The pre-World War II Bulgarian economy had several main features. Most importantly, agriculture was the dominant sector o f the national economy. The industrial sector (mainly that of light food processing industries) was in the initial stage o f its development. The major Bulgarian foreign markets were located in Europe. At the beginning o f the 20^ century the geographic structure o f exports was well balanced. The leading trading partners, with comparable shares in Bulgarian exports, were the major European economies (Austria, France, Germany, Great Britain and Italy) and some Balkan countries (Turkey and Greece). From the middle o f the 1930s exports became strongly concentrated towards Germany and Italy, and to a lesser extent to Austria.
Probably the most appropriate period to look at when analysing the direction of inter war Bulgarian foreign trade is the end of the 1920s. This is the time when the biggest difficulties connected with the losses from the Balkan wars and World War I and the subsequent economic and social turmoil started to subside. The economy managed to return to relative stability, before, plunging with the rest of the world into the depression o f the 1930s. Another development in the 1930s started distorting foreign trade: the increasing dependence on economic links with one country - Germany.
The list o f trade partners o f Bulgaria at the turn o f the 1930s was heavily dominated by Central and West European countries, with Germany leading both in imports and exports (tables 2.1 and 2.2). 88.3 per cent o f Bulgarian exports and 87.3 per cent of
imports in 1928 was conducted with countries from Western and Central Europe. Another feature worth mentioning is the practically non-existent trade with the Soviet Union.
Table 2.1: Bulgarian Export Values, per cent, 1928-1932
Country 1928 1929 1930 1931 1932 A veragel928-32 Germany 27.90 29.90 26.18 29.45 26.03 Austria 14.69 12.55 7.70 16.80 15.00 13.34 Italy 11.01 10.48 8.30 5.80 12.54 9.63 Poland 4.59 8.48 10.19 8.26 5.21 7.35 Belgium 4.21 4.61 4.90 8.56 8.56 6.17 France 5.61 5.14 5.18 3.94 2.65 4.50 Greece 8.05 7.59 4.41 1.64 0.41 4.42 Czechoslovakia 2.94 4.76 6.39 4.62 3.08 4.36 Switzerland 1.16 2.09 4.22 5.23 6.52 3.84 Holland 3.36 1.42 3.35 2.88 4.17 3.04 Hungary 2.29 2.7 3.81 3.04 0.72 2.51 Turkey 4.76 2.52 1.29 1.35 1.42 2 J 7 USSR 0.01 0.01 0 0 0 0.00 Others 9.42 7.75 14.06 8.46 13.70 10.68
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1933
Table 2.2: Bulgarian Imports Values, per cent, 1928-1932
Country 1928 1929 1930 1931 1932 A veragel928-32 Germany 21.21 22.22 23.22 23.26 25.92 18.92 Italy 15.20 10.66 13.58 13.67 15.61 13.74 Czechoslovakia 10.75 8.99 9.37 9.25 8.42 9.36 Great Britain 10.40 8.88 8.19 13.24 10.31 8.12 France 7.67 8.17 9.26 7.04 6.54 7.74 Austria 8.05 7.63 6.80 7.20 6.00 7.13 Switzerland 2.41 2.56 2.83 3.23 4.91 3.19 Belgium 3.69 2.77 2.40 2.38 2.84 2.82 Holland 2.42 2.44 2.99 2.09 2.12 2.41 Turkey 2.26 2.27 2.05 1.94 2.16 2.14 Hungary 1.90 2.35 1.94 2.24 1.28 1.94 Poland 0.42 0.58 1.14 3.11 3.03 1.66 USSR 0.26 0.33 0.48 0.06 0.35 0.30 Others 13.36 20.15 15.78 11.31 10.51 20.54
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1933
These figures suggest that the substantial growth in the share o f EU countries in Bulgarian foreign trade over the last years is a natural process of return to more traditional trade partners and that a potential for further development o f this process exists. The well-developed trade links with Poland, Czechoslovakia and Hungary
suggest the existence of substantial trade integration with these countries prior to the formation of Comecon.
The export composition of trade for this period was still dominated by agricultural products, despite some advances in industrialisation, connected mainly with the processing o f agricultural production. The composition o f Bulgarian exports to the main trading partners in 1930 is presented in table 2.3.
