South East Europe 2020South East Europe 2020Towards a Regional Growth StrategyTowards a Regional Growth StrategyMay 2013May 2013

How it all begun…

• Emergence of multiple regional cooperation frameworks requiring coherence & coordination

• Need to anchor reform efforts into an overarching growth and development agenda

• Provide RCC with a mandate to perform its role to its fullest potential

…with kick-start by Europe 2020

?

• Preparations for future membership suggest that the Europe 2020 policy goals and implementation methods are pertinent to enlargement countries

• However, a strong need to adjust the strategy to region’s needs, making it more realistic and credible

• Main objectives include boosting competitiveness, productivity, growth potential, social cohesion and economic convergence.

Materialized as a response to Europe 2020, as the region was left out of the main European growth framework:

Getting the mandate

SEE 2020

RCC to provide a “link between the national and regional level and … for the efforts going

into Europe 2020 implementation in the region to demonstrate a considerable level

of complementarity with the work being done at the national level.” Montenegrin C-i-O SEECP

“The [European] Commission will propose to the Regional Cooperation Council that it sets up platforms for dialogue and peer review in

other areas in line with Europe 2020 priorities”

Enlargement Strategy 2010-2011

Actively pursue “a regional recovery and development strategy which should follow the main parameters of EU 2020, based on

knowledge and innovation.”June 2010 Sarajevo High Level Mtg

SEE Investment Committee – SEE2020 Catalyst

Transfer of SEEIC provided an opportunity to:1.Get a clear mandate for SEE2020 Development2.Engage national administrations3.Secure resources

Integrated growthdeeper regional trade and investment

linkages and policies enhancing the flow of goods, investment, services

and persons

Smart growthcommitment to compete on value added, promoting knowledge and

innovation across the board

Sustainable growthenhancing competitiveness, entrepre-

neurship and a commitment to greener and more energy-efficient

development

Inclusive growthskills development, employment

creation and labour market participation by all, including

vulnerable groups and minorities

Governance for growthimproving the capacity of public

administrations to strengthen the rule of law and reduce corruption so as to

create a business-friendly environment

Key principles of SEE 2020

1. Added value to national efforts – regional relevance2. Decentralized development and implementation3. Quantifiable indicators and measurable progress4. Clear governance structure and political support

Strong link with IPA 2

Formulating SEE 20201. IDENTIFY PRIORITIES

integrated, smart, sustainable, inclusive growth within good governance framework

2. DETERMINE APPROPRIATE POLICY AREAS FOR SETTING OBJECTIVES AND TARGETS

e.g. trade as an area that best captures integrated growth

3. FORMULATE APPROPRIATE OBJECTIVESe.g. increase intra-regional trade as an objective of integrated growth

4. DETERMINE BASELINE DATA FOR OBJECTIVESe.g. currently intra-regional trade (goods) amounts to EUR 12.5 billion

5. ESTABLISH STRATEGIC INTENT (TARGET)e.g. increase intra-regional trade by 240% by 2020

6. PUT FORWARD INDICATION OF MEASURES/ACTIONS AND INDICATORSe.g. removal of NTBs and greater facilitation of trade; fostering of regional value chains to boost movement of goods/services accross borders etc.

Milestones:

Targets setDescription 2010 2020Overall strategic goals 1. Increase of GDP PPP per cap relative to the EU (% of EU 27 GDP PPP p/c avg) 38.4 45.92. Growth of Total Trade in Goods and Services (in EUR million) 89,884 212,5203. Reduction of Trade Deficit /Improvement of Trade Balance -14.1 -11.6Integrated growth 4. Growth of intra-regional trade in goods (in million EUR) 12,507 42,1205. Growth of Overall FDI Inflows (in current EUR million) 3,334 7,527Smart Growth 6. Growth of GDP per Person Employed (in EUR) 18,371 24,462Sustainable Growth 7. Growth of enterprise creation 30,107 36,1008. Growth of Exports of Goods and Services per capita (in EUR) 1,844 4,221Inclusive Growth 9. Growth of Overall Employment Rate (per cent of 15+) 40.2 45.210. Increase Population With Tertiary Education Within the Regional Workforce 1.7 mil. 2 millionGovernance for Growth 11. Increase Government Effectiveness (as measured by WBI indicator) 2.33 2.80

Milestones

April 2012: SEEIC sets-up a Task Force to look into targets

July - Sep 2012: SEE Task Force meets to develop targets

October 2012: SEEIC approves targets

November2012: SEE Ministers endorse targets

November 2011: SEE Vision adopted by the Ministers

Dec 12 – Nov 13:Strategy & Action plan development & governance proposal

2011

2012

2013

November 2013: SEE Ministers endorse strategy and governance mechanism

SEE 2020 Development Process

A distributed approach:1. Divest development of SEE 2020 to regional structures that:

