9 EBRD transition indicators, converted for the purpose of this analysis along similar lines as for first generation reforms into a single index of structural reforms,<sup>4</sup> provide interesting insights into Bulgaria’s pace of institutional transformation since the collapse of central planning in 1990. The values of structural reform index show very little progress until 1997. An almost total absence of government commitment to structural reforms during the initial stages of transition is best illustrated by the fact that the value of this index for Bulgaria in 1994 was the same as for Poland in 1990, that is, when structural reforms barely started. Even then the achieved progress in 1995-96 would put Bulgaria on par with Poland’s achieved progress in 1992 (Table 4).

**Table 4:** _Progress in structural reforms revealed in values of EBRD-based aggregate index in 1991-2004 in selected transition economies (in percent)_

||1990|1991|1992|1993|1994|1995|1996|1997|1998|1999|2000|2001|2002|2003|2004|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Bulgaria|0.0|5.7|13.4|17.1|22.9|28.6|28.6|41.9|41.9|41.9|47.6|47.6|51.4|53.3|57.1|
|Poland|22.9|28.6|28.6|45.7|51.4|57.1|57.1|60.9|62.8|62.8|64.7|66.6|66.6|66.6|66.6|
|Estonia|0.0|0.0|11.4|38.1|43.8|49.5|51.4|59.0|59.0|64.8|64.8|66.7|68.6|68.6|70.5|
|Romania|0.0|3.8|3.8|11.4|22.9|28.6|32.4|38.1|36.2|38.1|40.0|41.9|41.9|41.9|45.7|
|Memorandu|m: media|n valuei|n|||||||||||||
|SEE-4|0.0|0.0|0.0|3.8|8.6|11.4|14.3|14.3|23.8|23.8|26.7|27.6|29.5|30.5|31.5|
|CEEC-8|0.0|11.4|24.8|41.0|47.6|51.5|52.4|57.1|57.1|60.0|61.9|63.8|63.8|64.8|65.7|

Notes: (1) the aggregate is the average of scores ranging between 1 (no liberalization) and 4.5 (liberalization at the levels of highly developed market economies) for government and enterprise restructuring, competition policy, banking reform and interest rate liberalization, security markets and non-bank financial institutions, and large scale privatization. It has been normalized with 1=0 and 4.5=100; (2) SEE-4 includes Albania, Bosnia and Herzegovina, Macedonia and Serbia and Montenegro.

Source: own calculations based on data from EBRD Annual Transition Reports.

**Figure 2:** _Values of index of structural reforms in 1994-2004_

<!-- Start of picture text --> 60<br>50<br>40<br>30<br>20<br>10<br>0<br>1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004<br><!-- End of picture text --> Source: as in Table 4.

Perceptible change began to take place only around 2000.The change came in three stages—two piecemeal increases followed more recently by a continuous growth. The value of the index jumped in 1997 and then stayed at the same level in 1998-99 (Figure 2). Another jump occurred in 2000-01, with the value of the index rising from 42 in 1999 to 48 in 2000. In 2002-04 the value of the index increased significantly every year indicating that various pieces of institutional reforms were finally coming together. Progress in large-scale privatization drove the change in 2000 and 2004, in banking reforms in 2002 and 2004, and in governance and enterprise restructuring in 2003.

4 The index is a simple average of measures of reforms, reflecting policies in different areas directly related to restructuring: government and enterprise restructuring, large scale privatization, banking reform and interest rate liberalization, security markets and non-bank financial institutions, and competition policy. The values ranging from 1 (no market economy) to 4.5 (equivalent of institutions and policies in highly industrialized countries) were normalized with 1=0 and 4.5=100. Hence, the value of index of 50 implies that a country is half-way from highly industrialized countries in terms of institutions and policies.