Ministry of Economy & EnergyMinistry of Economy & Energy

presentspresents

Enterprise Policy DirectorateEnterprise Policy Directorate

Introduction toIntroduction to

OPERATIONAL PROGRAMMEOPERATIONAL PROGRAMME

DEVELOPMENT OF THE COMPETITIVENESS OF THE DEVELOPMENT OF THE COMPETITIVENESS OF THE BULGARIAN ECONOMYBULGARIAN ECONOMY

2007-20132007-2013

„„Operational Programme Enterprise and Innovations 2007 – 2013:Operational Programme Enterprise and Innovations 2007 – 2013:The Gate of Czech Enterprises to Prosperity on Domestic and Foreign Markets“ The Gate of Czech Enterprises to Prosperity on Domestic and Foreign Markets“

27 April 2006 in Senate House – Valdštejnský palác27 April 2006 in Senate House – Valdštejnský palác

0

5000

10000

15000

20000

25000

1997 1999 2001 2003 2005

GDP EURO mio Since 1997 GDP increased by more

than 140%

Real Growth Rate for 2005

5.5%

GROSS DOMESTIC PRODUCTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

5.5%5.7%

4.5%4.9%

4.1%5.4%

2.3%4.0%

-5.6%

Real Growth Rate

14.1

17.1

15.6

18.8

68.7

71

67.8

66.1

17.2

11.9

16.6

15.1

0% 20% 40% 60% 80% 100%

Bulgaria

Slovakia

Austria

Denmark

0-14

15-64

64+

Closest EU member countries to Bulgaria in terms of population -

2005

5,432,000

8,185,000

5,431,000

7,719,000

Age Structure

%

Population

+0.34%

+0.11%

+0.15%

-0.85%

Since 1997 Bulgarian population decreased by 565,000 people

POPULATIONALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

2006 forecast & change towards EU-25 since 1997

100% 122% 124%56%33%

+10%+8%

-2% 0%

GDP per capita in PPS (EU-25 =100)ALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

Since 1997 Bulgarian GDP PPS is steadily increasing but still very slowly

0

2

4

6

8

10

12

14

16

18

20

1997 1998 1999 2000 2001 2002 2003 2004 2005

Rates 1997 - 2005

5.0%

2.8%2.2%2.1%1.7%

Price levels of final consumption in 2005 & change towards EU-25

since 1997

100%55%43% 104% 137%

+5%

+10%

+13%-5%

Coming from 1058.4% in 1997

INFLATIONALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

Now the inflation is stable and relatively low – it has to be decreased more

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002 2003 2004 2005

Overall change in number of unemployed people in % since 2001

+7.0%

+7.6%

+49.9%

-14.5%

-50.5%16.4%

9.9%

8.7%5.2%

4.8%

Rates 1997 - 2005

UNEMPLOYMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

Unemployment is decreasing fast – more jobs to be created soon

VALUE ADDED STRUCTURE

1.4

42.6

6.92.4

23.4

3.8

12.66.9

Mining and quarrying

Manufacturing

Construction

Electricity, gas and watersupply

Wholesale and retailtrade;

Hotels and restaurants

Transport, storage andcommunication

Real estate, renting andbusiness activities

Value Added by Sectors in %

42.6%

ALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENTALL-ROUND DEVELOPMENT

Manufacturing has the greatest share in Gross Value Added

NUMBER OF ENTERPRISESNUMBER OF ENTERPRISESNUMBER OF ENTERPRISESNUMBER OF ENTERPRISES

 Comparison:Bulgaria = 100

1997 2003 1997-2003

Number of Enterprises

Number of Enterprises

Change in Number of Enterprises

Bulgaria 100100 100100 +14%+14%

Slovakia 88 2525 +238%+238%

Austria 105105 104104 +12%+12%

Denmark 102102 6868 -24%-24%

MANUFACTURING

Similar shares of SMEs in the number of enterprises

TURNOVERTURNOVERTURNOVERTURNOVER

 Comparison:Bulgaria = € 1 M

1997 2003 1997-2003

Turnover of Enterprises

Turnover of Enterprises

Change in Turnover of Enterprises

Bulgaria 1.01.0 1.01.0 +56%+56%

Slovakia 1.7 1.8 +94%

Austria 12.4 11.1 +27%

Denmark 8.4 7.5 +23%

Bulgarian enterprises are catching up but the gaps are still big

MANUFACTURING

 Comparison:Bulgaria = € 1 M

1997 2003 1997-2003

VA of Enterprises

VA of Enterprises

Change in VA of Enterprises

Bulgaria 1.01.0 1.01.0 +42%+42%

Slovakia 1.71.7 1.91.9 +76%+76%

Austria 20.220.2 17.817.8 +25%+25%

Denmark 14.414.4 11.911.9 +18%+18%

The gap in value added is even larger but it’s also decreasing

MANUFACTURINGVALUE ADDED to FACTOR COSTVALUE ADDED to FACTOR COSTVALUE ADDED to FACTOR COSTVALUE ADDED to FACTOR COST

EMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITY

Apparent Labour Productivity – it seems with more workers we produce lesser value added

