Economist Adrian Nikolov on the specific benefits for the Bulgarian economy of our entry into Schengen

Once again, it became clear that Bulgaria will not become part of the Schengen agreement, mainly because of the distrust in the work of the institutions and their ability to effectively guard the external border of the visa-free area. However, apart from deepening the country's European integration and closer association with the "club of the rich", joining Schengen would also have very specific positives for the Bulgarian economy, which at this stage we disagree with. This was commented in an analysis by the economist from the Institute for Market Economy Adrian Nikolov.

These effects are generally in several directions, he presents.

Increasing the volume of trade with other members of the Schengen area.

The elimination of the last remaining barriers and complications to trade with the rest of the EU (and several countries outside it) brings with it an increase in trade volumes with all other members. Estimates of this effect are quite different - while a study from the middle of the last decade estimated it at about 0.1% growth per year, the German Institute IFO is of the opinion that the restoration of border controls would mean a contraction of trade by about 3%. Even if we assume more conservatively that inclusion in Schengen would bring only a 1% growth in trade with the EU countries, this would measure in a lower growth of exports and imports of almost 700 million BGN per year. From the state's point of view, greater trade flows also mean higher tax revenues.

Reduced costs and uncertainty for exporters.

Currently, waiting at the borders brings significant additional costs for exporters and transport companies (according to some estimates - about 100 million BGN per year). The blocking of their resources is also important, since the trucks waiting at the borders cannot be used for other transport. Uncertainty is also reduced - in the absence of border control, the time it takes to transport a given good can be estimated with a great deal of accuracy, which is far from the case in the presence of a border.

Facilitation and time savings for passengers.

Throughout 2021, the trips of Bulgarian citizens to the EU were just over 700 thousand, but in the years before the Covid pandemic, their number was many times higher - 4.2 million in 2019, and we have every reason to expect, that they will gradually recover. Even if we assume that removing border controls only saves 20 minutes per journey (and queues are often significantly longer), the time saved by passengers would exceed 1.4 million hours per year – time they could be productive or to make the most of their vacation.

Increased growth potential of border areas.

Facilitating connections with neighboring Schengen countries creates opportunities for cross-border business development. This applies with particular force in a scenario where Romania also joins the agreement, due to the short distance between Ruse and Silistra to the leading economic center Bucharest. Today, however, it is hampered by the control of the Danube bridges.

New opportunities for the labor market. Joining the Schengen area creates new job opportunities for both Bulgarians and citizens of other countries in Bulgaria. Against the background of the increasingly noticeable shortage of workers in the Bulgarian economy, the maximum facilitation of work opportunities for foreigners in the country seems a necessary step.

Savings on administration and checks.

As long as the need for administrative services and checks at external Schengen borders remains, the state budget would realize significant savings from providing them at the borders with the Schengen countries, as well as at Bulgarian international airports. This also creates opportunities for more fruitful work for the employed border police and customs authorities, who today serve the traffic to Schengen countries.

It is also important to note that none of these apparent positive consequences of joining the Schengen area are one-off - on the contrary, they are reinforced with ever deeper economic integration between European countries, which means that each successive postponement leads to greater lost benefits for the Bulgarian economy. This is also why accession should be a key priority, along with the institutional reform and closing of the loopholes it requires.