Contributions of Regional Programmes to National Competitiveness

1. Contributions of Regional Programmes to National Competitiveness Investment Compact for South East Europe 31 March 2011 November 2010

2. Structure of the Investment Compact and SEEIC SEE Investment Committee Co-chairs: OECD Country (Austria) + SEE Country (Serbia) + OECD Secretariat (DAF/PSD) OECD donor countries SEE country economic teams International organisations Private sector Regional Cooperation Council Investment Compact for South East Europe Analytical support Project management Policy Dialogue: Regional Working Groups Human Capital Investment Promotion Regulatory Reform Trade Assessment: Investment Reform Index SME Policy Index Strategy: Sector-specific Sources of Competitiveness Assistance and training for implementation Regional Competitiveness Initiative

3. Three main regional activities

4. What does the Investment Compact / SEEIC do? I. Policy DialogueRegional Working Groups I. Policy DialogueRegional Working Groups Sharing of best practices at regional level. Mechanism for regional peer-based reviews. Identified synergies for regional collaboration.

5. What does the Investment Compact / SEEIC do? II. Policy assessment: Investment Reform Index 2010 IRI – SEE average score 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 5

6. Example of policy assessment (from IRI 2010) 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 approvepermits) • Weakaftercare in BiH, BG, MNE and RO • Legalframeworks for PPPs to bedeveloped • Need to improve IP rightsenforcement Note: (1) Dimensions on SME policy, which was derived from the SME policy index and on infrastructure were not scored

7. What does the Investment Compact / SEEIC do? III. Sectoral Policy Strategy: Sector Specific Sources of Competitiveness Results Developed 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

8. What does the Investment Compact / SEEIC do? 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 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 8

9. Contributions of effectiveregional programmes to national competitiveness • Focus effect: Provide a platform and consensus on high impact country project sthrough voluntary comparative assessment • Multiplier effect: Spread results and knowledge from successful country projects to regional partners • Mirror effect: Motivate economies to introduce better policies by comparing progress highlighting best practice examples • Awareness effect: Strengthen awareness and adoption of latest international policy standards and instruments • Coordination effect: Avoid duplication of country initiatives and get better return on investment from donor contributions • Image effect: Send strong signal to private sector of joint government commitment to make markets more attractive • Regional issue effect: Address policies challenges that can only be tackled through regional collaboration (eg; CEFTA NTBs)

10. Somelessonslearnedfromregional programmes • 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

11. 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)

12. Anthony O’Sullivan Head of Division Private Sector Development Organisation for Economic Co-operation and Development (OECD) Anthony.osullivan@oecd.org www.investmentcompact.org