Fdi in Bulgaria
COURSEWORK
FDI in Bulgaria and the Impact of the Global Financial Crisis
Sofia, February 2012 |
Table of Contents
Introduction 2
Definitions and registration of FDI 2
Factors determining the attractiveness of Bulgaria for FDI 5
Challenges for foreign investors 10
FDI in Bulgaria before the global financial crisis 10
FDI in Bulgaria during the years of the global financial crisis 13
FDI in Bulgaria in 2009 15
FDI in Bulgaria in 2010 16
Conclusion, recommendations and future prospects 18
References: 19
Introduction
During the late 1990s, Bulgaria’s geographic location and its low inflation rate made it a popular destination for foreign direct investment (FDI) so that in the period between 2000 and 2005, Bulgaria was viewed as the third most popular FDI destination among the countries in the South Eastern European region. In these years Bulgaria started to receive significant foreign capital and funds which allowed for a transfer of technology, skills and job opportunities.
During the last decade, the country became an attractive FDI destination due to three main circumstances. Firstly, because Bulgaria had a rather low GDP, there was significant room for growth, and the stable amount of GDP and rates of inflation Bulgaria achieved during the 2000-2005 period appeared promising. Secondly, the strengthening of the national economy coincided with Bulgaria’s accession to the EU in 2007 which caused further FDI inflow. Thirdly, as a result of regional trade and market cooperation, Greek FDI had already become a major inflow of investment in Bulgaria’s industry. Thus, by the end of 2008 Bulgaria’s national economy had become one of the most FDI heavily reliant countries in the Central and Eastern Europe region, attracting EUR 6,7 billion.1
However, shortly after this FDI growth period, significant problems began to emerge. Ever since Bulgaria’s accession to the EU, the country has been failing to meet EU
FDI in Bulgaria and the Impact of the Global Financial Crisis
Sofia, February 2012 |
Table of Contents
Introduction 2
Definitions and registration of FDI 2
Factors determining the attractiveness of Bulgaria for FDI 5
Challenges for foreign investors 10
FDI in Bulgaria before the global financial crisis 10
FDI in Bulgaria during the years of the global financial crisis 13
FDI in Bulgaria in 2009 15
FDI in Bulgaria in 2010 16
Conclusion, recommendations and future prospects 18
References: 19
Introduction
During the late 1990s, Bulgaria’s geographic location and its low inflation rate made it a popular destination for foreign direct investment (FDI) so that in the period between 2000 and 2005, Bulgaria was viewed as the third most popular FDI destination among the countries in the South Eastern European region. In these years Bulgaria started to receive significant foreign capital and funds which allowed for a transfer of technology, skills and job opportunities.
During the last decade, the country became an attractive FDI destination due to three main circumstances. Firstly, because Bulgaria had a rather low GDP, there was significant room for growth, and the stable amount of GDP and rates of inflation Bulgaria achieved during the 2000-2005 period appeared promising. Secondly, the strengthening of the national economy coincided with Bulgaria’s accession to the EU in 2007 which caused further FDI inflow. Thirdly, as a result of regional trade and market cooperation, Greek FDI had already become a major inflow of investment in Bulgaria’s industry. Thus, by the end of 2008 Bulgaria’s national economy had become one of the most FDI heavily reliant countries in the Central and Eastern Europe region, attracting EUR 6,7 billion.1
However, shortly after this FDI growth period, significant problems began to emerge. Ever since Bulgaria’s accession to the EU, the country has been failing to meet EU