One-third of Bulgaria generates 86% оf all production and investment. The remaining two-thirds оf the country is an economic “desert,” according to a report of the Institute for Market Economics (IME) presented in mid-January 2018.
In 2015, Bulgaria’s economic hubs attracted the bulk of foreign investments (81%) and employed three out of every four economically active citizens. Nearly two of every three Bulgarians lived there. The economic heavyweights were the regions around Sofia, Plovdiv, Burgas, and Varna.
The IME report emphasized that hubs of economic activity tend not to overlap with administrative divisions, and development strategies should acknowledge natural economic areas rather than target specific territorial units.
Other key points and recommendations included:
1. Limited human and financial resources reduce local government officials to mere observers of the processes taking place in their territories. Fewer administrative units will better reflect the country’s social and economic reality.
2. Municipalities are experiencing a considerable shortage of funds, which has prompted local tax hikes in recent years. Even so, many local problems cannot be addressed due to the lack of sufficient resources.
3. The best way to overcome the gap between taxation and political representation at the local level is to transfer income tax revenues back to municipalities. This would help cover old liabilities and new capital costs and give local authorities an incentive to attract investments and achieve higher employment and incomes.
4. Developing infrastructure is a top priority. The infrastructure of Northern Bulgaria remains underdeveloped, and connections with the country’s south are limited.
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