Economic Reform Programme - oecd.org · The ERP Diagnostic Tool identifies key structural obstacles that affect an economys ’ competitiveness and inclusive growth, offering two

Economic Reform Programme

DIAGNOSTIC TOOL For Identifying Key Constraints to Competitiveness

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This paper is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and the arguments employed herein do not necessarily reflect the official views of OECD member countries.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

This document has been produced with the financial assistance of the European Union. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the European Union.

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Foreword

Structural reforms are fundamental for the six economies of South East Europe (SEE) – Albania, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia, Kosovo*, Montenegro, and Serbia – in their transition to becoming fully-functional market economies. They are also an indispensable pre-requisite for joining the European Union. To guide the accession process, SEE economies are required to prepare Economic Reform Programmes (ERPs), which outline economies’ medium-term macroeconomic and fiscal policy frameworks and structural reform agendas. The ERPs are reviewed at the highest instances of the EU and discussed at the annual Economic and Financial Dialogue between the EU and the Western Balkans and Turkey. Once agreed, they serve as roadmaps for governments to prioritise and implement needed economic reforms.

To support Western Balkan governments in this novel economic governance exercise, the European Commission mandated the OECD SEE regional programme to provide policy advice and capacity building to SEE governments in the ERP preparation and co-ordination process. Building upon its unique expertise in supporting economies in the region in the design and implementation of reforms in favour of growth, investment and employment, the OECD SEE regional programme engages in a highly collaborative policy dialogue with SEE government officials and stakeholders from the region to: 1) analyse the main constraints to growth and competitiveness; 2) identify policy responses and prioritise structural reforms; and 3) monitor progress in the ERP implementation.

The resulting ERP tool box aims to provide line ministries with a practical instrument that will help strengthen institutional capacities and boost inter-governmental transparency. It consists of three different tools, which can be used separately, or optimally, all together:

1. The ERP Diagnostic Tool identifies key structural obstacles that affect an economy’s competitiveness and inclusive growth, offering two customised methodologies to analyse the state of play and to define constraints per policy area.

2. The ERP Prioritisation Tool helps authorities to select and prioritise reform measures for their annual ERPs using a three-step approach: By offering; 1) a set of screening questions; 2) an evaluation of proposed measures; and 3) a holistic review vis-à-vis all pre-selected reforms.

3. The ERP Monitoring Tool provides guidelines and examples on how to track progress in the ERP implementation over time as well as to measure immediate outputs and the outcome of reforms.

To support the effective implementation of the ERP tool box, the OECD has provided hands-on assistance to government authorities in preparing their annual ERPs, and in particular: 1) supporting governments in setting-up the ERP preparation process and building capacities of line ministries involved in the ERP; 2) providing extended ad-hoc analytical support on issues of regional interest as well as on specific requests from each economy, both in terms of analytical reports and policy workshops; and 3) reviewing the final ERP documents and providing its own assessment to the EC. The ERP tools were pilot-tested in selected SEE economies in 2016 and 2017 and are being constantly updated to reflect feedback from its users to align with changes in the ERP Guidance Note and process.

* This designation is without prejudice to positions on status and is in line with United Nations Security Council Resolution 1244/99 and the Advisory Opinion of the International Court of Justice on Kosovo’s declaration of independence. Hereafter referred to as Kosovo.

FOREWORD


Governments from the SEE regions and the EC have recognised the usefulness and relevance of these tools and the ERP exercise. They have contributed to better inter-ministerial co-ordination and to reinforcing economic governance structures across SEE economies.

Box. The ERP annual cycle and the role of the OECD

Since 2015 SEE economies have been developing annual ERPs. The ERP exercise derived from the European Semester and form part of the EU’s multilateral surveillance and economic policy co-ordination procedures. The ERPs are centrally co-ordinated within each economy and endorsed at the highest political level. An official ERP Co-ordinator is appointed within the government who steers the process and ensures a widespread consensus. The work of the ERP Co-ordinator is typically supported by technical co-ordinators within each line ministry. Together they form an ERP Working Group that ensures broad ownership of the exercise and a whole-of-government approach. As one of the key institutions involved in this process, the OECD provides substantive support to the ERP Working Groups throughout the ERP annual cycle. Key milestones in the ERP annual cycle include:

Guidance for the Economic Reform Programmes (April): The European Commission (EC) issues the updated Guidance for the ERPs, providing detailed guidelines on the structure and content of the ERP.

Joint Conclusions of the Economic and Financial Dialogue (JCEFD) between the European Union (EU) and the Western Balkans and Turkey (May): Representatives of the EU Member States, the Western Balkans and Turkey, the EC and the European Central Bank (ECB), as well as representatives of the central banks of the Western Balkans and Turkey meet for their annual economic policy dialogue, to present a set of policy guidelines to support economies’ efforts towards fulfilling the Copenhagen economic criteria. This policy guidance represents a cornerstone for SEE economies’ subsequent ERPs.

Regional Meeting of the ERP Co-ordinators (May): The OECD and the EC jointly organise the yearly Regional Meeting of the ERP Co-ordinators to discuss the ERP Guidance Note and the OECD expertise to help prepare the ERPs. Meetings are attended by high-level officials from the Western Balkans and Turkey and present the opportunity to discuss lessons learnt and next steps in the ERP preparation, and present economy-specific work plans and support.

Commission’s Overview and Country Assessments (June): The EC provides an assessment of the previous year’s ERPs, taking stock of the implementation of the country-specific policy guidance. Together with the JCEFD, this document represents the basis for the following ERP cycle.

In-country kick-off events (June–July): In-country kick-off events take place in the SEE capitals to align all stakeholders involved in the ERP preparation process by setting a clear timeframe and clarifying responsibilities of line ministries. The OECD also takes this opportunity to discuss pending challenges linked to the previous year’s exercise and key milestones to be achieved in the new cycle.

Policy seminars and capacity-building events (September–October): Upon ERP Co-ordinators’ request, the OECD holds in-country policy seminars and capacity building events with line ministries to discuss specific structural challenges and potential reform priorities for each economy, suggesting ways to further improve them for the purposes of the ERP. For example, in the 2016 and 2017 ERP cycles, the OECD organised more than 30 seminars, involving over 800 participants collectively.

OECD review of the first draft ERP (October–November): After the submission of the first draft ERP, the OECD reviews and provides written feedback on the draft diagnostics and reform measures. To do so, key reference sources consulted include the OECD SEE regional programme publications , as well as other international analyses (e.g. from the European Commission, World Bank, EBRD) and international experts’ feedback.

FOREWORD


FOREWORD

Box. The ERP annual cycle and the role of the OECD

Stakeholder consultations (November–December): ERP Co-ordinators undertake in-country consultations to receive feedback on the diagnostics and reform measures from relevant stakeholders, including the private sector, NGOs and international organisations.

OECD review of the second draft ERP (December): After the submission of the second draft ERP, the OECD reviews and provides feedback on the updated versions of the draft diagnostics and reform measures.

Submission of the final ERP to the European Commission and the OECD (31 January): Finally, ERP Co-ordinators submit the final ERP to the European Commission and the OECD.

OECD involvement in the annual ERP cycle

May: ERP launch event in Brussels & bilateral meetings.

November - December: Stakehol-ders consultations in the countries.

December: OECD reviews 2nd ERP drafts.

October - November: OECD reviews 1st ERP drafts.

31 January: Countries submit final ERP 2017-19 to the EC.

September - November: Policy seminars and capacity building events.

February - April: ERP assessment and new guidelines.

June - July: Kick-off events and seminars in the capitals.

August- September:

Review of relevant

sources and documents to provide ERP

support.

In addition, the OECD SEE regional programme provides analytical support on topics of regional or economy-specific interest when setting their structural reform agendas. For example, it has provided policy makers with a comprehensive growth diagnostic and a regional study on special economic zones. It examines their relevance as a policy tool for sustainable investment in the region and raises questions on potential deadweight effects, foregone revenues and competition distortion.

(cont.)



ACKNOWLEDGEMENTS

Acknowledgements

The ERP Tools have been specifically developed to support governments from the Western Balkans and Turkey to prepare their annual Economic Reform Programmes (ERP). They consist of three components to be applied in the different stages of the preparation process: the (1) ERP Diagnostic Tool to identify obstacles to competitiveness and growth; the (2) ERP Prioritisation Tool to select the most credible and growth-enhancing reform measures and the (3) ERP Monitoring Tool to track progress in the reform implementation.

The work was led by Anita Richter, Project Manager, Haris Avdić Pejićić, Alessandro Kandiah, Marijana Petrović and Filip Stefanović, Policy Analysts in the OECD South East Europe regional programme under the guidance of Marzena Kisielewska, Head of Division. The tools also benefited from significant contributions from Marija Kuzmanović (ERP Diagnostic Tool) and Janez ŠuŠterŠič (ERP Prioritisation Tool, ERP Monitoring Tool). Max Bulakovskiy, Sandra Hannig, Katarina Djermanovic-Largenton, Umur Gökçe, Jovana Pavlović, Patrik Pruzinsky and Juliane Stolle, OECD South East Europe regional programme, provided useful input. Editorial and technical support was provided by Sally Hinchcliffe and Pierre-Yves Perez-Queyroi.

The project also benefitted from inputs and suggestions from the European Commission, the ERP Co-ordinators from the region and their teams, in particular: Bernard Brunet, Hillen Francke and Gabriela Negut, European Commission (DG NEAR); Ms Adela Karapici, Ministry of Economic Development, Tourism, Transport and Entrepreneurship (Albania); Mr Amil Kamenica, Office of the Prime Minister, Council of Ministers (Bosnia and Herzegovina); Mr Qemajl Marmullakaj, Office of the Prime Minister (Kosovo); Mr Andrija Aleksoski, Ministry of Finance (The Former Yugoslav Republic of Macedonia); Ms Nina Vujosević, Office of the Prime Minister (Montenegro); and Ms Jasna Atanasijević, Public Policy Secretariat (Serbia).



