Sectoral Productivity – Allocation of FDI Nexus in Bulgaria after the 2008-2009 Global Crisis

Abstract

Studies of foreign direct investment in Bulgarian economy have had a decades-long history since the beginning of the transition to a market economy. This subject was particularly topical in the early transition period, when foreign investments were expected to be a major driver of the recovery and renewal of Bulgarian economy. Thirty years later, the relevance of this topic has not diminished, given the extraordinary degree of globalization of the world business into which Bulgarian economy must successfully integrate. The main goal of the current study is to present preliminary results of a statistical analysis of the dependence of sectoral labor productivity on the level of foreign direct investment allocated to various sectors of Bulgarian economy. For this purpose, two basic specifications of econometric models are built, adapted for estimation using panel data for the 2008-2019 period. The models are estimated using annual data for the sectors defined in the framework of the International Standard Industrial Classification of economic activities (ISIC-2008). Statistically significant results are obtained on various effects of the sectoral allocation of FDI in Bulgarian economy.