Our new national goal should be economic ‘catch-up’

Photo: AFP/ Getty images

Analysing the benefits of the ‘lowest common denominator’

History shows that economic development, and the subsequent societal modernisation are strong correlates to having both a developed ‘democracy’ and a sustainable ‘rule of law’ and ‘welfare’ state. At the same time, the Bulgarian ‘transition’ can be understood as a failure to meet the expectations of for rapid material convergence with ‘developed’ European economies. This comparative failure is manifested daily in Bulgarian daily through the high levels of poverty, crime, corruption, emigration. Bulgaria has no national (strategic, long-term, non-partisan) goal for eleven years now, after the completion of the last one – our entry into the EU which was accepted by most major social groups at that time.
And since ‘politics is the art of the possible’, let us choose a new goal to serve as the ‘lowest common denominator’ that unifies our heterogeneous society. Such a goal could be sustained, accelerated economic growth until Bulgaria  reaches the status of a ‘developed’ country, per the World Bank classification (World Bank 2018a). Or, in other words, join the historically similar nations of Greece, Poland, the Czech Republic, Hungary, Slovakia, Slovenia, the Baltic States (there) in that club (ibid).

Bulgaria is currently classified as a ‘middle-income’ country with a gross domestic income (GNI) of around $7500 per capita. This is about $5,000 from the ‘developed’ group of countries where those similar (but not identical) nations are situated (ibid.). Even less favourable is the comparison with historically different recent late (since 1950) developers such as Italy, Finland, Portugal, Spain, Ireland. The drastic divergence in less than 30 years between us and, for example, Poland – with which we had a similar level of per capita development in 1989 (Figure 2), is remarkable. An analysis deserves our economic lag behind Greece in the late 1960s (Figure 1).

Graphs 1 and 2: The Bulgarian underperformance compared to similar historical and ‘institutional’ cases such as Greece (until 1950) and Poland (until 1989). Data: Maddison Project Database, 2018.

What are the benefits of economic development?

The symptoms of this material underdevelopment are many and visible every day. Often, they are mutually reinforcing, and are expressed in the weaknesses and failures in seeking the following ‘societal benefits’ associated with ‘developed nations’:

A/ Supporting a stable ‘democracy’

The election of the rulers by all adult citizens (democracy) historically often closely follows economic development, i.e. the processes of industrialisation and urbanisation. The subsequent material accumulation  often serves as the basis for political freedom, but of course development is not sufficient for the act democratisation itself. Nevertheless, historically, economic development has often been an obstacle to a return to dictatorship (Przeworski et al., 2000).

→ The usual examples are most of the ‘Western’ countries that first industrialised and urbanised in the 19th century and then ‘democratised’ between the 1920s and 1980s for all of their citizens. Examples are the United States, France, the United Kingdom, Germany, Switzerland, etc.

Other (recent and somewhat closer) examples of post-development democracies are Portugal, Spain, Greece, South Korea and Taiwan. After a rapid growth phase in the 1950s-60s, these countries ‘democratised’ between 1974 and 1992 (Polity IV, 2012).

B / Supporting an established rule of law regime (liberal democracy)

This is usually defined as the establishment of systems of rules (‘institutions’) that apply to every member of a society such as the ‘rule of law’, ‘judicial’ and ‘media independence’, and ‘anti-corruption’ efforts. Such durable frameworks often emerg to serve already prospering nations. In such nations, individuals are empowered by the material progress that industrialisation and urbanisation have created, and demand the establishment of such institutions (i.e. appearance of a ‘middle class’) (Lipset, 1959).

→ Examples: The development-to-democratisation cases previously mentioned in East Asia and Southern Europe since 1950; and after 1990 – Eastern Europe. The change in individual- but collective- behaviour and preferences (that comes with the horizontal spread of the real power through material development) is evident from the recent cases of mass protests against the perception of government corruption. These led to resignations or the loss of long-held power – and not to indiscriminate repression, as is often the case in many poorer countries – in the newly prospering Slovakia, Romania, Korea, Malta, Malaysia.

C / Building and paying for a sustainable welfare state’

This is defined as accessible health care, education, guaranteed pensions, and other social benefits. This political ‘package’ was actually formed during the so-called ‘golden age’ of growth and development (1950-1973) of industrialised nations. For comparison, in 2016 nearly 23% of Bulgarians are below the national poverty threshold; this problem is visible throughout the transition period (World Bank, 2018b).

→ Examples: post-war Western European countries, Canada, Australia, New Zealand, the  Scandinavian nations, Southern Europe.

D / Crime Reduction, Sustainable Defence Spending, Sound international Relations

The urbanisation and industrialisation of societies is also marked by a steady decrease in the levels of crime per capita (The Economist, 2013). In addition, defence is, of course, easier when the material well-being of the economy can provide the budget resources for satisfactory defence capabilities. Another observed durable trend is that modern democratic nations very rarely fight (openly) between each other (Doyle, 1986); that is, the economic development of Bulgaria and the region can prevent future conflicts by strengthening the democratic responsibilities of respective governments (see points A/ b and B/).

