The rates of development of Bulgaria and Poland on their way to European integration

Inhaltsverzeichnis

1. Introduction

2. European integration- essence of the concept and influential factors
2.1 Political integration
2.2 Economic integration
2.3 Social integration

3. Political model

4. Economic model

5. Social model

6. Conclusion

7. Appendix

8. Literature

1. Introduction

Since ancient times, the European countries have strived for unification. They have gone through many wars and alliances while trying to get to the idea that a unite Europe would be of everyone’s favor. In 1992 with the signing of the Maastricht contract, the two already existing European organizations- European Coal and Steel Community (ECSC) and the European Economic Community (EEC), form the European Union. In its essence, the EU is a general framework for the development of integration between countries. Among its main goals are to guarantee political freedom and economic prosperity, to ensure the free movement of people and goods throughout the Union and to establish a single currency and enrich every nation with the cultural values ​​of the others. Any state which is a member of the European Union (or wishes to join it) should respect its values, including human dignity, freedom, democracy, equality, rule of law, and respect for human rights. These main goals of the European Union are important to mention, as first it should become clear why a country would like to join such an organization. Only then we could continue to investigate the reasons for the different development of each country and its path leading to European integration.

With the adoption of the 10 countries of Central and Eastern Europe and the transformation of the Union into EU-27 the beginning of a new historical period in the development of European integration has been set. This analysis will focus on two transition countries, which after the collapse of communism in 1989, have been facing a great deal of issues concerning their future in Europe. Since 2004 (respectively 2007) Poland and Bulgaria belong to the European Union. Both countries had a relatively equal starting position after the transition to democracy, but a series of factors have been the reason for the faster and much more efficient development of Poland which in turn contributes to its earlier accession in the EU and its adjustment to the West European standards. The aim of this comparative analysis is to try to find out which factors have played a significant role in shaping today’s prosperity of Poland over Bulgaria. By using the comparative method we would be able to clearly distinguish between different variables and discover some national characteristics which might have influenced the dependent variable, namely the level of European integration. The paper will first deal with the term European integration and try to determine what exactly a successful integration means. Determing the different types of integration will lead to outlining the different factors for comparison. The analysis will proceed with a deeper insight into both countries’ political, economical and social life. The paper will end with a short conclusion which will aim to summarize the results from the analysis and give a plausible answer to the research question. Eurostat researches, Eurobarometer data and other reliable sources will be used to obtain up-to date data for the analysis. Although Bulgaria and Poland are countries with different geographical location, area and population, the results at the end will be sufficient to make an accurate comparison.

2. European integration- essence of the concept and influential factors

Many areas of modern life require international cooperation. To better understand the concept of European integration, it is important that it is viewed as one of the methods used for nation-state cooperation in the search for solutions to common problems. It requires a high degree of coherence between the participating countries and is associated with significant risks, evidenced by the partial loss of a nation’s sovereignty. Each theory is a magnifying glass with which researchers seek to understand better the logic and the results of the integration process and present them in an accessible manner to the political elite and the general public. It should be borne in mind that theories explaining the integration processes have never been conceptual basis for political decisions. There are a couple of theories, which aim at explaining the process of integration in the European Union. The most dominant ones since the 1950s are neo-functionalism, as well as intergovernmentalism, liberal intergovernmetalism and multi-level governance (Hatton 2011). However, the main focus of this analysis will be put on a perspective, which differentiates between three types of European integration- economical, political and social integration. Based on this division, the factors which will serve as comparative points between Poland and Bulgaria and their development towards Europe will be determined. This way we will be able to determine whether the European integration was successful as a whole for the two countries.

2.1 Political integration is concerned with the strengthening of political systems, “in particular the scope and capacity of its decision- making process” (UNU/CRIS, Allied Consultants 2002). As Brou and Ruta conclude in their study on economic and political integration, both are complementary institutions (Brou, Ruta 2007). Despite this, the analysis will try to separate them. The European Union is a democratic union, so as part of the comparison one must consider the way in which Poland and Bulgaria have established the democratic regime and whether there are any significant differences which might have played an important role for the process of integration. The political model of comparison will also consider the party system , electoral system and level of corruption in both countries.

