Abstract

The article aims at identifying and measuring the determinants of the European union enterprises' relocation in Bulgaria and their impact on the relations between foreign and local enterprises; an area, in which positive effects concerning the recipient country are expected. The transnational enterprises are engaged with local subsidiary when the costs for technological and another specific transfer are lower than the export costs. The initiatives of the transnational companies depend on the contract enforcement system. Different practices of foreign investors' entering the country are discussed - through privatization deals as well as through the "Greenfield" investments. The third part of the paper contains the results from covariance and fixed effect models (FEM) for the impact of different sector characteristics on the ratio of FDI and production output of respective manufacturing sector are presented.