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VOJVODINA in the Serbian economic space Valentina Ivanic, director Centre for Strategic Economic Studies “Vojvodina-CES

VOJVODINA in the Serbian economic space Valentina Ivanic, director Centre for Strategic Economic Studies “Vojvodina-CESS” . Hungarian Regional Science Association 7 th Annual Meeting Cross border and transnational cooperation Subotica, 12-13 November, 2009. CONTENT S.

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VOJVODINA in the Serbian economic space Valentina Ivanic, director Centre for Strategic Economic Studies “Vojvodina-CES

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  1. VOJVODINA in the Serbian economic spaceValentina Ivanic, directorCentre for Strategic Economic Studies“Vojvodina-CESS” Hungarian Regional Science Association 7th Annual Meeting Cross border and transnational cooperation Subotica, 12-13 November, 2009

  2. CONTENTS • APVojvodina – in the Serbian economic space • AP Vojvodina – How we can improve regional competitiveness: inherited and created factors • Types of regional instruments and policies: macro and micro competitiveness • AP Vojvodina – structure of growth, RCA, external trade

  3. SERBIA and AP VOJVODINA Vojvodina Teritory: 21.500 km2 (24.3% of Serbia) Population: 2.031.992 (27.1% of Serbia population) Rate of population that speaks English in the total population amounts 42,3% which is above the average in most CEE countries (Bulgaria 14%, Romania 16%, Poland 22%). Global Competitiveness Index (GCI) in 2009-2010, ranked Serbia on 93 place. GCI consists of three groups of variables: technology, public institutions, macroeconomic frame. In Business Competitiveness Index (BCI)in 2007, Serbia was ranked 91th place among 127 countries.

  4. SUMMARY OF THE FORECAST FOR SERBIA 1) 2008 partly estimated. 2) Total employment excluding agricultural producers. 3) Unemployed persons as percentage of unemployed persons plus total employment. 4) Unemployed persons as percentage of unemployed persons plus total employment excluding agricultural producers. Source: Economic Forecatst for Serbia 2009 and 2010, IHS / Economica/Centre for Strategic Economic Studies „Vojvodina CESS“

  5. ECONOMIC GROWTH - FORECASTS% CHANGE OVER PREVIOUS YEAR Source: Economic Forecatst for Serbia 2009 and 2010, IHS / Economica/Centre for Strategic Economic Studies „Vojvodina CESS“

  6. SERBIA – REAL GDP GROWTH Source: Economic Forecatst for Serbia 2009 and 2010, IHS / Economica/Centre for Strategic Economic Studies „Vojvodina CESS“

  7. SERBIA – GROWTH STRUCTURE • GDP of Serbia showed a trend of growth in the period 2000-2008. • Calculated by constant prices from 2002. it grew by an average rate of 5.4% annually, which is faster if compared to global economy growth rate of 3.94% . Structure of DP of Vojvodina, 2004 Structure of GDP, Serbia, 2007*

  8. DP STRUCTURE OF VOJVODINA, BY ACTIVITIES TRADABLE SECTORS 55.7 % UNTRADABLE SECTORS 44.3% Health and social work: 0.2% Other: 0.2% Real estate: 2.7% Transport, storage and communication: 7.8% Agriculture: 22.4% Hotels and restaurants: 1.4% Fishing: 0.1% Wholesale and retail, repair: 17.8% Construction: 4.5% Electricity, gas and water supply: 4.4% Manufacturing: 33.2% Mining and qarrying: 5.3%

  9. THE DEGREE OF OPENNESS OF THE SERBIAN ECONOMY

  10. PYRAMID OF COMPETITIVENESS TYPE OF COMPETITIVENESS TYPE OF INVESTMENT TYPE OF POLICIES Efficiency seeking type (patents, brands, human capital) Innovation based competitiveness (Business sophistication, innovation) Market seeking type (horizontal FDI) (“green field” , telecom, energy ... ) Investment based competetiveness Basic elements for competitiveness building Serbia is in the second stage (Commodity market and labour market efficiency, financial market sophistication, market size, higher education and training, ...) Asset seeking type - vertical FDI (oil, natural gas, cheap labour...) Resource based competetiveness (Infrastructure, institutions, macroeconomic stability, health and primary education)

