Bulgaria Falls Into Bottom Group of EC's Competitiveness Ranking

Politics » BULGARIA IN EU | September 11, 2014, Thursday // 16:19| Views: | Comments: 0
Bulgaria: Bulgaria Falls Into Bottom Group of EC's Competitiveness Ranking Photo by EPA/BGNES

Bulgaria has been estimated as an EU Member State with "modest and stagnating or declining competitiveness" in a report of the European Commission.

The EC published Thursday two reports on industrial competitiveness.

The reports are produced annually in order to provide evidence-based indicators to support policy making at EU and Member State level, according to the EC press room.

The 2014 European Competitiveness Report 'Helping Firms Grow' gives a quantitative assessment of the competitive performance of EU industries and provides empirical answers to important questions in the industrial policy debate.

The 2014 Member States' Competitiveness Report "Reindustrializing Europe", provides an indicator-based assessment of the implementation of industrial policy at EU and national level, with a country by country breakdown.

The EC has divided Member States into four groups on the basis of their performance in the sphere of industrial competitiveness, with Bulgaria ending up in the group of EU countries with "modest and stagnating or declining competitiveness," together with Slovenia, Croatia, Malta and Cyprus.

The top performing group, which brings together EU Member States with high and improving competitiveness, includes the Netherlands, Germany, Denmark and Ireland.

The group of EU countries with high but stagnating or declining competitiveness includes Belgium, the United Kingdom, Austria, France, Italy, Luxembourg, Sweden and Finland.

The group of EU Member States with modest but improving competitiveness brings together Estonia, Lithuania, Spain, Latvia, Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Greece.

The EC argues that to ensure that growth does not stall, the EU and Member States urgently need to address a number of areas of concern: investment, access to finance, public administration, access to foreign markets, innovation and energy prices.

European Commissioner for Industry and Entrepreneurship Ferdinando Nelli Feroci, commented: "I appreciate the efforts made by Member States to improve their industrial competitiveness. However, a lot still needs to be done. Tackling lack of investment, limited access to finance, high energy prices and inefficient public administration will put our companies and SMEs in a stronger position to compete in the global market place."

Overall, the EU's competitive strengths in manufacturing remain intact: highly skilled workers, high domestic content of export goods, and comparative advantages linked to complex and high-quality products. EU Member States have also implemented a range of policies to increase competitiveness over the period since the start of the crisis in 2008.

The data produced by both reports leads EC experts to a number of conclusions, including that additional investment is needed across all sectors to ensure that European industry can maintain its competitiveness.

The EC points out that small and young firms find it more difficult to obtain bank credit compared to other firms, even if their financial performance is the same.

According to the experts, competitiveness is supported by more efficient innovation and commercialization of research, and access to highly-skilled labor.

The EC also argues that competitiveness requires reducing costs and uncertainties for businesses when dealing with public administration.

"Increasing the efficiency of public administration induces higher numbers of fast-growing firms, in particular by increasing firm's financial turnover. Time-consuming and costly tax rules, corruption and ineffective justice systems are the most detrimental to firms' growth. Most Member States also need to better take into account the effects of rules and legislation in other fields on competitiveness," the EC states.

The EC experts also call for support to help the internationalization of SMEs as it finds that smaller and younger firms are currently less likely to enter foreign markets and reap the associated benefits.

"Policies targeting the business environment with respect to access to capital, skills support for innovation and actions to enhance productivity are important to help small firms expand exports," the EC concludes.

According to the reports, competitiveness is negatively affected by electricity and gas prices which are higher in the EU than in a number of other economies.

"Energy efficiency improvements have not fully offset the negative impact of increasing prices. Efficient markets for electricity and diversified energy sources are therefore needed to ensure that energy is available at a competitive price," the EC says.

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Tags: European Commission, EU member states, Competitiveness, SMEs, industrial competitiveness
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