'Red tape" hinders competitiveness in Bulgaria, Greece and Romania. Absorption of EU funds is vital

According to an analysis by the European Commission, Bulgaria, Greece and Romania are still facing major competitiveness challanges. The full report is available here. For your information, country specific information is presented below.


"Bulgaria faces some important challenges on its way to improve its competitiveness such as cutting red tape at different levels of the state and local authorities, fostering innovation in view of increasing productivity, improving the energy efficiency across all sectors of the economy and developing the transport infrastructure. In the short term, absorption of structural funds which is crucial in supporting these undertakings remains dramatically low. A proper implementing mechanism for management and control of the funds can help remedy that situation, in particular the EU co-financed programmes. Cooperation and coordination between research institutions and businesses is still limited. The implementation of the measures of the existing innovation and R&D programmes is rather slow and there is lack of large flagship projects of excellence in the field. Bulgaria needs to improve its administrative capacity and simplify existing rules and procedures in order to accelerate the absorption of funding in all sectors. In the short term, high loan interest rates, required collateral and securities and government arrears remain a significant burden to business."


"Apart from the short-term concerns related to the economic crisis, such as getting access to finance and adjusting to the internal demand shock, the main challenge facing industry, but also the real economy overall in Greece is a business environment that is not delivering optimally. Improving the business environment through actions such as those planned in the MoU will contribute to growth by reducing the costs of doing business in Greece across the board, thus increasing productivity. However, there remains the structural problem of specialisation in less technologically advanced and low growth sectors. The policy response to this problem calls for actions to facilitate structural change, some of which, such as labour and product market reforms have been adopted or are in progress, and to raise the knowledge base. The public administration constitutes an important bottleneck to economic growth, through its huge cost to the rest of the economy, both through its size and through its often ineffective functioning. In this area, as in the business environment, some progress has been made, mainly in the context of the MoU, but efforts will have to persevere over the medium term for setting in place the conditions for sustainable growth."


"Whilst the short-term priority is to bring public finances under control and stabilise the macro-economic situation, the implementation of a number of urgent structural reforms should help to significantly improve the business environment. In this light, the effective and timely implementation of the measures included in the 2009 and 2011 Memorandum of Understanding will be critical as it will help to pave the way for a return to sustainable growth. Strengthening the efficiency, effectiveness and independence of the public administration should help improve the quality and enforcement of policies as well as the effective absorption of structural funds. Making an increase of the low rate of absorption of the EU Structural Funds a priority for economic policy would also allow increasing the necessary investment in infrastructure and human capital without an excessive burden on the national budget. Nevertheless, improving the heavy regulatory environment and reducing the significant red tape in all sectors of the administration would contribute to unlocking the business potential and reducing costs of doing business. Furthermore, developing the weak transport (especially motorways) and communication infrastructure would be critical to improving competitiveness and attracting investments. In the long term, the challenge will be to ensure a paradigm shift away from unskilled labour and energy intensive sectors towards more smart, low-carbon and resource-efficient activities. Upgrading productive capacities and processes, investing in environmentally friendly, eco-efficient technologies, increasing the innovative potential of enterprises, and upgrading labour force skills and improving vocational and higher education and training will be essential for the future competitiveness of the Romanian industry."

Source: European Commission