The interaction of international trade and Foreign Direct Investment (FDI) under decisive Institutional Reforms in Bulgaria

The paper examines the interaction between FDI and International Trade in Bulgaria on the basis of successful structural and institutional reforms. After 1989, major changes took place in the political and economical scene in Bulgaria. The country has managed to successfully reform institutions and as a result liberalisation policies became effective in the transition to a market economy. This is evident in the entrance of Bulgaria into the EU, the increased FDI inflows and the re-orientation of trade activities towards the EU member countries. Our empirical research suggests that FDI and international trade are both complements and substitutes in the case of Bulgaria.