Issue 1, 2020

This expert report has been prepared by Economic Research Institute at the Bulgarian Academy of Sciences, in connection with the initiative of the President of the Republic and the Embassy of Japan for a Bulgaria-Japan Business Meeting on February 5^th, 2020. It presents an analysis and assessment of the opportunities and prospects for Japan’s investments in Bulgaria, in particular:

• Main trends in Japan’s investments in the EU Member States from Central and South-Eastern Europe (CSEE) are studied and outlined to identify the specifics of Japan‘s investments abroad by countries, sectors, productions, forms, in which they invest. In this way, a targeted approach is introduced, tailored to the specifics of these investments.
• A historical overview is presented – the successes of trade and economic cooperation in the area of investments, in order to outline how the good practices and experiences in the past would support future investments from Japan in Bulgaria.
• A critical review of the comparative advantages of investing in Bulgaria is presented along with an identification of those, that are important to Japanese investors.
• Studied is the current European regulatory framework for foreign investments in order to identify the opportunities and policies that could support Japanese investors in Bulgaria as an EU Member State.
• Outlined are important strategic priorities of the Bulgarian economy in regard to the development of innovations, information technologies and green economy, in order to direct the interest of Japanese investors towards them.
• Identified are the opportunities for using the local raw materials through Japanese investments in Bulgaria, as well as the potential for waste processing and circular economy.
• Determined are sectors and productions where the capacity and interest of the Japanese investors coincide with the opportunities and advantages of the Bulgarian economy.
• Identified are economic sectors and productions of mutual interest to Japanese investors and Bulgarian business.

Attracting investments from Japan would have a significant national economic effect in implementing the strategic long-term priorities of the country. For the Bulgarian business, this would expand the economic space to high technologies and partnerships with Japanese companies and the access of Bulgarian goods to the Japanese market. For the Japanese economy and investors, expanding the economic space to Bulgaria would have a strong positive effect, including increasing their presence on the EU markets.
JEL: O23; O24; O25; O53

The article analyzes the emergence and development of business ethics in Bulgaria from 1989 to the present day, that is, it traces the emergence of ethical infrastructure in the conditions of transition from a centrally planned to a market economy and its development already in the conditions of the country's membership in the EU. The period of the last 30 years is divided into three sub-periods: (a) the collapse of state socialism and the launching of a market economy and democratic principles (1989-1997); (b) the period of deeper structural reforms and the preparation of the economy for EU accession (1997-2007); (c) the years of Bulgaria's EU membership (since 2007 up to now). The research deals with main problems of building ethical infrastructure – at the beginning of the period the ownership change – restitution, privatization, etc., and later on – legislation, freedom of speech, shadow economy, corruption and more are studied. The issues discussed herein are complemented by the results of the surveys conducted in 1996 and 2019. The questions of established business ethics in Bulgaria are posed in the context of the challenges facing the society of this still transforming country.
JEL: H11; J38; J68; P16

The main objective of this study is to provide a theoretical and empirical framework for analyzing the relationship between economic growth and the property rights institute in different countries. The key idea is that property rights are multifarious and can be classified according to their role in economic development. These days it is the intellectual property rights that impact the economic development through propensity to innovate. However, the protection of intellectual property rights does matter for economic growth only in a well-developed political and legal environment. We find that economic performance in highly developed countries is to a greater extent contingent upon a quality of the protection of intellectual property rights than in less developed economies. This finding raises an important question about the credibility of the preponderant approach based on a simple unification of countries with a different institutional framework under one umbrella when their effects on growth. Such an approach may provide inconsistent and misleading results and lead to false conclusions and wrong policies.
JEL: B52; E02; K11

This study presents the results from the second end-stage of a project on the topic of “Marketing Communication and Developing Competitive Advantages in Higher Education”, financed by the “Scientific Research” fund at Plovdiv University “Paisii Hilendarski” for the period 2017-2018. The main goal of the conducted empirical research is describing and comparing communication practices and activities by the Bulgarian state higher schools and universities in relation to their target groups – candidate students, current students and employers. The object of study are the public higher schools and universities operating on the territory of the Republic of Bulgaria. The subject of study is the marketing communication as a factor in building competitive advantages by Bulgarian higher schools and universities. Questionnaires were prepared and distributed online among experts in the statistical units in order to solve the posed research problems. Among the significant conclusions derived from the results are that surprisingly larger high schools rarely have their written communication strategy and medium and smaller ones seem to be more engaged with active strategic marketing communication planning; only 1/3 of higher schools are trying to track and evaluate the impact of marketing communication in changing their reputation what should be one of their long-term communication goals if planned effectively.
JEL: M31; L22

