transition, globalisation and labour in the bs & ca …•armenia – mr. armen hovhannisyan...

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Transition, Globalisation and Labour in the BS & CA Region

20 May 2010

Chisinau

Stephanie Char

Junior Policy Analyst

Black Sea and Central Asia Initiative

Development Centre

Colm Foy

Co-ordinator

Black Sea and Central Asia Initiative

Development Centre

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DEV Policies for a better world

The European Commission participates in the

work of the Development Centre

Non-OECD members

2010 - 15 members

OECD members

2010 - 25 members

Egypt

South Africa

India

Thailand

Brazil

Peru

Indonesia

Senegal

Morocco

Mauritius Romania

Vietnam

Colombia

Israel Costa Rica

27

22

25

27 28

32

38

40

20

25

30

35

40

45

Development Centre

Membership

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BSECAO 2008 An OECD Development Centre Economic Outlook

Focus on the BSEC-CA Regions • A cross-country comparative analysis of

macroeconomic and policy developments of the BSEC-CA region, involving 12 BSEC and 5 CA countries

Black Sea and Central Asia: Promoting Work and Well-being

• Recent economic developments in the BSEC-CA regions (Part I)

• Work and well-being: policy challenges in the global environment (Part II)

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Stylised Map of the Region

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Growth Trend

Regional GDP growth has been impacted by the financial crisis

GROWTH: • Over 2001-07, average growth rate

for the region was around 7.2 %, comparable to Asian economies.

• The crisis led to a regional recession of around 6 %

• Substantial variations in growth performance exist within each group of countries, LLM countries recovering slightly faster than UMU

TRADE: • The European Union is the main

trade partner for the region, with great importance for Moldova.

• Russia is the main intra-regional trading partner – embargo since 2009 on Moldovan wine

Growth in Real GDP (%)

Source: IMF, World Economic Outlook October 2009

-8,0

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Black Sea countries

Average Lower to Lower Middle income countries: Albania, Armenia, Azerbaijan, Georgia, Moldova and Ukraine

Average Upper Middle to Upper income countries: Bulgaria, Greece, Romania, Russia, Serbia, Turkey

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Growth: LLM

Impressive growth performance until 2008, then great recession with the crisis

Growth in Real GDP (%) • The impressive growth performance in 2001-07 reflects gains in term of trade and an improvement in macroeconomic management, notably on the fiscal front.

• Regional economic growth fell from +6% in 2008 to -6% in 2009 as a result of the crisis. It is projected to reach 2.5% in 2010.

• These countries are highly exposed to international shocks, notably Moldova whose economy relies on remittances and trade with Russia

Source: IMF, World Economic Outlook October 2009

-20

-15

-10

-5

0

5

10

15

20

25

30

Albania Armenia Azerbaijan Georgia Moldova Ukraine

2007

2008

2009(e)

2010(e)

2011(f)

7

Finance Increased reliance on external funds

Source: OECD Development Centre / IMF

0

2

4

6

8

10

12

14

-20

30

80

130

180

230

280

330

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

External Financing before crisis: BSEC

External financing/GDP (right-hand axis) External financing

Capital inflows FDI Inflows

Workers' remittances and compensation of employees

USD Billion %

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Finance Increased reliance on remittances

Source: OECD Development Centre / IMF

0,0

200,0

400,0

600,0

800,0

1 000,0

1 200,0

2000 2001 2002 2003 2004 2005 2006 2007 2008

Moldova , receipts (BoP, current mln US$)

Moldova

Moldova heavily depends on Workers' remittances which was multiplied by five between 2004 and 2008 – from $221.4 mln to $1,046 mln

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Exports Specialisation in BSEC Countries

Export specialisation (Balassa Index) average 2007-08

SITC group 1 2 3 4 6

beverages & tobacco

crude materials (ex.

fuel)

mineral fuels

animal & vegetable oils

manufactured goods

Albania 2.1 8.1 1.3 0.2 3.5

Armenia 33.1 7.9 0.1 0.0 6.5

Azerbaijan 0.6 0.2 13.9 2.4 0.2

Bulgaria 4.6 3.4 2.2 1.3 3.4

Georgia 25.6 11.3 0.5 0.5 2.9

Greece 7.7 2.3 1.8 6.8 2.8

Moldova 30.4 5.2 0.0 14.0 2.0

Romania 2.1 2.8 1.3 0.9 2.6

Russia 0.5 3.7 1.7 1.1 3.5

Serbia 5.3 2.3 0.5 4.2 4.2

Turkey 1.1 0.5 0.2 1.2 1.8

Ukraine 1.8 1.2 0.8 1.2 3.6

Source: OECD Development Centre / Comtrade, 2008

• No BSEC-CA countries have any form of specialisation in exports of food and animals (SITC 0), chemical products (SITC 5) or machinery and transport products (SITC 7)

