Smaller cities more business-friendly than capitals in Bulgaria, Hungary

Smaller cities more business-friendly than capitals in Bulgaria, Hungary
By Carmen Simion in Bucharest July 14, 2017

Romania’s capital Bucharest outperforms smaller cities in the country dealing efficiently with a much higher demand for business service, while smaller cities in neighbouring Bulgaria and Hungary are more business-friendly, the World Bank Group’s Doing Business in the European Union 2017: Bulgaria, Hungary and Romania report showed on July 13.

All three countries have experienced significant growth since joining the European Union, but they still face economic challenges, given the volatile international economic environment and the continuous need for institutional improvements.

The World Bank report analyses business regulations affecting domestic small and medium sized firms in five Doing Business areas: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, and Enforcing Contracts.

The 22 cities covered are: Burgas, Pleven, Plovdiv, Ruse, Sofia and Varna in Bulgaria; Budapest, Debrecen, Gyor, Miskolc, Pecs, Szeged and Szekesfehervar in Hungary; and Brasov, Bucharest, Cluj-Napoca, Constanta, Craiova, Iasi, Oradea, Ploiesti and Timisoara in Romania.

The report found that no city excels in all the measured areas and each of the benchmarked cities ranks in the top half on at least one indicator set and in the bottom half on at least one other.

"The gaps in performance among cities in each country suggest that there are important lessons that local and national policymakers can learn from one another and this will make a difference in the relative competitiveness not just within-country but also at the global level," said Mierta Capaul, manager of the Subnational Doing Business programme at the World Bank.

In Romania, the northeastern city if Iasi leads in getting electricity, Craiova stands out for its good practices in construction permitting, Timisoara for its performance in contract enforcement, and Oradea for its higher quality land administration. The capital Bucharest performs generally well in most areas demonstrating the potential for dealing efficiently with high demand for business services.

In Bulgaria, Ruse leads in the areas of registering property and enforcing contracts, Burgas in getting electricity, while Varna performs well in terms of business registration. Sofia stands out in issuing construction permits, but lags behind in starting a business, registering property and enforcing contracts.  

In Hungary, Debrecen performs well in terms of practices in contract enforcement and property registration, Szeged leads in getting electricity, Pecs in construction permitting, while Budapest trails behind in most areas.

Budapest and Sofia both lag behind most of the smaller cities in their countries. The World Bank said the results can be attributed in part to the higher demand for business services in the largest business city in each country than in the smaller, less populated ones.