarian economy to be trapped by the vicious circle of time out at the end of 2008 after experiencing a prolonged 10 years steady growth.The effect has been seen in the mounting household debt and the increased rate of unemployment in the country. In this situation the government has responded by taking an anti-crisis system for strengthening fiscal reco rattling and pro moting economic stability. To increase the power over the funds of the European Union, the government has also given its commitment. Such political steps are also expected to fight the crime and the putrescence in the Bulgarian economy in an organized way. ( thrift in Bulgaria, n. d. ). allow us look at some of the basic statistics which are really helpful to assess the present economic structure of the Bulgarian rescue and its overall development. It is a known fact in the history of redevelopmentman that the identification of the goals of economic development has not been properly done by human. (Todaro and Stephen, 2009, p 16) The Bulgarian economy has been designated as an economy with an upper and middle income nation by the World Bank. Though in the recent chivalric the country has exhibited a steady trend in its growth, it is one of the least(prenominal) developed nations of Europe.The economy of Bulgaria heavily dependent on the industrial sector, but in recent past the service sector has also contributed to the growth of the countrys GDP. Petroleum, copper, gold, coal, beverages and tobacco, fruits, electronic tools and items, vehicle machineries, nuclear fuel, iron, construction items, sunflowers, wine, barley, etc. , are some of the major products of the country. From 1996 to 2008, over a period of 12 years, the country has able to maintain a growth of 6% and more. The huge inflow of foreign direct investment in the country has helped it to maintain such a significant rate of growth.However, the latest global fadeout has adversely bear on the country on its export sector as well as on its capital inflow. This in turn has affected the growth of the country. The GDP of the country has fall to 5% in 2009. In terms of purchasing power parity, the GDP of Bulgaria has dropped to $90. 54 one thousand thousand in 2009 from the level of $95. 1 gazillion of 2008. In terms of absorption of the rick force of the country, the agriculture sector con tributes 7. 5%, whereas industry contributes 27. 6% and service sector contributes 64. 9%. According to the estimation of 2009, the total work force of the country is 2.63 trillion. The share of unemployed existence in 2009 stands around 9. 1% in the total working world. The corrupted system of public administration, feeble judiciary system and the increasing criminal activities has led almost 14. 1% of the tribe of Bulgaria to live their lives below the poverty line and downstairs a greater hardship. (Bulgaria thriftiness, n. d. ). The estimated per capita GDP of the country has dropped to $12,600 in 2009 from the level of $13,100 in 2008. The estimated percentage of GDP of the country in agriculture, industry and services sector are 7.5%, 27. 6% and 64. 9% successively. The estimated level of unemployment of Bulgaria has risen to 9. 1% in 2009 in comparison with 6. 3% in the previous year 2008. Total estimated gross investment in 2009 of the country is 28. 6% of GDP. The est imated mensuration of public debt has risen to 21. 4% of GDP in 2009 from the level of 14. 1% in 2008. The growth rate of industrial production in 2009 has been estimated as negative and stands at -14% of GDP. The estimated foreign exchange reserve and gold has also dropped to $16. 49 billion on December 31, 2009 from the level of $17.93 billion on December 31, 2008. In response to the unfavorable effect of the global financial turmoil on the economy of Bulgaria, the government has taken many steps to strengthen the economy. Such governmental initiatives are supported by various statistics. The estimated public debt of Bulgaria has dropped to 21. 4% of GDP in 2009 as compared to the 14. 1% of the year ago. Estimated rate of inflation in terms of consumer prices has also rock-bottom to 2. 7% in 2009 from that of 12. 3% in 2008. The prime lending rate of the central bank of Bulgaria has been increased to 10.86% in December 31, 2008 from that of 10% in December 31, 2007. The stock of domestic credit has increased to $32. 04 billion in December 31 which was $17. 03 billion in December 31, 2007. (Bulgaria Economy 2010, February 8, 2010). According to the latest available data as published by Nation Master, the external debt of Bulgaria has increased to $3488 million which is a very gritty amount. In terms of Gini index, which is the measure of arcdegree of in satisfactoryity in the scattering of family income, the country has been rank and fileed as 103rd out of 133 nations in case of its equal distribution of family income.