Discussion Papers 2002.
Regional Challenges of the Transition in Bulgaria and Hungary 49-61. p.
TRANSFORMATIONS IN THE TERRITORIAL
STRUCTURE OF BULGARIAN ECONOMY
IN THE 1990s
Margarita Ilieva
The processes of transformations, which take place during the period of transition
in Bulgaria, are a priority research problem, tackled by professionally heterogene-
ous experts. The analysis of the available publications indicates that the attention is
focused on the way the processes are going on at a national rather than at a regional
level. This is partly due to the insufficient information, which would have shown
the differentiation of the transformation processes by separate territorial units. The
lack of adequate information can be attributed to the changes in the statistical ac-
countancy, caused by the attempts to unify the Bulgarian statistics with the EU sta-
tistics, by the new administrative-territorial division of the country, etc.
Since the beginning of the 1990s Bulgaria has been experiencing a deep eco-
nomic and social restructuring. The transition to market economy in Bulgaria and
in the remaining countries from Central and Eastern Europe follows one and the
same pattern. The system's transformation is concurrent with the structural trans-
formation. The system's transformation is defined as a process of turning the so-
cialist planned system into a capitalist, market one. The structural transformation
proceeds as changes in the structure of ownership, production and technologies, in
the organisational forms, etc. The Bulgarian model of transition to market economy
has its characteristic features, resulting from the specific conditions in the country.
Compared to the other Central and East European states, the process of restructur-
ing in Bulgaria is more distinct. The more profound changes in Bulgaria are due to
the much lower share of private ownership and to the predominant share of the
state ownership in the economic sector, having been observed for several decades
(1950s-1980s), to the deeper social and economic crisis towards the end of the
1980s and in the first half of the 1990s, to the unfavourable political situation in the
Balkans during the first five years of the 1990s, to the larger scope and slower rate
of the reform, to the inadequate capitals, to the smaller amount of direct foreign
investments, to the more serious obstacles in the formation and functioning of la-
bour market, etc.

Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
Against the background of the general characteristics of transformations
throughout the country, significant differences can be distinguished at a regional
level. These differences depend on the built-up economic potential and its present
state, on the degree to which national and local factors (geographical location, eco-
nomic structure, attractiveness for foreign investments, demographic factors,
newly-created jobs, disparities in the incomes and living standard, infrastructure,
communications, etc.) exert their influence, on the different pace of the reform, etc.
Everywhere the transformation started first in the economic sector and it was the
economic changes that altered the demographic conditions and the employment.
Some of these changes are similar to the changes in the national economy while
others are not. Generally, the specificity of the transformation processes is pro-
duced by the overlap of the national trends and the specific processes and phenom-
ena in different parts of the country.
The six regions for planning, outlined in conformity with the 1999-Law on Re-
gional Development, which is in fact the first regional development plan passed by
the Parliament, have been used by the author as key research units for studying the
differences in the process of transformation. In some cases, when possible, the dif-
ferences are further specified at the level of the constituent administrative districts.
The creation of a new spatial framework and organisational structure for future
sustainable and balanced regional development, conformable to Bulgaria's integra-
tion into the European structures, can be treated as a specific aspect of the trans-
formation process. In terms of their area and population, the planning regions are
comparable to the NUTS 2 territorial units in the EU-countries. The planning re-
gions involve territories with different natural conditions, geographical location
and development prospects, which taken together, will guarantee their prosperity.
Each planning region covers not less than three districts (e.g. the North-western
region) and not more than six districts (e.g. the South-central and the North-eastern
regions). Except for the North-western region, the planning regions are comparable
with respect to their area, demographic and economic potential (Figure 1). The
South-western and the South-central region are remarkable for their greatest num-
ber of population and most advanced economy, which actually contribute with the
highest share to the gross domestic product. The biggest cities and industrial cen-
ters of the country — Sofia and Plovdiv — are located in these two regions. The
South Central region is the largest (by area) and the North-western region is the
smallest (Table 1). The North-western region, which is the most backward, has the
smallest number and density of population and the lowest share of urban popula-
tion. The North-western and the North-central regions, which extend over large
depopulated areas, are subjected to the highest population decrease during the last
two censuses.
50

Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
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Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
the basis of land division plans and 26,5 % of the land was returned in its original
or reconstructed landholdings. There were considerable differences in the rates of
the reform and in the ways of property right restoration at a regional level. The
lengthy agrarian reform, the slow rates of land restitution and the related difficul-
ties, the destruction and plundering of farm property (buildings, machines, peren-
nial crops, animals, etc.) adversely affected the creation of new forms of produc-
tion organization, of land use, etc. The changes of the agricultural ownership and
organizational forms in the post-socialist Central European countries are smaller
(Veznik  1995, Kovcics  1999, Zglinski  1999,  Csatciri 2000,  Galczynska—Ilieva  2001).
A number of documents and publications emphasize that as a whole the process
of privatization in Bulgaria is slower than that in the other states going through a
period of transition. Besides, its regional disparities are significant. According to
the National Statistical Institute, the greatest number of transactions is recorded and
most of the property is sold during 1993-1998 in the South-western region (over
40% of the cost of all privatization contracts in the country), followed by the
South-central region (about 19%), by the South-eastern, by the North-eastern and
the North-central region. These territorial differences can still be observed, which
is associated with the attractiveness of the sectors, regions, districts and munici-
palities for foreign investments. Throughout the transition period the biggest share
of the direct foreign investments has been allocated for the South-western region
and particularly for the district with the capital city of Sofia as its center. The latter
with its well developed material and technical base, versatile economic structure,
available technical and social infrastructure, etc., is most attractive for direct in-
vestments (local, national and foreign) needed for economic restructuring and
creation of new jobs. A characteristic feature in the process of Sofia city's trans-
formation is the development of service sectors and activities, some of which have
a supra-regional importance, such as finances, insurance, consultative and adver-
tising activities, computer services, publishing and printing trade, private mass me-
dia, telecommunications, etc.
Proceeding from the analysis of the foreign investment distribution by sectors, it
becomes clear that during 1992-1998 the foreign investors were most interested in
service sector.
Owing to the changes in the ownership during the transition period, the share of
private property has rapidly grown in all economic sectors both in the individual
territorial units and in the whole country. The private sector has enormously in-
creased its percentage in the gross domestic product  (Table  2) and has employed
far more workers  (Figure 2).
The deep economic crisis in the first half of the 1990s, the changes in the own-
ership, the on-going reforms in the production sphere and service sector (education,
health service, etc.) and other factors led to substantial changes in the employment
53

Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
There are significant differences in the per capita gross domestic product at a
district and intra-regional level. Depending on the 1999 values of this indicator, the
districts can be divided into several groups. The biggest is the group of districts
(22) in which the per capita gross domestic product is below the national average.
Eight districts of them are remarkable for substantially lower values (about 75% of
the average national). Among them are either less developed in the past districts
(Montana, Vidin, Yambol, Kardzhali, etc.) or such whose economy (mainly indus-
try) has been on a steady decline during the transition period (Pernik, Sliven,
Shoumen, etc.). Almost equal to the national average value is the per capita gross
domestic product of the Dobrich district while in only 5 districts the above men-
tioned indicator is of higher values (the capital city of Sofia and the town of Bour-
gas fall under this category). The lack of sufficient information does not allow to
reveal the dynamics of changes, referring to this indicator in each territorial unit.
The country as a whole is characterized by trends and changes  (Table 3),  which are
similar to those in most of the Central and Eastern European countries in transition
(Horvath  1999, Eberhardt 2000). Nevertheless, the estimations, aiming to facilitate
the elaboration of the reports on human development in Bulgaria, have to be taken
into account because they suggest that the economic growth and the improvement
of lifestyle not always advance in the same direction (Bulgaria 2000; Doklad za
2000, p. 9.).
The regional index for human development gives a general idea of the degree of
development the territorial units have reached and the differences between them.
For the first time in 1999 a report about Bulgaria was prepared, dealing with the
districts, followed by another one in 2000, concerning the municipalities. Consid-
ering the values of the regional index for human development, the districts have
been divided into three groups: with the highest (12 districts), moderate (10) and
low (6) index. It has been established that the districts with high regional index of
human development, called "engines of growth", are dispersed all over the country.
"Unlike many other countries, the potential for growth is not concentrated in one
geographical region" (Bulgaria 2000; Doklad za... 1999, p. 9.). The analysis of the
territorial distribution of the districts with the highest regional index of human de-
velopment makes it obvious that most of them are located in the North-central re-
gion (4 of the five constituent districts), in the South-western region (3 of the 5
constituent districts) and in the South-central region (3 of the 6 constituent dis-
tricts). The greatest number of districts with a moderate regional index of human
development is to be found in the North-eastern and North-western regions, while
the districts with the lowest regional index for human development are situated in
the southern and western parts of the country  (Figure 4).
56

