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The recently published study “Regional Profiles: Indicators of Development 2012” has already caught the attention of policy makers and is being used in the preparation of strategic documents and reports. The results of the study have been quoted in this year’s�report�on management of EU funds, presented by the Parliamentary Committee on European Affairs and Oversight of European Funds.

The study has also been used in the preparation of some of the recommendations of the Committee on improving the allocation and utilisation of EU funds during the next programme period (2014-2020).

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

* Stoyan�Hristov

During the analysis of regional development, an interesting question arises: is the domination of different economic branches a factor when it comes to poverty levels or wealth in the region? In order to be able to answer this question, we are going to use data from the recently published survey “Regional Profiles – Indicators for Development”.

One of the ways to explore whether such a link exists is to use the gross value added (GVA) of each branch in the districts. The data for 2009 (the most recent data available) shows that the sector of services accounts for the largest portions of GVA in 24 of the regions. In the remaining four – Sofia district (62%), Stara Zagora (58%), Gabrovo (48%) and Vratsa (46%) – the leading branch is industry. In regions where large cities are present the trend is for services to take the largest part; here the city of Sofia features as leader with its services branch amounting to almost 79%, followed by Varna where services hold 68.6%.

Source: NSI

As expected, according to the data, agriculture makes for a rather small portion of GVA in all regions and the country as a whole. The next graph shows the interconnection between the size of the agricultural branch and the economic development of the region.

The main indicator for the degree of regional development is GDP per capita. The following graph shows the reverse relation between GDP per capita and the share of the agricultural branch in the economy of the region[1]. Given this negative trend, two separate groups stand out. The first group is comprised of regions with relatively well-developed agricultural branch and a GDP per capita lower than the country average. The second one encompasses regions with relatively underdeveloped agriculture and a GDP above the country average.

Source: NSI

This leads to two separate conclusions. The data show that regions with a higher portion of agriculture in their GVA – above the country average – have relatively weaker economies. Examples for this are regions like Silistra, Vidin and Razgrad, which have a relatively large agricultural branch and feature a rather bad economic state and negative demographic trends[2]. On the other hand, the number of regions in this first group is bigger. Put in other words, these are the less populated areas, which fall behind according to a big number of indicators. If we compare these data with the “Regional Profiles: Indicators of Development” survey, we will reach the same conclusion. The average score in the “Economy” indicator is “unsatisfactory” for the first group and “good” for the second one.

On the other hand, the economically well-developed regions have a relatively underdeveloped agricultural branch – below the country average. There is only one exception – Vratsa region – and even there the share of agriculture is above 14 per cent lower than the leader in this respect – Silistra. In other words, the most developed regions in Bulgaria, according to the majority of indicators, fall in the second group. According to IME’s survey, these regions are also the ones with the best environment for business development (Stara Zagora, Targovishte); they also have the best socioeconomic state (Bourgas, Varna, Plovdiv) and have the most promising development trends (Ruse, Sofia).

Does this all mean that the population of these regions is poorer? The results depend on how we define poverty: 1) As an absolute indicator (income) or 2) as the standard of living above the poverty level. The first option covers what we had just shown – the economic development of the regions – and the results are fairly similar. NSI provides us with a second option. If we look at the poverty and social inclusion indicators we are bound to notice that there is a connection – albeit not a strong one – between the relative share of the agricultural branch and the poverty line. The graph below shows that with an increase of the share of the agricultural branch the poverty line drops lower[3]. This is to say that a lower income is necessary to maintain a standard of living above the poverty line in these regions – the standard of living there is lower. Despite that fact, if we consider the share of the population living below the line of poverty, we will see that these numbers cannot be linked to the size of the agricultural branch.

Source: NSI

To summarize, we can safely say that despite the small share of the agricultural branch in Bulgaria it is obvious that it is inversely related to the socio-economic development of the regions. However, when it comes to poverty, this link cannot explain why certain regions are poorer than others or why the number of poor people is bigger. Still, we can state that in the regions with a better-developed agricultural branch the poverty line is lower, which is an indicator for the standard of living in these regions.

*The author is an intern at IME

Almost a month after the publication of the Bulgarian edition of the study “Regional Profiles: Indicators of Development 2012”, it continues to be the subject of high interest among Bulgarian media, as well as among different groups in the government and nongovernmental sector.

A few days ago the website Economy.bg published extensive video coverage of a forum, titled “Possibilities and Challenges of Doing Business in the Gabrovo Region”, organized by Economy.bg and Jobs.bg. IME’s senior economist, Petar Ganev, took part in the debates, where he had the chance to present the study’s results, alongside Bulgaria’s minister for EU funds management, and the economist Georgi Stoev (Industry Watch).

Additional information about the research was published on the international portals 4liberty.eu and Stockholm Network.

The full media coverage of the study is available here.

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

Here you can find links to the scanned copies of articles that some of the leading Bulgarian newspapers dedicated to the study.

• "Capital Daily" Newspaper
• "24 Hours" Newspaper
• "Trud" Newspaper
• "Monitor" Newspaper
• "Pressa" Newspaper
• "Standart" Newspaper
• "Telegraph" Newspaper
• "Duma" Newspaper

The full media coverage of the study is available here.

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

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.