Table of contents

Introduction ............................................................................................................................................................................................................. 11

Chapter 1 Overall diagnostic ...................................................................................................................................................................... 13Objective ....................................................................................................................................................................................................... 15

Key Questions to be Answered ................................................................................................................................................... 15Step-by-step Approach .................................................................................................................................................................... 15

Methodologies for identifying obstacles to competitiveness and growth ............................................ 17

Chapter 2 Policy area diagnostic ............................................................................................................................................................. 19Objective ....................................................................................................................................................................................................... 21

Key Questions to be Answered ................................................................................................................................................... 21Step-by-step Approach .................................................................................................................................................................... 21

Energy and transport market reform .................................................................................................................................... 25Sectoral Development ........................................................................................................................................................................ 33Business environment and reduction of the informal economy .................................................................. 45Trade-related reforms ......................................................................................................................................................................... 51Research, development and innovation (RDI) and Digital Economy ......................................................... 59Education and skills ............................................................................................................................................................................. 67Employment and labour market ................................................................................................................................................ 73Social inclusion, poverty reduction and equal opportunities ......................................................................... 79

TABLE OF CONTENTS



INTRODUCTION

IntroductionThe Diagnostic Tool was developed by the OECD South East Europe (SEE) regional

programme with the purpose of supporting governments of SEE in identifying the key structural challenges that hinder competitiveness and inclusive growth. The tool could serve as the cornerstone of the structural reform chapter of the Economic Reform Programme (ERP), from which all structural reform proposals should logically stem.

The tool offers a systematic approach for identifying and describing structural challenges to growth. As they address both economy-wide and sector-specific obstacles, the tool proposes two customised methodologies: the overall diagnostic and the policy area diagnostic. Both methods are presented in a ready-to-use format with detailed descriptions, but are not necessarily economy-specific: the accessing economies from SEE (Albania, Bosnia and Herzegovina, Former Yugoslav Republic of Macedonia, Kosovo, Montenegro and Serbia) share a significant number of similar challenges, but face an array of specific obstacles at the same time. Therefore, this Diagnostic Tool provides a framework, targeting the most common and significant obstacles to growth that SEE economies address; it is neither exhaustive, nor specifically tailored upon any of them.

The tool is specifically designed to be used by government authorities in charge of co-ordinating the structural reforms of the ERP (i.e. ERP co-ordinators) as well as by the line ministries when drafting their sector analyses, adapting it to the context of the specific economy they operate in.

A. The overall diagnostic methodology sheds light on the most critical obstacles to growth for the economy in general and consists of two implementation steps:

1. Definition of high-level growth challenges: This first step serves the purpose of providing a bird’s eye view of the economy and highlighting fundamental growth challenges. It should ideally seek to provide information on the key features of an economy’s state of play, such as the structure of the economy, its productive base and current growth drivers.

2. Identification of the underlying obstacles to growth: This second step aims to zoom in on the main structural constraints identified in the previous step, by taking into account findings of existing studies that identify obstacles to growth, or selecting a methodology to conduct a new analysis.

A brief summary of key selected methodologies to identify economic constraints, analyse growth opportunities, and derive policy priorities accordingly economy-wide is presented at the end of this section.

A. The policy area diagnostic methodology focuses on the key challenges the economy faces in each policy area and explains how they affect competitiveness. It will help, in particular line ministries, in providing accurate analysis input to the ERP and linking them with reform measure proposals. It consists of three implementation steps:

1. Definition of the state of play in a given policy area: This first step should provide a general overview of the current landscape for the given policy area to be analysed, by asking for the key features of the given policy area, state-of-play vis-à-vis the government’s strategic targets and other benchmarks.

2. Identification of the underlying obstacles to growth: This second step aims to zoom in on the main constraints that impede the economic development in that specific policy area. This step should help in giving an answer to the main structural obstacles in that area.

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3. Highlighting how these obstacles impact economic competitiveness and inclusive growth: This final step puts the structural obstacles into perspective by highlighting how they affect the overall economy. It also demonstrates why the identified obstacles are the most relevant ones for that policy area. This section should give an answer on how the structural obstacles affect investment, exports, consumption, productivity or employment, and how does this impact manifest itself.

This section will also offer a set of relevant indicators, potential structural obstacles and the consequent impact on growth for all ERP policy areas, with the exception of Public Finance Management (PFM).

The set of proposed indicators for the analysis of the state of play takes into consideration their availability for the SEE region. They derive from OECD and other international sources* directly applicable to the region (e.g. Competitiveness in South East Europe: A Policy Outlook, SME Policy Index Western Balkans and Turkey) or serve as good practice examples for gauging certain aspects of the market regulation (e.g. OECD Indicators of Product Market Regulation). When a source for an envisaged indicator was not directly available, the most relevant ministry was suggested as best institution to provide a similar set of data. Overall, the indicators and the methodology outlined in the Diagnostic Tool, are not mandatory: they should serve as a guidance for national ERP co-ordinators, when selecting relevant data for the analysis of the state of play of the economy, but can be complemented or replaced, based on criteria of pertinence and availability, by best proxies available at the time of conduction of the diagnostics.

By following these steps, ERP co-ordinators, in co-operation with relevant line -ministries, can come up with a detailed analysis that will allow for a better selection of measures that will effectively tackle the economy’s main constraints.

INTRODUCTION

* Eurostat, EBRD, World Bank Development Indicators, ILO, UNCTAD, UNESCO, FAO, World Economic Forum, national statistical offices.

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Chapter 1

OVERALL DIAGNOSTICStep-by-step approach and summary of key selected methodologies



Overall diagnostic

Objective

To identify the key economy-wide structural challenges that hinder competitiveness and inclusive growth. This diagnostic is the foundation of the structural reform section of the Economic Reform Programme (ERP) from which all reform proposals should logically follow. Specifically, this methodology should help authorities when selecting and providing input for the drafting of the ERP Section 4.1 (Identification of key obstacles to competitiveness and inclusive growth).

Key questions to be answered

1. What are the high-level growth challenges (e.g. weak domestic and foreign investment, limited export capability or low levels of export sophistication)?

2. What are the key underlying causes behind these growth challenges, as derived from diagnostic analyses (e.g. weak access to finance for domestic small and medium-sized enterprises, or low quality education producing inadequate skills for the needs of the economy)?

Suggested approach

Define the high-level growth challengesProvide a bird’s eye view of the economy and highlight fundamental growth challenges.

Identify the underlying obstacles to growth/ growth challengesDetail these structural obstacles and explain how they affect competitiveness and growth.

Step-by-step approach

1. Define the high-level growth challenges

This step provides a bird’s eye view of the economy and highlights the fundamental growth challenges (e.g. the economy is not exporting enough, the economy does not innovate enough, or human capital is weak). It should demonstrate how the current economic structure and growth drivers differ from the desired outcomes as based on government development goals or strategies.

This part should seek to answer the following questions:

1. What is the overall structure of the economy? i.e. what is the share of investment and exports vs. other components of gross domestic product (GDP), what is the share of manufacturing vs. services vs. agriculture? What are the key recent trends in these indicators?

2. What does the economy produce – its main sectors, main exports and export sophistication? Which products have high development potential? What are the key recent trends in these indicators?

3. What is the investment composition and where is investment going? For example what is the share of private vs. public investment as a share of GDP, domestic vs. foreign investment and foreign direct investment (FDI) vs. portfolio? What are the key recent trends in these indicators?

1. OVERALL DIAGNOSTIC


4. What are the current growth drivers? For example, what are the growth rate of exports and investment vs. other components of GDP, or the growth of manufacturing vs. that of services?

5. How do indicators 1) to 4) compare to the government’s strategic targets? How do they compare to relevant benchmarks from other economies?

Note: benchmark economies will vary depending on the indicator under examination. They can thus include developed economies (e.g. EU15), EU28, new EU member states (EU13), fast-growing emerging markets (for example if looking at GDP growth rate figures or the range of products the economies produce) as well as regional peers (e.g. WB6). Selecting the right benchmarks is essential for the development of a sound and objective diagnostic. If needed, the OECD can assist in identifying appropriate benchmarks.

2. Identify the underlying obstacles to growth and growth challenges

This second step aims to provide a more detailed overview of the key growth challenges, zooming in on the main structural obstacles that impede the development of the economy. It should also explain how these structural constraints affect competiveness and inclusive growth.

The writing of this section consists of two steps:

1. Take stock of existing studies that identify obstacles to growth for that economy

Most economies will have at their disposal a number of studies, for example by the OECD, World Bank or the International Monetary Fund (IMF), which identify the most critical and pressing obstacles to growth and competitiveness. They can rely on those results for this section of the ERP document.

2. If a new study is needed, select the methodologies to be used for the analysis

If economies need to conduct new analyses or update old ones, proposed tables summarise the suggested methodologies. The tool for writing the ERP policy area diagnostics provides concrete examples of indicators that can be used in the diagnostic analysis, and the sources where these data can be found.

Note: this section should not necessarily highlight issues in all policy areas of the ERP document nor does it need to follow the ERP policy area structure. This part of the document should shed light on the most critical obstacles to growth.

This section should answer the following questions:

a. What are the main structural obstacles as identified in your diagnostic analysis/analyses? These could include weak access to finance for small and medium-sized enterprises (SMEs), a weak and unpredictable regulatory environment, unreliable and poorly maintained infrastructure, heavy administrative and regulatory burden on businesses, limited capacity for innovation, or poor quality of education.

Note: this section should not go deeper into the analysis of these constraints, as that analysis will be presented in the specific policy area diagnostics. For example, it is sufficient to say access to finance is a constraint without explaining that it is a constraint because of high interest rates and collateral requirements, etc. as that will be examined more closely in the policy area diagnostic.

b. How do these obstacles hinder the economy’s competitiveness and growth? What is the impact on relevant variables such as investment, exports, consumption, productivity, employment and inequality, and through what channels is this impact manifested? For example weak access to finance affects SMEs’ capacity for investment and innovation, which, in turn, limits the scope for the diversification of the domestic production and export base and the capacity of SMEs to link into global value chains.



