Explanatory Variables for Low Western Investment Interest in Bulgaria

The understanding of a country's past is important in the process of analyzing a country's present. Through the study of Bulgarian history, the researcher developed a relatively good understanding of the country's image at the beginning of the period in question (1989-2002). The evidence supports the unexpected finding that historical links do not affect a company's decision to invest in another country. Furthermore, there is support for the conclusion that political unwillingness to make significant reforms together with the inefficiency of the post-communist Bulgarian government rather than Bulgarian political instability led to delays in structural reform and delayed progress in privatization, limited foreign direct investment (FDI) inflows, and thus to a delay in the overall Bulgarian transition process. Moreover, the cultural closeness and/or distance of multinational enterprises' (MNEs') countries of origin vis-à-vis the host country remain questionable, and they have been used either as incentives or as obstacles to MNEs' investment decisions depending on the specific industries and on the specific products. On the other hand, the geographical distance of Bulgaria from advanced Western countries is an important barrier that partially explains low Western investment interest in Bulgaria.