Regional integration – changes & challenges. A case study of Bulgaria in the perspective of Swedish manufacturing TNCs

Abstract

This thesis aims to explain how foreign TNCs have been affected by a country’s integration into the EU, with a focus on production networks. The research question that will be answered concerns how Bulgaria’s entry into the EU has changed the structure of Swedish manufacturing TNCs’ production networks. To conduct this, a sub-question is added with the aim to research the changes and challenges in seven chosen dimensions of the Bulgarian business environment. These are: Trade, infrastructure, legislation, competitors, corruption, unregistered firms and labour. The four selected companies in the study are ABB, SKF, Trelleborg and Volvo Trucks. We will conduct the research through a qualitative method with comprehensive case studies including interviews. Bulgaria's EU membership has increased the trade and developed the infrastructure, which has affected the TNCs in a positive way. The product and security legislation has become stricter and the competitive environment has increased, though this has not affected the TNCs to a major degree due to their size and international setting. However, there have been implications of a process towards Brain Drain in Bulgaria since the country entered the EU. Bulgaria´s business environment is moreover still very politically unstable, where corruption and unregistered firms continue to affect the Swedish manufacturing companies’ affairs in the country. After analysing the changes in the business environment, a trend of regionalism has been discovered concerning the location choice of production networks. China has lost its competitiveness as a country for low-cost production, in favour of Eastern European countries such as Bulgaria.