Most economies will have at their disposal a number of studies which identify the most critical and pressing obstacles to growth and competitiveness (Step 2 in the writing of the diagnostic section as described in the diagnostic tool) and thus can rely on those results when writing this section of the Economic Reform Programme (ERP) document. However, in case some countries need to conduct new analyses or update old ones. For this reason, this tool also includes some suggested methodologies:

Table 1 below gives a brief summary of the key selected methodologies. Some of these seek to identify economic constraints, while others analyse growth opportunities and derive policy priorities accordingly. Some of the methodologies are comprehensive enough to be able to independently meet the ERP diagnostic requirements, whilst others will have to be supplemented with additional analysis.

Table 2 provides a more detailed discussion of each methodology and its relevance for the ERP document.

Methodologies for identifying obstacles to competitiveness and growth

Table 1. Methodologies

Identifying economic constraints

1 Growth diagnostic Identifies binding constraints to an economy’s economic growth.

2 Growth identification and facilitation (GIF) framework

Identifies industries with high growth potential and the constraints that hamper their development.

Investigating economic opportunities

4 Growth accounting Examines the contribution of different factors to economic growth (available capital, labour, human capital, and technology) in order to determine which factor has the highest potential to boost GDP growth

5 ITC export competitiveness assessments Identifies 1) the drivers and/or obstacles to an economy’s export competitiveness; 2) high potential export products and attractive markets for each high performing export product and 3) export opportunities for economies and regions (can be done bilaterally).

6 EXPY (export sophistication)/product space analysis

Estimates the level of technological sophistication embodied in an economy’s export portfolio.

7 Cluster analysis Examines and evaluates the health and dynamics of an economy through benchmarking clusters.

Table 2. Diagnostic methodologies

Identifying obstacles/constraints Description Advantages Disadvantages Relevance to ERP

Growth diagnostics

Identifies binding constraints to an economy’s economic growth.

• Undertakes a comprehensive economy-specific assessment of a wide set of economic indicators to identify most pressing constraints to competitiveness and growth.

• Targets and prioritises policy reforms with the highest potential impact on growth.

• Most of the data needed are available from domestic/international sources.

• Does not provide insights for specific sectors nor does it examine potential new industries (which are not diagnosed).

• Focus is only on competitiveness and growth and does not factor in social inclusion, poverty reduction and equal opportunities.

• Focuses on binding constraints to growth, so cannot provide detailed policy recommendations across all thematic areas of analysis.

Can provide insights for an overview of the main structural obstacles to competitiveness and growth at national level (i.e. economy-wide diagnostic).

Depending on the identified binding constraints, the methodology can provide insights into some of the sector-specific diagnostics in the ERP document.

Growth identification and facilitation (GIF) framework

Identifies industries with high growth potential and the constraints that hamper their development.

• Provides insights on key strategic sectors by comparing the country to others with similar factor endowments.

• Identifies key barriers preventing the development of selected industries.

• Lays out a step-by-step approach for policy makers to facilitate structural change based on the framework of New Structural Economics.

• Data can be obtained from domestic/international sources (e.g. the United Nations Comtrade Database)

• Comparing to other economies based on factor endowments does not take into account changing economic circumstances (such as new technologies or shifts in demand for goods).

• Depending on the selected sectors, the analysis may not provide a comprehensive overview of cross-sectoral/horizontal obstacles to competitiveness and growth.


Can provide insights for the sectoral development section of the ERP document i.e. what are the sectors with the greatest development potential.

Can provide some insights for the overall economy-wide diagnostic of key obstacles to competitiveness and growth.



Table 2. Diagnostic methodologies

Investigating Economic Opportunities Description Advantages Disadvantages Relevance to ERP

Growth accounting

Examines the contribution of different factors to economic growth (available capital, labour, human capital and technology) in order to determine which factor is most likely to create an increase in real gross domestic product (GDP).

• Suggests where the potential structural improvements in growth of real GDP lie.

• Required data should be available for all South East Europe (SEE) economies.

• Does not explain the underlying causes of growth. It therefore should be complemented by institutional, historical and case studies if one wants to explore the underlying causes of growth, innovation and productivity change.

It is critical for the analysis of growth challenges at the national level(i.e. economy-wide diagnostic) especially the section on high-level growth challenges.

ITC export competitiveness assessments

Trade competitiveness assessments: Identify drivers and/or obstacles to an economy’s export competitiveness.Export potential assessments: Identify high-potential export products and attractive markets for each high-performing export product. Export opportunity scans: Identify export opportunities for economies and regions (can be done bilaterally)

• Gives a better understanding of what encourages/discourages export competitiveness.

• Benchmarks an economy’s export strength in terms of factors of production and the general business environment.

• Compares an economy to others with similar export structures to help understand where domestic capacities are strong/weak.

• Required data is mostly trade-related and thus available for most SEE economies.

• Cross-country comparison does not take into account the changing dynamic structures of the global economy.


Can provide insights on external competitiveness for the economy-wide diagnostic.

Can provide insights for the sectoral development section of the ERP document i.e. which sectors have the greatest development potential.

Can provide insights for the diagnostic of the external trade and investment facilitation section of the document.

EXPY (export sophistication) / product space analysis

Estimates the level of technological sophistication embodied in an economy’s export portfolio.

• Gives an indication of the economy’s potential for export diversification and further productivity gains.

• Provides insights into how easily export diversification can be achieved.

• Helps understand which sectors have high development potential based on complementarities with existing sectors.

• Relies on data that is available for most economies in the SEE region.

• Does not take into account the differences in quality of exported goods between economies, which reflect differences in productivity.

• Does not provide insights into structural/institutional constraints to export diversification.


Can provide insights on external competitiveness for the economy-wide diagnostic.


Can provide insights for the diagnostic of the external trade and investment facilitation section of the ERP document.

Cluster analysis

Examines and evaluates the health and dynamics of an economy through benchmarking clusters.

• Helps identify the sectors with highest diversification potential.

• Helps evaluate which regions are most likely to develop clusters in new areas.

• Cluster development is a challenging endeavour with mixed results.

• Data limitations may constrain such an analysis in some SEE economies.


Can provide some insights for the overall economy-wide diagnostic of key obstacles to competitiveness and growth


(cont.)



Chapter 2

Policy area diagnosticStep-by-step approach and selected policy area indicators, structural obstacles and impacts on growth and competitiveness.



Policy area diagnostic

Objective

To summarise the key challenges the economy faces in each policy area and to explain how they affect competitiveness, growth and social outcomes. The policy area diagnostics are part of the foundation of the structural reform section of the ERP from which all policy area-specific reform proposals should follow logically. The methodology laid in the following pages should help line ministries and other relevant authorities in providing an analysis of main obstacles for the ERP Section 4.3 (Analysis by area and structural reform priorities).

Key questions to be answered

1. What is the state of play in the given policy area? What are the key features characterising the policy area?

2. What are the main structural obstacles and bottlenecks in this policy area?

3. How do these obstacles affect competitiveness and growth?

Suggested approach

Define the state of play in the given policy areaProvide an overview of the key features characterising the policy area.

Identify the underlying obstacles to growth and growth challengesSummarise the key barriers to sector development (economic) for the given policy area.

Highlight how these obstacles impact economic competitiveness and inclusive growthExplain through what channels these key obstacles affect the economy.

Step-by-step approach

1. Define the state of play in a given policy area

This first step should provide an overview of the current landscape for the given policy area. As with the economy-wide diagnostic, this first step seeks to give a bird’s eye view of the main features of that policy area.

Note: this section should not be backward-looking and should not provide a progress report on what has been done to reach the current state. The focus of the diagnostic should really be on describing, as succinctly as possible, the current challenges/situation in each policy area.

This first part should seek to answer the following questions:

1. What are the key features characterising this policy area?

A good diagnostic will provide a concise but thorough overview of the state of play in each policy area. To help line ministries in this endeavour, an overview of key features that should be covered in the diagnostic for each policy area of the ERP

2. POLICY AREA DIAGNOSTIC


document is provided (see Table 3 below). In addition, the tables of this document provide a list of key indicators that could be used to analyse and subsequently describe these key features in the document.

2. How do the indicators in 1) compare to the government’s strategic targets (i.e. where is the economy now compared to where the government wants it to be)? How do they compare to relevant benchmarks from other economies?

Note: benchmark economies will vary depending on the indicator under examination. They can thus include developed economies (e.g. EU15), the EU28, new EU member states (EU13), fast-growing emerging markets (for example if looking at growth figures) as well as regional peers (WB6). Selecting appropriate benchmarks is essential for a sound and objective diagnostic. If needed, the OECD can assist in identifying appropriate benchmarks.

Table 3. Key features of the state of play

Policy area Key features of state of play

Energy and transport market reform

Transport: main transport corridors, different modes of transport, inter-modal connectivity, road safety, institutional infrastructure governing transport (including private sector share, level of unbundling, alignment with EU legislation).Energy: main energy corridors, different sources of energy supply, energy connectivity with neighbouring countries, institutional infrastructure governing the energy sector (private sector share, level of unbundling, extent of liberalisation of the market. alignment with EU legislation).

Sectoral development Agriculture: size and significance of the sector (including contribution to GDP, contribution to employment, level of state aid), structure of the sector (including agricultural and livestock production), capacity and potential of the sector (including agricultural land, level of consolidation, irrigation, quality of machinery, food safety and quality standards compliance, size of rural population, labour productivity in agriculture).Manufacturing: size and significance of manufacturing industry (including contribution to GDP, contribution to employment, level of state aid), structure of manufacturing industry (including industrial and manufacturing production), capacity and potential of the industry (including quality of machinery, compliance with quality and eco- standards, labour productivity in manufacturing). Tourism: size and significance of tourism (including contribution to GDP, contribution to employment, level of state aid), capacity and potential of tourism (including overnights in all types of accommodation, destination accessibility, tourism infrastructure [accommodation facilities, air connectivity and inter-modality], natural resources and cultural resources, visitor satisfaction rating and intention to repeat visits, use of e-tourism and other innovative services, labour productivity in tourism).

