Ministry of Economy & Energy presents Enterprise Policy Directorate

Introduction to OPERATIONAL PROGRAMME DEVELOPMENT OF THE COMPETITIVENESS OF THE BULGARIAN ECONOMY „Operational Programme Enterprise and Innovations 2007 – 2013: The Gate of Czech Enterprises to Prosperity on Domestic and Foreign Markets“ 27 April 2006 in Senate House – Valdštejnský palác

GDP EURO mio Since 1997 GDP increased by more than 140% Real Growth Rate for % GROSS DOMESTIC PRODUCT ALL-ROUND DEVELOPMENT 5.5% 5.7% 4.5% 4.9% 4.1% 5.4% 2.3% 4.0% -5.6% Real Growth Rate

Closest EU member countries to Bulgaria in terms of population ,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 POPULATION ALL-ROUND DEVELOPMENT

2006 forecast & change towards EU-25 since %122%124%56%33% +10% +8% -2% 0% GDP per capita in PPS (EU-25 =100) ALL-ROUND DEVELOPMENT Since 1997 Bulgarian GDP PPS is steadily increasing but still very slowly

Rates % 2.8% 2.2% 2.1% 1.7% Price levels of final consumption in 2005 & change towards EU-25 since %55%43%104%137% +5% +10% +13% -5% Coming from % in 1997 INFLATION ALL-ROUND DEVELOPMENT Now the inflation is stable and relatively low – it has to be decreased more

Overall change in number of unemployed people in % since % +7.6% +49.9% -14.5% -50.5% 16.4% 9.9% 8.7% 5.2% 4.8% Rates UNEMPLOYMENT ALL-ROUND DEVELOPMENT Unemployment is decreasing fast – more jobs to be created soon

VALUE ADDED STRUCTURE Value Added by Sectors in % 42.6% ALL-ROUND DEVELOPMENT Manufacturing has the greatest share in Gross Value Added

NUMBER OF ENTERPRISES Comparison: Bulgaria = Number of Enterprises Change in Number of Enterprises Bulgaria % Slovakia % Austria % Denmark % MANUFACTURING Similar shares of SMEs in the number of enterprises

TURNOVERTURNOVER Comparison: Bulgaria = € 1 M Turnover of Enterprises Change in Turnover of Enterprises Bulgaria % Slovakia % Austria % Denmark % Bulgarian enterprises are catching up but the gaps are still big MANUFACTURING

Comparison: Bulgaria = € 1 M VA of Enterprises Change in VA of Enterprises Bulgaria % Slovakia % Austria % Denmark % The gap in value added is even larger but it’s also decreasing MANUFACTURING VALUE ADDED to FACTOR COST

EMPLOYMENT & PRODUCTIVITY Apparent Labour Productivity – it seems with more workers we produce lesser value added Comparison: Bulgaria = € 1 K Employees in Enterprises Bulgaria = 1000 GVA per person employed Change in GVA/ person employed Bulgaria e % Slovakia e % Austria e % Denmark e % 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 Employees in Enterprises Bulgaria = 1000 GVA per unit personnel cost Bulgaria e % Slovakia e1.1+30% Austria e % Denmark e % MANUFACTURING EMPLOYMENT & PRODUCTIVITY

WAGES & SALARIES MANUFACTURING Comparison: Bulgaria = € 1 K Average Wage Change in Average Wage Bulgaria % Slovakia % Austria % Denmark % 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 GOODS MANUFACTURING Comparison: Bulgaria = € 1 M Investments in Tangible Goods Change in Investments Bulgaria % Slovakia % Austria % Denmark % The investments are growing rapidly

CERTIFICATESCERTIFICATES ISO 9000:2001 Comparison: Number of ISO 9001:2000 Change in number of ISO 9001:2000 Bulgaria Slovakia Austria Denmark The enterprises seem to take care about quality management

ISO Comparison: Number of ISO Change in number of ISO Bulgaria Slovakia Austria Denmark CERTIFICATESCERTIFICATES Not the same situation in the field of environmental care

OPERATIONAL 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

OPERATIONAL PROGRAMME DEVELOPMENT OF THE COMPETITIVENESS OF THE BULGARIAN ECONOMY The TOP 3 things that pop-up into a foreigner’s mind when he/she hears

Thank you for your attention! Ivaylo GRANCHAROV, Chief Expert, Ministry of Economy and Energy; © 2006 Take a look also at the ANNUAL REPORT on the Condition & Development of SMEs in BULGARIA SMEs ALPHABET