The Political Economy of Corporate Governance Change in Bulgaria: Washington Consensus, Primitive Accumulation of Capital, and Catching-Up in the 1990

Abstract

This study examines three key determinants of corporate governance change in Bulgaria: the Washington Consensus policy, primitive accumulation of capital forces, and 'catching-up' factors. The study reveals that in the early transition (1989-96) primitive capital accumulation prevailed over the Washington Consensus impact on corporate governance transformation while since 1997 Washington Consensus has been in the process of becoming the decisive factor for institutional change. The emerging corporate governance system has been neither Anglo-American (market based) nor bank-based, but rather a 'crony' relationship-based one. The striking features of this system are as follows: (i) a dual enterprise sector, (ii) ownership heterogeneity; (iii) fragile capital markets; (iv) pervasive banks lending behavior; (v) globalization factors discretion. The challenge to policy-makers in Bulgaria is how to design institutions for 'catching-up' that would curb both managerial and globalization factors discretion.