Bulgaria, planned economy or market economy?

The idea for this post came from a recent trip to Bulgaria. I got the Lonely Planet guide from the local library and was surprised when reading its section about the recent history of Bulgaria, as they take very clearly a political side. I wondered whether their position would be supported by facts and so went and study the matter.

In this first post I study a set of indicators to compare with facts the two historical periods. In a forthcoming post I will contrast these facts with Lonely Planet’s views.

Premise. The intention of this post is not to express any opinion or to take any political side. The author just reports on the evolution of a set of indicators for Bulgaria during two historical periods.

The Facts

We consider the following four indicators as representative enough to get a general idea of the situation of Bulgaria:
- Population growth
- Level of inequality
- Economy growth
- Unemployment rate

We will see how these indicators have evolved in the two relevant historical periods:
- 1945-1989. Bulgaria under centrally planned economy
- 1990-today. Bulgaria under market economy

Population growth

During the years of planned economy, population went up from 7 million in 1946 to 9 million in 1990, an increment of 29%.

During the years of market economy, population has decreased, reaching 7.4 million in 2011. This is a decrement of 1.6 million or 18%.

Level of inequality

The GINI coefficient is a widely used metric to measure the level of inequality. It is a value between 0 and 1; 0 meaning perfect equality and 1 maximal inequality. Hence, the lower the value, the more equal the citizens of the society being studied.

During the last decade of planned economy, the GINI value decreased from 0.24 (1980) to 0.2 (1988).

Conversely, after two decades of market economy, this value has almost doubled (0.36 in 2010).

Economic growth

During the last decade of planned economy GDP per capita almost doubled, increasing from $3,799 (1980) to $7,538 (1989).

After two decades of free market economy, GDP per capita reached $12,934 in 2010. This is almost double the value in 1989. Thus, we can say roughly that under centralised economy GDP doubled in 10 years, while under market economy doubling GDP took double that time.

Unemployment Rate

Unemployment rate was 1.7% at the end of the period of planed economy. During the transition to market economy the rate went up to 19.5% (2001) and then decreased to 11.3% (2011). However, this value is still almost 7 times higher than it was in 1989.

Summary

The four indicators analysed exhibit better trends for the period 1946-1989 than for the period 1990-today. In a nutshell:
- Population increased by 29% during 1946-1989 and decreased by 18% during 1990-2011.
- Inequality has almost doubled since 1990.
- Economy is now growing at half the pace than it was before.
- Unemployment has increased in the current period by a factor of nearly 7 times.

Sources

Growing Inequality and its Impacts in Bulgaria http://gini-research.org/system/uploads/445/original/Bulgaria.pdf?1370090444

http://www.indexmundi.com/bulgaria/gdp_per_capita_%28ppp%29.html

http://en.wikipedia.org/wiki/Demographics_of_Bulgaria

http://en.wikipedia.org/wiki/People%27s_Republic_of_Bulgaria#Economy

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