 Comparison:Bulgaria = € 1 K

2003 1997 2003 1997-2003

Employees in Enterprises

Bulgaria = 1000

GVA per person

employed

GVA per person

employed

Change in GVA/ person

employed

Bulgaria 10001000 1.01.0ee 1.01.0 +63%+63%

Slovakia 681 2.4e 3.23.2 +142%

Austria 997 25.5e 20.520.5 +25%

Denmark 712 22.9e 19.219.2 +34%

MANUFACTURING

Simple Wage Adjusted Labour Productivity – actually Bulgarian enterprises produce at the same rate of productivity but obviously products with lower value added and with lower unit labour cost

 Comparison:Bulgaria = € 1 K

2003 1997 2003 1997-2003

Employees in Enterprises

Bulgaria = 1000

GVA per unit personnel

cost

GVA per unit personnel

cost

GVA per unit personnel

cost

Bulgaria 10001000 1.01.0ee 1.01.0 +22%+22%

Slovakia 681 1.1e 1.11.1 +30%

Austria 997 1.1e 1.01.0 +0.1%

Denmark 712 1.1e 0.90.9 -0.1%

MANUFACTURINGEMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITYEMPLOYMENT & PRODUCTIVITY

WAGES & SALARIESWAGES & SALARIESWAGES & SALARIESWAGES & SALARIES MANUFACTURING

 Comparison:Bulgaria = € 1 K

1997 2003 1997-2003

Average Wage Average Wage Change in Average Wage

Bulgaria 1.01.0 1.01.0 +29%+29%

Slovakia 1.81.8 1.91.9 +46%+46%

Austria 22.322.3 20.520.5 +19%+19%

Denmark 19.219.2 17.417.4 +17%+17%

Very large gaps in terms of wages and salaries

The gap between wage rates and value added rates is larger in Bulgaria than in the other countries

INVESTMENT in TANGIBLE GOODSINVESTMENT in TANGIBLE GOODSINVESTMENT in TANGIBLE GOODSINVESTMENT in TANGIBLE GOODS MANUFACTURING

 Comparison:Bulgaria = € 1 M

1997 2003 1997-2003

Investments in Tangible Goods

Investments in Tangible Goods

Change in Investments

Bulgaria 1.01.0 1.01.0 +308%+308%

Slovakia 5.65.6 1.31.3 -0%-0%

Austria 17.617.6 5.55.5 +27%+27%

Denmark 14.314.3 3.53.5 -0%-0%

The investments are growing rapidly

CERTIFICATESCERTIFICATESCERTIFICATESCERTIFICATES ISO 9000:2001

 Comparison:

2001 2004 2001-2004

Number of ISO 9001:2000

Number of ISO 9001:2000

Change in number of ISO

9001:2000

Bulgaria 3838 16851685 +1647+1647

Slovakia 144144 20082008 +1864+1864

Austria 700700 38393839 +3139+3139

Denmark 3636 10501050 +1014+1014

The enterprises seem to take care about quality management

ISO 14001

 Comparison:

2001 2004 2001-2004

Number of ISO 14001

Number of ISO 14001

Change in number of ISO

14001

Bulgaria 66 2626 +20+20

Slovakia 7373 184184 +111+111

Austria 223223 549549 +326+326

Denmark 620620 711711 +91+91

CERTIFICATESCERTIFICATESCERTIFICATESCERTIFICATES

Not the same situation in the field of environmental care

OPERATIONAL PROGRAMMEOPERATIONAL PROGRAMMEOPERATIONAL PROGRAMMEOPERATIONAL PROGRAMME

Problems to solve ensuing from the above

INNOVATIONS

TECHNOLOGY, EQUIPMENT & PRODUCTIVITY

ENERGY EFFICIENCY and ENVIRONMENTAL CARE

EASIER ACCESS TO FINANCE

INVESTMENTS

DEVELOPMENT OF THE COMPETITIVENESS OF THE BULGARIAN ECONOMY 2007-2013

OPERATIONAL PROGRAMMEOPERATIONAL PROGRAMMEOPERATIONAL PROGRAMMEOPERATIONAL PROGRAMME

DEVELOPMENT OF THE COMPETITIVENESS OF THE BULGARIAN ECONOMY 2007-2013

The TOP 3 things that

pop-up into a foreigner’s mind when

he/she hears

Thank you for your attention!www.mee.government.bg

Ivaylo GRANCHAROV, Chief Expert, e-mail: i.grancharov@mee.government.bg , Ministry of Economy and Energy; © 2006

Take a look also at theTake a look also at the

ANNUAL REPORT ANNUAL REPORT

on the Condition & Development ofon the Condition & Development of

SMEsSMEs

in BULGARIAin BULGARIA

SMEs ALPHABETSMEs ALPHABET