Business environment and reduction of the informal economy

Overall ease of doing business, administrative and regulatory burden on businesses (including fiscal and para-fiscal charges), property rights, competition (including informal economy), bankruptcy and second chance.

Trade-related reforms Trade integration at regional, EU and global level, with a special focus on standards, trade agreements, trade openness, membership towards the World Trade Organization (WTO), main trading partners, main trading sectors, policies to attract FDI.

Research, development and innovation (RDI) and Digital Economy

Research, development and innovation (RDI): level of public and private investment in research and innovation, incentives for innovation, inter-institutional collaboration on innovation.Digital Economy: significance and capacity of the ICT industry, regulatory framework, digital skills, e-government

Education and skills Educational attainment and quality, alignment with needs of labour market, life-long learning, public-private partnerships in education etc.

Employment and labour market Employment, labour force participation, unemployment (including structural), labour market flexibility.

Social inclusion, poverty reduction and equal opportunities

Poverty rate and profile (by age, gender, ethnicity etc.), access to education and other public services (by gender, ethnicity etc.), income inequality.

2. Identify the underlying obstacles to growth and growth challenges

This second step aims to provide a more detailed overview of the key growth challenges, zooming in on the main structural obstacles that impede the economic development in that policy area.

Most economies will be able to rely on existing studies to identify the most critical and pressing obstacles to inclusive growth and competitiveness for each policy area when writing this section of the ERP document. The OECD Competitiveness in South East Europe: a Policy Outlook and SME Policy Index, World Bank Doing Business report, studies of the national investment forum council and other relevant publications can also serve as repositories of data and insights on key structural obstacles by policy area.



The approach outlined in this tool relies predominantly on benchmarking against relevant comparable countries, but economies in South East Europe (SEE) can also rely on other approaches if they deem them more appropriate.

This section should answer the following question:

What are the main structural obstacles, as identified in your analyses? Structural obstacles represent features in the current economic and governance structure that hamper economic development and growth. They can be caused by government failures (inefficient or ineffective government policies) or by market failures (problems arising from inefficient functioning of the market due to externalities, information asymmetries etc.).

Defining the structural obstacles to growth or development in a given policy area can be challenging for a number of reasons. First, it may be difficult to disentangle obstacles from their negative outcomes on the economy. For example, outdated infrastructure can be defined as an obstacle in that it has a negative impact on the cost, speed and quality of transport of goods and services, which, in turn, negatively affects investment and exports. However, outdated infrastructure is also fundamentally a negative outcome of structural issues pertaining to underinvestment (especially private) in infrastructure, which, in turn, has to do with incentives for private-sector participation in this sector.

Another challenge is to identify the level at which to define obstacles. For example limited access to finance is a key obstacle to growth and competitiveness. If firms cannot easily and affordably access finance, they cannot make productive investments that enable them to grow. However, difficulties accessing finance can reflect a series of underlying structural constraints from weak competition in the banking sector to issues with the cadastre system.

In this tool, the OECD attempts to provide some illustrative guidance on how countries could define the structural obstacles. It mostly concentrates on high-level obstacles that are essential ingredients of the diagnostic, keeping in mind that elaborating those obstacles will require the provision of specifics about the underlying causes, which will differ from economy to economy. It also distinguishes between obstacles and their potential impact on the economy which can also help disentangle the two.

The tables present in the following pages summarise these structural obstacles along with common symptoms associated with each. This is by no means an exhaustive list and economies are encouraged to use them as examples/templates against which they can define their own obstacles for the ERP documents.

3. Highlight how these obstacles impact economic competitiveness and inclusive growth

The final step puts the structural obstacles into perspective by highlighting how they affect the overall economy. It also demonstrates that the structural obstacles identified are indeed the most relevant and important ones for that policy area.

This section should answer the following questions:

1. Do the obstacles affect one or more of the following variables: investment, exports, consumption, productivity or employment?

2. If so, through what channels is this impact manifested? For example, weak access to finance affects SMEs’ capacity for investment and innovation, which, in turn, limits the scope for diversification of the domestic production and export base and limits the capacity of SMEs to link into global value chains.

Please note this can be just a qualitative overview of the kinds of negative impacts that the structural obstacles have on the economy. However, if there are concrete studies that have attempted to provide a quantitative measure of that impact, they can be cited in the report (e.g. “a study conducted in 2014 estimates that disruptions from electricity outages costs companies X millions of euros annually”).



Note

1. The indicators, structural obstacles and envisaged impacts on competitiveness and growth listed in the following pages should not be considered rigid or exhaustive: the main purpose is to guide line ministries in collecting relevant information and processing it in order to detect relevant structural obstacles and their impact on growth and competitiveness in the specific field of competence. Line ministries are invited to reduce, expand or change indicators according to their availability and relevance in describing the state of the economy. Likewise, if economies can define the underlying structural problems behind these obstacles more narrowly, they should concisely do so in the ERP diagnostic. Additionally, users should go through the questions outlined above to provide a more detailed review specific to the obstacles they have identified.

2. The categorisation of indicators, obstacles and their effect on the economy is meant to provide illustrative guidance to support line ministries in effectively defining the overall state of play in its field of competence. The outcome should be a clear and concise description of the main obstacles limited to approximately one page in the final Economic Reform Programme (ERP) document (Section 4.3, as detailed on p. 12 of the European Commission’s ERP Guidance Note).



Energy and transport market reformPolicy area indicators, structural obstacles and impact on competitiveness and growth



I. IN

FRAS

TRUC

TURE

AND

CAP

ACIT

Y

1. E

nerg

y

Mai

n en

ergy

cor

rido

rs, b

y ty

pe o

f ene

rgy

Indi

cate

s th

e ec

onom

y’s

mai

n co

rrid

ors

for d

iffer

ent e

nerg

y se

gmen

ts (

oil,

gas,

ele

ctri

city

). In

par

ticul

ar, h

ighl

ight

s w

here

ene

rgy

tran

smis

sion

de

pend

s m

assi

vely

on

one

chan

nel/

coun

try

of o

rigi

n. T

his

indi

cato

r is

rele

vant

to a

sses

sing

ove

r-re

lianc

e on

sin

gle

supp

liers

and

sys

tem

ic r

isks

to

ene

rgy

suff

icie

ncy

in c

ase

of d

isru

ptio

ns.

Sou

rce:

En

erg

y m

inis

try.

Tota

l inv

estm

ent i

n en

ergy

infr

astr

uctu

re (

% o

f GD

P)M

easu

res

the

leve

l of i

nves

tmen

t in

ener

gy in

fras

truc

ture

as

a pe

rcen

tage

of g

ross

dom

estic

pro

duct

(G

DP)

. It g

ives

an

idea

of t

he e

cono

my’

s ca

paci

ty to

upg

rade

its

curr

ent i

nfra

stru

ctur

e.So

urc

e: E

ner

gy

min

istr

y.

Inve

stm

ent i

n en

ergy

wit

h pr

ivat

e pa

rtic

ipat

ion

(cur

rent

USD

)M

easu

res

the

amou

nt o

f pri

vate

par

ticip

atio

n in

infr

astr

uctu

re (

PPI)

in th

e en

ergy

sec

tor a

t cur

rent

pri

ces.

It is

a r

elev

ant i

ndic

ator

of t

he

econ

omy’

s op

enne

ss to

pri

vate

fund

s fo

r ene

rgy

infr

astr

uctu

re p

roje

cts.

Sou

rce:

Wo

rld

Ba

nk

Dev

elo

pm

ent

Ind

icat

ors

, htt

p:/

/dat

aba

nk

.wo

rld

ba

nk

.org

/

Tota

l ene

rgy

prod

ucti

on/T

PES

(%)

Mea

sure

s th

e am

ount

of e

nerg

y pr

oduc

ed in

the

econ

omy

as a

sha

re o

f the

tota

l prim

ary

ener

gy s

uppl

y (T

PES)

. Thi

s is

a r

elev

ant i

ndic

ator

of t

he

econ

omy’

s en

ergy

sel

f-su

ffic

ienc

y, w

hich

is s

trat

egic

ally

impo

rtan

t for

dev

elop

men

t and

as

a so

urce

of p

oten

tial f

luct

uatio

ns in

the

perf

orm

ance

of

the

econ

omy.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Tota

l fin

al e

nerg

y co

nsum

ptio

n (T

FEC)

(M

toe)

Mea

sure

s th

e ag

greg

ate

of a

ll of

the

ener

gy th

at is

use

d fo

r pro

vidi

ng v

ario

us e

nerg

y se

rvic

es in

mill

ion

tonn

es o

f oil

equi

vale

nt (

Mto

e). U

sual

ly,

tota

l fin

al c

onsu

mpt

ion

is a

n ag

greg

ate

of e

nd-u

se e

nerg

y. T

his

mea

ns th

at it

focu

ses

on e

nerg

y cu

rren

cies

like

ele

ctri

city

and

sec

onda

ry

fuel

s lik

e ga

solin

e. T

he fo

cus

of th

e TF

EC is

in c

ontr

ast w

ith th

e TP

ES. T

otal

fina

l con

sum

ptio

n co

nsis

ts o

f ene

rgy

that

can

rea

dily

be

used

by

cons

umer

s to

ser

ve th

eir e

nerg

y ne

eds,

whi

le T

PES

is a

n ag

greg

ate

of a

ll of

the

ener

gy g

oing

into

the

ener

gy s

ecto

r.So

urc

e: I

nte

rnat

ion

al E

ner

gy

Age

ncy

(IE

A) s

tati

stic

s, w

ww

.iea

.org

/sta

tist

ics/

.

Tota

l net

impo

rts

of e

nerg

y (M

toe)

, and

by

sour

ceM

easu

res

impo

rts

of e

nerg

y in

mill

ion

toe.

