increased regional integration and the role of eu accession: during and after the crisis visnja...

IMOIMOIMO Dr. Višnja Samardžija, Institut za međunarodne odnoseLjudevita Farkaša Vukotinovića 2, 10 000 Zagreb, e-mail: [email protected]

Increased Regional Integration and the Role of EU Accession:During and After the Crisis

Visnja Samardzija, Ph.DInstitute for International Relations – IMO, Zagreb

[email protected]

Western Balkans in 2020Overcoming the Economic Crisis and Developing Competitive Economies

Sarajevo, 24-24 February 2010


Key points of presentationKey points of presentation

• Regional cooperation could contribute to economic recovery of SEE, through

– strengthening regional trade – attracting FDI – human potential development– sharing experiences, policy development and

coordination, reforms and EU accession

…in context of EU integration


Priorities in SEE regional co-operationin economic recovery

• Regional cooperation could contribute to economic recovery• “New achitecture” in SEE cooperation established (SEECP,

RCC)– Regional “ownership” principle strengthed

• Impact on SEE political and economic developments• Synergy of participation in numerous coordinated regional

initiatives and networks• Project oriented cooperation, generationg new values• Economic, infrastructure, social, security dimension• Participation of donors and EU institutions• Linking the people!


Perception of ties between neighbours in SEE region

Source: Analytical Report 2008, Gallup Balkan Monitor. Insights and Perceptions: Voices of the Balkans

Relations are not strong enough!


Regional trade cooperation in SEE Regional trade cooperation in SEE

• Exports are vital for growth and current account sustainability

• Growth of region should be export led• CEFTA 2006

– CEFTA helped reducing impacts of the crisis – Alignment with trade related issues of the acquis– Still limited trade flows in SEE region, poor export

performance (low-skill based, natural resource-intensive exports)

– Exports well below potential and needs – EU integration also requires increased exports!


TTowards export-led growth in SEE…

• Strengthen regional trade through joint projects!• Move towards skill-intensive exports • Reducing market segmentation through (joint) policies

– Elimination of barriers to trade in services, FDI friendly policies, coordination of sectoral policies, joint development of policies (industry, R&D?)

• Capacity building in strengthening policy design• Specialisation through regional economic cooperation • Promoting cooperation among customs administrations• Achieving full benefits in implementing diagonal cummulation of

RuO– Intra CEFTA diagonal cummulation scheme– Bilateral EU/SEE cummulation in force– Inclusion in Pan-Euro-Med diagonal cummulation necessary


Doing Business 2010: Rankings in the Area of Trade

Source: www.doingbusiness.org


How to achieve stronger FDI inflow to SEE

• External environment has changed dramatically• FDI decreased after stronger growth• FDI stimulated investment but not directed towards

export oriented projects, mostly related to privatisation process, greenfield marginal

• Structure and quality of investment is not stimulating rapid growth

• Geography matters for investors – investors target individual SEE countries, but not

entire region as one market


Overview of FDI in Central, East and Southeast Overview of FDI in Central, East and Southeast EuropeEurope

FDI inflow, EUR million Per capita inflow, EUR

Per capita stock, EUR

2005 2006 2007 2008 2008 2008

Albania 213 259 481 682 215 935

Bosnia and Herzegovina 493 572 1546 690 179 1400

Croatia 1468 2765 3667 2930 661 4930

Macedonia 77 345 506 413 201 1600

Montenegro 393 644 1008 832 1325 4864

Serbia 1265 3516 2272 1879 256 1586

Southeastern Europe 3909 8101 9480 7425 346 2200

European CIS 16997 28624 49121 57240 284 2000

EU NMS-10 37143 45152 49151 44868 439 4100

Total 58049 83494 110271 109533 337 2700

Source: Source: wiiw Database on FDI incorporating national bank statistics


Number of greenfield FDI projects, 2004-2009 (concluded)

Partner region/economy World as source

South-East Europe 2004 2005 2006 2007 2008 2009 (Jan-Mar)

Albania 7 13 11 6 16 3


Croatia 39 46 39 32 39 7

The FYR of Macedonia 7 11 25 9 23 9

Montenegro - - 3 5 15 1

Serbia 52 53 43 79 112 15

EU 3 405 3 935 4 708 4 625 5 115 1 047

Selected EU new member states

Bulgaria 109 140 285 151 146 33

Czech Republic 148 150 179 148 141 22

Hungary 221 205 241 217 147 31

Poland 239 270 337 340 353 43

Romania 180 262 373 369 348 41

Slovakia 88 118 118 99 86 15

Slovenia 23 19 23 23 23 1

Source: World Investment Report 2009: Transnational Corporation, Agricultural Production and Development


Attracting FDI through regional co-Attracting FDI through regional co-operationoperation

• Crisis might be opportunity for SEE– short-term actions combined with strategic measures

• Policy development for attracting FDI in SEE– Offering foreign investors opportunity to serve „regional“ market

(investing in one country - „access“ to the region)– Reducing market segmentation, deeper integration - regional

cooperation in services– Linking foreign and domestic investors at regional level – Reduction of barriers (services), pro-business initiatives, low tax

regime, effective deregulation– Acceleration of structural reforms

• on labour / product markets, improving quality of public spending, increasing competitive capacity of SEE for attracting FDI during recovery period

• Regional investment strategy


Building knowledge based society in SEE

• Shift to more skill-intensive exports needed• Increasing productivity and fostering “knowledge based” regional

competitiveness through research, education and innovation (“knowledge triange”)

• Designing integrated research policies and strategies for SEE– from fragmented to integrated approach in the region…

• Modernising research capacity, focus on value-added services and innovation

• Increasing links between research and business – finding innovative ways to increase participation of private sector

in policy formulation and funding of R&D; establish competitive regional centres of excellence

• Promoting human capital development• Encouraging transfer of knowledge (networks)• Visa free trade regime important!


