Western Balkans and Europe 2020 Does the Western Balkan need a new Growth Model? Peter Sanfey Lead Economist, EBRD Regional Coordination Meeting, Regional Cooperation Council Brussels, March 31 2011
Mar 27, 2015
Western Balkans and Europe 2020
Does the Western Balkan need a new Growth Model?
Peter Sanfey
Lead Economist, EBRD
Regional Coordination Meeting, Regional Cooperation Council
Brussels, March 31 2011
The “growth model” of the Transition Region (incl. the Western Balkans):
Market-oriented reforms
Trade integration
Financial integration with the West
Political integration (for EU or near-EU countries).
Rapid catch up and growing prosperity
But also important weaknesses and gaps
Is a new approach to development needed after the crisis?
The EBRD answer in a nutshell
No new “growth model” needed, but region must address its key weaknesses
Need both stronger and safer growth New reform agenda
• Close sector-level reform gaps
• Develop local currency finance
• Strengthen export capacity
• Improve business environment
Weakness (1): Incomplete Reforms
HUNEST
POL
SVK
BGR
ROMTUR
ALBARM
MNEMDV
GEO
UKR
FYRKAZ
SRB
MON
KYR
BIH
AZE
TAJBEL
UZB
TKM
RUS
LIT
LATSVN CRO
1
1.5
2
2.5
3
3.5
4
4.5
1 1.5 2 2.5 3 3.5 4 4.5
Traditional country-level transition indicators
Ne
w E
BR
D s
ect
or
ind
ica
tors
Weakness (2): Financial Sector Fragility
Weakness (3): Unbalanced Growth
Exports ► Innovation ► Growth
0
8
16
24
32
Pro
ba
bili
ty (
%)
Firm level R&D Spending
≈1/3Export activity significantly raises probability of R&D
No
n-e
xpo
rter
Exp
ort
er
Top priorities to improve export-friendliness
Weakness (4): persistent business environment problems
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Albania BiH Croatia FYR Macedonia Montenegro Serbia
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BEEPS: Top three constraints in each country