  11. PHASES OF ECONOMIC DEVELOPMENT – POLICIES AND INSTRUMENTS I N S T R U M E N T S Late 1990s • Networking and partnerships • Improving labour force quality • Strategies for improving competitiveness of business climate and stimulating development • Investments in soft infrastructure • Public-private partnerships • Targeted investment attracting 1980-1990 • Business incubators, • Top-down cluster initiatives • Support for business start up • Direct payments to certain industries • Trainings for SMEs • Attracting investments aimed at specific sectors or geographical areas 1960-1980 • Employing cheap labour force • Subsidies for investments in hard infrastructure • Investments in hard infrastructure • Attracting mobile production investments from external local areas • Attracting FDIs 1960-1980 1980-1990 Late 1990s

  12. SPATIAL FACTORS - IPA CBC – VOJVODINA Until 2013, Vojvodina can receive from 4.5 – 6 mil € annualy from IPA -Cross Border Cooperation IPA CBC Serbia – Croatia– Period 2007-2009 Total funds: ≈ 3 mil. EUR IPA CBC Serbia - Hungary Period 2007-2009. Total funds: ≈6,1 mil. EUR IPA CBC Romania-Serbia Period 2007-2009. Total funds : ≈7,2 mil EUR IPA CBC Serbia – BiH Period: 2007-2009. Total funds: ≈3,3 mil EUR

  13. MEASURES OF IRDP AND STAGES OF DEVELOPMENT ASC - Agricultural Land Site Consolidation Scheme EEP - Energy Efficiency Programme WSP - Water Supply Pilot Project NTD - Nautical Tourism Development Programme • I STAGE – FACTOR-DRIVEN ECONOMY • Economies primarily compete on low prices and natural resources • Enterprises are mainly involved in primary production and occupy a small part of the value chain • -The economy is particularly susceptible to fluctuations in the world economic cycle, commodity prices, and exchange rates • - GDP per capita: under 2000 $ IQS - Integrated Qualification Scheme BSC - Business Standardisation and Sertification APF - Agricultural Promotion Fund BPF - Business Export promotion Fund LSC - Labour Cost Subvention Scheme - E - Vojvodina BNT- New Technologies Transfer Scheme - II STAGE – INVESTMENT-DRIVEN ECONOMY - Bigger share of high and secondary educated working force - More efficient production processes and increase product quality - Absorption of new technologies - Opened market - GDP per capita between: 3000-9000 $ III STAGE – INNOVATION-DRIVEN ECONOMY - Innovation supporting - Innovative products on market - High price of products - High standard of living - Well connected business sector - GDP per capita: over 17000 $ BBI - Building Business Incubators in Vojvodine VIP - Vojvodina Investment Promotion Fund CESS - Centre for Economic Strategic Studies

  14. COMPETITIVENESS ON THE MICRO LEVEL – CREATED FACTORS • Barriers • Learning about foreign environment • Doing market analyses abroad • Adaption of products to foreign markets • Accesing information abour other markets • Lack of information • Knowledge and experience in international markets • Research and education policies • Barriers • Higher business and financial risk • Identifying foreign business opportunities • Enteroreneurship abilities • Managerial abilities Strategic costs Knowledge costs • Measures*: • VIP • IQS • BBI • Guarantee fund • Measures*: • CESS • BSC • APF • BPF • BBI • Chamber of commerce Kinetic costs • Barriers: • Travel expenses • Establishing foreign distribution and marketing networks • Distance of foreign markets • National competition policies • Telecomunications infrastructure • Barriers: • Purchasing legal consulting services • Translation of documents • Regulatory requirements on product standards • Legislative and regulatory frameworks • Measures*: • VIP • BPF • CESS • E-Vojvodina • Measures*: • VIP • BBI • BSC *Measures defined in Integrated Regional Development Plan (IRDP), except Guarantee Fund and Chamber of Commerce

  15. SHARE OF AP VOJVODINA IN INDUSTRIAL PRODUCTION OF R SERBIA Fields of industry with smallest share of AP Vojvodina in Serbia

  16. SHARE OF AP VOJVODINA IN INDUSTRIAL PRODUCTION OF R SERBIA Fields of industry with biggest share of AP Vojvodina in Serbia

  17. IMPORT BY INDUSTRY, Serbia 2008. Medium Low tech (3329.6 mil EUR) Coal and nuclear fuels, rubber and plastics, base metals and metal products, other non-metal products Medium High tech (6003.1 mil.EUR) Chemical products, machines, electrical devices, motor vehicles and other transporting vehicles High Tech (541.9 mil.EUR) Office supplies and computers, medical and optical instruments, clocks and watches. Low Tech (2620.5 mil.EUR) Production of food and beverages, tobacco, textile, clothes, leather and footwear, wood and wooden products, cellulose and paper, printing, furniture

