the plan for a regional economic area in the western balkans · • intra-regional trade in the...
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TheplanforaregionaleconomicareaintheWesternBalkans
WillBartlettLSE
Outline
• ThebackgroundtoMAPforREA• Trade• Regionalinvestmentagenda• Mobility• Digitalintegration• Conclusions
RealGDPgrowthinWB6region
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-2
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2000 2002 2004 2006 2008 2010 2012 2014 2016
Average
Av2000-08
Av2009-16
Background• TriesteSummitofBerlinprocessJune2017• Multi-annualActionPlan(MAP)foraRegionalEconomicArea,2017-2020
• KeycomponentsareTrade,Investment,Mobility,Digital– Withinthese,PolicyAreas,eachwithObjectives
• KeyaimisintegrationofWB6intoEuropeanandglobalvaluechains
• EachcountryhasaMAPCoordinatorinitsgovernmentstructures
AimofMAP• BasedonCEFTAlegalframeworkandindividualSAAs• Itaimstofosteragradualandprogressiverule-basedeconomicintegrationintheareasof– trade,– investment– mobility– digital
• Toenableunobstructedflowofgoods,services,investmentandhighlyskilledlabourthroughouttheregion,thusdevelopingaWesternBalkanRegionalEconomicArea
REGIONALTRADE
• Averagetradeopenness(thesumofexportsandimportsasapercentageofGDP)oftheWB6islow,just65%of“EU11”,dueto– poortransportinfrastructure– poorbusinessenvironment– failuretodevelopvaluechainswithEUmarkets,orwithintheregion
• Intra-regionaltradeintheWesternBalkansislessimportantthantradeoutsidetheregiondueto:– Customsandtraderegulations– Highcosttoexportwithinregion– Lengthoftimetoexport
TradeandtheMAP
• MAPpoliciesinclude:– Facilitationoftradeingoodsthroughtradedisputesettlements,jointbordercontrols,closercooperationbetweentheindividualmarketsurveillanceauthorities
– Facilitationoftradeinservices,throughadoptionoftheAdditionalProtocol6anddialogueonregulatoryissuesinelectroniccommerce
– Creatinganon-tariffmeasures(NTMs)freeregion,includingthroughinformationexchangebetweencompetitionandstateaidauthorities
REGIONALINVESTMENTAGENDA
Whyaregionalinvestmentagenda?
• Lowlevelofinvestmentinsomecountriesinhibitsgrowth
• RegionhasverypoorrecordinattractingFDI
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2008 2009 2010 2011 2012 2013 2014 2015
FDI flow, % GDP (3-year moving average)
ALBAMKMERS
CompetitionforFDI
• RecentlySerbiaandtheformerYugoslavRepublicofMacedoniahaveintroducedasetofsubstantialinvestmentincentives– Thishascreateda“racetothebottom”inwhichcorporatetaxrateshavebeenreduced
– Taxholidaysareavailableinsomecircumstances(e.g.10yeartaxholidayinMacedonianSEZs)
– Morebroadlybasedemploymentsubsidiesrelatedtoemploymentcreation
• Dothesesubsidiesconflictwithstateaidrules?
Corporateincometaxrates
15%
10% 10% 10%9%
15%
23%
0%
5%
10%
15%
20%
25%
AL BA XK MK ME RS EU
Goodsexports(%GDP)
14.0 14.812.3 11.9 11.3
28.529.9
32.234.0 35.1
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2012 2013 2014 2015 2016
AL,BA,ME,XK
MK,RS
MAPRegionalinvestmentpolicyareas
• Develop,formaliseandimplementaregionalinvestmentreformagenda
• PromoteWB6asauniqueinvestmentdestination
• Diversifyfinancialsystemstoboostinvestment
• Smartgrowth
Developingaregionalinvestmentreformagenda
• Investmentattraction:– Harmoniseinvestmentincentivesataregionallevel
• Investmentpromotion:– EBRDRegionalInvestmentPlatformCommonplatformisausefulinstrumentforinvestmentpromotion
• Investmentimpact– LinkSMEsassupplierstoforeigninvestors– Createa– Providetrainingtosuppliercompanies
MOBILITY
Mobility
• Mobilityofresearchers• Mobilityofprofessionals• (Mobilityofstudentsandhighlyskilledworkers)
Mobilityofresearchers:benefits
• Increasedmobilityofresearcherscanimprovecompetitivenessofeconomies
• Economieswithmoreopenresearchsystemsperformbetteroninnovation
• IntegrationtotheEuropeanResearchAreacanbeassistedbymorecollaborationbetweenresearcherswithintheregion(andviceversa)
Mobilityofresearchers:obstaclesinWB6
