Economics - 1 / 2008          

In this issue:

MANAGEMENT

page 6
Result-oriented policy for development of the national transport system based on the European principles
Peter Mutafchiev

"....Our first priority is related to a considerable improvement of the condition of the railway transport because of the highly unbalanced development of the transport system during the years of transition. In this sector the legging behind is significant and with the assistance of our European friends and personally of comissioner Barrot we are encouraged to undertake active measures for a priority development of this sub-sector. Improvement in the railway transport service for the people and the business, is maybe the biggest indicator, which will affiliate us to the requirement for integration of our transport system into the European one. The measures include predominantly recuperation of the two main state companies - the infrastructure and the transport operator, as well as active partnership with the European railway operators and private initiatives.  The economic and the financial parameters for implementation of the priority are determined. The annual capital investments, which should be reached in the following years by the railway infrastructure amount to around 250 M BGN (125 M EUR) per year.  The situation with the BDZ operator is nearly the same with half of the investment expected to be under the form of subsidies and compensations for maintenance of exploitation level of the passangers transportation.  Compared to the European railways, these resources are modest. For example, the 5-year program for development of the Solvak railways, which are twice smaller than ours, anticipated two times more funding for development, incl. for modernisation and renewal of the engine and the coach park. The Austrian railways spend annually several billions of euro for their development. However, we should consider the GDP level and the budget."

p. 12
Inflation, price convergence, income policy
Sr. sc. Ass. PhD Haim Gozes

p. 16
We don't have state policy on the quality 
Interview with ass. prof. Anastas Kehayov, manager of "Alfa Quality Int." Ltd.

VIEWPOINT

p. 20
What shows the balance of payment in 2007
Dimitar Chobanov

".... The traditional approach is to examine first the current balance, which is considered the more significant for the overall development of the other positions. However, it is important to pay more attention to the financial account since it shows the sources and the duration of the used funds. In 2007 the balance on the financial account is approximately 9.4 bln EUR, according to BNB data (around one third of the GDP for the year), which means that the money flows to the country are increasing significantly.  This is a result of the introduction of the currency board, the liberalisation of the economic relations and Bulgaria's membership in the European Union. The structures of the incoming flows is very important. The most sustainable component - the foreign direct investments (FDI) in the country - reach nearly 5.69 bln EUR (19.9% of the GDP).

The attraction of foreign direct investment is a sign of a long-lasting interest in the Bulgarian economy, because it is based on expectations for realization of incomes and benefits in the long-term. Investments in real estate prevail with returns from them amounting to 1.68 bln EUR. This is one of the reasons for the continuing growth on this market in 2007.

The development in FDI is determined to a higher extent by the long-tern factors and for this reason they are not influenced so strongly by the international financial markets situation. With portfolio investments, however, the mortgage markets crisis reflects on the attracted in the country funds, which drop down with more than 440 M EUR. The consequences can be felt clearly also on the Bulgarian stock exchange, where the price of many shares went down."

DISCUSSION CLUB "IKONOMIKA"

p. 22
The Bulgarian „green" economic alternative
Dimitar Sybev

"....The fact that the preserved environment in Bulgaria has economic value becomes obvious from the natural prerequisites of the country, which secure wide opportunities for the green production. This green production could be exported under perfect conditions considering the growing demand and the high prices throughout the world. The demand on green production has prospects also within the country: both considering the Bulgarian population and the tourism and the possible flow of environmental migrants from the over-urbanized economies to peripheries like Bulgaria. Green production is only this production which has significant contribution to the sustainability of the human existance on the planet.

This definition differentiates from the idea for «the less harmful compared to the rest on the market» green production because such is not environmentally benefitial.

The first step for the correct understanding of the principles of the green economy is the realisation of the possibility to create more added value with less use and without loss of resources».