  18. EXPORT BY INDUSTRY, Serbia, 2008. Direction of restructuring in Western Balkan countries Medium Low tech (2509.3 mil EUR) Coal and nuclear fuels, rubber and plastics, base metals and metal products, other non-metal products Medium High tech (1946 mil.EUR) Chemical products, machines, electrical devices, motor vehicles and other transporting vehicles High Tech (204.7 mil.EUR) Office supplies and computers, medical and optical instruments, clocks and watches. Low Tech (2341.3 mil.EUR) Production of food and beverages, tobacco, textile, clothes, leather and footwear, wood and wooden products, cellulose and paper, printing, furniture

  19. REVEALED COMPARATIVE ADVANTAGE OF THE APV RCA of the APV in trade with the EU (1990, 1998, 2008)

  20. REVEALED COMPARATIVE ADVANTAGE OF THE APV RCA of the APV in trade with the CEFTA countries (1990, 1998, 2008)

  21. CONCENTRATION INDICES Concentration index CR 10 of import and export of APV with world Concentration index CR 10 of import and export of APV with EU • The smaller the country is the specialization index of export should be higher and specialization index of import should be smaller. • Specialization indices of export of APVojvodina are in all observed years smaller then the specialization indices of import of APVojvodina which indicates that Vojvodina does not have export strategy . • Export of AP Vojvodina in trade with EU is more concentrate than import and import from other countries is more concentrate than from EU which is result of import structure (raw material, oil, gas)

  22. Specialization indices of export and import of AP Vojvodina SPECIALIZATION INDEX The smaller the country is the specialization index of export should be higher and specialization index of import should be smaller.

  23. COVERAGE OF IMPORTS BY EXPORTS OF AP VOJVODINA, BY SMTK SECTORS

  24. GROSS VALUE ADDED EMPLOYMENT Share of GVA of SME'S in Vojvodina in the total GVA of Vojvodina (2007) Share of employees in SME'S of Vojvodina in the total number of employees in Vojvodina (2007) VOJVODINA’S SMEs 64,4% Large Large SME’s SME’s In EU, share of GVA of SME'S in the total GVA was 57.6% In EU, SME sector employs 67.2 % of total employees

  25. STRUCTURE OF COMPANIES IN AP VOJVODINA

  26. APV - INVESTMENTS • The share of investments into construction works decreased in the APV in the period from 2000 to 2007 and the share intended for purchasing of equipment increased since 2001. • Investments into equipment in 2004 were at the level above 50%, which means that economy of the AP Vojvodina passed the first (initial) phase of development Beginning of the second phase of development

  27. Projection of number of inhabitants by assumption of constant fertility PROJECTION OF NUMBER OF INHABITANTS By 2002. census R. Serbia had population of 7.498.001, of what 5.466.009 lived in Central Serbia, and 2.031.992 in AP Vojvodina. In year 2008. number of inhabitants has reduces in Vojvodina (1.979.389) as well in Central Serbia (5.370.833), that means that number of inhabitants also reduced in Republic of Serbia (7.350.222)

  28. Projection of contingent of working age population by assumption of constant fertility CONTINGENT OF WORKING AGE POPULATION Contingent of working age population consists of men between 15 and 65 years old and women between 15 and 59 years. By the 2002 census. in Vojvodina was 1320694 working-age inhabitants, while in Central Serbia this category consisted of 3476003 people, that means that at the level of Serbia there was 4796697 of working age population. According to the state in year 2008., that number of working age population in Vojvodina has dropped to 1298487, in Central Serbia on 3451800, Which means that number of working-age population in Serbia has decreased for 46,410 and is 4750287.

  29. HUMAN RESOURCES Employment structure in enterprises, institutions and organisations, by sectors in Vojvodina in 2008 Tertiary 54.7% Primary 8.3% Secondary 37% In September 2009, primary sector employed5.7%, secondary 25%, and tertiary sector employed 69.3%of total number of employees in EU27* Source: Eurostat, National Accounts, annual average

  30. SWOT Analysis and Policy recommendations Source:Competitivenes of Vojvodina economy drafted by Vojvodina-CESS (unpublished).

  31. THANK YOU FOR YOUR ATTENTION Centre for Strategic Economic Studies “Vojvodina-CESS” Mite Ružića 2 Phone: +381(21) 528-755 office@vojvodina-cess.org www.vojvodina-cess.org

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