2.2 Economic integration can be roughly defined as “the elimination of economic frontiers between two or more economies”. (Pelkmans 2006). Economic integration occurs when two or more countries adopt policies which result in becoming highly dependent on each other in economic and political terms. It is a process of interaction between the institutions of the countries in Europe with the aim of achieving a uniform policy (Marinov 2004). Economic integration involves several stages, including free trade area, free trade area with customs union and a single market (Vössing 2012). According to these definitions, in order to compare Bulgaria and Poland’s level of economic integration (and most importantly find the reasons for the different developing of their economic integration) we will look closely in the process of privatization , European funds and foreign direct investments , GDP rates and inflation rates .

2.3 Social integration is in most cases directly connected to migration and the adaptation of one group of people to the mainstream society. Assuming that the European Union has its own identity and following Carey’s analysis on national and European identity, it becomes clear that people who show high levels of national attachment to their nation are rather skeptical and less expected to favor European integration (Carey 2002). Of course besides political and economical aims, the EU is “resolved to continue the process of creating an ever closer union among the peoples of Europe” (Consolidated Version of the Treaty on European Union). The existence of a common European set of moral values ​​and common cultural characteristics is still questionable, but it seems that many countries feel open to show their national specifics and customs to the rest of Europe. Besides the cultural aspect of social integration, this model will consider the way in which Bulgaria and Poland try to coordinate social policies and how successful they are in their introduction. Therefore we will look at rates of unemployment, education in Bulgaria and Poland, as well as people’s opinion and public perception towards European integration.

3. Political model

Bulgaria and Poland begin their journey to democracy together in 1989. Since then, a lot of effort has been put into establishing new institutions so that both political models are constructed in order to successfully join the European structures. According to Lijphart’s analysis of majortiarian and consensus democracies, there are two dimension with five characteristics each, which could define a nation state as a majoritarian or a consensus democracy (Lijphart 1999). Following this criteria, both Bulgaria and Poland belong to the consensus type, in which there is balance of power between the executive and legislative and a coordinated and “corporatist” interest group system aimed at compromise and concentration. Of course they should not be considered as examples of the ideal type. Although both countries have a directly elected president, their constitutions determine the parliamentary form of government (Bulgarian Const., art.1, § 1/ Polish Const., art.4, § 2). As Linz claims in his essay “The Perils of Presidentialism”, a parliamentary system is more conductive to stable democracy as parliamentalism imparts flexibility to the political process (Linz 1990). With the help of the Comparative Study of Electoral Systems one is able to observe different national specifics in the political systems of the European Union member states. While analyzing the Macro Report from the Election Study Archive for 2001, it becomes clear that Poland has a bicameral parliament, while in Bulgaria there is no second chamber in the legislature (Comparative Study of Electoral Systems). Stating such slight differences might play an important role for discovering the reasons for Poland’s more successful integration to the European Union, because of the lack of major deviations between the Bulgarian and Polish political systems. The fact that both share a proportional electoral system and a multi-party system supports this statement (ebd.). Nevertheless, a short retrospective look at the situation just after the democratic revolutions reveals that the consolidation of the new democracies took different courses. While in Poland the opposition party of the Communists called "Solidarity" took power and immediately began democratic changes, in Bulgaria the Communist party, claiming to have changed their position to a social democratic one, again took power after a success with 47,25% of the votes (Delev 2006). The first democratic elections in Bulgaria led to days of stagnation and lack of reform for the transition country. The Eurobarometer pre-election study for Bulgaria from 1990 makes visible the uncertainty of the people about democracy and its way of functioning. 41% of the participants claim that the divison between a socialist and capitalist way of development is artificial when asked what would the most appropriate way for the development of the country be (Eurobarometer 1990). Another indicator of the hesitant political situation is the lack of judgment among 31% of the people concerning all kinds of reforms in the sphere of economics and whether they should be stopped or not (ebd.) These results could still be justified by the lack of erudition of the democratic regime and the rapid shift from the well familiar communist regime.

The next factor which this analysis takes into account is corruption. The main organization which deals with the corruption issue is Transparency International that measures the level of corrupption within more than 200 countries with the help of a Corruption Perception Index. Like the European Union itself, this organization promotes “transparency, accountability, solidarity, justice and democracy” ( Transparency International). Corruption is a phenomenon that affects exclusively the political life of a country and its elimination is even enshrined in the Maastricht treaty of the European Union ( Consolidated Version of the Maastricht Treaty, Title VI, Article 29). The following graph shows the level of corruption in Bulgaria and Poland according to the Corruption Perception Index. The graph shows that the starting point of both countries is almost identical. We can see that Poland makes a visible progress since 2006 (altough certain fluctuations in previous years) and the perceived level of public sector corruption increases from 3,7 in 2006 to 4,2 points in 2007 and continues to go up with a result of 5,8 in 2012.