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Transformations in • •
the Territorial  •
Structure of Bulgarian Economy in the 1990s.
•
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In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
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Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
The location of the areas for growth and the areas for development and their
future encouragement will certainly lead to a balanced regional development. The
seven areas for growth, which will be encouraged to obtain a stable economic
growth of national significance, include 24 municipalities around 7 of all the nine
big cities — Sofia (1,096,000 people), Plovdiv (340,600), Varna (314,500), Bourgas
(193,300), Rousse (162,100), Stara Zagora (144,000), Pleven (122,100). These
towns are notable for their well-developed industrial, transport, commercial, ad-
ministrative, scientific, cultural, financial and other functions, which make them
one of the most powerful centers of gravitation in the country.
The seven areas for development, which will be stimulated in order to solve re-
gional problems, involve fewer municipalities and a smaller share of the country's
area and population (Table 3). These are municipalities of district centers — mid-
sized towns (50,000-100,000 people), excepting the town of Dobrich (over
100 000 people), with a more limited economic gravity potential than the first
group.
An important element of the regional policy will be to promote 21 areas for
cross-border cooperation and development with a view to further stimulation of
good-neighbour relations and Bulgaria's future integration into the European
structures. They embrace 76 of the municipalities adjacent to Bulgaria's land bor-
ders and to the Danube riverside. Most of them are considered to be a periphery
owing to the small investments, the poor economic development, the mighty out-
migration flows from the border-line municipalities during the 1960s and the 1970s
and the underdeveloped links with the neighbouring regions. Among them there are
municipalities with considerable demographic and economic potential (Rousse,
Vidin, Blagoevgrad, Kiustendil, Silistra, etc.) and with heavy cross-border traffic
(Vidin, Oryahovo, Rousse, Silistra, Dragoman, Petrich, Svilengrad). In the 1990s
the responsible institutions in Bulgaria did their best to build new border posts or to
reconstruct the old ones as well as to establish an active cooperation with the
neighbouring countries, but the results seem to be unsatisfactory so far.
Almost half of the municipalities, which are constituent parts of the areas with
specific problems and priorities, are located in the Northwestern and Northeastern
region. The stimulation of their development by regional impact or assistance,
aimed at finding solution to urgent regional problems and at reducing the degrada-
tion in the economic and social sphere, will play a significant role for the future
economic progress both of the individual municipalities and of the country as a
whole. At present, greater attention is paid to the areas of industrial decline and to
the underdeveloped rural areas both of which incorporate 97 municipalities and
cover 1/3 of the country's area.
The economic crisis in the early 1990s has exerted a strong negative effect on
the industry of many regions, which is the predominant sector in the economic
59

Margarita Ilieva : Transformations in the Territorial Structure of Bulgarian Economy in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 49-61. p. Discussion Papers. Special Issue
structure of almost all Bulgarian towns. The areas of industrial decline, include 20
municipalities, situated in five out of the six regions for planning. Some of them
specialize in mining and others — in manufacturing but they all need aid. Much
more are the municipalities in the underdeveloped rural regions — 77  (Table 3).
They occupy either areas under favourable agroecological conditions for agricul-
ture in the Danube Plain (Northwestern and Northeastern region) and the Upper
Thracian Lowland (South Central region) or regions where there are conditions,
favouring the monocultural agriculture, e.g. in the Rhodopes, etc., (South Central
region).
"...So that the regional policy would be able to turn the regional disparities
from a burden into an advantage, it has to observe three basic assumptions: 1) there
a national vision in which the regions are supposed to play a certain role; 2) the
rising living standard at a national level is a sum total of the growth and prosperity
of the individual regions; 3) the growth and the regional development should be
based predominantly on endogenic factors" (Bulgaria 2000. Doklad za..., 2000, p.
9). Essential is the elaboration of development strategies and plans at a local, re-
gional and national level, and the preparation and implementation of "the national
plan for regional development as a key instrument for the formulation of a compre-
hensive, long-term regional development policy, pursuing a balance between the
national, regional and local interests and priorities" (Nationalen Plan..., 1999). It is
emphasized that the encouragement of regional development, the mitigation of re-
gional disproportions and the growth of regional prosperity are possible by stimu-
lating the development of the more advanced regions, which are the "engines of
growth". The implementation of an appropriate regional policy by the government
will be important for the transformation of territorial structures and for the planning
and management of the country's regional development. The regional policy, pur-
sued by the EU through its structural and pre-accession funds and programs, also
contributes to this process.
References
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2002. 49-61. p. Discussion Papers. Special Issue
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