The public opinion for the private sector is an important indicator for the public support for this new phenomenon of the Bulgarian economic and political system. It can be characterized by an extraordinary dynamics. The opinion pole for the private sector is considered as one of the major attributes of reforms. In this sense there is a direct connection between the public opinion of reforms in general and the private sector in particular. Analyses show that the individuals who generally support the reforms tend to a greater extent to approve the private sector emergence and expansion. The attitude towards the private sector has to do with the political orientation. BSP supporters have preferences to the state sector while UDF supporters mostly have preferences to the private sector.

Table 18

What ownership type of your company do you prefer?

(%)

Source: The Public Opinion on the economic reforms, National Representative Survey of the Center for the Study of Democracy, 1993

It is of importance to note that the private sector is not viewed as a place where those who went out of the state sector are forced to seek and find any jib but as a prestigious and cherished place for the enterprising people and those who do not fear to take risks. The opinion pole data shows that as a result of the engagement of the economic transactors in the private sector their financial status improves. About 45% of the respondents in the survey for the "Business elite about the economic reforms and privatization" - June 1993 indicated similar changes and about 10% think that the changes are substantial. Therefore, more that half of the respondents are of the opinion that their private sector job is rewarding and that adds up to their personal financial security and self-esteem.

Parallel to this, there can be observed an increase of the investment culture of the Bulgarian private individual, which is just another proof for the prestige he thinks he will gain dealing with such business. More that 1/3 of the respondents in the survey for "The Business Elite and economic Reforms" indicated that they would prefer to invest their money in a business of their own and about 20% prefer investments in real estate.

The attitude towards the private sector can be traced not only in the general and abstract questions concerning its approval in general but in the ones that concern the personal desire and willingness to be employed in it. The public opinion about the role of the private sector in the various branches of economy is differentiated (March 1992-April 1993). In distinction to the business elite, where banking, radio and TV are viewed as spheres in which the private sector prevails, the population prefers that the state property prevails in these spheres.

What should be the predominant type of ownership in economy?

During the three years of transition to a market economy the share of persons that are of the opinion that the private sector should prevail in economy is constantly high but still lower relative to the share of persons who thing that the state sector should have the dominant position. That means that that there exist stable tendency of affiliation to the state sector which makes it difficult to achieve the radical privatization policies and transition to an economy based on the private ownership.

Data shows that from November 1990 until the end of 1993 the preferences to the state sector have not decreased. It is even likely that this tendency have increased in the last year.

Table 19

What should be the predominant type of ownership in economy?

November 1990

Table 20

What type of enterprise do you prefer to work in?

September 1991

(%)

Table 21

What type of enterprise do you prefer to work in?

March 1992

(%)

The preferences as far as the employment in the different types of ownership depend on the respondents' education, profession, sex and age. The surveys during the three years show that women prefer the state sector to a greater extent compared to men but the difference is small. With the increase of age the share of those who prefer to work in the state sector increases as well. Thus this share is only 31.4% among those between 18 and 25 years of age and 52.4% among the ones between 46-60 years of age. This is to a great extent preconditioned by the already established labour stereotypes and low mobility of the older employees. The state sector is preferred most by those employed in industries--48.8%. 48.7% of the government employees, 44.8% of the pensioners and 39% of the unemployed prefer to work in state enterprises.

The private sector is favoured by the persons that began their job career in it, as well as by the freelance workers (66.8% of them) and 62.2% of the private farmers. The pensioners have a clear negative attitude to the private sector. Only 15.2 % of them prefer to be employed in it.

The family status is also indicative of the preferences of employment. The preferences of the single to be employed in the private sector are twice as big as those of the married (50.8% against 25.8%). Obviously the instability of the private sector has risks that the single could afford to take to a greater extent compared to those with families and children.

The increase of household incomes increases the preferences to the private sector employment. While only 19.8% of the persons with low incomes (about the minimum salary) want to work in the private sector, 57.1% of the people with high incomes prefer to work in it.

