North Bulgaria – the poor relative

Dimitar Sabev, Bodil, 16.03.2024

The failure of national development policies risks regional disintegration, writes Bulgarian economist Dimitar Sabev. The Bridge of Friendship syndicates his analysis from Spring 2024 because it is relevant both to the drama of Bulgarian existence and to Bulgarian-Romanian relations.

The Bridge of Friendship sees part of the explanation why southern Bulgaria is richer lies in its strong economic ties with Greece and Turkey. These create an economic and existential sense for more people to stay in their home regions or settle in this part of Bulgaria. Isolation, ignorance and mistrust between Bulgarians and Romanians condemn Northern Bulgaria and Southern Romania to economic backwardness and social conservatism.

Many districts in northern Bulgaria have lost 20% of their population in the decade since 2011. Given this situation, it seems logical that one of the solutions for the development of Northern Bulgaria is related to developing experience and skills to do things with Romanian neighbors. At this stage, this seems a difficult, painful, thankless and undesirable path to many on both sites of the border. Dimitar Sabev’s text could point us to the alternative to opening North Bulgaria to its Romanian neighbor – the lack of investment, depopulation, social problems and decline continue to be self-perpetuated.

The Balkan Peninsula is named after the Balkan Mountains, which geographically and historically divide Bulgaria into two large regions: north and south. Northern Bulgaria is slightly smaller – about 48.5 thousand square kilometers, or 43.7% of the country’s territory.

Despite the weight of the capital, the share of northerners in Bulgaria’s population has long been similar to that of the occupied area. At the end of 1977, 8,822 million people lived in Bulgaria; of these, 41.2%, or 3,632 million people, were registered in the counties belonging to North Bulgaria.

45 years later, the situation is different. Today, only 33.8% of the country’s population live in the three statistical regions of Northern Bulgaria. Compared to the level in 1977, the population of Northern Bulgaria has decreased by 40%. South Bulgaria’s population decline over the same period was 17.8% – a significant percent, but one that pales in comparison to the depopulation in the north.

A comparison of demographic and economic indicators, which we will examine below, shows that a rift is opening up between North and South Bulgaria: it is as if we are now talking about different countries. The decline of the North is an example of the failure of the Bulgarian regional policy implemented by the executive in the capital.

Artificial regionalization of the country

In 2013, by the order of the then president of the National Statistical Institute, Reneta Indzhova, the territory of Bulgaria was divided into two statistical zones: the North and Southeast of Bulgaria and the Southwest and South-Central Bulgaria. Such a regionalization has nothing to do with historical, transport or economic realities – but it has the politically useful property of partially concealing the backwardness of the north.

We say “partly” because the South-East statistical region, which is artificially glued to northern Bulgaria, although economically inferior to the other two southern regions, is 33% ahead of the North-East, the largest in the northern Balkans and centered on Varna, in terms of gross domestic product. The official statistics do their best to hide the regional polarization, but the differences are nonetheless obvious.

We will leave without comment the fact that the south-eastern region (i.e. the one that falls within the statistical area of North Bulgaria) includes the district of Stara Zagora, through the center of which the Trakia highway runs, and the drive to Plovdiv takes 1:15 hours and to Sofia 2:20 hours – but the trip from Stara Zagora to Pleven, although only 180 km, takes 3 hours.

Ignoring the artificial statistical regionalization of the country, some key indicators for the “two Bulgarias” are calculated below: for the three northern and three southern regions separately. The basis for the calculation is the latest regional data of the NSI for 2022.

First for worse, second for better

The population density in the south is 68 persons per km² and in the north 45 persons per km². In the last 5 years (2022 vs 2017), Northern Bulgaria has depopulated by 12.2% and Southern Bulgaria by “only” 6.6%. In 2022, 31.3% of all children in the country were born in the north: given the 33.8% share of the total population mentioned above, this suggests that the birth rate in the north is lower than in the south. And migration south of the Balkans is more favorable: there is a demographic divergence between the two Bulgarians.

Of the many indicators of socio-economic development, Northern Bulgaria outperforms Southern Bulgaria only in terms of the “bad”. In Northern Bulgaria, 36.9% of Bulgarians are over working age, i.e. older than in Southern Bulgaria. A frequently used indicator of ongoing negative processes in society is the divorce rate: the North accounts for 36.5% of divorces in Bulgaria.

Even more pronounced is Northern Bulgaria’s “advantage” in terms of unemployment: 43.9% of all unemployed people in Bulgaria are registered in the three northern regions (and 56.6% of those unemployed for more than one year).

Demographic disparities explain – and are explained by – a similar disparity in economic indicators. The North accounts for only 23.8% of the country’s gross value added. From this we understand that the labor productivity of employees in northern Bulgaria is lower: relatively more people create relatively less added value.

The gross domestic product per capita in South Bulgaria at the end of 2022 is about 30 thousand leva (€15315). North Bulgaria do with a GDP of 18.3 thousand leva per person (€9342) – or almost 40% less.

To summarize: the historical and geographical region of North Bulgaria, which occupies 44% of the territory, is today home to 34% of the country’s population; it accounts for 24% of the value added in the economy and 44% of Bulgaria’s unemployed.

