-  11  -

**Table 3** : _Share of Bulgaria’s exports of goods in total exports of regional groupings: CEEC-11, CEEC-3 and Stability Pact economies in 1996-2004 (in percent and millions of US dollars)_

||1996|1997|1998|1999|2000|2001|2002|2003|2004|Index, 1999<br> 1996=100|Index, 2003<br>2000=100|
|---|---|---|---|---|---|---|---|---|---|---|---|
|In total CEEC-11|4.8|4.4|3.4|3.2|3.5|3.3|3.2|3.3||66|96|
|In total CEEC-3|28.0|27.9|25.1|23.5|24.6|24.2|23.4|24.1||84|98|
|In total "Stability" countries|24.0|23.0|20.1|20.0|21.2|20.7|20.1|21.3||84|100|
|**_Memorandum_**: exports|4,890|4,940|4,293|3,925|4,822|5,114|5,749|7,540||80|156|

Notes: “Stability” countries include Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Moldova, Romania and Serbia and Montenegro. Due to the missing data, Bosnia & Herzegovina is based on IMF DOT data. Sources: UN COMTRADE Statistics and IMF Direction of Trade Statistics.

In all, the grand failure of not staying the reform course following the introduction of the stabilization-cum-transformation program in 1991 seems to explain why Bulgaria’s export performance in the 1990s is reminiscent of developments in CIS economies rather than of CEEC10 economies including Romania. Economic mismanagement of transition until the 1996 crisis has exacted a huge toll on the Bulgarian economy. Quickly abandoned radical approach to firstgeneration economic reforms locked Bulgaria, like most other CIS economies, into a path of partial reforms generating systemic corruption, plunder of state assets and ultimately producing a financial meltdown in 1996. Historically, high level of dependence on trade with CMEA countries had contributed to the high cost of adjustment. But had Bulgaria stayed the reform course in the early 1990s this cost would have been much smaller and spread over a shorter period of time, as the experience of Baltic States has clearly demonstrated. Macroeconomic stability and the pursuit of unfinished agenda of structural economic reform beginning in 1997 have been behind improved export performance in 2000-03.

# **C** **_._** _Reorientation of foreign trade: unusual pattern?_

The most striking features of Bulgaria’s geographical pattern of foreign trade are the lack of increase in the share of the EU in total trade turnover since 1992 and reorientation of trade away from the EU in 1993-97 (Table 4). The share of the EU in total trade turnover was 51 percent in 1992 and 52 percent in 2003, as the shares of the EU in Bulgaria’s exports and imports moved in opposite direction. The share in exports went up 11 percentage points while that in imports 12 percentage points.

Reorientation in Bulgaria’s trade away from the EU in 1993-97 was driven by both exports and imports. The share of the EU in total trade turnover fell from 51 percent in 1992 to an average of around 40 percent during the 1993-97 period. It is interesting to note that this reorientation away from the EU appear to have coincided with the beginning of the second stabilization-cum-transformation program. Export reorientation, i.e., faster expansion in the growth of EU-oriented exports than in ROW-oriented exports, rather than import reorientation has been responsible for it.

As mentioned earlier, Bulgaria’s geographical pattern of trade also diverged from other CEEC-10 economies. While non-EU exports of other CEEC-10 countries were falling during the initial stages of transition—in contrast to rapidly growing EU-oriented exports, Bulgaria’s succeeded in expanding its non-EU exports—most notably to Belarus—more than EU-oriented exports in 1992-95 (Figure 2).