• Relativelyfewbarrierstoshorttermmobilitylessthanthreemonths(researchvisit)inWB6
• Mainbarriersaretolong-termmobility(employment)beyondthreemonths– OftennotcoveredbybilateralagreementsbetweenHEIs
– Institutionalbarriersarealsolinkedtonon-meritbasedpromotioncriteria
• OnlyBA&MEhavesimplifiedproceduresforobtainingworkpermitsandresidencepermits
• OnlyMEhasresearchinfrastructureroadmap
Mobilityofprofessionals:challenges• Asymmetricinformationbetweenprofessionalsandconsumersenablesprofessionalstoraisepricesandreducequalityofservices.– Consequently,professionalservicesareoftensubjecttoregulationtoensureminimumstandardsofserviceprovision
• Yet,regulationmayrestrictthesupplyofservices,drivingupconsumerpricesandreducinginternationalmobility.– Professionsmayinfluencepolicy-makerstoprovideexcessiveregulationtoprotecttheirprivilegedpositions
– WithinCEFTA, liberalisationofinternationaltradeinprofessionalservicesaimstoeliminateexcessiveregulations
MobilityofprofessionalsinWB6:obstacles
• MAPaimstoprovideincreasedcompetitionamongfourregulatedprofessions– DoctorsofMedicine,Dentists,ArchitectsandCivilEngineers
– SupportsMode4oftradeinservices• Mobilityishinderedbylackofmutualrecognitionofprofessionalqualifications– RecognitiondecisionsmadeindifferentwaysacrossCEFTAregion
– Procedureslengthyandburdensome– CredentialevaluatorsdonotapplyLisbonRecognitionConventionproperly
ProgressinmobilityofprofessionalsinWB6
• HarmonizationwithEUServicesDirectiveandProfessionalQualificationsDirectivewillencouragealignmentbetweenWB6economies– AL:LawonRegulatedProfessions2011– BA:RoadmapforImplementingEUDirectiveonRegulated
Professions,2016– XK:onlyfourprofessionsregulatedbylaw– ME:LawonRecognitionofForeignQualificationsforAccessto
RegulatedProfessions2012– MK:LawonRecognitionofProfessionalQualifications2011– RS:Asyetnounifiedlistofprofessionalqualifications
• RCC-WGMRPQhasrecommendedopeningofnegotiationsonMRAsfor4professions– butlongwaytogo
Mobilityofstudentsandhighlyskilledworkers
• Mobilityofstudentsraisesgraduates’skilllevelsandimprovestheiremployability
• ItisacentralobjectiveoftheBolognaProcessandEHEA
• Exx:CEEPUSexchangeprogrammeforstudentsinDanuberegion
Mutualrecognitionofacademicqualifications
• Mutualrecognitionofacademicqualificationsisrequiredtopromotemobility,but:– LisbonRecognitionConvention1997unevenlyorincorrectlyapplied
– NationalQualificationsFrameworksunevenlydeveloped
– ENIC-NARICinformationcentresunderfunded– HEaccreditationpoliciesareuneventhroughoutregion– aretheyindependent?
DIGITALAGENDA
DigitalAgenda:policies
• Networksandconnectivity• Trustandsecurity• Digitaleconomy• Digitisationandstandards
Digitaldividend&digitaldivide
• Digitaleconomycanraiseproductivityandreducecostsofinternationaltrade– Knownas“digitaldividend”
• But– Digitaleconomyisvulnerabletomonopolizationbenefitingincumbents
– Inequalityofwageincomesmayincreaseduetoincreasedreturnstodigitalskills
– Digitaldivideininternetaccess
ME
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BA
EU
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
PercentageofhouseholdsthathaveInternetaccessathome
Montenegro TheFormerYugoslavRepublicofMacedonia
Serbia BosniaandHerzegovina
EU-28
DigitalEconomy
• Internetenablesfirmstoreachnewmarketsandmayboostinternationaltrade– A10%increaseininternetuseincreasesthenumberofproductstradedbetweentwocountriesby1.5%
– Onlineplatformsopenupnewmarketstosmallsuppliers
• Digitalskills– Schoolsnotuptospeedinteachinguseofdigitaltechnologies
– Skillgapsandskillmismatchesarewidespread
DigitalintegrationoftheWB6economies
• Steadygrowthofinternetpenetration,partlyledbynewentrantssuchasUnitedGroup
• Newchallengersarebeginningtotakemarketsharefromincumbents– Pushbackfromincumbentsvianon-independentregulators
– Regulatorybarriersbutalsoreputationalattacksonnewentrants
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