Not just Sofia

The “Sofia factor” has recently been used as an explanation for all regional disparities in Bulgaria. Is the above not entirely due to the fact that Sofia is located geographically and administratively in southern Bulgaria?

Sofia has a huge influence, but even without it the south is ahead of the north, and not only in absolute terms, but also per capita. The GDP per capita in southern Bulgaria, after Sofia is lowered, is 19.8 thousand leva (10108 euro), or 8% higher than in the north.

The difference in GDP* between north and south, excluding Sofia, is not too large, but will increase as less investment is made in northern Bulgaria. Spending on acquisition of fixed assets in the North accounts for 24.1% of the total in 2022. Excluding Sofia, spending on fixed assets per capita in South Bulgaria is 6.6% higher than in North Bulgaria.

Regional data from the National Statistical Institute on expenditure on acquisition of tangible fixed assets allow us to calculate another key indicator. If we subtract private expenditure on tangible fixed assets from total expenditure on tangible fixed assets, we get public expenditure on tangible fixed assets – in other words, investments made with public money. For 2022, this amounts to over 4.5 billion leva (€2.3 billion).

Could it be that the state leadership, dissatisfied with the uneven development of the country, has directed a little more money to the north? The south accounted for 82.6% of public spending on fixed assets; the north accounted for 17.4%.

It is true that the lion’s share of public investment in the year in question went to Sofia: 2.66 billion leva (€1.36 billion), or more than 58% of total state spending on tangible fixed assets. Excluding the capital, public spending on fixed assets per capita in northern and southern Bulgaria was exactly the same: 361 vs. 362 leva.

And such “complete equality” is a bad sign: instead of prioritizing investment in backward areas and projects with potential, the government gives money “per person” so that no one feels offended. This is not appropriate for a country with growing regional disparities. Most problematic, however, is the part that fell to Sofia: there, public spending on fixed assets per capita is 7 times higher than in the “countryside”.

Grain in the north, investment in the south

Even more pronounced is the divergence between north, south and Sofia in terms of foreign direct investment. By the end of 2022, they amount to €4.8 billion in the north and €24.6 billion in the south. The ratio is 16.3:83.7.

More than half of all foreign direct investment in Bulgaria over the years has gone to Sofia. Even after the decline in capital in southern Bulgaria, we see that 47% more foreign investment per capita went to the south than to the north.

South Bulgaria also leads the way in tourism: 71% of tourist nights are spent south of the Balkan Mountains. In terms of industry (mining, manufacturing, energy, construction, plumbing), the south accounts for 75%. In services, the South leads with 78.4%.

The only advantage that the North has over the South is agriculture, especially cereals. 71% of the country’s forests are located in the South, while the North has 69.5% of the area planted with cereals. On a smaller area than in the south, the north produces 68.6% of wheat.

Wheat, as well as sunflower seeds, maize, barley, etc. are exported raw and sold on world commodity exchanges, while Bulgaria imports food in parallel. This billion-dollar business does not need a large labor force; in fact, the fewer people living in the villages, the less the grain growers will have to worry about.

Population is the engine of the economy: it exists because of people in the role of consumers and workers. But there are also economic sectors and national policies that see people as an obstacle. Fewer people – fewer protests against mining. Fewer people outside economic centers – less need for regional investments with low and delayed returns.

The Danube Vilayet needs highways

Although with significant regional disparities, the distribution of population and economic activity across Bulgaria has long been relatively uniform. Today, the country is increasingly fragmented, with three large territorial zones emerging in parallel. The North is progressively depopulating and lagging behind economically. The south is partially stabilizing, not least because of its proximity to the capital. Sofia receives many times more state investment per capita than the others.

Bulgaria is clearly entering a phase of regional disintegration. What can be done? One measure that could be useful is to separate North Bulgaria as an administrative unit with Pleven or Ruse as its center. Important state bodies should be relocated to the “second capital” and public investment channeled. To form something similar to the pre-liberation Danube Vilayet – in fact, a successful territorial experiment from the times of the Ottoman empire.

A more conventional measure to bridge the gap between northern and southern Bulgaria is to first align a key indicator of regional development: highway length. At present, 15% of North Bulgaria’s highways and 85% of South Bulgaria’s highways are located in Northern Bulgaria.

Currently, a commuter from Dobrich to Sofia can choose between getting to the capital in 5:58 hours, passing through a mountain pass to southern Bulgaria and the comparative comfort of the Trakia highway, or slaloming for 5:53 hours through the potholes planned half a century ago as the Hemus highway. Because the second option has 15% lower fuel costs, commuters usually go “over the limit”. One thing is certain: without smart, decisive and swift action, the number of commuters from Dobrich and Varna to Sofia on both routes will accelerate.

* More serious are the disparities that are not directly reflected in GDP: 19% of the population of Targoviste district and 25% of the population of Loci district are only partially supplied with water (a water supply scheme applies). While the national average of population with access to public sewerage is 75%, the indicator for Razgrad district is 42%, for Silistra 52%, for Vidin 54%. Out of 14 districts in North Bulgaria, 4 have highways; out of 13 districts in South Bulgaria, 11 have highways.

Photo: A view from North Bulgaria – the note says “for sell” (source: Bodil)

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