EUROINTEGRATION

p. 28
South-East Europe: from a Stability pact towards a Council for Regional Cooperation
Tsvetelina Yancheva

p. 32
The Hungarian transition: Effective investments, strong economu, budget deficit
Albena Stoeva

MARKETS

p. 35
The goods' divisions with negative trade balance increase
Emiliya Gigova

p. 38
The dollar in a „free fall" after the large-scale financial crisis
Yavor Rimski

p. 40
Is the world economy dependent on the US problems?
Todor Roussanov

p. 42
Crisis in the securities trade in the first months of the year
Emil Brandiyski 

p. 44
Who will draw the Unlucky card?
PhD in ec. sc. Boris Vodenicharov

OUR GUEST - Bulgarian industrial capital association

p. 46
Innovations and human resources quality are essential for economic growth
Interview with Vassil Velev, chairman of the Management board of BICA

".... The last year was very successful for the Bulgarian industry. we have specific proofs for this from various researches. According to EUROSTAT, Bulgaria ranks third in Europe in industrial growth. According to a range of other studies Bulgaria ranks seventh in the world in attractiveness for foreigh capital and first in Central and Eastern Europe.

One of the last studies determines Bulgaria as the second country in Europe with most favorable business climate for 2008. The reasons for this are: 10 % corporate tax, 0% capital gains tax, 5% tax on dividents, new decrease of the social security charge with 3 points, which entered into force on 1 October 2007, 0% gain tax for 138 municipalities with a higher percent of unemployment and 10%flat tax on the income of physical persons.

However, there are many problems that should be resolved. It should be noted that we are lagging behind with the labor production and energy management is also not satisfactory. Another important problem which the Bulgarian business should cope with, is the human resources. This is why, one of the priorities of BICA is an active policy, aiming at satisfying the specific needs of the Bulgarian employers through fostering of the controlled immigration and development of secondary, professional and higher education".

p. 48
Objectives and policies of Bulgarian industrial capital association

p. 50
Improvement of the corporate management and development of the corporate social responsibility

RESEARCH

p. 53
International comparison of the health expenditures - where is Bulgaria?
Sr. sc. Ass. PhD Rossitza Rangelova, PhD Grigor Sariyski 

p. 59
Supplementary pension insurance and pensions in Bulgaria and EU
Margarita Dakova

SOCIETY

p. 66
What changes are needed in the political system?
Ass. Prof. PhD Antonii Todorov

p. 68
Everybody wants to make money
Yordan Suev   

p. 70
Ayn Rand's contribution to the freedom cause
Prof. Andreas Tauber

WORLD

p. 76
The chances and the risks for the emerging countries
PhD ec. sc. Boris Vodenicharov

p. 81
BRIC advances in the world economy
Ass. Prof. PhD Maria Marikina

p. 84
The globalisation - joy for Bulgaria
Dimitar Sybev

p. 85
Robert Solow: „If I could choose between ECB and Fed ..."

BUSINESS PROFILE

p. 86
The really good prove themselves in times of difficulties
Interview with Petko Krastev, chairman of the Management board and executive director of „DSK assests management" company

".... I think we should clearly state: the situation with the public companies is very good. It could have been defined so even last year, despite the negative movement of their shares in the last 3-4 months and  remains so after the release of their annual financial results for 2007. With regard to this, the investments in shares of the companies which are traded on the Bulgarian stock exchange, continue to look like having good potential for growth in mid-term and long-term perspective. Therefore, I believe that the sector of the collective investment schemes will continue to develop and accumulate funds. Of course, this won't be at the same speed as last year but this is the natural pace of development of every market. The competition in the sector grows and this will reflect in a more active development of new products, which to attract the investors' interest".

MANAGEMENT

p. 89
Accounting and financial value of the joint-stock company
Ass. Prof. PhD Marin Galabov

p. 92
Special features of the management style
Emiliya Dimitrova                                              

p. 94
Ratan Tata. The car as a luxury and necessity

p. 98
Summary

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