The residents of the smaller places are more conservative in their attitude to the private sector. Only 19.6% of those living in places with less than 5000 people prefer to work in the private sector while the share of people living in towns with more that 500 000 is 51%.

The educational background also affects the preferences of the private sector employment. The higher the degree of education, the higher the willingness to work in the private sector. The knowledge helps forecast the risks involved and favour the legal business.

Table 22

Who should own your enterprise?

What is your education?

(March 1992)

(%)

The persons with a lower degree of education - primary and basic education do not show specific preferences as to the sector they wish to work in. The majority of them see themselves as employees irrespective of the sector. Generally, however, they feel more secure in a state-owned enterprise. The higher the educational level, the clearer the preferences regarding the type of ownership.

The larger number of the respondents wish their firms to remain state-owned, which could be explained by the fact that most of the active population is employed in the state sector and the change in the type of property would bring about disruptions of the employment status. Analyses show that the Bulgarians more and more regard the types of ownership as a pluralistic phenomenon, in which the dilemma "state vs.private" is being complicated by mixed as well as other types of ownership. The interest in joint-ventures is obvious - 8,6% of the respondents would prefer to work in such firms. The self-management form is not popular - 6,44%. It is surprising that it is favored mostly by managers of state companies. They also surprisingly regard the employees buy-out of the company as the best way of privatization. Probably they hope to retain control over the company if it becomes the property of their employees.

Table 23

The most highly educated part of the population prefer to own the business in which they work:

The cooperative sector seems the most attractive form for the least educated and the oldest parts of the respondents.

Age groups preferring the cooperative sector:

21-29 years - 2,1%

30-39 years - 3,5%

40-49 years - 4,2%

over 50 years - 10,6%

The data shows that the share of those who are indifferent to the type of ownership is increasing. It was 16% in 1991, while in 1992 it jumped to 23%.

Table 24

The attitude of the ethnic minorities to the private business is interesting.

(%)

It is evident that the private sector is favored mostly by the ethnic Bulgarians. This is related to the higher degree of education and training of this group. Besides, the employment status of the other groups (the ethnic Turks above all) is connected closer to the state sector. The gypsies are an exception to this.

The established mentality on the one hand and the difficulties of the transition on the other, foster the affiliation of the Bulgarian to the state sector. The predominant opinion is that under efficient management, the state companies could be competitive to the private ones.

Table 25

Which of the following statements is closer to your opinion?

(%)

The public opinion of the role of the private sector differs by branches. The private sector should prevail in agriculture, trade, light industry, tourism, services. Respondents think that the state should retain its control over the power production, heavy industry, education, communications, electronic media, military production, banking, transport.

Conclusions

I. There is now a sufficiently broad legislation framework in Bulgaria for the economic activity of the private sector. Its development will above all be closely related with the privatization process, as private business still does not have the means of production concentrated in the state-owned enterprises. The possibilities for participation of private business in privatization have been provided for by the Law on the Transformation and Privatization of State-Owned and Municipal Enterprises.

A number of areas, however - taxation, the securities market, stock-exchanges, trade transactions, collaterals, land registries - are either subject to outdated, or no legislative regulation at all. Furthermore, even in the presence of modern legislation, the institutions authorized to enact it - administrative or court authorities - fail to operate efficiently. Those are the chief obstacles to the full-scale unfolding of private enterprise.

Our economic legislation still leaves a lot to be desired with respect to the private sector. An updated regulation of trade transactions would boost economic activity and would likewise contribute to a greater stability of the relations between the commercial entities. A number of laws still include provisions that tend to keep up certain contradictions between the public and the private sector. It is necessary to remove the ambiguity and lack of "transparence" in the legal framework.

Concerning the tax system, the principle should be upheld for all taxes to be established only by laws and for the provisions to be optimally clear and exhaustive, so as to avoid any conflicting interpretations in the process of their enactment. There should be internal consistency and conformity among the tax laws if they are to form a unified tax system. The legislation should be characterized by stability and continuity in order to allow taxpayers to make long-term economic development plans without facing constant uncertainty of their financial relations with the state. Tax concessions for the private sector ought to be equal for all entities - regardless of the particular legal status or the share of state or private capital.