– Are able to play a leading role within each pillar– Are functionally aligned with SEE 2020– Have capacity to work on development and can build capacity for

implementation– Have, or are willing to put in place adequate governance mechanisms

2. Coordinate development of joint objectives, actions and indicators at the regional level

3. Verify through national administrations (shaping governance)4. Coordinate at RCC level

De-centralized dev’t & implementation

pillar: integrated

growth

pillar: smart

growth

pillar: sustainable growth

pillar: inclusive growth

pillar: governanc

e

SEE 2020

RCCSEECP

SEEIC CEFTA

JHA Strat

EDIF

R&D Strat

RENA

ECS

Social Agenda

ERI SEE

Parliament

e-SEE

SEETO

Integrated growth:Targets and priority actions

a. Removing trade distortive non-tariff barriers and facilitating cross-border movement of goods in a timely fashion;

b. Undertaking concerted efforts for the liberalisation of trade in services, under the auspices of CEFTA;

c. Creating a regional strategy for investment promotion that builds on the work that has already been conducted by the regional working groups under the auspices of the Investment Compact and the SEEIC;

d. Enforcing laws and regulations to protect intellectual property; e. Supporting the work of all CEFTA bodies and structures to fulfill their respective

mandates; and f. Developing a single regional capital market.

1. INCREASE INTRA-REGIONAL TRADE IN GOODS BY MORE THAN 230% 2. INCREASE OVERALL FDI INFLOWS TO THE REGION BY AT LEAST 120%

Main regional platforms:• RCC/SEE Investment

Committee• CEFTA

Main partners:• OECD• IFC• Regional expert networks

National counterparts:• Ministries and Agencies in

charge of trade and investment

Integrated growth:Main stakeholders

• Investment Promotion– Re-branding the image of SEE so as to leverage the region

globally and build a perception of an ideal business location.

• Investment Policy • For reforms/ initiatives in institutional, legal and regulatory

frameworks that create and improve an enabling environment for investment

Integrated growth: Investment Dimension

Common Regional Investment Promotion ToolsWhat national IPAs promote:•Competitive location •Competitive workforce•Industrial heritage•Friendly business environment•Fiscal incentives•Labor incentives•Financial incentives•Investment facilitation assistance•National treatment•FTAs, double taxation agreements, bilateral investment protection agreements

Similarities:• Industrial compatibilities• Infrastructure, physical and other

linkages• Similar challenges and issues

Investment Promotion Tools

• What investors need to see in the Region:– Openness to foreign investment– Right to private ownership and establishment – Full protection of property rights– Liberalized foreign exchange markets– Conducive earnings repatriation conditions– Stable, transparent and predictable regulatory framework– Simplification of investment establishment procedures – National treatment status– Right to national and international impartial arbitration in the event of a dispute with government

The Roadmap to Regional Investment Promotion

Pilots

Agreement on investmentpromotion > review and upgrade

Regional one-stop-shop

Regional exhibitions, visits to the region to seethe value chain

Joint actions to improvethe image of the region,

low profile in the beginning

Checklist for FDI indicators(OECD)

Joint promotion activities

Regional investment promotion

Example„Scandinavian tourist board“1 office covering more than

1 organisation

Key Success Factors• Strategic view – importance of trade and investments in strengthening regional

cooperation/partnerships• Parties in the context of their economic development, regional cooperation

and accession to the EU• Donors in the context of the impact of trade on promoting economic

development in the Region • Coordination – efficient coordination required:

• among and within respective Parties administrations• between the Parties and the Secretariat to execute action• between the Parties, the Secretariat and international partners to seek for

synergies and prevent overlapping of efforts• Sustainability – ensuring sustainability of the process as one of the

prerequisites to success

Challenges

• Agreement to interlink and improve national policies with regional goals and achieving regional goals in line with national priorities

• Putting together and rolling out a programme for regional investment promotion strategy, policies, and identifying priority cooperation sectors for joint promotion

• Financial resources: investment promotion is an expensive exercise

• Human capital resources• Competition

Overcoming the Challenges: Need for Regional Cooperation

Competition

“COOPETITION”

Cooperation

Core partners: RCC/SEEIC, IPAs, Business and Donor Community, Int’l organizations, Sub-regional initiatives, Economic Diplomacy Network

• Focused and intensive investment promotion campaigns for SEE Partners at national and supranational/regional levels

Assets

• Legal base – CEFTA Agreement• Commitment – SEE 2020• Platform – RCC Secretariat / SEEIC• Agreement and expertise – Western Balkans

administrations and regional partners

Dragana DjuricaDragana DjuricaSouth East Europe Investment CommitteeSouth East Europe Investment Committeee: dragana.djurica@rcc.inte: dragana.djurica@rcc.intwww.seeic.rcc.intwww.seeic.rcc.int