The

gre

ater

the

impo

rts,

the

mor

e de

pend

ent a

n ec

onom

y is

on

fore

ign

prov

isio

n an

d th

e m

ore

vuln

erab

le d

omes

tic e

nerg

y pr

ices

are

to e

xter

nal f

luct

uatio

ns in

pri

ce.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Ener

gy b

alan

ceTh

e m

ake

up o

f ene

rgy

sour

ces

in th

e ec

onom

y’s

tota

l pro

duct

ion

and

cons

umpt

ion

of e

nerg

y (c

oal,

crud

e oi

l, oi

l pro

duct

s, n

atur

al g

as, n

ucle

ar,

hydr

o, g

eoth

erm

al, s

olar

, bio

fuel

s an

d w

aste

, ele

ctri

city

, hea

t). H

eavy

dep

ende

nce

on fo

rms

of e

nerg

y w

hich

are

not

loca

lly p

rodu

ced

lead

s in

m

ost c

ases

to h

ighe

r im

port

s an

d a

high

er tr

ade

defic

it. H

eavy

dep

ende

nce

on s

olid

fuel

s (c

oal,

ligni

te) l

eads

to h

ighe

r lev

els

of p

ollu

tion

with

co

sts

to th

e en

viro

nmen

t and

hea

lth.

Sou

rce:

IE

A s

tati

stic

s, w

ww

.iea

.org

/sta

tist

ics/

.

ENER

GY

MA

RK

ET

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. L

ack

of r

elia

ble

elec

tric

ity

supp

ly.

A co

ntrib

utin

g fa

ctor

is th

e er

ratic

el

ectr

icity

con

sum

ptio

n pa

tter

n of

the

poor

er p

arts

of t

he p

opul

atio

n, w

hich

ex

acer

bate

s se

ason

al a

nd w

eath

er-

rela

ted

peak

s in

ele

ctri

city

dem

and

(par

ticul

arly

for s

pace

and

wat

er

heat

ing)

. Ext

rem

e pe

aks

can

lead

to

blac

kout

s an

d/or

ele

ctri

city

rat

ioni

ng.

To e

nsur

e co

ntin

ued

serv

ice,

ver

tical

ly

inte

grat

ed u

tiliti

es a

re fo

rced

to

mai

ntai

n co

nsid

erab

le r

eser

ve

capa

city

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •fr

eque

nt b

lack

outs

(nu

mbe

r of

outa

ges

over

last

fisc

al y

ear)

•hi

gh s

hare

of e

lect

rici

ty p

rodu

ced

by e

stab

lishm

ent’s

ow

ned/

shar

ed

gene

rato

r(s)

•m

easu

reab

le r

even

ue lo

sses

due

to

dis

rupt

ions

(qu

antif

iabl

e as

ex

pect

ed %

dec

reas

e in

tota

l cos

ts if

el

ectr

icity

dis

rupt

ion

was

no

long

er

an o

bsta

cle)

.

2. L

ow r

egio

nal c

onne

ctiv

ity.

Lack

of s

upra

natio

nal i

nter

conn

ectin

g en

ergy

pro

ject

s an

d in

fras

truc

tura

l di

vide

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •he

avy

depe

nden

ce o

n a

sing

le

ener

gy s

uppl

ier

•he

avy

depe

nden

ce o

n a

sing

le

ener

gy s

ourc

e.

3. In

suff

icie

nt o

vera

ll in

vest

men

t in

new

ene

rgy

infr

astr

uctu

re p

roje

cts

and

mai

nten

ance

or u

pgra

ding

of

exis

ting

one

. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•lo

w in

vest

men

t in

ener

gy

infr

astr

uctu

re a

s %

of G

DP

•lo

w P

PI.

1. L

ack

of a

rel

iabl

e el

ectr

icity

su

pply

is a

maj

or d

eter

rent

for

inve

stm

ent e

spec

ially

for l

arge

m

anuf

actu

rers

that

rel

y on

a s

tead

y su

pply

of e

lect

rici

ty. D

isru

ptio

ns in

el

ectr

icity

sup

ply

resu

lt in

red

uced

pr

oduc

tion

and

thus

loss

of r

even

ue.

2. L

ow r

egio

nal c

onne

ctiv

ity

redu

ces

the

poss

ibili

ty o

f sup

ply

diff

eren

tiat

ion,

trad

e po

tent

ial

and

ener

gy s

ecur

ity,

lead

ing

to

an in

effic

ient

allo

catio

n of

ene

rgy

supp

ly th

at tr

ansl

ates

into

an

inab

ility

to m

eet p

eaks

in d

eman

d.

Mor

e br

oadl

y it

mea

ns in

crea

sed

unce

rtai

nty

and

redu

ced

grow

th

oppo

rtun

ities

. Reg

iona

l int

egra

tion

wou

ld a

lso

bene

fit e

nerg

y su

pplie

rs

inso

far a

s it

enla

rges

thei

r mar

ket,

unca

ppin

g th

eir g

row

th p

oten

tial.

3. L

ack

of in

vest

men

t lea

ds to

ou

tdat

ed e

nerg

y in

fras

truc

ture

, re

sult

ing

in in

effi

cien

t and

po

lluti

ng e

nerg

y pr

oduc

tion

, whi

ch

redu

ces

dom

estic

cap

acity

for

pow

er g

ener

atio

n, a

nd d

amag

es

the

envi

ronm

ent,

viol

atin

g EU

en

viro

nmen

tal s

tand

ards

. It m

ay

resu

lt in

dep

ende

nce

on e

nerg

y im

port

s, a

con

side

rabl

e is

sue

for e

nerg

y se

curi

ty e

spec

ially

if

conn

ectiv

ity w

ith th

e re

gion

is lo

w.

4. T

he u

se o

f hig

hly

pollu

ting

ener

gy s

ourc

es a

nd p

roce

dure

s ha

s ha

rmfu

l con

sequ

ence

s fo

r hu

man

hea

lth

– of

ten

with

a

disp

ropo

rtio

nate

eff

ect o

n po

orer

pa

rts

of th

e po

pula

tion.

Alto

geth

er,

it le

ads

to in

crea

ses

in th

e le

vel o

f ai

r pol

lutio

n, d

ust,

and

leve

ls o

f su

lphu

r dio

xide

and

nitr

ogen

oxi

de

com

ing

from

the

ener

gy s

ecto

r.


http://databank.worldbank.org/

http://ec.europa.eu/eurostat/data/database

http://www.iea.org/statistics/




TPES

/GD

P (t

oe p

er th

ousa

nd 2

005

USD

)TP

ES d

ivid

ed b

y G

DP

mea

sure

s th

e en

ergy

inte

nsity

of a

n ec

onom

y, i.

e. th

e am

ount

of e

nerg

y it

need

s to

gen

erat

e a

unit

of g

ross

dom

estic

pr

oduc

t. It

is u

sual

ly p

refe

rred

to T

PES

per c

apita

bec

ause

the

latt

er d

oes

not t

ake

into

acc

ount

eith

er th

e im

pact

of c

limat

e on

ene

rgy

use

(hea

ting,

coo

ling)

or t

he s

ize

of th

e te

rrito

ry a

nd th

e de

nsity

of t

he p

opul

atio

n.So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

2. E

lect

rici

ty

Elec

tric

ity

gene

rati

on (

for h

eat/

othe

r use

and

by

prod

ucti

on s

ourc

e: c

oal,

oil,

gas

, bio

fuel

s, w

aste

, nuc

lear

, hyd

ro, g

eoth

erm

al, s

olar

ph

otov

olta

ics

(PV

), s

olar

ther

mal

and

oth

erSh

ows

whi

ch s

ourc

es o

f ele

ctri

city

gen

erat

ion

the

econ

omy

mos

tly d

epen

ds o

n, a

nd c

an b

e an

indi

cato

r of v

ulne

rabi

lity.

It a

lso

show

s th

e ex

tent

to w

hich

pro

duct

ion

is d

epen

dent

on

high

ly p

ollu

ting

ligni

te v

s. c

lean

er s

ourc

es li

ke h

ydro

pow

er a

nd r

enew

able

s an

d ca

n su

gges

t why

ec

onom

ies

may

not

be

mee

ting

Euro

pean

env

ironm

enta

l sta

ndar

ds.

Sou

rce:

IE

A s

tati

stic

s, w

ww

.iea

.org

/sta

tist

ics/

.

Impo

rts,

exp

orts

and

dom

esti

c su

pply

of e

lect

rici

tyTh

ese

indi

cato

rs p

oint

to th

e tr

ade

bala

nce

in e

lect

rici

ty a

nd th

eref

ore

the

econ

omy’

s se

lf-su

ffic

ienc

y in

ele

ctri

city

gen

erat

ion.

Sou

rce:

IE

A s

tati

stic

s, w

ww

.iea

.org

/sta

tist

ics/

.

Loss

es in

tran

smis

sion

An in

dica

tor o

f tra

nsm

issi

on n

etw

ork

qual

ity a

nd e

nerg

y in

tens

ity in

the

econ

omy.

Sou

rce:

IE

A s

tati

stic

s, w

ww

.iea

.org

/sta

tist

ics/

. N

umbe

r of p

ower

out

ages

ove

r las

t fis

cal y

ear

Num

ber o

f pow

er o

utag

es th

at d

isru

pted

pro

duct

ion,

dec

lare

d by

a s

ampl

e of

firm

s in

the

econ

omy.

Bla

ckou

ts m

ake

busi

ness

unp

redi

ctab

le a

nd

incr

ease

cos

ts fo

r ent

erpr

ises

.So

urc

e: W

orl

d B

an

k, E

nte

rpri

se S

urv

eys

Perc

enta

ge o

f est

ablis

hmen

ts’ e

lect

rici

ty fr

om g

ener

ator

(s) o

wne

d or

sha

red

Unr

elia

ble

elec

tric

gri

ds fo

rce

som

e fir

ms

to s

ecur

e el

ectr

ic p

ower

thro

ugh

owne

d or

sha

red

gene

rato

rs. T

his

incr

ease

s op

erat

iona

l cos

ts.