Bulgaria is threatened by the ‘growing old before it got rich’ syndrome (World Bank, 2015: page 14). The peak in the birth rate was observed in the 1920s – about one generation prior to the forced industrialisation and urbanisation (Ivanov and Tooze, 2007). It is clear from UN data that the decline in birth rates to the reproductive minimum (about 2 per mother) occurred in the mid-1960s (United Nations Population Division, 2017).
Sustaining it around this level by the 1980s can be explained by the policies of full employment and closed borders, as well as by raising the standard of healthcare and, following from that, the average life expectancy. However, immediately after 1989 this birth rate dropped to less than 1.23 per mother, within just 6 years (ibid.).

Why? To a large extent, the Bulgarian economic underdevelopment compared to ‘developed’ Europe at the start of the 1990s  generated the currently observed high rates of economic emigration. This in turn feeds back to even lower birth rates, and a monotonous decline in the working population since the mid-1990s. The vicious spiral of the so-called ‘brain drain’, largely due to relative historic economic underperformance, should be the leading public topic in modern Bulgaria. A current problem for Bulgarian companies is the shortage of skilled labour (BNT, 2017). According to Eurostat, in 2017 about 13% of the Bulgarian working population  lives in another country of the European Union (Eurostat, 2018).
This number excludes popular destinations for Bulgarian emmigrants such as the United States, Canada, Australia. As a result, a few weeks ago, Bulgaria’s population officially fell below 7 million, a fact long predicted by the United Nations (DarikNews, 2018). The lower economic  development compared to the countries of Western and Southern Europe has probably resulted in the loss of 1 850 000 Bulgarians in the last 30 years, 1986-2016; of these emigrants are 1.1 million, hence, there are 750,000 ‘unborn’ Bulgarians hidden under the euphemism of ‘negative natural growth’ (Open Society Institute – Sofia, 2017). All of this data is based on the work of the National Statistical Institute.

Examples from other nations: the decline in birth rates – and the subsequent ageing of the nation and the decline of the working population – is a universal process observed in already ‘developed’ nations (‘demographic transition’). It has already been observed in Western and Southern Europe during the rapid post-war development, along with urbanisation and gradually increasing immigration. The same is true of Japan and South Korea in their development until the early 1990s. A number of countries classified as ‘middle- income’ such as China, for example, have experienced declining birth rates since the 1970s (before state intervention), and then birth rates of about 2 mothers in the early 1990s. In 2015, the peak of the working population was noted as part of the total.

However, some studies have found that fertility rates stabilise after the achievement of a high level of development (Myrskylä et al., 2013). But the success of a demographic transition is dependent on an increase in the quality of education that economically compensates for the decline in population growth. For comparison, Bulgarian secondary education is lagging behind, for example, the Polish one in quality and results, according to the PISA study (PISA, 2015).

In conclusion, of course, economic development does not automatically imply the achievement of the above-presented societal benefits. But it can provide the material basis for political mobilisations and policy formulation to achieve these societal goal. Fast-growing Poland, for example, is currently offsetting its own emigration to Western Europe with the inclusion in its economy of up to 2 million Ukrainian immigrants (Bloomberg, 2018).

Why is economic development the consensus  ‘least common denominator’ of our diverse society?

The above-presented demographic crisis is just one of the many reasons why we need material convergence to the developed European countries. The state of a community can be measured quite easily – with the number of its members as well as with their well-being. This is a non- partisan, non-ideological argument against which few can object. Unfortunately, tthe population decline discussed above can be supplemented by the standing in the 2018 World Happiness Report, where Bulgaria occupies 101st position among 156 nations (Helliwell et al., 2018).

All public groups are potential winners from economic development, including the established political forces. The long-term effects of growth will create new voters, new popularity and legitimacy, new and more capable party members, new budget resources to be allocated. Growth is beneficial to both business (through additional markets) and  the workers (rising incomes).

The ‘catch-up’ with developed countries can speed up the adoption of the euro, one of the priorities of a number of Bulgarian governments. Also, the capital and equity investments of foreign institutional investors will be easier because of the current rules of the European Commission and the monitoring of the MSCI index on world markets.
Economic development is not only desirable because of the relative underdevelopment compared to   similar nations, and the popularity of material progress as a national goal of a ‘lowest common denominator’ calibre. Growth is needed to support a range of other societal achievements, as seen in the analysis above. These (both ‘rightist’ and ‘leftist’) benefits lead to stronger democracy and institutions, established rule of law, and more opportunity to apply ‘welfare’ policies. Development may slow the demographic-emigration crisis. There is no other real, unifying, non-ideological, national goal other than economic development.

Finally, let’s put the ‘End of Transition’ exactly as it is (informally) defined by the majority – reaching the ‘Western’ standard of living. Let us focus on this most pressing, biggest problem; this positive goal can reduce the sense of crisis and missed opportunities, stemming from the disappointment of the high ‘transition’ expectations. Finally, by achieving economic development Bulgarians will be able to fulfil what was stated as the Goal in the Constitution of the Third Bulgarian Republic:

‘We, the Members of Parliament of the Seventh Grand National Assembly, in our quest to express the will of the Bulgarian people,

(…)

we proclaim our determination to create a democratic, legal and social state, for which we accept this Constitution’ (Constitution of the Republic of Bulgaria, 1991).

Author: Ognyan Zhelyazkov
Email: ognyan.zhelyazkov@gmail.com
Millennium Club Bulgaria

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