Investors interested in setting up shop in Bulgaria or Romania face considerably higher risks compared to the countries that joined the EU in 2004.

Even under communism, the countries of Eastern Europe and the former Soviet Union varied widely in the risks they presented to potential investors and trading partners. Today, those gaps have grown into chasms of commercial practice and experience, according to Financial Times (FT).

In Central Europe and the Baltic region, the eight states that joined the European Union in 2004 are increasingly closely integrated with western Europe, particularly with Germany.

As the European Commission has pointed out in a report this summer, both Bulgaria and Romania face serious problems with corruption and Bulgaria with organised crime. The potential of these two Balkan economies was considerable, especially in the case of Romania, said FT.

Economic and political stability would also not be guaranteed. Romania, where gross domestic product rose 7.7 per cent last year, showed signs of overheating, with both private and public spending having grown rapidly and the external deficit having risen to 11.6 per cent of GDP. Meanwhile, policymaking has been hampered by repeated political battles between president Trajan Basescu and the government.

In Bulgaria, the political position was more stable but the economy perhaps even more vulnerable to external shocks with the current account deficit having soared last year to 14.8 per cent of GDP, FT continues.