Sou

rce:

Wo

rld

Ba

nk

, En

terp

rise

Su

rvey

s

Shar

e of

ent

erpr

ises

men

tion

ing

elec

tric

ity

as a

n ob

stac

le to

cur

rent

ope

rati

ons

Rel

evan

t ind

icat

or to

ass

ess

if el

ectr

icity

(ac

cess

to, r

elia

bilit

y, c

ost…

) rep

rese

nts

a si

gnifi

cant

obs

tacl

e to

dai

ly o

pera

tions

and

ther

efor

e to

pr

oduc

tion

for e

ntre

pren

eurs

.So

urc

e: W

orl

d B

an

k, E

nte

rpri

se S

urv

eys

Expe

cted

% d

ecre

ase

in to

tal c

osts

if e

lect

rici

ty w

as n

o lo

nger

an

obst

acle

Mea

sure

s th

e im

pact

of m

ore

stab

le e

lect

rici

ty p

rovi

sion

on

firm

s’ to

tal o

pera

tiona

l, ac

cord

ing

to th

e en

trep

rene

urs

surv

eyed

.So

urc

e: W

orl

d B

an

k, E

nte

rpri

se S

urv

eys

II. R

EGUL

ATOR

Y FR

AMEW

ORK

Entr

y re

gula

tion

for g

as a

nd e

lect

rici

tyIn

dica

tes

how

the

term

s an

d co

nditi

ons

of th

ird p

arty

acc

ess

(TPA

) to

the

ener

gy tr

ansm

issi

on g

rid a

re d

eter

min

ed. I

s th

ere

a lib

eral

ised

who

lesa

le m

arke

t fo

r ene

rgy

(a w

hole

sale

poo

l)? W

hat i

s th

e m

inim

um c

onsu

mpt

ion

thre

shol

d th

at c

onsu

mer

s m

ust e

xcee

d in

ord

er to

be

able

to c

hoos

e th

eir s

uppl

ier?

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

ENER

GY

MA

RK

ET

(con

t.)In

dica

tors

of

sta

te o

f pla

ySt

ruct

ural

ob

stac

les

Impa

ct o

n co

mpe

titi

vene

ss

and

grow

th

4. H

igh

ener

gy in

tens

ity

is th

e co

mbi

natio

n of

thre

e m

ain

fact

ors:

de

grad

ed e

nerg

y in

fras

truc

ture

; hig

h en

ergy

loss

es in

tran

sfor

mat

ion,

tr

ansm

issi

on a

nd d

istr

ibut

ion

of

ener

gy; a

nd in

effic

ienc

y in

the

end-

use

sect

or. S

ympt

oms

of th

is o

bsta

cle

incl

ude:

•hi

gh T

PES

to G

DP

ratio

com

pare

d to

EU

eco

nom

ies.

5. H

igh

carb

on in

tens

ity

due

to h

eavy

de

pend

ence

on

ligni

te.

Oth

er e

nviro

nmen

tal c

once

rns

incl

ude

pollu

tion

from

ene

rgy

com

bust

ion

(e.g

. ind

oor a

nd lo

cal a

ir po

llutio

n fr

om in

effic

ient

and

impr

oper

ly

used

sto

ves)

, def

ores

tatio

n an

d la

nd

degr

adat

ion

(fro

m e

xces

sive

use

of

woo

d fo

r fue

l).

6. H

igh

mar

ket d

epen

denc

e on

hy

droc

arbo

ns im

port

ed fr

om

outs

ide

the

regi

on.

Sym

ptom

s of

this

obs

tacl

e in

clud

e: •hi

gh to

tal n

et im

port

s of

ene

rgy.

7. L

ack

of c

apac

ity

in e

nerg

y ad

min

istr

atio

n.

Adm

inis

trat

ive

bodi

es a

re

unde

rsta

ffed

and

nee

d to

bui

ld

capa

city

and

enh

ance

mec

hani

sms

to in

crea

se tr

ansp

aren

cy a

nd p

ublic

co

nsul

tatio

n on

str

ateg

y an

d po

licy

deve

lopm

ent.

This

par

ticul

arly

in

clud

es s

eeki

ng in

put f

rom

ac

adem

ia, e

nerg

y an

d en

viro

nmen

tal

asso

ciat

ions

, and

con

sum

er

orga

nisa

tions

.

5. H

ighe

r net

impo

rts

of

hydr

ocar

bons

incr

ease

the

net

ener

geti

c tr

ade

defi

cit o

f the

co

untr

y. T

his

in tu

rn w

ill h

ave

to b

e co

vere

d by

sur

plus

es in

oth

er s

ecto

rs

of th

e ec

onom

y.

6. R

educ

ed a

dmin

istr

ativ

e ca

paci

ty

affe

cts

the

deve

lopm

ent o

f ene

rgy

mar

kets

in a

num

ber o

f way

s:

lack

of r

elia

ble

ener

gy d

ata

time

seri

es w

hich

mak

es it

har

d to

bui

ld

just

ified

ana

lyse

s, la

ck o

f reg

ulat

ive

tran

spar

ency

or a

nat

iona

l ene

rget

ic

stra

tegy

, and

lack

of s

yner

gies

, bot

h w

ithin

the

coun

try

and

regi

onal

ly.

7. C

ondi

tions

of m

onop

oly

or q

uasi

-m

onop

oly

redu

ce e

nerg

y pr

ovid

ers’

co

mpe

titi

vene

ss o

n se

vera

l fro

nts,

in

clud

ing

high

cos

ts o

f ene

rgy

prod

uctio

n, a

nd lo

w q

ualit

y su

pply

. Co

uple

d w

ith li

mite

d re

gula

tory

ca

paci

ty, i

t als

o re

sults

in la

ck o

f da

ta a

nd tr

ansp

aren

cy, c

onge

sted

cr

oss-

bord

er c

apac

ity

and

wea

k m

arke

t rul

es.

8. If

a s

ingl

e co

mpa

ny o

pera

tes

a tr

ansm

issi

on n

etw

ork

and

also

ge

nera

tes

or s

ells

ene

rgy,

it m

ay h

ave

an in

cent

ive

to o

bstr

uct c

ompe

titor

s’

acce

ss to

infr

astr

uctu

re. T

his

prev

ents

fair

com

peti

tion

in th

e m

arke

t and

can

lead

to h

ighe

r pr

ices

fo

r co

nsum

ers.

9. D

ue to

the

limit

ed in

volv

emen

t of

priv

ate

acto

rs, m

ost e

nerg

y pr

ojec

ts

are

not c

omm

erci

ally

dri

ven.

Th

ey a

re c

ostly

and

ris

k be

ing

unde

rutil

ised

. Com

mer

cial

oil

and

gas

oper

ator

s ar

e be

st p

lace

d to






http://www.oecd.org/economy/growth/indicatorsofproductmarketregulationhomepage.htm


Publ

ic o

wne

rshi

pW

hat p

erce

ntag

e of

sha

res

does

the

gove

rnm

ent o

wn,

eith

er d

irect

ly o

r ind

irect

ly, i

n th

e la

rges

t firm

in th

e se

ctor

?So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n

Vert

ical

inte

grat

ion

Wha

t is

the

degr

ee o

f ver

tical

sep

arat

ion

betw

een

any

give

n se

gmen

t of t

he e

lect

rici

ty s

ecto

r and

oth

er s

egm

ents

of t

he in

dust

ry?

(Ave

rage

d ov

er fo

ur s

egm

ents

: gen

erat

ion/

impo

rt, t

rans

mis

sion

, dis

trib

utio

n an

d su

pply

.)So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n.

Mar

ket s

truc

ture

Wha

t is

the

mar

ket s

hare

of t

he la

rges

t com

pany

in th

e el

ectr

icity

indu

stry

?So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n.

Conn

ecti

vity

wit

h ot

her r

egio

nal e

nerg

y m

arke

tsSt

ate

of im

plem

enta

tion

of s

oft m

easu

res

targ

eted

at i

nteg

ratin

g re

gion

al m

arke

ts, h

ence

incr

easi

ng e

nerg

y ef

ficie

ncy

and

secu

rity

. The

se

incl

ude

deve

lopm

ent o

f spo

t mar

kets

, cro

ss-b

orde

r bal

anci

ng, r

egio

nal c

apac

ity a

lloca

tion

and

cros

s-cu

ttin

g m

easu

res.

Sou

rce:

En

erg

y C

om

mu

nit

y.

Cent

ral a

nd S

EE G

as C

onne

ctiv

ity

Init

iati

veLo

ng te

rm s

ecur

isat

ion

of g

as s

uppl

y th

roug

h re

gion

al in

tegr

atio

n of

sto

cks

and

links

. Thi

s in

clud

es m

arke

t ope

nnes

s to

third

par

ty o

pera

tors

, en

surin

g fr

ee fl

ow o

f gas

, inf

rast

ruct

ure

rela

ted

(e.g

. con

nect

ion

of s

pur l

ines

thro

ugh

the

Ener

gy C

omm

unity

Gas

Rin

g) a

nd m

arke

t int

egra

tion

mea

sure

s, tr

ansm

issi

on s

yste

ms

oper

ator

s (T

SO) u

nbun

dlin

g an

d na

tiona

l reg

ulat

ory

auth

ority

(N

RA)

inde

pend

ence

.So

urc

e: E

ner

gy

Co

mm

un

ity.

Dev

elop

men

t in

regi

onal

oil

stoc

khol

ding

Prog

ress

in th

e le

vel o

f sec

uris

atio

n of

oil

and

petr

oleu

m s

tock

hold

ing

syst

ems

in a

ccor

danc

e w

ith E

U d

irect

ives

(st

ate

of le

gisl

ativ

e ha

rmon

isat

ion)

, in

orde

r to

min

imis

e ri

sks

and

cost

s. D

ue to

a h

igh

depe

nden

cy o

n im

port

s w

ith a

lim

ited

num

ber o

f dom

estic

pro

duce

rs,

secu

rity

of o

il su

pply

is o

f spe

cial

con

cern

. The

dep

ende

ncy

is a

ggra

vate

d by

the

lack

of i

nter

conn

ectio

ns to

faci

litat

e oi

l flo

ws

as w

ell a

s in

suff

icie

nt s

tora

ge c

apac

ities

.So

urc

e: E

ner

gy

Co

mm

un

ity.

