1. Enlargement of the Euro-area Competitiveness Issues: The Case of Bulgaria Ruslan Stefanov Center for the Study of Democracy Brussels, 9 December 2010

2. Content Center for the Study of Democracy – Short Presentation International Context and Bulgaria’s ERM II / Eurozone Bid Competitiveness Profile: the Bottomline Governance Concerns Hidden Economy and Undeclared Work Innovation: the Economic Growth Engine Policy Ideas

3. CSD Services and Activities Research Public awareness Policy impact Economic Sociological Legal Conferences Round-tables Media training European Commission Bulgarian government Foreign governments

4. International Context The Future of Capitalism Debate The Future of Economics Debate The Future of the Eurozone Debate Fallen Angels and Rising Stars – In and Out of Eurozone Love Clear Path

5. Bulgaria’s Bid Preserve the currency board Keep the existing exchange rate 0% tunnel for fluctuation of national currency in ERMII Requests for ERMII membership – 2007 / 2009? The modus operandi is clear … … Bulgaria has subscribed for all the downside risks but no action on the upside benefits … … and the bottom line remains: competitiveness

6. Productivity Differentials Source: Eurostat. Labour productivity per person employed = GDP in PPS per person employed relative to EU-27 (EU-27 = 100)

7. Bulgaria’s Competitiveness Landscape Source: IMD, 2010.

8. Government Top Competitiveness Deficiencies Social cohesion is not a priority Enforcement of competitiveness legislation (general law enforcement is lax) Population aging Financing the social security system Access of foreign bidders to public procurement

9. Governance Concerns (Corruption and Organised Crime): Country Clusters Source: Study on the Links between Corruption and Organised Crime, 2010

10. Governance Concerns: Clusters Clarified Cluster 1: Denmark, Finland, Sweden Cluster 2: Austrian, Belgium, Germany, Ireland, Luxembourg, Slovenia, Spain, UK Cluster 3: France Cluster 4: Estonia, Latvia, Lithuania, Portugal Cluster 5: Czech Republic, Cyprus, Greece, Hungary, Malta, Slovakia Cluster 6: Italy Cluster 7: Bulgaria, Poland, Romania Weak link b/w corruption & OC Strong link b/w corruption & OC Source: Study on the Links between Corruption and Organised Crime, 2010

11. Corruption and Bad governance: Corruption and GDP Source: Study on the Links between Corruption and Organised Crime, 2010

12. Bad Governance: the Hidden Economy Source: CSD, 2010

13. Bad Governance: Undeclared Work 9/20098/20083/20042/2003 The minimum social security threshold, although the total sum of my remuneration is higher 12.913.513.412.1 The minimum social security threshold, which is what I am actually paid 12.69.514.310.3 The amount stated in my contract even though the total sum of my remuneration is higher 15.515.08.36.7 The amount stated in my contract, which is what I am actually paid 56.261.863.468.3 Other 2.80.30.62.6 Source: CSD, 2010

14. Company Innovation: Imitate Locally Source: ARC Fund, 2010

15. Innovation Characteristics 90% of companies are micro-sized European/national/regional/local = 5/15/20/60 Networked for fun Why report R&D?

16. Improve policy responsiveness, incl. information gathering to societal needs – Eurozone entry is a means not an endgoal Design a common good governance bottomline Do reverse discrimination if needed – e.g. FP 7, CIP, etc. Some Policy Ideas (Wild Cards)

17. Thank You! www.csd.bg Ruslan Stefanov ruslan.stefanov@csd.bg