Eastern Europe and South Caucasus economies will have to become more competitive if they are to attract more and better targeted foreign investment, says a new OECD report to be presented on 17 June at an OECD Ministerial Roundtable in Prague, Czech Republic.
The OECD Eastern Europe and South Caucasus Outlook recommends that governments in the region implement reforms to tackle three key barriers to competitiveness: poor educational systems that do not sufficiently prepare workers for the modern job market, limited access to finance for smaller enterprises and a lack of appropriate incentives to attract diversified investments.
OECD Deputy Secretary-General Richard Boucher will highlight the opportunities for the region’s economies and global investors at the launch. ”Countries in the Eastern Europe and South Caucasus have already undertaken a series of far-reaching economic reforms from a centrally planned to a market-based system,” he said. “But to tap into their full potential, they must improve education, open up finance and standardise investment policy to raise productivity and competitiveness.”
“The OECD and the EU stand ready to share their experience in supporting transition economies to grow and develop with our partners in Eastern Europe and the South Caucasus region.” said Karel Schwarzenberg, Deputy Prime Minister and Minister of Foreign Affairs of the Czech Republic. “History and daily practice have shown that small and medium-sized enterprises are pivotal in driving entrepreneurship, productivity and growth, and I am pleased to see that the OECD Eastern Europe and South Caucasus Outlook, and our discussions at the Ministerial meeting, focus on implementing reform in this area.”
The region has the opportunity to access a market of over 400 million citizens in neighbouring countries. The region also holds significant resource endowments ranging from black soil that produces some of the best wheat in the world to large energy reserves.
However, in spite of recent growth – an average of almost 8% of GDP during 1998-2008 – the region’s productivity levels remain 77% below the world average. Moreover, the 2009 crisis exposed some important economic and structural policy weaknesses that had been masked during the brisk economic expansion of the past decade.
To increase the competitiveness of the region, policy makers must work more closely with the private sector, focusing on:
• improving the overall quality of the educational system and ensuring that curricula reflect labour market needs;
• easing access to finance for small and medium-sized companies by improving the regulatory and legal framework affecting credit provision and further developing micro-credit institutions;
• improving investor perception by reforming the region’s investment policy and promotion frameworks to ensure the enforcement of national treatment, transparency and accountability.
OECD countries include Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, FYR Macedonia, Greece, Montenegro, Romania, Serbia, Slovenia and Turkey.
Source balkans.com