1. Corruption Perception Index 2000-2012

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Data from Transparency International’s yearly researches 2000-2012 ( 0-highly corrupt, 100- very clean)

The results for Bulgaria detect a tendency of continuous decline and increase in the level of the perceived corruption. This could be explained mainly by the alternating left and right governments, respectively with a pro-east and pro-Western orientation.

There are no obvious differences in terms of political patterns in Bulgaria and Poland, although the level of corruption in Bulgaria is much higher in terms of quantity, which certainly will affect the development of the democratic processes.

4. Economic model

There is a strong relationship between economic and political integration, which may differ in its essence from case to case. The processes of economic and political integration in the EU have been linked from the start. It is a fact that the greatest success of the European Union is namely economic integration- merging the markets of the member states, the removal of barriers to the movement of goods, persons, services and capital, the common European currency, the single position in world trade negotiations. But countries, which had their first encounter with the democratic and pluralistic management of the economy in the 90s, experienced a great amount of pressure while dealing with the process of transition. Poland and Bulgaria follow different patterns of transition and the results they achieve are also significantly different. However, both Poland and Bulgaria had a common goal, namely to select the optimal strategy for a successful accomplishment of the privatization process, which would secure their faster and more efficient integration to the European market. To start with, a brief definition of the concept of privatization will be included, the two main paths for economic transition will be shortly presented and after that it will become clear which methods both countries used to develop their economies.

Like the main objective of the European Union is economic integration, privatization is the most important economic process in the former Eastern Bloc. According to Investopedia, privatization is “the transfer of ownership of property or businesses from a government to a privately owned entity” (Investopedia US 2013). Two main changes have to be made so the transitional process could be performed- “forcing a move from a seller’ to a buyer’s market (via price liberalization) and enforcing a hard budget constraint (via privatization and elimination of various government support mechanisms)” (Havrylyshyn, McGettigan 1999: 10). Numerous studies investigate the positive effects of privatization in transition countries, although authors like Carlin et.al. (1995) come to the conclusion that privatized enterprises did not achieve better results in restructuring than state own enterprises (ebd.). However, the two main methods of privatization are theoretically defined as radical (or shock therapy) and gradual (Poznanski 1994: 204). Both Bulgaria and Poland choose the radical approach which Poznanski manages to describe as an approach which “stresses speed in the belief that anything less than a “shock” treatment administered by the state will not have the credibility necessary to alter economic agents’ behavior” (ebd.: 206). One of the most representative studies on the privatization process in Bulgaria and Poland was conducted by Polish Case Research Foundation together with the Bulgarian Market Research Institute, which tracks the fiscal effects of the process from its beginning in 1990, respectively 1993 until 2000. The following statistical data concerning the process of privatization is therefore to be cited from this study.

During the years of investigation, privatization moves with variable rate depending on the political forces in power. During the socialist governments, the privatization process is trying to achieve so-called "social justice" while the right governments try to speed up the privatization process to realize market reforms. In Bulgaria, for the period 1993 - 1999, the total cash proceeds from privatization amounted to about 1 billion dollars. Privatization revenues recorded continuous growth since 1993 with the growing number of transactions and volume of privatized assets. Privatization revenues were only 0,1% of the GDP in the first year of the process, but in 1997 reached 3,21%. The share of revenues from the privatization income of the consolidated budget became relatively significant since 1995, when it reached 1,2 %. This share was highest in 1997- 9,9%. Privatization revenues in Poland for the period 1991- 1999 amounted to 11.878 billion dollars. In 1999, the total share of indirect privatization, companies and banks reached 97% of total revenue. The profit from indirect privatization is also characterized by the most regular real growth over the years. The share of privatization revenues to GDP in Poland in 1999 was 9,58%. The privatization process is a powerful factor in attracting foreign investments. For the period 1997- 1999, 42% of the total volume of foreign direct investment is privatization. Respectively, in Poland, the percentage is much smaller- for the period 1994- 1997 revenues from transactions with foreign investors are 10%.

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