Issue 7, 2002

Equilibrium in the transition economy of Bulgaria is discussed on the basis of the IS - LM - BP model, and the conditions affecting its variables are identified. An approach in macroeconomic policy is offered, through which it is possible to make the economic mechanism more market-oriented.
The factors affecting the formation of the IS, LM and BP curves are analyzed.
It is argued that in order to overcome disequilibrium in the economy, a suitable instrument can be the mixed monetary-fiscal policy, suggested by the concept, known as the Mundell-Fleming model. Neither of those policies, applied individually in order to cure the unbalanced economy is able to offer a solution, while the two of them used simultaneously, can produce such an effect that deficiencies in either of them can be offset by the other, since in order to counteract internal disequilibrium, an expansive fiscal policy will be used, and in order to counteract the external disequilibrium - a restrictive monetary policy.

JEL: F41; F43

The paper outlines the contemporary state of the economic science in Bulgaria, acquired as a result of the changes over the last 12 years. The analysis is carried out in five major directions - predefining of the subject, main theoretical and methodological orientations, thematic orientation and financing, social space and academic debates and views for further development. The situation before 1989 is briefly presented in order to position and understand clearer the issues and processes of development. The different directions have been chosen in a way that they ensure comparativeness between the different countries.
The main conclusions are that the economic science in Bulgaria has undergone through sufficiently serious and deep changes in the topics and methodology of research and education, in its connection with the world, incl. Especially the European economic science, which is a good prerequisite for successful inclusion of the Bulgarian economists in the unified European research space.

JEL: A11, B25, A19

The subject of this article is the specific character of the economic transition in the countries of Central and Eastern Europe (CEE) in the context of intensively running processes of globalization and localization. It underlines that the profound fundamental economic change can be accomplished through a number of system transformations connected with a certain aggregation of institutions. They are one of the most important factors, which determine the content and the structure of the economic interrelations between people, as well as the parameters and mechanisms of the economic order of the national economy. On this basis, the conclusion is drawn that the economic transformation cannot proceed without a relevant institutional change. If even temporary limitations to and difficulties for the process of establishment of the institutional change are created during the period of implementation of the economic transition, this will inflict an impact on the mechanisms, intensity end efficiency of the economic transition. It is pointed out, in this plan, that the speed, continuity and efficiency of economic transition in its integrity are determined by the effectiveness of the institutions and institutional transformation.

JEL: A10; O11; P11

The article aims at identifying and measuring the determinants of the European union enterprises' relocation in Bulgaria and their impact on the relations between foreign and local enterprises; an area, in which positive effects concerning the recipient country are expected.
The transnational enterprises are engaged with local subsidiary when the costs for technological and another specific transfer are lower than the export costs. The initiatives of the transnational companies depend on the contract enforcement system.
Different practices of foreign investors' entering the country are discussed - through privatization deals as well as through the "Greenfield" investments.
The third part of the paper contains the results from covariance and fixed effect models (FEM) for the impact of different sector characteristics on the ratio of FDI and production output of respective manufacturing sector are presented.

JEL: F15; F21; O19

This paper discusses the 'New Economy' in connection with the on-going global debate on its range, content and statistical measurement. It includes all changes and effects in productivity and growth, caused by ideas, information, information and communication technologies and their infrastructure throughout the globalization of markets. Statistical measurements of the New Economy are based on the System of National Accounts, its subjects and interaction. There is an analysis of empirical results on added value, employment and productivity rates in the New Economy of countries from the European Union, the USA and Japan. Some general conclusions are given on the need for further development of the methodology of statistical measurements of that economy.

JEL: F02; C82; O11

This article analyzes the external and internal factors that have led to the formation of a specific unfavorable macroeconomic environment for the agrarian activity in this country. A particular attention is attributed to inflation, exchange rate, and interest rate, which have aggravated to a very great extent this environment. It brings forward the necessity of an advent of positive economic changes for which radical measures have been recommended to the economic environment of the industrial branch itself.

JEL: Q10; Q18

The municipal finance system in Bulgaria is in crisis. The problems have structural nature and result from the lack of correspondence between the expenditure needs for providing the legally regulated municipal services and the financial resources received by the municipalities and the local powers to influence these resources. The local budgets become more and more difficult to understand, intransparent and create unclear picture for the financial situation of municipalities. Changes towards decentralization and improvement of budgetary process are urgently needed. The article makes analysis and evaluation of the financial situation of all 262 Bulgarian municipalities for the period 1999-2001. For this purpose, the municipalities have been divided into groups based on their functional role in the provision of local public services. On this basis 5 municipality groups have been formed: group 1 - Sofia; group 2 - the municipalities - regional centers; group 3 - the municipalities - secondary centers (former okolia centers); group 4 - municipalities paying contributions to central budget (excluding the ones from group 2); group 5 - all the rest municipalities (small and underdeveloped municipalities).

JEL: H72; H74

Basic components of values of biodiversity have been analyzed. The methods of estimation of various benefits of biodiversity conservation have been exposed with an emphasis on the contingent valuation methods. On the basis of the questionnaire prepared by the author various Willingness-To-Pay (WTP) values have been estimated for the non-use value benefits. Various estimations of the basic components of the value of biodiversity have been commented based on case study of the Bulgarian Danube islands. The results demonstrate relatively high WTP in favor of restoration of natural forests on the Danube islands, which is expected to promote the development of tourism and recreation, commercial and non-commercial fishing and hunting. It is expected that the growth of revenues from activities stimulated by biodiversity conservation as tourism, recreation, etc. will compensate the reduction of revenues from the reduced felling of timber from the poplar plantations.

JEL: Q26; R14

The subjects of this article are the processes of globalization in higher education. On the basis of the experience of leading countries and the current situation, it suggests some solutions for the adaptation of the Bulgarian education system to the new global challenges. The author stresses on the mechanisms of increasing the quality and effectiveness of Bulgarian higher education. Solutions are searched in the deregulation and the expansion of academic autonomy, pluralism and financial self-sufficiency, introduction of new methods of management. The article supports the idea that the government should gradually withdraw from education, but at the same time it has to increase its role in the definition of educational goals, financial support and control over the quality of the education product.

JEL: 121; 122; 128