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Explore OECD development efforts and economic outlook, focusing on work and well-being policies in countries like Romania. Learn about growth, trade, investment, and current account trends in emerging economies. Gain insights into FDI patterns and social indicators. Find out how regional dynamics and international partnerships shape economic development.
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Promoting work and well being: an OECD Development Centre Economic Outlook 23 June 2008 Bucharest Javier Santiso Director & Chief Development Economist, OECD Development Centre
A platform for OECD & developing country dialogue DEV OECD members 2008 - 23 members Non-OECD members Israel Brazil Romania Vietnam Chile South Africa India Thailand Egypt
An OECD Development Centre Economic Outlook BSEC-CA • The OECD BSEC-CA Economic Outlook • A cross-country comparative analysis of macroeconomic and policy developments of the BSEC-CA region, involving 12 BSEC and 5 CA countries • The first such report dedicated to a cross-cutting policy issue: Work and Well-Being • Further OECD work on Romania: • Reform Effort Support – Sigma – 2001-2008 • Education Policies for Students at Risk and those with Disabilities in South Eastern Europe- EDU - 2006 • Investment Policy Review for Romania – DAF – 2005 • Enterprise Policy Performance Assessment Romania – DAF - 2005 • Reviews of National Policies for Education Romania - EDU - 2003 • Romania -- Economic Assessment – ECO - 2002
Strong & sustained overall growth Growth • GROWTH: • Over 2001-06, average growth rate for the 11 CIS countries was around 8 per cent, comparing favourably with Asian economies. • Substantial improvements in productivity have been the driving force behind this strong growth. • TRADE: • TheEuropean Union is the main trade partner for the region, accounting for over half of all trade for the six non-CIS countries. • Russia is the main intra-regional trading partner,
Low & Lower-middle income countries L-LM • Inflationary pressures are increasing in a number of Low- and Lower-middle-income BSEC countries. The main drivers are high import prices, particularly energy, and increasing consumer demand boosted by remittances. • Growth is projected to slow somewhat from 10.6 per cent to 9.2 per cent in 2008. Source: OECD Development Centre / IMF
Upper Middle & High-income countries UM-H • Widening current account deficits across these countries underline an increasing exposure to international shocks. • Strong currency appreciation and import growth led to larger trade deficits. Import prices, particularly tied to energy and import demand, are also rising. Source: OECD Development Centre / IMF
Boom times for oil exporters Central Asia • Regional growth slowed slightly in 2007 to 8.6 per cent, with 7.7 per cent forecast for 2008, mainly because of decelerating Kazakh growth. • Inflation is on the rise, mainly due to high energy prices, booming domestic demand and rapid accumulation of forex reserves. Source: OECD Development Centre / IMF
Growing fast, yet still oil-focused Investment • FDI in the countries of the south Caucasus and Central Asia has been driven by the availability of oil and gas. • Privatizations in South East Europe have boosted FDI figures in those countries. • Efficiency-seeking and market- seeking FDI (mainly in telecommunication and banking) has been important in non-oil producing countries. • The entry of Romania and Bulgaria into EU have been strong drivers of investment for those countries. • Outward FDI from the region has also increased, thanks to dynamic MNCs mainly from Russia (78% of total). Source: OECD Development Centre / UNCTAD WIR
Increasing access to funding Pub. finance Source: OECD Development Centre / IMF
A heavy social cost: death rates in BSEC-CA countries Social indic. Source: OECD Development Centre / IMF
Specialisation in BSEC-CA countries Exports • No BSEC-CA countries have any form of specialisation in exports of food and animals (SITC 0), chemical products (SITC 5) or machinery and transport products (SITC 7) Source: OECD Development Centre / Comtrade, 2008
Romania in perspective Focus • Romania • Romania was the second largest FDI recipient in both South Europe and the CIS. This is essentially the result of privatization. • Very low labour costs coupled with proximity to the EU market contribute to the strong attraction of Romania for FDI. Nevertheless, higher value-added sectors are also attracting strong investment. • Romania needs to comply with E.C rules and regulations on judicial independence, and structural transparency and accountability reforms • BSEC-CA • 2006 saw a dramatic surge in FDI to the BSEC-CA reegion, raching USD 90 billion • Inflows rose in almost all countries, driven by several factors. FDI to UMH-BSEC countries more than doubled in 2006 when it reached USD 76 billion. • Inflows rose in almost all countries, driven by several factors. FDI to UMH-BSEC countries more than doubled in 2006 when it reached USD76billion. • The principle drivers were the forthcoming accession of Bulgaria and Romania to the European Union, the continuation of the privatization process and new opportunities in extractive industries, especially in Russia. • Greece and Turkey recorded their highest-ever FDI inflows, owing to large takeover deals in the financial sector and telecommunication sector (OECD, 2007a).
Looming inflation risks on the horizon Outlook • The entire BSEC-CA region faces slower growth as a result of the U.S. and Western European downturn. • Inflationary pressures are increasing with high import prices, particularly energy, and increasing consumer demand boosted by remittances. • The poor are particularly vulnerable people to the effects of higher food and energy prices. • BSEC-CA economies will continue to prosper, but challenges are rising
Promoting work and well being: an OECD Development Centre Economic Outlook 23 June 2008 Bucharest Javier Santiso Director & Chief Development Economist, OECD Development Centre