II. The analysis of the main sources of credits and aid for the private sector shows some common tendencies. One of the problems with the financing of the private sector is the lack of compact information on the preferences available. This limits the access to the different programs and their effect.

Bulgaria is one of the few countries without a special policy to the private sector and especially the small and medium-sized firms. There is neither a concept of such a policy nor a necessary legislature and institutions. The lack of a global strategy of the structural reform and the branch and regional development makes impossible the adoption of a consistent policy for stimulating the private sector.

Instead of a definite and consistent policy, there are some sporadic attempts to implement some elements of the traditional West European promotion principles - moderate tax concessions, establishment of national and regional funds for encouraging and developing the local private business. These initiatives are separated from one another, they are not carried in the framework of a total policy, and that is why they are not very efficient.

Rough estimates show that the abovementioned initiatives have provided assistance to only 326 companies, which is far from the serious support that the 330 000 private firms need.

In spite of the popular criticism of the foreign aid sources, one could boldly state that they have helped much more companies (206) than the state (66). More than 0 mln. have been invested in private projects. Unfortunately, these funds do not generally provide more detailed information about the credit borrowers, so that one could analyze the types of firms that were given credits to.

In principle, the credit terms of the foreign sources of support for the private companies are very restrictive and are applicable in economies where the private sector have established positions and developed enough in respect to finance and training. Because of the restrictive requirements, only the large and already prosperous private firms could have access to the foreign aid sources. In this way there exists the danger of these funds providing opportunities for the large private business to expand, while those who start a business or do not have big assets are being disregarded. The incentives provide by the government show a similar tendency. They are too complicated, require particular selection and monitoring, allow misinterpretation and misapplication on the part of the state institutions, which leads to bureaucratic misbehavior.

Almost always, it is necessary to have special legal motives for the institutionalizing of the funds and their managing bodies. There are problems with the registration of such specific institutions. That is why, as the international experience also suggests, it is necessary to create only one institution, which will coordinate all preferences and policies, to give a common legal regime of the financial institutions that support the private sector, and to establish clear terms and criteria for the credit extension. Not least, it is also necessary to simplify the monitoring and control of the efficient use of the respective preferences and credits, and to avoid duplication. It is necessary to reassess the whole policy of the foreign funds and make it compatible with a general priorities policy of the government in the transition. The incentives should be directed to the small and medium-sized business and not to the private sector in general, since such a concept does not exist any more. The private sector is a category versatile enough to be treated in the same way.

III. The establishment of organizations for self support of the private sector is based on the natural progress of private sector development, aiming to coordinate interests, settle contradictions, allocate markets and determine prices. One of the important factors for the emergence of such institutions is the formation of the social partnership system, whose statute presupposes the existence of the so-called empoyers' organizations. Certain international organizations as well as the bilateral technical aid substantially assisted the constitution and development of these institutions.

The traditions of the institutions that existed under socialism is a specific factor for the formation of the Bulgarian business organizations. For instance, The Bulgarian Chamber of Commerce and Industry and the Bulgarian Chamber of Economy as followers of such structures that existed before the reforms began, studied new models of internal organization, objectives, membership, priorities and predominantly business purpose.

In accordance with the transition legislation they preserved some of their previous functions that ensured significant and stable membership. On the other hand the experience, funds and infrastructure they inherited was undoubtedly comparative advantage for them.

The role of these organizations in providing consultancy services for private firms, the publication of macroeconomic literature aiming at assisting the registration and functioning of companies, the creation of information networks and the establishment of contacts among the firms are an important contribution of the business organizations in its development. Most of the organizations attracted free foreign technical assistance to support the private sector which is still another significant contribution.

Their social partnership participation enabled them to influence the governments economic policy. Most of the business organizations, however, consist of both private and state sector ones. Even those that emerged with the purpose to support the private sector later included state enterprises as well.

The lack of modern legal regulation of the statute of these organizations (they are all registered according to the Person and Family Law) hinders their activities. The enforcement of appropriate law for the non-government organizations is an important precondition for the development of the non-profit organization including the business ones.