Stru

ctur

al c

hang

e in

dica

tors

: inf

rast

ruct

ure

refo

rms:

ele

ctri

c po

wer

(w

here

1 =

full

stat

e co

ntro

l, 4

+ =

full

liber

alis

atio

n)Th

is E

urop

ean

Bank

for R

econ

stru

ctio

n an

d D

evel

opm

ent (

EBR

D) i

ndic

ator

pro

vide

s a

quan

titat

ive

foun

datio

n fo

r ana

lysi

ng p

rogr

ess

in th

e re

form

of t

he e

lect

rici

ty m

arke

t. It

capt

ures

law

s, m

arke

t reg

ulat

ion

and

pric

e co

ntro

l fac

tors

to a

sses

the

scor

e.So

urc

e: E

BR

D, h

ttp

://w

ww

.eb

rd.c

om

/wh

at-w

e-d

o/e

con

om

ic-r

esea

rch

-an

d-d

ata

/dat

a/f

ore

cast

s-m

acro

-dat

a-tr

an

siti

on

-in

dic

ato

rs.h

tml.

Res

iden

tial

and

non

-res

iden

tial

ele

ctri

city

pri

ces,

eur

ocen

ts/k

Wh

(exc

ludi

ng ta

xes)

Mea

sure

s th

e pr

ice

of e

lect

rici

ty b

efor

e ta

xes

(eur

ocen

ts/k

Wh)

for r

esid

entia

l and

non

-res

iden

tial u

se. A

mor

e co

mpe

titiv

e en

ergy

mar

ket c

an

lead

to lo

wer

cos

ts o

f ele

ctri

city

for f

inal

use

rs.

Cost

of e

nerg

y is

a v

ery

impo

rtan

t fac

tor f

or p

oten

tial i

nves

tors

in d

ecid

ing

whe

re to

loca

te th

eir p

rodu

ctio

n pl

ants

, and

ther

efor

e lo

wer

el

ectr

icity

pri

ces

can

mak

e an

eco

nom

y m

ore

attr

activ

e fo

r for

eign

dire

ct in

vest

men

t (FD

I), a

ll ot

her t

hing

s be

ing

equa

l, th

an it

s co

mpe

titor

s.So

urc

e: E

ner

gy

reg

ula

tors

’ reg

ion

al a

sso

ciat

ion

s.

ENER

GY

MA

RK

ET

(con

t.)In

dica

tors

of

sta

te o

f pla

ySt

ruct

ural

ob

stac

les

Impa

ct o

n co

mpe

titi

vene

ss

and

grow

th

8. L

ack

of c

lear

reg

ulat

ory

and

anti

-m

onop

oly

fram

ewor

k.

In th

e ab

senc

e of

rob

ust r

egul

ator

y st

ruct

ures

, the

pos

sibi

lity

that

a

sing

le c

ompa

ny –

of a

ny n

atio

nalit

y –

mig

ht c

ontr

ol th

e m

ajor

par

t of

the

oil,

gas

or e

lect

rici

ty a

sset

s in

a

mar

ket r

educ

es th

e lik

elih

ood

of

mar

ket-

base

d ap

proa

ches

to e

nerg

y po

licy

deve

lopi

ng. S

ympt

oms

of th

is

obst

acle

incl

ude:

•lo

w n

umbe

r of e

nerg

y pr

ovid

ers

on

the

mar

ket.

9. S

talle

d un

bund

ling

proc

ess,

de

fined

as

the

sepa

ratio

n of

ene

rgy

supp

ly a

nd g

ener

atio

n fr

om th

e op

erat

ion

of tr

ansm

issi

on n

etw

orks

. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude:

•lo

w n

umbe

r of e

nerg

y pr

ovid

ers

on th

e m

arke

t and

no

dist

inct

ion

betw

een

oper

ator

s in

gen

erat

ion,

tr

ansm

issi

on a

nd d

istr

ibut

ion.

10. E

lect

rici

ty m

arke

ts n

ot fu

lly

liber

alis

ed.

The

lack

of a

com

petit

ive

regi

onal

en

ergy

mar

ket h

inde

rs s

tabi

lity

and

econ

omic

sus

tain

abili

ty. S

ympt

oms

of

this

obs

tacl

e in

clud

e on

e or

mor

e of

th

e fo

llow

ing:

•el

ectr

icity

pri

ces

are

regu

late

d an

d no

t det

erm

ined

by

the

mar

ket

•en

ergy

reg

ulat

ory

agen

cy is

not

in

depe

nden

t •re

side

ntia

l ele

ctri

city

pri

ces

are

low

com

pare

d to

rel

evan

t EU

be

nchm

arks

•no

n-re

side

ntia

l ele

ctri

city

pri

ces

are

low

com

pare

d to

rel

evan

t EU

be

nchm

arks

.

stud

y, im

plem

ent a

nd o

pera

te la

rge

proj

ects

for e

nerg

y tr

ansp

orta

tion.

In

effic

ient

pub

lic p

roje

cts

are

not o

nly

unsu

stai

nabl

e in

them

selv

es, b

ut a

lso

risk

cro

wdi

ng o

ut p

riva

te c

ompa

nies

, ex

acer

batin

g th

e pr

oble

m. I

f tar

iffs

fo

r ele

ctri

city

are

kep

t art

ifici

ally

low

by

the

publ

ic r

egul

ator

, thi

s re

duce

s in

tere

st fo

r pri

vate

ope

rato

rs a

nd

also

the

gene

ral a

bilit

y to

inve

st in

m

aint

enan

ce a

nd u

pgra

ding

, fur

ther

re

duci

ng th

e qu

ality

of t

he e

cono

my’

s en

ergy

infr

astr

uctu

re.





http://www.ebrd.com/what-we-do/economic-research-and-data/data/forecasts-macro-data-transition-indicators.html

30 ECONOMIC REFORM PROGRAMME : DIAGNOSTIC TOOL © OECD 2018

I. IN

FRAS

TRUC

TURE

AND

CAP

ACIT

Y

Mai

n tr

ansp

ort c

orri

dors

(la

nd, w

ater

, air

)O

utlin

es th

e m

ain

tran

spor

t art

erie

s, li

nkin

g to

the

mos

t rel

evan

t int

erna

tiona

l tra

de r

oute

s.So

urc

e: T

ran

spo

rt a

nd

in

fra

stru

ctu

re m

inis

trie

s.

Part

icip

atio

n in

TEN

-T c

ore

netw

ork

proj

ects

and

con

nect

ivit

y ag

enda

Leve

l of e

ngag

emen

t in

the

Tran

s-Eu

rope

an T

rans

port

Net

wor

k (T

EN-T

) and

Eur

opea

n co

nnec

tivity

age

nda

(sta

te o

f int

egra

tion

and

com

plet

ion

of m

ajor

tran

spor

t cor

rido

rs).

Bet

ter c

onne

ctiv

ity w

ith th

e EU

is a

key

fact

or fo

r gro

wth

and

jobs

.So

urc

e: T

ran

spo

rt a

nd

in

fra

stru

ctu

re m

inis

trie

s

Inla

nd tr

ansp

ort i

nfra

stru

ctur

e in

vest

men

t in:

road

reha

bilit

atio

n, ro

ad m

aint

enan

ce, n

ew ro

ad c

onst

ruct

ion,

railw

ay m

aint

enan

ce (%

of G

DP)

Mea

sure

s th

e le

vel o

f inv

estm

ent i

n tr

ansp

ort i

nfra

stru

ctur

e as

a p

erce

ntag

e of

GD

P, b

roke

n do

wn

into

diff

eren

t are

as o

f int

erve

ntio

n. G

ives

an

idea

of t

he e

cono

mic

cap

abili

ty to

upg

rade

the

curr

ent i

nfra

stru

ctur

e.So

urc

e: N

atio

na

l sta

tist

ics.

Num

ber o

f roa

ds p

er s

quar

e ki

lom

etre

, per

uni

t of G

DP

Rel

ates

the

num

ber o

f roa

ds to

the

size

of t

he te

rrito

ry a

nd th

e ec

onom

y at

the

sam

e tim

e. A

n in

dica

tor o

f the

ade

quat

enes

s of

the

road

net

wor

k co

mpa

red

to th

e ph

ysic

al a

nd e

cono

mic

dim

ensi

on o

f the

cou

ntry

.So

urc

e: N

atio

na

l sta

tist

ics.

Roa

ds a

s a

shar

e of

tota

l tra

nspo

rt in

fras

truc

ture

leng

th, a

nd s

ervi

ce d

eliv

ery

(fre

ight

tonn

e/pa

ssen

ger k

m)

Mea

sure

s th

e ro

le o

f roa

ds b

oth

in te

rms

of to

tal t

rans

port

infr

astr

uctu

re in

vest

men

t, an

d sh

are

of to

tal t

rans

port

they

car

ry.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Rai

l tra

ffic

inte

nsit

y (f

reig

ht to

nne

per k

m p

lus

pass

enge

r km

per

km

of l

ine)

Indi

cate

s th

e le

vel o

f util

isat

ion

of r

ailw

ay n

etw

orks

, bot

h fo

r the

tran

spor

t of p

eopl

e an

d of

goo

ds.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Shar

e of

tran

spor

t of g

oods

con

duct

ed b

y ro

ad /

rail

/ wat

er /

air

Mea

sure

s th

e sh

are

of th

e to

tal g

oods

tran

spor

t for

eac

h ty

pe o

f tra

nspo

rt. I

ndic

ates

rev

eale

d pr

efer

ence

s in

tran

spor

tatio

n, b

ut c

an a

lso

hint

at

spec

ific

obst

acle

s fo

r cer

tain

mod

es o

f tra

nspo

rt th

at r

educ

e its

usa

ge c

ompa

red

to o

ther

s.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Num

ber o

f inj

ured

and

num

ber o

f fat

alit

ies

on r

oads

This

is a

n in

dica

tor o

f the

gen

eral

saf

ety

of th

e ro

ads,

and

thus

, ind

irect

ly, a

lso

of th

eir l

evel

of m

aint

enan

ce.

