The Impact of Bulgaria's Eurozone Accession on Attracting Chinese FDI: An Empirical Analysis
The Impact of Bulgaria's Eurozone Accession on Attracting Chinese FDI: An Empirical Analysis

Author(s): Zhenyu Lou
Subject(s): Politics / Political Sciences, Politics, Economy, National Economy, Supranational / Global Economy, Business Economy / Management, Economic policy, EU-Approach / EU-Accession / EU-Development
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: Bulgaria; China; FDI; Euro
Summary/Abstract: This report investigates the prospective impact of Bulgaria's accession to the Eurozone on 1 January 2026 on its capacity to attract Foreign Direct Investment (FDI) from the People's Republic of China. Amidst a backdrop of low historical Chinese FDI inflows despite a formal strategic partnership, Euro adoption is often cited by policymakers as a key catalyst. This study employs a qualitative, comparative analysis of analogous Central and Eastern European (CEE) countries—both Eurozone members (Slovakia, Croatia, the Baltic States, Slovenia) and nonmembers (Hungary, Poland)—to empirically assess the "Euro effect." The findings suggest that while Euro adoption enhances macroeconomic stability by eliminating currency risk and reducing transaction costs, it is not a sufficient condition for attracting substantial Chinese FDI. The analysis reveals that strategic alignment with China's industrial policy, particularly within the electric vehicle (EV) value chain, and a proactive national industrial strategy are far more decisive determinants, as evidenced by Hungary's and Slovakia's recent success. The conclusion is that for Bulgaria, the benefits of Euro adoption will likely be muted unless complemented by targeted industrial policies and significant improvements to its domestic business environment to overcome institutional weaknesses identified in its convergence assessments.

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