(Economy, 2010). For analyzing the socio-economic structure and development issues of Bulgaria we should study the basic tuition system, health care system, urbanization process and migration and the strategies of the country to develop the economy in the charge of corruptness. The minority communities of Bulgaria are protected by many international instruments check to the 1991 new Bulgarian constitution. Such a extreme structure has established the superiority of the international law over the national law of Bulgaria.Such international norms and regulations have made the basic principles of the legislation of the country through which the government of Bulgaria is able to control and adjust the common rights of its citizens who vary crossways the languages of their respective communities, religions and cultures. However, in that location are many worrys in the country associated with the minorities. Such problems are not only related with the cultural or religious variations but also basically with the economic and social values of the citizens. (Karasimeonov, n. d. ).The government of Bulgaria is very concerned to respect its citizens human right. In past, there were, however, some problems in many areas. The citizens who were the member of minority population of the country were suspected by the law enactment officials. The prisoners were also mistreated and misbehaved. The degree of arbitrary arrest, po lice violence and exploitation were very common in the country. The prevalence of corruption and other problems associated with the system led the judicial structure of the nation to suffer greatly. The press was also restricted to freely discover the views.In Bulgaria there were also many barriers on some of the religious groups of the nation. They were strictly deterred to present their cultural and religious outlooks. Communal harassment was very common in the country. Social discrimination between the men and women was very high and the violence against the women was vastly prevalent in the society. The increasing problem of child labor in the country have also volte-face the economy of Bulgaria. Throughout the ruling of all the political organizations in Bulgaria, corruption and crime has remained the basic concerning factors of all the governments.To fight against the corruption and to increase the sensation of its citizens, the government of Bulgaria has formed the inter-m inisterial anticorruption commission in 2002. To combat against corruption though the Bulgarian government has taken various methods, the European Union, however, has argued that the country is soothe facing many problems associated with the presence of corruption in the economy. The Union has recommended for the want of rehabilitated efforts to tackle such advanced and sophisticated corruption. (Corruption and Anti-corruption Policy in Bulgaria, 2002, pp 102-104 Bulgaria, February 28, 2005).The education system of Bulgaria is basically national in nature, but also affected significantly by foreign controls. In the 19th century the educational system of the country was highly motivated and influenced by the impact of Soviet Russia. The influence of Hesperian Europe and the American educational culture are also significant on the overall educational environment of Bulgaria. However, to take the countrys educational system in the line of Western European process of education the e ducational system of Bulgaria has been reformed.With such initiative to reform the educational system of the economy, Bulgaria has supported the agreement with the European Union. (Bulgaria- educational System- overview, 2010). Development is the concept of freedom of human. The Human development index consists of the office of health, education and the income (Todaro and Stephen, 2009, p 19-21). The Human Development Index of Bulgaria is . 808 which has given it the rank of 55 among the 178 nations. (Economy 2010). In the early 20th century the proportion of residents who lived in the cities with their counterparts who lived in the villages were merely 20 percent.In 1945 the proportion has increased to almost 24 percent and at the end of 1990 it has been seen that more than 6 million people resided in the cities while less than 3 million population of Bulgaria resided in the villages. Such a change in demographic faecal matter is well enough to argue that Bulgaria has experienced the pace of urbanization with the musical passage of time. Since almost 66% of Bulgarian migrants has relocated in the same states of the country, so there has not been seen any sharp decline in the regional population ratio.The demographers, however, are very concerned over the decline of the population of the villages. They are very concerned over the skewed distribution of population towards the cities. The 1990 democratization activities have raised many debates over the issue of boorish privatization program of the government. (Curtis,1992). References 1) Todaro, P, M and S, C, Stephen (2009), Economic Development, Pearson Education Limited, 10th Edition, England. 2) Background Note Bulgaria (November 27, 2009), government agency of European and Eurasian Affairs, U. S. Department of State. unattached at http//www. state. gov/r/pa/ei/bgn/3236. htm Access On may 18, 2010 3) Economy in Bulgaria (n. d. ), World66 Available at http//www. world66. com/europe/bulgaria/economy Acc ess On may 18, 2010 4) Bulgaria Economy (n. d. ), EconomyWatch Available at http//www. economywatch. com/world_economy/bulgaria/ Access On May 19, 2010 5) Economy (2010), Bulgaria, Europe, NationMaster. com Available at http//www. nationmaster. com/country/bu-bulgaria/eco-economy Access On May 19, 2010 6) Bulgaria Economy 2010 (February 8, 2010), Countries of the World. Available at http//www.theodora. com/wfbcurrent/bulgaria/bulgaria_economy. html Access On May 19, 2010 7) Karasimeonov, G, (n. d. ), The constitutional Rights of Minorities in Bulgaria Available at http//www. cecl. gr/RigasNetwork/databank/REPORTS/r9/BU_9_Konstantinov. html Access On May 20, 2010 8) Corruption and Anti-corruption Policy in Bulgaria (2002), Open Society Institute Available at http//info. worldbank. org/etools/antic/docs/Resources/Country%20Profiles/Bulgaria/OpenSocietyInstitute_CorruptionBulgaria. pdf Access On May 20, 2010 9) Bulgaria (February 28, 2005), Bureau of Democr