An economic and political assessment of the adoption of the euro by Bulgaria

Abstract

This study provides a comprehensive view to the multifaceted context of Bulgaria's process of Euro adoption. Following independence, Bulgaria faced periods of political instability, including its transition from a communist state to a democracy in the early 1990s. The economic landscape is examined, with a focus on GDP per capita, unemployment rates, and inflation. The chapter also highlights fiscal discipline and concerns such as political corruption, media freedom, poverty, and education in Bulgaria. The study further delves into integration and its application to join the EU. The central focus, Euro adoption, is discussed with Bulgaria's timeline joining the Exchange Rate Mechanism (ERM II) in July 2020, marking a significant step toward Eurozone membership. The criteria for convergence, economic stability, and alignment with Eurozone policies are examined, emphasising Bulgaria's active efforts to meet these requirements. Study further highlights the variations in Euro adoption strategies among EU member states and the potential trade-offs that Bulgaria may face regarding its national objectives. The political aspect of Euro accession is emphasised, recognizing that economic decisions are closely intertwined with political interests and aspirations. The literature review delves into the historical and economic implications of Euro adoption in the Eurozone. It references the experiences of recent Eurozone entrants and assesses potential impacts on sectors like manufacturing, trade, and investment in Bulgaria. Methodology to address key research questions is also outlined. A comparative analysis with Romania is also presented to the study, allowing for insights into potential challenges and opportunities. Key findings, acknowledging limitations, and discussing potential future developments in Bulgaria's economy and politics as a Eurozone member are also presented underscoring its significance in guiding policy decisions and informing further research endeavours within the complex landscape of Euro adoption in Bulgaria.