The universal character of their structure and functions is a common feature. They include firms of all branches and are not have regional restrictions. Their universal character, however, has recently began to erode affected by the spontaneous emergence of chambers and other organizations, combining the producers of a certain branch. These institutions create better conditions to mutually assist and coordinate interests, to face unfair competition and create regulations for the relationship among competitors. Under the present conditions of lack of efficient government control and competition protection, the branch organizations could take the role of such a corrective, created by the economic practice.

IV. The institutionalization of large business interests in the so-called Confederation of the industrialists aimed to synchronize activities considering the market influence of every single member of the confederation. It seems as if the market allocation was completes faster tan expected and the quick retreat of some of its founders is a signal for this similar to the principle that opposites attract. That is why at present the question whether the large and small businesses could cooperate in the sphere of private initiative still remains a rhetoric question.

The large business in Bulgaria is distinguished by its branch diversification. This process has to do with the companies' efforts to gain position at the market which distinguishes them from their competitors and at the same time makes them unique as far as their market presence is concerned. Most of the groupings's interests collide in the key economic branches.

Their different market influence makes them to a great extent equal and this at the same time presupposes serious conflicts, concerning their similar market interests. Usually this collision shows certain common features, characteristic of the Bulgarian large business:

(1) The analysis done shows that 70% of the media is owned by the large private business. The large business exerts strong influence on the public opinion, both inside and outside the country through a powerful media propaganda. There is an obvious interest of the industrialists in sports and football in particular.

(2) One of the criteria for the formation of the Confederation of the Industrialists is their connection to a private financial institution, which is a symbol of reliable partnership in the world of international business. In most of the cases such connection has to do with the decapitalization processes in a similar country.

(3) The large private individuals prefer the holding company structure of management because it presupposes flexibility as far as the legal framework is concerned and allows low degree of transparency of the financial situation of every single member of the holding company.

(4) The large business expands very fast in a comparatively short period. This is due to the favourable conditions that were created at the beginning of the economic reform and the lose control on such formations. This can be proved by the increased popularity of these groupings in the last two years. Up to the present moment they have been developing their structure and defining their image using the time to accumulate capital. Their financial institutions were established , enterprises were purchased in order to hide the secret decapitalization of state enterprises. The expansion of these structures is connected with the development of spheres of influence in the following directions: money, communication and power. They gained enough power to compete among themselves in these directions and it was not until then that the state proved too weak to counteract them. In addition, the exclusive independence characteristic of the groupings has now reached the prerogatives of the state.

(5) Guesses can only be made about the political origin of the large private business as well as about their current political engagement. It can only be said with certainty that they have connections with foreign persons and banks, a fact which even they do not try to hide. Their foreign connections (Russian, American and European) are the sources of their initial capital with which they started. Similar to the electricity the money currents move on the least resistance principle. The money accumulation on one place presupposes less resistance and lower criteria for their origin.

(6) The unique character of the Bulgarian large business is also characterized by the efforts to decapitalize the state financial institutions and to impose their own rules of management. Guesses can only be made about the dimensions of their influence upon the state management, which is due to the extremely complex management system in their own structures.

The existence of large business inevitably poses the question of the place of its antipode - the small business. They are sharply opposed in Bulgaria. The large business intention to encourage the small and medium business in this country became very popular. As a result of the market reallocation monopoly structures were created that under the conditions of a weak market necessitate the encouragement of the smaller business structures and subjects. This is meant to ensure flexibility as far as the market influence is concerned and at the same time to avoid market disruptions.

Efforts are made at present to distinguish the place of the middle class as a balancing stratum. Its formation is considered as timely and necessary development. the dilemma it has to solve is whose interests to combine. The large business has obviously concentrated in the financial and production sphere while the small business has focused mainly on the trade sphere. The renters and new inheritors of restitution property have pretence to the middle class. Both parties (the large and small business) have reserves concerning the ability of renters to serve as tramplin for small business stratum transition to the large business class. It seems as if the reverse process does not offer preconditions for serious analysis.