Economic freedom on the rise in many Balkan countries

17/01/2014

Bulgaria registered the highest improvement in freedom from corruption, though reforms are still necessary to increase transparency and establish a real competitive market environment.

By Tzvetina Borisova for Southeast European Times in Sofia -- 17/01/14

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Bulgarian citizens hold an anti-corruption rally in July 2013. [AFP]

Economic freedom in the Balkans is on the rise, with most countries ranking in the moderately free category, according to the latest Economic Freedom Index compiled by the Wall Street Journal and the Heritage Foundation, in partnership with the Croatia-based Adriatic Institute for Public Policy.

Romania, Bulgaria and Macedonia registered their highest-ever economic freedom scores, underlining improvement in areas such as the rule of law, regulatory efficiency, limited government and open markets.

Meanwhile corruption, one of the main factors undermining economic freedom, remains a serious problem in most countries in the region.

"Widespread corruption, political interference in the judiciary and weak protection of property rights deter foreign investment, reduce potentially profitable domestic investments and affect employment," Natasa Srdoc, chairperson of the Adriatic Institute, told SETimes.

The 2014 index shows that Bulgaria has the highest improvement of the regional countries in the freedom from corruption indicator, by 2.2 percent. According to Srdoc, however, this increase is due to the changed methodology of Transparency International's Corruption Perception Index, which is the base for calculating this indicator.

"With the 2014 Index score of 35.2 in freedom from corruption (with 100 being the best) Bulgaria remains rated as repressed," Srdoc pointed out, noting the report's findings that, "Bulgaria's democracy is undercut by lack of transparent decision making and widespread corruption … The judicial system does not enforce property rights effectively, and inconsistencies in regulation discourage private investment."

A report on anti-corruption efforts in Bulgaria by Sofia-based think-tank Centre for the Study of Democracy also suggested a minimum change in corruption pressure and involvement of people in corrupt activities.

Citizens continue to demonstrate intolerance for corruption, and business acceptance continues to decrease. Still, the practical efficiency of corruption as a means to resolve problems and gain access to a given service remains high, the centre said.

The report also suggests that the actions of the judiciary and executive authorities in anti-corruption efforts lack significant results. Therefore, politicians should concentrate on two of the key areas of countering corruption: the need for administrative reform to build professional public administration and strengthening corruption investigation authorities.

Lyubomir Todorakov, social researcher at the Alpha Research agency, said working reforms are the key to eradicating corruption, a precondition for the establishment of an actual competitive market environment.

"Change is necessary in key regulatory regimes. What I mean are laws dealing with concessions, public procurements, forests, waters, energy," he told SETimes.

"These regulatory regimes allow the siphoning of huge money to certain circles, organisations and companies, which consequently use it to increase their power and control over institutions, citizens and other regulatory regimes," Todorakov said.

In practice, Todorakov said he does not see substantial progress because there haven't been any substantial reforms.

"What seems important to me in terms of economic freedom is the lack of efficient, impartial and most importantly fair judiciary. Widespread corruption in the judiciary is the main hurdle to a real competitive market environment," he said.

The 2014 Economic Freedom Index also notes that the judicial system in Bulgaria does not enforce property rights effectively, and inconsistencies in regulation discourage private investment.

"Bulgaria's democracy is undercut by lack of transparent decision making and widespread corruption," the report said.

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Asked to comment on the index results, Tove Ernst, the press officer for European Commissioner for Home Affairs Cecilia Malmstrom, told SETimes that at this stage they cannot comment on Bulgaria's anti-corruption efforts and progress, adding that "new reports will be published within a few weeks."

Bulgaria is ranked 61st in this year's Economic Freedom Index. Romania follows at 62nd, falling in the group of moderately free countries, which also includes Macedonia at 43rd, Cyprus at 46th, Albania at 54th, Turkey at 64th, Montenegro at 68th and Croatia at 87th.

Serbia at 95th, along with Bosnia and Herzegovina at 101st, and Greece at 119th are part of the group of mostly unfree countries.

What steps can regional countries take to increase their economic freedom? Tell us your thoughts below.

This content was commissioned for SETimes.com.
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