Table 2.3: Composition of Bulgarian Exports by Main Trading Partners, 1930
Germany Austria Italy Poland Belgium
Tobacco* 41.8 42.0 42.6 97.6 29.0
Food o f animal origin 31.2 29.9 10.5 - -
Grain and processed food from grain 10.2 3.5 15.0 - 41.9
Furs and leather 6.9 14.7 3.4 1.8 -
Fruits, vegetables, fodder 4.9 6.5 2.5 - 6.6
Textile - - 12.2 - 0.1
Live animals - - 11.4 - -
Metals, ores - 1.3 - - 20.6
Other 5.1 2.1 2.4 0.5 1.8
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1933
*Tobacco is listed under the category “Colonial products”
The data shows a substantial concentration o f exports in 5-6 groups o f goods for all the main trading partners. The figures suggests that Bulgarian trade with its main trading partners was overdependent on a single export product - tobacco. This made the Bulgarian economy even more vulnerable to the shocks o f the depression in the early
1930s.
***
Bulgarian trade in the 1930s was influenced by a growing economic dependence on Germany (tables 2.2.4 and 2.2.5). The global economic crisis o f the early 1930s reduced the opportunities for exports to West European markets. By 1932 other East European countries had negotiated agreements for preferential access to these markets. Bulgaria
was denied such agreements. The legacy o f being on the losing side of the First World War continued to haunt the country (Lampe, 1986).
The onset of the global economic crisis in 1929 brought a strong decline in agricultural prices, which by 1931 were at only a half o f the pre-crisis levels. Consequently, Bulgarian export earnings started a slide, which reduced them to less than half the 1929 level by 1933. The balance o f payment was only maintained due to the even larger fall in imports (Ibid.).
Several factors accounted for the increasing throughout the 1930s Bulgarian economic dependence on Germany. One was the mentioned above restricted access o f Bulgarian products to other West European markets, which became more pronounced with the start o f the depression. Another factor was the very strict monetary policy, which kept the national currency, the Lev, overvalued for most of the interwar period. In the 1920s this policy was determined by the victorious powers, which were keen to make sure the Bulgarian reparations payments were not inflated away by a weakening currency. The restrictive monetary policy was maintained in the 1930s by the Bulgarian National Bank, perpetuating the overvalued exchange rate. This discouraged and made uncompetitive any Bulgarian exports outside special clearing or compensation agreements.
Germany was as eager as Bulgaria to conduct foreign trade that would not add to debts owed in Western Europe. Thus the two countries concluded an informal clearing agreement in 1931 which was formalised in 1932 (before Hitler’s coming to power, contrary to widespread perception). A new clearing agreement was concluded in 1936 with the visiting Finance Minister o f Nazi Germany Hjalmar Schacht. By that time, trade between the two countries was already partially motivated by Bulgaria’s rearmament programme. The average share o f Germany in Bulgarian trade in 1934-38 was 48 per cent for exports and 52 per cent for imports (tables 2.4 and 2.5). Both
represented major increases compared to the 1928-32 period (20 and 33 percentage points respectively).
Table 2.4: Bulgarian Exports Values, per cent, 1934-
Country 1934 1935 1936 1937 1938 A veragel934-38 Germany 42.70 48.00 47.60 43.10 58.9* 48.06 Great Britain 2.10 4.40 11.60 13.80 4.80 7.34 Italy 9.20 8.80 3.60 4.20 7.60 6.68 Czechoslovakia 3.60 6.90 3.30 5.60 4.60 4.80 Austria 5.30 4.60 3.00 4.00 4.23 Poland 1.60 2.10 3.70 4.70 5.70 3.56 Switzerland 4.80 2.90 2.10 2.30 1.80 2.74 USA 0.60 1.00 2.60 3.80 3.40 2 J 4 Holland 3.10 1.50 2.60 2.20 1.70 2.22 Belgium 3.50 1.00 3.70 1.70 0.60 2.10 France 2.10 1.80 2.10 1.60 1.50 1.82 USSR 0.00 0.00 0.00 0.00 0.00 0.00 Others 21.40 17.00 14.10 13.00 9.40 14.14 938
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1938,1939
*Including Austria
Table 2.5: Bulgarian Imports Values, per cent, 1934-1938
Country 1934 1935 1936 1937 1938 A veragel934-38 Germany 40.10 53.50 61.00 54.80 52.00* 52.28 Czechoslovakia 3.80 9.70 7.70 5.00 5.90 6.42 Great Britain 6.40 4.70 4.60 4.70 7.10 5.50 Austria 4.80 6.40 5.70 3.40 5.08 Italy 7.80 3.20 0.60 5.00 7.50 4.82 Switzerland 5.90 5.40 2.10 2.40 2.20 3.60 Poland 2.10 1.20 2.90 4.30 5.60 3.22 Belgium 7.50 1.20 1.50 4.30 0.70 3.04 France 3.80 1.40 1.20 3.30 3.70 2.68 USA 2.30 1.30 2.20 2.10 2.70 2.12 Holland 1.20 1.30 0.90 1.30 1.20 1.18 USSR 0.40 0.20 0.10 0.00 0.00 0.14 Others 13.90 10.50 9.50 9.40 11.40 9.93
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1938,1939
♦Including Austria
There are no dramatic changes on the list of other trading partners compared to 1928-32. An interesting exception is the growth of trade with Great Britain, which became the second biggest trading partner o f Bulgaria in 1934-1938. This is even more remarkable given the lack o f a clearing agreement and a favourable exchange or tariff rate. The establishment o f diplomatic relations with the Soviet Union in 1934 did not lead to
growth in trade and economic links; these remained almost non-existent between the two countries until the end of World War II.
