ABSTRACT
External economic relations are at the center of Bulgaria’s transition experience. The Council for Mutual Economic Assistance was established in 1949, its membership consisting of the USSR, all European communist countries other than Albania and Yugoslavia, and certain non-European communist states. From the 1960s onwards the Council for Mutual Economic Assistance became the most important external influence on Bulgaria’s economic development, because such a high proportion of the country’s trade was with other members, and especially with the former Soviet Union. In March 1993, Bulgaria became the fifth transition economy to conclude an association agreement with the European Community, the others being the former Czechoslovakia, Hungary, Poland and Romania. Trade restrictions reduce the incentives for European Union firms to invest in transition economies and, more generally, inhibit the efficient restructuring of economic activity which the movement to a market economy is designed to achieve.
