European Integration

Disinformation about EU Membership Allegedly Leading to Economic Collapse in Bulgaria and Romania

21 May, 2018

On April 27, an online portal Georgia and the World released an interview with Hamlet Chipashvili, a political analyst, in which the respondent talks about employment and economic problems and links that to the EU integration process and visa liberalisation. Chipashvili brings an example of Bulgaria and Romania, claiming that after joining the European Union the two countries’ expectation for better economic situation was not justified, as the enterprises and factories were shut down and the rates of unemployment reached an alarming level. The political analyst also noted that the same will happen in Georgia, especially in the spheres of wine-making and viticulture.

Chipashvili’s claims that the EU membership has led to economic collapse in Bulgaria and Romania are false. These countries joined the European Union in 2007; as a result, their GDP, export, average annual wages, as well as a share of products created in their economies by industrial sector increased. In addition, European countries account for 84% and 78% of Romanian and Bulgarian exports, respectively.

Real Facts

Fact No.1: In 2006, before joining the European Union, Bulgaria’s GDP was estimated at USD 34.4 billion; in 2016, this figure increased to USD 52.4 billion. In 2006, the GDP per capita was equal to USD 6 107.71 and in 2016 it increased to USD 7 926.

Chart 1. Bulgaria GDP before joining the European Union (1998 – 2006)

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Chart 2. Bulgaria GDP after joining the European Union (2007 – 2016)

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Source: Tradingeconomics.com, the World Bank

Fact No.2: In 2006, before joining the European Union, Romania’s GDP was estimated at USD 123.53 billion; in 2016, this figure increased to USD 186.69 billion. In 2006, the GDP per capita was equal to USD 7 418.42 and in 2016 it increased to USD 10080.97.

Chart 3. Romania GDP before joining the European Union (1998 – 2006)

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Chart 4. Romania GDP after joining the European Union (2007 – 2016) "

Source: Tradingeconomics.com, the World Bank

No.3: From 2006 to 2018, Bulgarian and Romanian exports increased by 122% and 142%, respectively. European countries account for 84% and 78% of Romanian and Bulgarian exports, respectively.

Bulgaria

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Romania

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Source: UN COMTRADE Database

Fact No 4: GDP created by industrial sector is steadily increasing in both Bulgaria and Romania in 2007-2018.

In Bulgaria, the figures of the first months are almost twice more compared to the first months after joining the European Union (see charts 5 and 6). In Romania, the GDP created by an industrial sector is by 27% more compared to the figures of early 2007.

Chart 5. Products manufactured in Bulgaria by industrial sector, 2007-2018 "
Source: Tradingeconomics.com, the National Statistical Institute of Bulgaria

Chart 6. Products manufactured in Romania by industrial sector, 2007-2018 "
Source: Tradingeconomics.com, the National Statistical Institute of Bulgaria

Fact No. 5. According to the World Bank data, average annual wages grew by more than 180% in Bulgaria and Romania after the two countries joined the European Union.

increased significantly in both Bulgaria and Romania after the two countries joined the European Union. According to the World Bank data, average annual wages amounted to 348.9 Bulgarian Lev before joining the EU (in 2006) and increased to 1045 Lev in 2017, ten years after joining the European Union. Similarly, average annual wages amounted to 1150 RON in 2006 and increased to 3314 RON in 2017, ten years after Romania joined the European Union. The above figures show that average annual wages grew by more than 180% in Bulgaria and Romania after the two countries joined the European Union.

Fact No. 6: The claims that the unemployment rates reached an alarming level after Bulgaria and Romania joined the European Union are groundless. The highest unemployment rates were observed in Bulgaria and Romania in 2013 (12.9%) and 2011 (7.2%), respectively. Since 2013, the unemployment rates have been decreasing in the both countries.

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Source: World Bank

No. 7: In 2009-2011, Romania received EUR 2.35 billion as part of financial assistance from the European Union. The programs implemented in Bulgaria aimed at promoting small and medium enterprises, developing human resources and agriculture.

The EU financial assistance programs facilitate the development of various sectors in member states and overcoming the consequences of economic crises. Following the 2009 financial crisis, Romania received the first disbursement from the European Union in 2009-2011 within the framework of the financial assistance program. A total of EUR 2.35 billion was allocated to the country. The second and third programs were treated as precautionary and no disbursements were made. All financial assistance programmes were jointly run with the International Monetary Fund (IMF) and supported by the World Bank.

The Innovations and Competitiveness program is mainly targeted at small and medium enterprises (SMEs). The program’s strategy, as a part of the implementation of the EU structural and investment funds (ESIF) in Bulgaria, is closely related to the investment for growth and jobs goal and Bulgaria‘s contribution to "Europe 2020" targets. Total EU contribution amounts to EUR 1.079 billion. Another assistance program aimed at human resources development and provided incentives for employers to hire and train up to 29-year-old unemployed people. The project budget was EUR 15 million. EUR 6 million was allocated in frames of the program on development of rural areas and it aimed at promotion of SMEs, agricultural producers and municipalities from rural and non-rural areas.

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Prepared by Vato Goglidze
Myth Detector Laboratory