Issue 5, 2017

This paper examines the process of negotiating social security floors (SSF) in Bulgaria and analyzes its problems. The focus is placed on finding the adequate balance between the role of SSF to accumulate sufficient means in the social funds and the impact of these floors on employment. Five different systems of SSF are presented aimed at offering specific rules for their change over time. These rules ensure the lack of motivation for informal practices and for reduction of employment, and at the same time meet the need for adequate revenues for the social funds. All five systems are based on sound economic arguments, they are practically oriented and are easy to use. They may be used separately or together – in combination.
JEL: J32; J38; J46; J50

Bulgaria’s potential output and cyclical position for the period 2010-2015 are estimated by a methodology based on a two-factor Cobb-Douglas production function. An IS-LM model of the Bulgarian economy is developed to study the condition of the different types of markets (labor market, goods market and money market). During the entire period 2010-2015 Bulgaria‘s output remained below its potential, while unemployment was above its natural level. The goods market and the money market were not balanced but fluctuated around their equilibrium levels. The conclusions of the study are in agreement with the Keynesian views about the disequilibrium character of the economic system and about the necessity of an expansionistic macroeconomic policy to stabilize the economy at its potential level in case of a deflationary gap (as in Bulgaria during 2010-2015). 
JEL: E32

At the end of March 2016, regional platform CEE link was established by three Balkan bourses from Macedonia, Bulgaria and Croatia. This platform provides investors from these countries possibility to buy and sell securities listed on the three bourses. The purpose of this paper is to investigate the linkages between Macedonian, Bulgarian and Croatian stock market indices. If they move together or there is common trend, then investors cannot gain portfolio diversification on this regional platform. Using Johansen Vector Error Correction Model (VECM) on data sample from January 3^rd, 2005 to December 30^th, 2015 the existence of long and short term relationships between the Macedonian and the Bulgarian and Croatian stock markets are detected. These findings can be limit to the benefits of equity portfolio diversification for Macedonian investors. Bilateral Co-integration test between Croatian and Bulgarian stock markets did not detect common trend that links these two stock markets. So investors from Macedonia cannot make diversification buying stocks on the Croatian and Bulgarian stock markets and vice versa, while Croatian and Bulgarian investors can diversify their portfolios by trading stocks listed on the Bulgarian and Croatian Stock Exchanges. The results are of particular interest for investors, portfolio managers and policymakers.    
JEL: G15, F36, C32

A number of previous projects on corporate governance, accomplished with the participation of the author (Dimitrov et al. 2014; Mintchev et al. 2007; Tchipev, 2009 and others), pointed out the fact that the set of instru­ments, regulations and good practices of corporate governance are a product of a more or less predeter­mined choice; of the firm specific creation and functioning in a certain economic system. Even more, the very firm, (called in general corporation or, sometimes, company with the same meaning) - being itself a subject of analysis and influence by the corporate governance is also a “datum”. There are many hypotheses on the rea­sons and nature of these specificity, starting from the different legal system applied in the different countries, through the varieties of corporate finances systems, to the nature of the firm in general. The answers are not quite satisfactory. The current paper studies in a broader methodological frame the characteristics of the modern firm, which define the features, interact and determine the choice of a model or system of corporate governance.
The analysis starts with the relation of the corporate governance to the institutional nature of the firm. The second section outlines the problems of defining the firm (the “paradox of the firm”) in the standard neoclassical economics. The third section draws special attention to the criticism of the transaction costs approach as defining the firm. The fourth section shows its contradiction with the other axioms of the classical and neoclassical economic paradigms and holds the thesis that the firm cannot be understood that way but only through its institutional nature. In the fifth section, with the help of the General Systems Theory, the firm is set in a wider frame of its relations with the market in general and the exchange of value (or utility, depending on the chosen explanatory model). The last section outlines the final conclusion that the firm (corporation) functions (through the value/utility mechanisms) as a base unit of distribution, which determines its contribution to the whole set of goods. Thus, the categories firm and corporate governance are in certain mutual order, and it creates the mentioned predetermination. The latter requires and suggests certain solutions for corporate governance adequacy. More concrete answers are also offered, for example to the question why the “stakeholders” cannot (and should not) be an object of the corporate governance.
JEL: D21; D23; G30

The complex of models of metallurgical enterprises competitiveness management in unstable currency environment is built based on the metallurgical enterprises competitiveness level evaluation and industry trends of their development. The degree of the exchange rates impact on the metallurgical enterprises competitiveness by the methods of reduction, integrated assessment models, and econometric panel data is estimated. The exchange rates dynamics is investigated based on fractal models and forecasts are made by using a wide range of forecasting models. The system of exchange rate factors is improved and their impact on the metallurgical enterprises competitiveness is assessed on the bases of an integrated evaluation, econometric dynamic models and fuzzy sets.
JEL: C13; C15; C51; C63; L61

This paper describes the phases of the development of a sample of logistics service providers (LSPs) based upon their service capabilities. Data was collected from 136 Bulgarian LSPs. Scores of 40 service capabilities were subjected to hierarchical cluster analysis using Ward’s method, and as a result, three distinct clusters of service capabilities were derived. On the basis of the differences in service capabilities the resulting groupings were labelled as: Typical transport providers, Transport providers in development, True third-party logistics providers. The clusters were characterised in terms of the LSPs’ resources and some aspects of the customer service provided by the LSPs. The use of cluster analysis for understanding the phases of the development of LSPs will be useful for researchers who want to test the existence of these phases in their countries and for managers who could formulate a strategy based on their companies’ level of development.
JEL: L89; M19

The issue of assessment of sustainability of agricultural farms is among the most topical for researchers, farmers, investors, administrators, politicians, interests groups and public at large. Despite that practically there are no assessments on sustainability level of Bulgarian farms in conditions of European Union Common Agricultural Policy implementation. This article applies a holistic framework and assesses sustainability of Bulgarian farm as a whole and of different juridical type, size, production specialization, and ecological and geographical location. Initially the method of the study is outlined, and overall characteristics of surveyed agricultural holdings presented. After that an assessment is made of integral, governance, economic, social, environmental sustainability of farms in general and of different type and location. Finally, factors for improving sustainability of Bulgarian farms are identified, and directions for further research and amelioration of farm management and public intervention in the sector suggested.
JEL: Q12, Q18, Q56, Q57