The lack of investments in human resources and education, health care and social reforms has blocked the Bulgarian economy from the path of sustainable development, and as the economy powered ahead in the past years, poverty mounted to the highest level in the European Union.

These are the findings of a report by the Open Society Institute (OSI), entitled “The Unfinished Business of the Fifth Enlargement”, which compares the achievements of the 10 Central and Eastern European EU newcomers in the spheres outsides the membership criteria monitored by the European Commission.

“The big question is why economic growth does not transform into a greater welfare for all. On the contrary, statistics show that in Bulgaria poverty has been on the rise over the past three years,” said Boyan Zahariev of the OSI.

He underscored the fact the economic growth was extensive and was not accompanied with investments in education and policies to promote the social integration of disadvantaged groups.

“It’s like an old car revving up to overtake new machines. But once out on the motorway, they will overtake it as they are driven by innovations and state-of-the-art technologies. This is the difference between our and the European economies,” Zahariev said.

“The lack of reforms affects the quality of life and provokes a brain drain, and this includes not only skilled but also unskilled workers,” said Asya Kavrakova, head of the research. “In the longer term, Bulgaria might face becoming an EU periphery supplying exclusively cheap labour. Therefore investments in human resources are essential,” she added.

Public spending on education in Bulgaria, the Czech Republic, Lithuania, Romania and Slovakia were below the EU average in 2007.

Insufficient funding hampers the performance of school children, according to the report. Another implication is the high school dropout registered in Bulgaria, Romania and Latvia. Moreover, Bulgaria and Slovenia are the only countries that failed to satisfy an EU requirement for an average increase in the number of university graduates in Mathematics, Natural Sciences and Technologies in 2006.

The growth of the Bulgarian economy is extensive and will subside within one or two years when there will be no tools left to boost employment and lower taxes, Zahariev said.