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share in total external EU imports in 2003.

Electro-engineering products have been responsible not only for a significant increase of machinery in Bulgaria’s total EU-destined exports from 2 percent in 1997-98 to 6 percent in 2003 but also for a _dramatic reshuffling_ of Bulgaria’s export offer of machinery products. Consider that the aggregate share of fast growers in Bulgaria’s EU-destined exports of machinery (SITC 7) increased from 47 percent in 2000 to 63 percent in 2001 and 81 percent in 2003. Furthermore, among top four-digit SITC products of this sector in terms of growth, there are at least three relative newcomers to EU markets: radiotelegraphic and radiotelephonic items (SIT 7643), telecommunications equipment (7648) and electro-thermic appliances (7758), with their respective annual growth rates in 2000-03 of 128 percent, 123 percent and 158 percent, respectively. The values of their exports were below US$ 500,000 in 1996. In contrast, exports of household-type refrigerators (SITC 7752), which recorded the fourth fastest growth in sales in EU markets in 2000-03, run in millions of US dollars already during this period indicating earlier established commercial presence in these markets (Table 19).

**Table 19:** _Top four export performers in electro-engineering products in EU markets in 1996-2003 (in thousands of US dollars)_

|SITC-<br>4|Product|1996|1997|1998|1999|2000|2001|2002|2003|Index,<br>2003|
|---|---|---|---|---|---|---|---|---|---|---|
|||||(in|millionof|US dolla|rs)|||2000=100|
||Radiotelegraphic &||||||||||
|7643|radiotelephonic|0.02|0.08|1.12|1.19|0.66|0.89|1.9|17.8|2708|
|7648|Telecommunications equipment|0.17|0.32|0.14|0.68|0.28|0.87|6.6|6.8|2467|
|7758|Electro-thermic appliances|0.21|0.17|0.40|0.64|0.56|0.54|11.3|24.7|4430|
|7752|Household type refrigerators|3.81|2.23|5.49|4.76|1.42|12.2|19.2|30.3|2134|
||TOTAL ABOVE|4.21|2.80|7.16|7.27|2.91|14.5|38.9|79.6|2735|
|Memor|andum:||||(inper|cent)|||||
||Share of the above in EU-||||||||||
|7|destined exports of machinery<br>Share of the above in EU|5.8|6.9|13.6|10.7|3.8|14.1|23.2|31.8|834|
||imports|0.06|0.06|0.12|0.10|0.03|0.14|0.31|0.47|1650|

Source: Based on EU Data from UN COMTRADE Statistics.

Exports of household type refrigerators provides an interesting illustration of sectoral “hick-ups’ usually triggered by restructuring. They fell dramatically in 2000 and rebounded massively the following year exceeding the earlier peak level in 1997 by a factor of 2.2.

Another indication of the ongoing change in Bulgaria’s export basket triggered by industrial restructuring is the sheer growth of electro-engineering products. The value of their aggregate exports in 2003 was 27-times higher than in 2000, with their share in EU external imports rising 117-times in 2003 over the 2000 level.

# **E.** _Conclusions_

The answers to three questions raised in the introduction to this section can be summarized as follows. First, changes in import demand suggest that the process of industrial restructuring has at last begun. The share of manufactures in Bulgaria’s imports has not only significantly increased but, within manufactures, there has been the shift towards products with higher technology content and capital goods. Bulgaria’s growing integration into pan-European markets for manufactures has accompanied this shift.

Second, Bulgaria’s export offer has become more processed indicating progress in modernization of industrial capacities. The fall in the share of traditional inputs, i.e., products used for further processing, in Bulgaria’s exports has been accompanied by a marked increase in the share of machinery. This, combined with the increase of more technologically advanced manufactures in Bulgaria’s exports, suggests a gradual shift towards more processed exports.