In the modern world, efficient transport infrastructure is one of the main factors ensuring economic growth in both countries and macro-regions. In this context, of particular interest are studies in states whose economies are in a state of crisis and are characterized by a high uncertainty of development parameters. To this aim, the influence of the rail transport on the economy of Ukraine was studied. The importance of Ukrainian railways in the system of international transport and communication links between the countries of Eurasia is considered. The use of scenario simulation to study the prospects for the development of the rail transport in conditions of high uncertainty has been substantiated. A SWOT analysis was performed, based on the results of which scenarios were constructed for rail transport in Ukraine. Scenario analysis showed that in the context of a systemic economic crisis, the rail transport can influence not the process of economic growth in the country, but its intensity, acting as a factor of acceleration or deceleration. Improvement of the situation is possible when developing a set of measures aimed primarily at improving the internal environment of rail transport.
JEL: C51; L92; R11

There is a need for firms to know the factors driving their process innovation. Knowledge of these determinants will help firms to withstand the tough market competitions from their rivals leading to growth and increased productivity. The purpose of this paper is to examine the determinants probable to influence firms process innovations. We focused on the automobile industries in the Czech Republic using data from the Eurostat Community Innovations Survey (CIS) conducted between 2012-2014 and the Structural Equation Model. Our results have shown that the main driving factors probable to contribute to process innovation in these industries were innovation expenditures, collaborations with different partners, engaging in research and development and innovation financial support. Contrary to the literature, we found out that firm’s competition in international markets didn’t have any influence on their process innovations. Practical implications are also provided for policymakers and management of these industries.
JEL: L62; 030; 031

The article identifies that a fundamental change in the financial monitoring system is the development of mechanisms to improve the risk-oriented approach that is applied at the national level to the reporting entities of the primary financial monitoring and aimed at carrying out risk analysis and classification. Methodical study of assessment of the probability of relatedness of insurance companies based on the use of tools of graph theory and indicators-markers for assessment of the probability of relatedness of insurance companies. The indicators-markers include: assets, equity and insurance reserves, insurance premiums and insurance premiums owed to reinsurers. For testing systems technologies (based on the use of indicators-markers) to assess the probability of relatedness of insurance companies and determining its impact on the risk of money laundering, it has been used data from the financial statements of 15 Ukrainian insurance companies for 2006-2017 years that served as the statistical base. This made it possible to identify the relatedness of insurance companies, which would improve the risk-oriented approach to insurance companies, which are the reporting entities of the initial financial monitoring. An empirical test of the use of the indicator-marker “equity” was used to determine the correlation coefficients that characterize the tightness of relatedness of the investigated insurance companies, as well as the determination of the coefficients for building the insurance companies' relatedness graphs.
JEL: C53, G17, G21

This paper would clearly reflect the need for the development of the individual indicators which allow the proper presentation of the analytical activity of the enterprises operating in the industrial sector of the economy. Therefore, we investigate and rank factors of economic, financial and accounting affecting the firm value of listed companies in Tehran Stock Exchange by using on Analytic Hierarchy Process (AHP) method. The data sample was selected five companies among ten active industries sector of the economy in the Tehran Stock Exchange from 2009 to 2015. The purpose of this research is to identify and rank economic and accounting factors affecting the value of firms with the use of multi-criteria decision-making techniques. In the first stage, the pooled OLS estimator was used to estimate the conceptual model and find significant factors include inflation, interest rate, liquidity growth rate, customer price index (CPI), profit sustainability, firm size, profitability, financial leverage affects firm value. In the second stage, the Analytic Hierarchy Process (AHP) was applied to rank the most effective factors on firm value.
The empirical results show all listed variables had a significant impact on firm value in the stock market except the interest rates. By using the AHP method, inflation and liquidity growth as macroeconomic variables, and profit sustainability and growth opportunities as financial variables, were most affective factors influence on the Firm value orderly.
JEL: G32; G11; D22; D81