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Bulgarian transition is influenced by radical events in the winter of 1997. The new
economic policy is based on the introduction of the Currency Board and the framing
of the reforms by the agreements with the International Monetary Fund in 1998 and
2001. In the period 1997-2000 massive foreign investments entered the country and
were supported by the macroeconomic stability maintained through the Currency
Board, the beginning of the radical structural reforms and an active privatization
policy. The EU accession perspective and the start of negotiations added a significant
external incentive to the vital internal necessities for capital to cover the "resource
gap" of the reform policies.
FDI could be beneficial for a host economy due to the following possibilities:
Creates linkages between foreign affiliates and local firms.
Domestic competitors may increase their productivity through the working of
‘demonstration effects’ (imitation of introduced innovations).
Training of local employees (managerial, marketing and technological
knowledge could be later transferred to local firms).
The article aims at identifying and measuring the determinants of the European union
enterprises’ relocation in Bulgaria and their impact on the relations between foreign
and local enterprises; an area, in which positive effects concerning the recipient
country are expected. The paper consists of 3 different sections.