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processed in their present form (Feenstra 1998). Their share in Bulgaria’s EU-oriented exports, which because of vulnerability to weather fluctuated significantly in both periods, fell from an average of 26 percent in 1997-99 to an average of 24 percent in 2000-03. Simultaneously, however, their aggregate share in EU external imports of traditional inputs increased from an average of 0.5 percent to 0.7 percent in respective periods.

Another indication of the shift towards more processed goods in Bulgaria’s export offer is a very sizable increase in the aggregate share of machinery and automobiles and parts. Their share in Bulgaria’s EU-oriented exports increased from an average of 9 percent in 1996-99 to 12 percent in 2002 and 13 percent in 2003. Simultaneously, Bulgarian producers outperformed suppliers from other countries, with the aggregate share of these products in EU external imports increasing from an average of 0.09 percent in 1997-99 to 0.12 percent in 2002 and 0.14 percent in 2003. While these shares are below the share of Bulgarian exports in EU total external imports of 0.37 percent in 2003, the dynamics of change has been impressive.

Although the EU absorbed most of the increase in Bulgaria’s sales of machinery and parts, the emergence of machinery as a driver of Bulgaria’s exports in 2000-03 was not limited to EU markets. The share of the EU in Bulgaria’s exports of these products increased from 51 percent in 2001 to 55 percent in 2003 (Table 14). But exports to other markets experienced explosive double-digit growth as well. Exports of machinery and parts to CEEC-8 rose 20 percent in 2001, 65 percent in 2002 and 28 percent in 2003. As a result, their share in Bulgaria’s CEEC8-oriented exports rose from 19 percent in 2001 to 25 percent in 2002 and slightly fell in 2003 because of huge increase in sales of agricultural products. The latter exploded 70 percent in 2002 over 2003. In all, CEEC-8 took 6 percent of Bulgaria’s machinery exports in 2003.

**Table 14:** _Share of the EU-15 and pan-European partners in Bulgaria’s exports in 1996-2003 (in percent)_

||1996|1997|1998|1999|2000|2001|2002|2003|
|---|---|---|---|---|---|---|---|---|
|**European Union(15)**<br>|||||||<br>|<br>|
|Agricultural Food & Feeds|28.9|33.0|37.2|41.1|36.7|42.2|<br>46.3|<br>43.9|
|Industrial Raw Materials|44.2|47.7|57.5|60.7|65.4|63.0|<br>63.5|<br>65.7|
|Machinery, excluding Automobiles|35.0|34.0|38.9|51.7|52.2|51.0|<br>49.9|<br>54.6|
|Automobiles & Parts|62.0|35.2|42.5|20.0|40.4|57.5|<br>69.3|<br>71.9|
|Other Consumer Goods|45.6|50.1|57.2|60.2|59.7|60.4|<br>59.0|<br>61.4|
|Fuels|19.2|24.3|13.1|18.2|11.0|29.9|<br>44.2|<br>20.8|
|All Goods<br>|39.1|43.3|49.7|52.5|51.1|54.8|<br>55.7|<br>56.5|
|**Pan-European countries**<sup>**~~1/~~**</sup>|||||||||
|Agricultural Food & Feeds|38.6|43.5|51.6|57.6|52.3|55.6|<br>58.8|<br>63.7|
|Industrial Raw Materials|70.5|71.5|76.8|73.8|82.4|77.0|<br>80.8|<br>82.2|
|Machinery, excluding Automobiles|44.0|44.3|54.5|60.7|63.2|62.2|<br>62.8|<br>64.1|
|Automobiles & Parts|73.4|58.1|55.1|25.1|55.3|66.1|<br>75.6|<br>79.2|
|Other Consumer Goods|53.5|58.4|67.1|70.0|72.9|72.2|<br>73.5|<br>73.3|
|Fuels|43.3|56.6|41.3|39.6|25.5|40.2|<br>55.3|<br>34.6|
|All Goods<br>|50.4<br>|55.7|62.6|64.6|65.0|66.8|<br>69.8|<br>69.7|

1/ Include EU-25, EFTA, Romania and Turkey. Source: Based on Bulgaria’s data reported to the UN COMTRADE Statistics.

As a result, Bulgaria has been increasingly integrating into pan-European markets for more processed goods. These markets took 64 percent of Bulgarian exports of machinery in 2003, up from 61 percent in 1999 and 79 percent of automobiles and parts in 2003, up from 55 percent in 2000. However, the latter accounted for a miniscule part of Bulgaria’s total exports.

# **C.** _Level of technology embodied in EU-oriented exports and competitiveness_

Although, not surprisingly, low technology activities continue dominating Bulgaria’s EU15 oriented exports, products of medium to high technology emerged in 2002-03 as levers of Bulgarian exports (see Section B above for the filter used to identify exports according to technological level). These products registered growth exceeding the growth of EU-oriented