Contributions of Regional Programmes to National Competitiveness

Investment Compact for South East Europe

31 March 2011

November 2010

Structure of the Investment Compact and SEEIC

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Investment Compact

for South East Europe

Analytical support

Project management

Investment Compact

for South East Europe

Analytical support

Project management

SEE Investment CommitteeSEE Investment Committee

OECD donor countries

SEE country economic

teams

Internationalorganisations

Private sector

Co-chairs:

OECD Country (Austria) + SEE Country (Serbia) + OECD Secretariat (DAF/PSD)

Regional Cooperation

Council

Policy Dialogue:

Regional Working GroupsHuman Capital

Investment PromotionRegulatory Reform

Trade

Assessment:

Investment Reform IndexSME Policy Index

Assistance and training for implementation

Regional Competitiveness Initiative

Strategy:

Sector-specific Sources of Competitiveness

Three main regional activities

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Investment Climate & competitiveness SME Policy Promoting Free Trade under

CEFTA

Recent publications

• Investment Reform Index 2010

•Sector Specific Sources of Competitiveness

•SME Policy Index 2009

• Intellectual Property Rights in the CEFTA 2006 Signatory Parties

•National Treatment Restrictions and Review of Bilateral Investment Treaties

•Trade Integration, Industry Concentration and FDI Flows

Projects 2010-2013

•Regional Competitiveness Initiative

•SME Policy Monitoring and Implementation

•Study on the impact of trade integration on investment localisation at sub-national level

• Independent monitoring of the elimination of Non-Tariff Barriers among CEFTA Parties

I. Policy DialogueRegional Working Groups

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Sharing of best practices at regional level.Mechanism for regional peer-based reviews.

Identified synergies for regional collaboration.

Sharing of best practices at regional level.Mechanism for regional peer-based reviews.

Identified synergies for regional collaboration.

I. Policy DialogueRegional Working Groups

What does the Investment Compact / SEEIC do?

What does the Investment Compact / SEEIC do?

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II. Policy assessment: Investment Reform Index 2010

Results• A comprehensive assessment of SEE

investment climate released in March 2010• 10 SEE economies were assessed using 8

policy dimensions and over 100 indicators

IRI – SEE average score

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Example of policy assessment (from IRI 2010)

Note: (1) Dimensions on SME policy, which was derived from the SME policy index and on infrastructure were not scored

IRI – SEE average score

Main improvement points – Investment Policy and Promotion

• Land title registration and cadastre is slow• Permits for foreign workers are cumbersome in BiH

and FYROM• FDI Incentives on sub-national level need more clarity• FDI-related capital transfer barriers remain in AL, SRB

and BiH• One-stop shop for investors (IPAs to approve permits)• Weak aftercare in BiH, BG, MNE and RO• Legal frameworks for PPPs to be developed• Need to improve IP rights enforcement

What does the Investment Compact / SEEIC do?

III. Sectoral Policy Strategy: Sector Specific Sources of Competitiveness

ResultsDeveloped strategic policy

recommendations on improving:• Access to finance in garment sector • Regional investment promotion

activities in automotive sector • Linkages between education and

industry in the information and communication technology sector

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What does the Investment Compact / SEEIC do?

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IV. Assistance and training for implementation:WB Regional Competitiveness Initiative

Objectives• Support long-term competitiveness of the Western Balkans.• Provide capacity building support through pilot projects and horizontal working groups.Focus Areas• Human capital development – focus on skills gaps.• Innovation – technology absorption by the private sector.

Timeline: 2010 - 2013

First four country projects in 2011

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Voucher scheme

Establishment of a Competence Technology Centre (CTC)

Development of a policy framework for innovation

Co-operation projects researchers-business-government

WITH THE FINANCIAL SUPPORT OF THE

EUROPEAN UNION

1. Focus effect: Provide a platform and consensus on high impact country project sthrough voluntary comparative assessment

2. Multiplier effect: Spread results and knowledge from successful country projects to regional partners

3. Mirror effect: Motivate economies to introduce better policies by comparing progress highlighting best practice examples

4. Awareness effect: Strengthen awareness and adoption of latest international policy standards and instruments

5. Coordination effect: Avoid duplication of country initiatives and get better return on investment from donor contributions

6. Image effect: Send strong signal to private sector of joint government commitment to make markets more attractive

7. Regional issue effect: Address policies challenges that can only be tackled through regional collaboration (eg; CEFTA NTBs)

Contributions of effective regional programmes to national competitiveness

• Need to complement horizontal policy approaches with a focus on improving policies for competitiveness in specific sectors with the highest potential for value added => next phase of WB RCI (WB RCI II) will focus on highest potential sectors

• Systematically involve business and civil society in the development of better policy, including at the sector level => dedicated session with BAC and MEDEF at next SEEIC in Paris on 4 May 2011

• Top level vision and political impetus is fundamental to ensure effective change => High level Ministerial on 23/24 November in Paris

Some lessons learned from regional programmes

Calendar of activities

4 May SEE policy dialogue between industry and public sector

5 May 8th SEE IC at OECD headquarters in Paris, France.

17-18 May Small Business Act (SBA) assessment launch in Istanbul

8-10 June RCI working groups on human capital and innovation (Croatia)

Mid Oct 2nd RCI working group meetings (TBD)

22 to 23 Nov CEFTA week 1-day event and CEFTA joint committee meeting (at ministerial level) in Paris

24 Nov SEE Ministerial on competitiveness and 2020 vision (Paris)

Anthony O’SullivanHead of Division

Private Sector Development Organisation for Economic Co-operation and

Development (OECD)Anthony.osullivan@oecd.org

www.investmentcompact.org