In the years between the world wars, Bulgarian efforts to raise agricultural and industrial standards closer to those of Western Europe yielded uneven results. Until the mid-1930s, political unrest, steep reparations payments, and the world financial crisis stymied growth. Reparations payments were finally canceled in 1932, however, and the stability of the royal dictatorship brought economic improvement in the late 1930s. Half the European average in 1930, per-capita agricultural production improved markedly when government control forced diversification, new methods, and new markets into the system. In the 1930s, a 75 percent increase in membership of agricultural cooperatives bolstered the financial stability of the agricultural sector, particularly benefiting small landholders. The most notable agricultural trend between the wars was the switch to industrial crops, especially tobacco, which replaced wheat as Bulgaria's top agricultural export. The predominance of small agricultural plots increased, however in 1944 only 1 percent of holdings were over twenty hectares, while the number of landless families had decreased (see Agriculture , ch. 3).

In the 1930s, Germany bought a huge percentage of Bulgaria's agricultural exports (67.8 percent in 1939), reinforcing economic dependency by selling finished industrial products for nonconvertible currency--a distinct advantage for the Bulgarian economy and a boon to the Bulgarian standard of living. Boris tried to balance German trade by expanding British and French markets, but he found little interest in either country. Although industry remained distinctly secondary to agriculture, contributing only 5.6 percent of the Bulgarian gross national product (GNP--see Glossary) in 1938, between 1929 and 1939 Bulgarian industry grew at an average rate of 4.8 percent, well ahead of the European average for the period. The role of state-owned enterprises dwindled steadily in the 1930s by 1944, only coal mines, electrical power, railroads, and banks remained predominantly in that category. While large state-sponsored enterprise diminished, small private industries flourished in the 1930s. At the same time, Bulgarian commerce became largely state-controlled and centralized in Sofia, and the social and political dichotomy between rural and urban Bulgaria was even sharper as World War II began.

Data as of June 1992