site.btaEconomic Analysis Council Secretary Plamen Nenov Discusses Industrial Policy

Plamen Nenov, Secretary of the Council for Economic Analysis at the Council of Ministers of Bulgaria, commented in an interview with BTA on the current state of industrial policy in the country.

The reason for the conversation with Plamen Nenov was information from the Ministry of Innovation and Growth about upcoming procedures in 2024 under the Research, Innovation and Digitalisation for Smart Transformation Operational Programme  and under the Competitiveness and Innovation in Enterprises Operational Programme.

Nenov said that often the use of the term "industrial policy" in the public and media space of Bulgaria has a negative connotation, although this type of economic planning and process management is fully compatible with the principles of modern market economies and liberal democracies. Industrial policy is not synonymous with trade protectionism or with centralized and planned economic management, it is a policy that uses a much more complex set of tools to achieve clearly defined goals, he explained.

Industrial policy can have lasting effects on the structure of the economy, with a long-term and positive effect on socio-economic development even decades after its implementation, the macroeconomist argued.

He explained that currently Bulgaria carries out its industrial policy, although it is not advertised as such in the public space of the country. This policy, according to Plamen Nenov, rests on two main pillars. The first is in line with the attraction of foreign investments in Bulgaria. The second is related to the European funds and the innovation and competitiveness programmes financed with them.

The expert pointed out that the current industrial policy of Bulgaria there are three elements that are insufficiently represented and which are important specifically for the Bulgarian context, in the light of the data on the economic development of the country in the last 15 years. First of all, it is the promotion of local entrepreneurship and investment activity of emerging local small and medium-sized enterprises, as well as the provision of more public services for these enterprises to improve their productivity.

The second element is the promotion of the innovative and development activity of enterprises by subsidizing this activity both with grants and with tax breaks, and the third  is the regional profile of the industrial policy. Against the background of the dramatic increase in regional economic imbalances in Bulgaria, especially in terms of employment, the implementation of a more ambitious regional industrial policy becomes particularly important.

All this, in Nenov's opinion, requires a much more serious fiscal commitment than the public resources currently engaged, as well as some optimization of current policies.

At the central level, Bulgaria's modern industrial policy is defined and managed by the Ministry of Innovation and Growth, the Ministry of Economy and Industry, the Ministry of Finance through fiscal policy and to some extent by the Ministry of Regional Development and Public Works.

Nenov noted that the possible risks of the industrial policy being carried out this country are mainly two, oversubsidization of a certain activity or group of enterprises and timidity in pursuing industrial policy in terms of the resources allocated to it. He argued that Bulgaria should work towards achieving a balance between these two risks when implementing the industrial policy.