The Bulgarian Economy - 67% of Services, 28% of Industry and 5% of Agriculture
The National Statistical Institute (NSI) published data on regional gross domestic product (GDP) for 2017
These data give us the opportunity to orient ourselves in the economic processes at the regional level, even though they are a year back. Traditionally, news about regional GDP focuses on differences between areas. And in 2017, for example, Sofia is far ahead with GDP per capita at the rate of 30 295 levs, and lastly Silistra is only 6 687 levs. Very rarely, however, it is included in the details of the branch structure of the regional economies. That is what we will do here by focusing on gross value added (GVA) by sectoral economic sectors.
The overall structure of the country's economy is clear - 67% are services, 28% are industry and only 5% are agriculture. These ratios are quite persistent. Over the last 5 years (2013-2017), industry added a total of just one percentage point to its account, which came equally from a slight decline both in services and in agriculture.
What, however, is the profile of the different areas and which are the industrial and agricultural regions in the country? To highlight them, we will use the share of key industries in value added at regional level. Separately, we will look at the added value per sectors for the specific areas - the latter shows whether this sector is really strong or simply has a high share due to the poor development of the other major spheres of economic life. It is important to clarify once again that we are weighing the data against the population of the districts.
What is the sectoral profile of the districts in the country:
Industrial districts - Stara Zagora, Sofia area, Vratsa and Gabrovo
The data for the industrial areas in the country are quite categorical. The four listed are the only areas where the industry is responsible for at least half of the gross added value of the whole region - 66% in Stara Zagora, 61% in the Sofia region and about 50% in Vratsa and Gabrovo. Interestingly, each of these areas marks an increase in the industry's share of value added by 5-6 percentage points in total over the last five years (2013-2017). If we look at not only the share but also the value added of the industry per capita, it is exactly the same areas in the first four places, in the same order - 9,985 leva in Stara Zagora, 8,177 leva in the Sofia region, BGN 5 305 in Gabrovo and BGN 5 300 in Vratsa.
The explanation for the industrial profile of these areas is not a surprise. They include significant industrial enterprises such as the large energy complexes in Radnevo and Galabovo on the territory of Stara Zagora Region, Kozloduy NPP on the territory of Vratsa region, as well as some of the big extraction enterprises from Srednogorie (for example in Chelopech and Pirdop) on the territory of Sofia district.
Gabrovo is the only example of an industrial area without a large energy or mining enterprise, but the district center has long-standing industrial traditions (notably called the "Bulgarian Manchester"), and large enterprises in Sevlievo are also included in the area.
Areas of services - the capital Sofia, Varna and Burgas
Defining areas with a stronger service profile is not an easy task. Only the capital Sofia is obvious, with the highest added value in services (22,575 leva per person) and 86% of the value of the services in the area's added value. It is then Varna District, where the value of the services in the value added is 69%, and the added value of the services is over 8,320 BGN per person. Burgas region also comes here, albeit not so categorically - the value of the added value of the services is 64% (high but still similar to that in Veliko Tarnovo and Pleven), but the added value of the services is BGN 6 790 per person, which is in front of all other areas except the capital Sofia and Varna.
Service areas are actually covered with the largest regional centers in the country - only Plovdiv is not here, but we will write about it at a separate point. However, the economy of Sofia and that of the districts of Varna and Burgas are very different. In the capital economy, for example, more than 10% of all employees are in the ICT sector (data for 2017), that is, in a high-tech service sector that pulls salaries up. In the districts of Varna and Burgas this sector is not yet at such a level - 1-2% of the employees are in the ICT sector. At the same time tourism in Varna and Burgas plays a leading role - 14% of employees in Burgas and 9% of Varna employees are in hotels and restaurants, while in Sofia they are only 4% (data for 2017). In other words, while the economy of services in Sofia has a higher technological profile, there are clearly defined traditional sectors in Varna and Burgas.
Agricultural areas - many and poor
Determining agrarian areas is perhaps the most difficult, as they are more and relatively poor. Accordingly, the poor development of other sectors sometimes makes the development of agriculture seem decisive. However, the following areas have the highest shares of agriculture compared to all other regions in the country - Silistra (23%), Vidin (18%), Montana (16%), Razgrad (16%), Dobrich (16% Kardzhali (15%), Targovishte (14%), Shumen (13%) and Yambol (13%). In these areas, the added value of agriculture per capita is highest - within BGN 1 000-1 300 per person.
What immediately impresses is that areas where agriculture accounts for more than 10% of added value rank among the bottom of wealth - have the lowest GDP per capita. This is because the value added in agriculture remains very low - the highest added value per capita in agriculture (BGN 1,327 in Silistra) is almost 3 times lower than the average value added of the industry in the country ( BGN 3 522) and 6 times lower than the average value added of services in the country (BGN 8 281). Silistra and Vidin are also the only areas in the country where the added value of a person in the industry is so low that it is below the added value of agriculture in the area.
What are the dynamics in Plovdiv?
The overall regional dynamics over the past five years shows that the growth of the industry's share of value added is driven precisely by those areas which have a stronger industrial profile. The areas of services except the capital also slightly increase the share of the industry - more visible in Burgas and more modestly in Varna, where services also bring more added value in principle. Relatively more agrarian areas, with the exception of the north-west Vidin and Montana, shrink the share of agriculture. Interesting is the case of Vratsa, where there is a huge growth in the industry at the expense of both services and agriculture. This is the result of the good results of Kozloduy NPP - BGN 100 million more in 2017
The lack of Plovdiv District in the profiled areas is due to the diversity of the economy in the area, which combines a strong industry and services that we have already seen are inevitably leading in the areas of the largest cities. According to the value added of industry and services, Plovdiv ranked immediately after the cited areas in the two categories - BGN 5 946 per person in services and BGN 4 143 per person in the industry. After a more pronounced growth of the industry in recent years, the ratio in Plovdiv has reached 56-57% of services and 40% of the industry in total value added. Similar are the processes in the Rousse district, which is close to Plovdiv in terms of added value of a person in the industry and services, and there is a very similar branch structure.
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