• Moldova has a clear specialisation in agriculture, with an index of 30.4, second after Armenia (33.1) and just before Georgia (25.6)

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• Transition in an open economy – More severe recession than expected

– Increased volatility and job insecurity

• During the 1990s labour market policy responses were limited

• The Outlook describes how labour market policies evolved during the 2000s – but the context was also set by households’

responses during the 1990s

BSECAO 2008

Labour Market Outcomes

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Social indic. A heavy social cost: death rates in BSEC-CA countries

Source: OECD Development Centre / IMF World Development Index 2008

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

18,00

20,00

2000

2007

Crude death rate is increasing in Moldova. It is expected to reach 13 per thousand in 2010-15; compared to 11.5 per thousand on average for the Black Sea countries for the same period Source: World Bank 2008

-

2,0

4,0

6,0

8,0

10,0

12,0

14,0

2000-05 2005-10 2010-15

Moldova

Av BS

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Conclusions and Policy Recommendations

• Investment on statistics

• Regularising informal activities

• Active labour market policies

• Employment-oriented social polices and targeted assistance

• Migration, remittances and migrant workers’ rights

• Sustaining reforms for better job creation

BSECAO 2008

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• Achieving transition requires more than shifting

wealth from the state to the private sector, it is

also about building markets and developing

certain state functions to support both the

private sector and the social indicators.

Prioritise policies to improve the business climate and meet the skill gaps facing the private sector

From BSCAO 2008 to the OECD Initiative for the South Caucasus and Ukraine

(2009-2010): BSCAI

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• Armenia

• Azerbaijan

• Georgia

• Moldova

• Serbia

• Ukraine

Target Countries

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• Black Sea and Central Asia Initiative (BSCAI)

team is composed of 11 persons located in

different countries as follow :

BSCAI team

Paris office - 5 persons

• OECD Development Centre

• Mr. Kiichiro FUKASAKU, Head of Regional Desks

• Mr. Colm FOY, BSCAI Co-ordinator

• Ms. Stephanie CHAR, Junior Policy Analyst

• Ms. Anna TCHOUB, BSCAI Communication (Russian speaker)

• OECD Directorate for Financial and Enterprise Affairs

• Mr. Barrie HEBB, Economist (under a joint project)

Local country experts – 6 persons

• Armenia – Mr. Armen Hovhannisyan

• Azerbaijan – Mr. Elkhan Kazimov

• Georgia- Mr. Alexander Khvtisiashvili

• Moldova- Mrs. Tatiana Lariushin

• Serbia-Mrs. Mirjana Radovic

• Ukraine-Mrs. Olga Kupets

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• Macroeconomic overview

• Regional Trade and Co-operation

• Private Sector Development

• Access to Finance

• Foreign Direct Investment

• Human Capital Formation

• Social Development (MDG)

Target Issues

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• Creation of comprehensive data base

• Co-operative policy formulation and advice

• Establishment of co-ordinated, regional development strategies

• Creation of Internet portal on the region

• Establishment of regional economic policy and research network

Objectives

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Current Moldovan Business Development

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Goal 1 Eradicate extreme poverty and hunger

Objective: Baseline Current data Target Halve the % of people

suffering from hunger Year Value Year Value Year Value

Undernourished people

(%) 2000 2008 2015

Goal 2 Achieve universal primary education

Objective: Baseline Current data Target

All children to complete

primary school Year Value Year Value Year Value

Net primary enrollment

ratio (%) 2000 89 2008 83 2015

Children reach grade 5 (%

of grade 1) 2000 2008 2015

Goal 3 Promote gender equality and empower women


Eliminate gender disparity

in all levels of education Year Value Year Value Year Value

Female primary ratio (as

% of male ratio) 2000 2008 2015

Female secondary ratio

(as % of male ratio) 2000 2008 2015

Millennium Development Goals (1)

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Goal 4 Reduce child mortality


Reduce by 2/3 under 5

mortality rates Year Value Year Value Year Value

Under 5 mortality rate

(per 1,000) 2000 24 2008 17 2015

Goal 5 Improve maternal health


Reduce maternal

mortality by 3/4 Year Value Year Value Year Value

Maternal mortality ratio

(per 1,000 births) 2000 … 2008 … 2015

Goal 6 Combat diseases


Halt and reverse spread

of Tuberculosis Year Value Year Value Year Value

Tuberculosis case

detention rate (all forms) 2000 38 2008 79 2015

Goal 7 Ensure environmental sustainability target


Halve the % of people

without access to safe

water Year Value Year Value Year Value

Access to improved safe

water (%) 2000 92 2008 … 2015

Millennium Development Goals (2)

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Transition is achieved through liberalisation, macroeconomic

stabilisation, restructuring, privatisation and legal and

institutional reforms.

transition, globalisation and labour in the bs & ca …•armenia – mr. armen hovhannisyan...

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