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Foreign Direct Investment
Since 1992, Bulgaria has experienced a steady upward trend in foreign direct investment (FDI). From a modest $34.42 million in 1992, Bulgaria attracted more than $1 billion in FDI in 2000 from more than 25 countries. According to official government figures, between 1992 and 2000, the industrial sector attracted over 50 percent of total FDI into Bulgaria, followed by finance, trade, tourism, transport, telecommunication, construction and agriculture. Furthermore, an encouraging trend is that in 2000 and for the third consecutive year, FDI in greenfield projects, joint ventures, and additional investment in companies exceeded FDI through privatization. During the same eight years, European investors constituted the largest foreign investors led by Germany, then Belgium, Italy, and Greece. As of the first quarter of 2001, Bulgaria had a total of 49,000 foreign investors, 4,000 of which are foreign investment companies.
The substantial improvement in FDI to Bulgaria over the last three years signals a growing investor confidence in its economy and the economic policies pursued by the government. The severe economic crisis in1996 to 1997 forced the government of Bulgaria (GOB) to undertake major economic reforms to create a functioning market economy and an investor-friendly business environment. Nevertheless, when compared with the rest of Eastern and Central Europe, Bulgaria has lagged behind in attracting FDI. The mixed history of economic reforms, poor infrastructure, an underdeveloped financial system, a perception of widespread and extensive government corruption, an uncertain, confusing and burdensome commercial law environment, and an unreliable judiciary have had a significant negative impact on the inflow of FDI into Bulgaria. Of particular concern to many foreign investors are uncertainty of the commercial law and regulatory framework; archaic, excessive and burdensome licensing requirements; and lack of confidence in the judiciary.
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