The composition o f trade did not change dramatically in the 1930s. The Bulgarian statistics from that time reports trade flows in much more disaggregated form. The most important exports of Bulgaria towards the main trading partners are presented in table 2.6.
T rading P artn er Export Goods
Germany* Tobacco leaves 34.6%; Eggs 13.6%; Fresh grapes 8.8%; Wheat 5.3%; Poultry 5.1%; Lamb furs 3.2%; Others 29.4%
Great Britain Wheat 57.2%; Maize 16.1%; Bran 5.1%; Cotton seeds 2.5%; Fresh grapes 2.2%; Eggs 1.8%; Rose oil 1.4%; Strawberry pulp 1.4%; Others 12%
Italy Tobacco leafs 33.2%; Wheat 15.4%; Poultry 13.7%; Beans 7.2%; Live pigs 7.0%; Others 13.5%
Czechoslovakia Tobacco leafs 61.4%, Lamb furs 11.6%; Sunflower seeds 7.9%; Rice 7.7%; Others 11.5%
Poland Tobacco leafs 73.8%; Lamb furs 24.4%; Fresh grapes 1.4%; Others 0.4%
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1938,1939
^Including Austria
The data shows dominance o f the export structure by only a few commodities, primarily tobacco leafs, as well as wheat, fresh grapes and others. The level o f processing of Bulgarian exports and imports for most of the interwar period is presented in tables 2.7 and 2.8.
1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938
Live animals 6.4 5.2 5.9 4.2 3.4 3.3 2.1 1.7 2.0 3.9 3.1 2.2 3.4 3.6
Food and drink 33.6 41.1 42.9 28.2 25.3 34.6 41.6 52.4 40.7 40.3 37.7 47.8 45.5 41.9
Raw and semi
processed goods 57.7 48.9 46.5 61.1 63.2 56.6 53.4 43.3 53.7 52.3 56.7 47.2 47.3 51.0 Manufactured
goods 2.3 4.8 4.7 6.5 8.1 5.5 2.9 2.6 3.6 3.5 2.5 2.8 3.8 3.5 Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian Kingdom), 1938,1939
1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938
Live animals 0.2 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0 0.1 0 0.1 0.1 Food and drink 11.7 5.7 4.6 4.3 7.9 4.4 3.3 4.6 4.7 3.9 2.5 3.1 2.2 2.9
Raw and semi
processed goods 17.1 19.7 20.4 20.0 22.4 24.1 20.7 22.5 30.6 34.1 25.1 27.8 31.5 28.2
Manufactured
goods 71.0 74.5 74.9 75.6 69.6 71.3 75.9 72.8 64.6 62.0 72.3 69.1 66.2 68.8
Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Source: Statisticheski godishnik na Bulgarskoto tsarstvo (Statistical Yearbook o f the Bulgarian
Kingdom), 1938,1939
As expected, exports are dominated by raw and semi-processed goods and food and drink. It is interesting to note, that the percentage o f manufactured goods was increasing substantially in the last years o f the 1920s, before the global economic crisis caused a decline in these exports. Further data on Bulgarian export composition, during this and subsequent periods, is contained in Table A.2.1 o f Appendix 2.1 o f this chapter.
Generally, observation o f Bulgarian foreign trade during the inter-war period shows traditionally strong economic links with Western and Central Europe. The vast majority of trade (nearly 90 per cent) was with countries that are currently or will in the medium term be members of the European Union. Admittedly the economic development o f the country was distorted in the early 1920 by war defeat, and in the 1930s by economic crisis and growing dependence on Germany. This however does not diminish the existence o f strong traditional economic bonds with these countries.