THE INFLUENCE OF MEMBERSHIP IN THE EUROPEAN UNION ON FOREIGN INVESTMENTS IN BULGARIA
The paper aims to assess how FDI is impacted by general factors relating to the EU membership, as well as specific factors relating to Bulgaria, such as the sustainability of the currency board maintained for more than 18 years and the low level of taxes and labour costs. In combination those factors led to a very strong catch-up of FDI during the initial EU membership culminating in a record high intensity of FDI in Bulgaria and in the entire EU for several years. The recent economic crisis in the EU drained the initial expelling impact on FDI and the strong dependence on the EU sources of FDI turned into a vulnerability and volatility of FDI. The crisis also revealed some weaknesses with regards to the quality and structure of FDI. Solutions to these weaknesses require the implementation of consistent policies for diversification of sources of FDI, improving the environment for investment in high value added and export oriented sectors, as well as promoting synergies between local and foreign controlled companies.
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