Global Competitiveness Index - ranking SEE and CEE countries according to performance

in education and innovation

Country Overall ranking Higher education and training ranking

Innovation ranking

2007-08 2009-10 2007-08 2009-10 2007-08 2009-10

Albania 109 96 103 90 131 126


Croatia 57 72 46 56 50 61

Macedonia, FYR 94 84 75 70 92 92

Montenegro 82 62 79 57 104 56

Serbia 91 93 82 76 78 80

Bulgaria 79 76 66 60 88 91

Romania 74 64 54 52 76 70

Slovenia 39 37 24 19 30 29

Source: The Global Competitiveness Report 2009-2010, and 2007-2008, World Economic ForumNote: Global Competitiveness Report 2007-2008 is based on survey and data of 131countries, while for 2009-2010, N=133.


Comparative ranking scores of EU and SEE countries according to selected Lisbon criteria, WEF

(2006 and 2008)

Country Final Index Sub indexes

Rank Score Information Society Innovation and R&D

2006 2008 2006 2008 2006 2008 2006 2008

Greece 23 23 4.19 4.10 3.17 3.18 3.77 3.85

Croatia 25 24 3.93 4.10 3.69 3.69 3.32 3.41

Italy 24 25 4.17 4.05 4.06 3.83 3.73 3.76

Montenegro 31 26 3.14 3.96 2.94 3.27 2.80 3.15

Romania 28 27 3.59 3.84 3.21 3.70 3.17 3.30

Turkey 26 28 3.92 3.82 3.22 3.34 3.27 3.25

Poland 27 29 3.76 3.76 3.32 3.18 3.57 3.51

Bulgaria 29 30 3.31 3.68 3.09 3.57 2.92 3.04

Macedonia, FYR 30 35 3.28 3.53 2.79 3.17 2.51 2.78

Serbia 31 37 3.14 3.44 2.94 3.20 2.80 3.00

Albania - 41 - 3.12 - 2.70 2.37

Bosnia and Herzegovina - 44 - 3.12 - 2.83 2.43

EU27 average - - - 4.73 - 4.53 4.18

EU15 - - - 5.07 - 4.86 4.62

Source: World Economic Forum. The Lisbon Review 2006. Measuring Europe's Progress in Reform. World Economic Forum. The Lisbon Review 2008. Measuring Europe's Progress in Reform.Note: WEF ranking 2006 (N = 31) included EU and SEE countries only, while the WEF ranking in 2008 (N=44) encompassed EU, SEE and Central Asian economies.


Expenditure on research and development (R&D) in the SEE

Country Gross domestic expenditure on research and development relative to GDP (%)

2000 2001 2002 2003 2004 2005 2006

EU-27 1.86 1.87 1.88 1.87 1.83 1.84 1.84

Croatia 1.23 1.07 1.11 1.11 1.22 1.01 0.87

The former YugoslavRepublic of Macedonia

0.44 0.32 0.26 0.23 0.25 0.25 :

Turkey 0.64 0.72 0.66 0.61 0.67 0.79 0.76

Montenegro 0.85 0.75 0.75 0.80 1.02 : :

Source: Pocketbook on candidate and potential candidate countries, 2009 edition. EUROSTAT

Lack of comparable data!


Croatia – priorities and experiences in regional co-operation

• Synergy of participation in numerous regional initiatives (SEE, Mediterranean, Danube region)

• Transformation from aid recipient into the aid supporter

• Support to coordinated and focused joint activities in different areas

• Initiative


Croatia’s participation in regional co-operation initiatives

• RCC– Trans regional projects: South-East European Firefighting Centre – SEEFRC,

Public-private Partnership co-operation network in SEE• Trade integration – CEFTA 2006• Central European Initiative (CEI)

– Intraregional and cross-border project based cooperation: turism, culture, environment protection, human resurces development, SMS

• Adriatic Ionian Intiative– Promoting regional tourism, maritime management, environment protection, SMS– Establishing new EU Adriatic-Ionian macro region

• Danube Cooperation Process, Danube Commission– Navigational, transport and socio-economic regional co-operation aspects

• Migration, Asylum and Refugees Regional Initiative – MARRI• Energy Community Treaty

• Other…


Role of EU Accessionin regional cooperation and recovery

• EU accession perspective helped to retain confidence in WB economies

• EU accession related reforms crucial in the recovery proces: – competitiveness, trade, investment, business climate,

structural reforms

• Regional cooperation complementary to EU integration

• Danger of delayed accession!


EU accession forecast or other time frame (?)

SAA signed EU Negotiations Potential

EU accession

Croatia 2001 2005 2011 / 12

Island (EEA,1994)

Schengen

2010 2011/12

Macedonia 2001 2009 2014

Albania 2006 2010 2015

Bosnia and Herzegovina 2007 2011 After 2015

Montenegro 2007 2010 2015

Serbia 2008 2011 After 2015

Kosovo After 2015

Turkey (1963 apl) 2005 2015-2010


EU accession as a challenge for regional cooperation

• Joint efforts in solving problems: cross-cutting issues– Rule of law, judiciary, fight against corruption, organised crime,

strengthening capacities– Bilateral issues easier to solve through regional cooperation

• Accession generates regional cooperation– Exchange of knowledge and experince – Protocols on

cooperation between SAP countries

• Establishing visa free regime – people to people contacts are the basis for regional

cooperation


Europe 2020Western Balkans 2020?

• Europe 2020– Creating values based on growth and

knowledge– Enpowering people in inclusive societies– Creating competitive, sonnected and

greener economy

• Global and regional context?– Western Balkans 2020

increased regional integration and the role of eu accession: during and after the crisis visnja...

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