Institutional change in Bulgaria: A socioeconomic approach

Abstract

Three years after shock therapy and related transformation policies based upon an orthodox neoclassical perspective of economies have been suggested, encouraged, and induced throughout Central and East Europe (CEE) skepticism is mounting regarding their efficacy. Faced with depressed economies and rising poverty partly caused by these policies, political authorities, economists, and interest group leaders throughout CEE are openly questioning the wisdom of such measures. This is especially true in Bulgaria. Authorities there are in a good position now to take advantage of the lessons provided by the transformation experience of other nations and the emerging body of transformation literature to develop an appropriate theory for transformation and new policies to achieve their goals. This article first presents a summary of Bulgaria's current economic, social, and political conditions. There follows an identification of lessons Bulgaria can learn from three sources: the transformation experience of CEE nations, the development experience of both wealthy Western nations and underdeveloped nations, and recent theoretical analysis of the transformation process. These lessons will serve as the basis, within an appropriate theory of technological and institutional change, for the proposed Bulgarian transformation policy.