Sou

rce:

Nat

ion

al s

tati

stic

s.

II. R

EGU

LATO

RY

FRAM

EWO

RK

Logi

stic

s Pe

rfor

man

ce In

dex

(1=l

ow; 5

=hig

h)Th

e Lo

gist

ics

Perf

orm

ance

Inde

x (L

PI) i

s th

e w

eigh

ted

aver

age

of th

e ec

onom

y’s

scor

es fo

r six

key

dim

ensi

ons:

1) e

ffic

ienc

y of

the

clea

ranc

e pr

oces

s (i.

e. s

peed

, sim

plic

ity a

nd p

redi

ctab

ility

of f

orm

aliti

es) b

y bo

rder

con

trol

age

ncie

s, in

clud

ing

cust

oms;

2) q

ualit

y of

trad

e an

d tr

ansp

ort-

rela

ted

infr

astr

uctu

re (

e.g.

por

ts, r

ailro

ads,

roa

ds, i

nfor

mat

ion

tech

nolo

gy);

3) e

ase

of a

rran

ging

com

petit

ivel

y pr

iced

shi

pmen

ts; 4

) com

pete

nce

and

qual

ity o

f log

istic

s se

rvic

es (

e.g.

tran

spor

t ope

rato

rs, c

usto

ms

brok

ers)

; 5) a

bilit

y to

trac

k an

d tr

ace

cons

ignm

ents

; 6) t

imel

ines

s of

sh

ipm

ents

in r

each

ing

dest

inat

ion

with

in th

e sc

hedu

led

or e

xpec

ted

deliv

ery

time.

Sou

rce:

Wo

rld

Ba

nk

, LPI

, htt

p:/

/lp

i.wo

rld

ba

nk

.org

/.

TR

AN

SPO

RT

MA

RK

ET

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. In

suff

icie

nt o

vera

ll in

vest

men

t in

tran

spor

t inf

rast

ruct

ure

proj

ects

an

d m

aint

enan

ce o

f exi

stin

g in

fras

truc

ture

. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•lo

w o

vera

ll tr

ansp

ort i

nfra

stru

ctur

e in

vest

men

t •lim

ited

road

den

sity

per

1 0

00

inha

bita

nts

•re

duce

d ro

ad s

afet

y w

ith h

ighe

r nu

mbe

rs o

f inj

ured

/fat

aliti

es.

2. L

ack

of c

o-m

odal

tran

spor

t so

luti

ons.

Th

e ab

senc

e of

mul

ti-m

odal

tr

ansp

orta

tion

node

s re

duce

s se

nsib

le

syne

rgie

s be

twee

n di

ffer

ent m

odes

of

tran

spor

t (ro

ad, r

ail,

air a

nd w

ater

).

3. L

ack

of a

dmin

istr

ativ

e ca

paci

ty.

This

is r

efle

cted

in u

nder

staf

fed

and

unde

rfun

ded

adm

inis

trat

ions

, and

ab

ove

all l

ack

of c

o-or

dina

tion

amon

g di

ffer

ent t

rans

port

aut

hori

ties,

whi

ch

prev

ents

the

deve

lopm

ent o

f a n

atio

nal

co-o

rdin

ated

str

ateg

y on

tran

spor

t.

4. N

on-p

hysi

cal b

arri

ers

to th

e m

ovem

ent o

f goo

ds a

nd p

asse

nger

s.

Thes

e in

clud

e ex

cess

ive

bord

er-

cros

sing

pro

cedu

res,

adm

inis

trat

ive

and

regu

lativ

e pr

oced

ure

obst

acle

s.

Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •la

rge

num

bers

of d

ocum

ents

re

quire

d to

exp

ort a

nd im

port

•un

cert

aint

y ab

out t

he ti

me

cust

oms

proc

edur

es w

ill ta

ke a

t the

bor

ders

.

5. L

imit

ed o

penn

ess

of tr

ansp

ort

netw

orks

to p

riva

te o

pera

tors

. D

espi

te p

rogr

esse

s in

libe

ralis

atio

n,

the

mar

ket i

s st

ill m

uch

clos

ed.

Sym

ptom

s of

this

obs

tacl

e in

clud

e: •no

pri

vate

ope

rato

rs o

n th

e m

arke

t.

1. In

adeq

uate

inte

rnat

iona

l co

nnec

tions

red

uce

the

leve

l of

tran

spor

t for

frei

ght a

nd p

eopl

e.

This

als

o m

akes

tran

spor

t slo

wer

, due

to

a la

ck o

f fas

t roa

ds, w

hile

the

divi

de

betw

een

prim

ary

and

seco

ndar

y ro

ads

crea

tes

disr

uptio

n an

d co

nges

tion

acro

ss d

iffer

ent r

egio

ns. O

vera

ll, th

is

decr

ease

s in

vest

ors’

inte

rest

and

pa

rtic

ular

ly r

educ

es F

DI,

in e

cono

mie

s w

here

mos

t of t

he p

rodu

ctio

n is

ex

port

ed a

nd p

rodu

ctio

n pl

ants

nee

d to

re

spon

d qu

ickl

y to

dem

ands

from

thei

r he

adqu

arte

rs a

broa

d.

2. L

ack

of c

o-m

odal

sol

utio

ns n

ot

only

incr

ease

s fr

eigh

t tra

nspo

rtat

ion

time,

but

als

o su

gges

ts th

at n

ot a

ll tr

ansp

ort s

yste

ms

are

used

to th

eir

full

capa

city

. Thi

s lim

its th

e ec

onom

y’s

trad

e po

tent

ial a

nd re

duce

s th

e be

nefit

of

indi

vidu

al in

fras

truc

ture

pro

ject

s.

3. L

ow a

dmin

istr

ativ

e ca

paci

ty

redu

ces

the

abili

ty to

bui

ld c

oher

ent,

na

tion

wid

e tr

ansp

ort s

trat

egie

s th

at

wou

ld e

ncom

pass

diff

eren

t tra

nspo

rt

syst

ems

and

crea

te s

yner

gies

am

ong

road

, rai

l and

wat

er tr

ansp

ort.

Inef

fect

ive

tran

spor

tatio

n sy

stem

s ne

gativ

ely

affe

ct o

vera

ll tr

ansp

orta

tion

of p

eopl

e an

d go

ods.

4. B

urde

nsom

e pr

oced

ures

cre

ate

a di

sinc

entiv

e to

trad

e go

ods

acro

ss

bord

ers.

One

vis

ible

out

com

e is

a lo

w

ratio

of f

reig

ht tr

ansp

ort t

onne

-km

/GDP

, an

d m

ore

gene

rally

a re

duct

ion

in F

DI

due

to in

crea

sed

barr

iers

to in

vest

men

t.

5. A

bsen

ce o

f pri

vate

ope

rato

rs

redu

ces

com

peti

tion

in th

e se

ctor

. O

n th

e on

e ha

nd, t

his

unde

rmin

es

the

sust

aina

bilit

y an

d pr

ofita

bilit

y of

the

tran

spor

t sec

tor,

and

on th

e ot

her c

once

ntra

tes

the

burd

en o

f ca

pita

l inv

estm

ent o

n th

e sh

ould

ers

of th

e pu

blic

sec

tor,

whi

ch h

as li

mite

d ca

paci

ty to

inve

st.



Entr

y re

gula

tion

for r

ail t

rans

port

Wha

t are

the

lega

l con

ditio

ns o

f ent

ry in

to th

e pa

ssen

ger/

frei

ght t

rans

port

mar

ket?

Sim

ple

aver

age

over

two

segm

ents

(fre

ight

tran

spor

t and

pa

ssen

ger t

rans

port

).So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n.

Publ

ic o

wne

rshi

p (r

ail t

rans

port

)W

hat p

erce

ntag

e of

sha

res

do th

e go

vern

men

t ow

n in

the

larg

est f

irm in

the

oper

atio

n of

the

infr

astr

uctu

re s

ecto

r? W

hat p

erce

ntag

e of

sha

res

do th

e go

vern

men

t ow

n in

the

larg

est f

irm in

the

pass

enge

r/fr

eigh

t tra

nspo

rt s

ecto

r? S

impl

e av

erag

e ov

er tw

o se

gmen

ts (f

reig

ht tr

ansp

ort a

nd

pass

enge

r tra

nspo

rt).

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

Vert

ical

sep

arat

ion

(rai

l tra

nspo

rt)

Wha

t is

the

degr

ee o

f sep

arat

ion

betw

een

the

oper

atio

n of

infr

astr

uctu

re a

nd th

e pr

ovis

ion

of r

ailw

ay s

ervi

ces

(the

act

ual t

rans

port

of

pass

enge

rs o

r fre

ight

)?So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n.

Mar

ket s

truc

ture

(ra

il tr

ansp

ort)

Wha

t is

the

max

imum

num

ber o

f ope

rato

rs c

ompe

ting

in th

e sa

me

area

/rai

l dis

tric

t pas

seng

er/f

reig

ht tr

ansp

ort m

arke

t?

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

Entr

y re

gula

tion

(ro

ad tr

ansp

ort)

In o

rder

to e

stab

lish

a na

tiona

l roa

d fr

eigh

t bus

ines

s (o

ther

than

for t

rans

port

ing

dang

erou

s go

ods

or g

oods

for w

hich

san

itary

ass

uran

ces

are

requ

ired)

do

oper

ator

s ne

ed to

obt

ain

a lic

ence

(ot

her t

han

a dr

ivin

g lic

ence

) or p

erm

it fr

om th

e go

vern

men

t? A

re d

ecis

ions

on

the

entr

y of

new

op

erat

ors

base

d on

cri

teri

a ot

her t

han

tech

nica

l and

fina

ncia

l fitn

ess

and

com

plia

nce

with

pub

lic s

afet

y re

quire

men

ts?

Doe

s th

e re

gula

tor,

thro

ugh

licen

ces

or o

ther

wis

e, h

ave

any

pow

er to

lim

it in

dust

ry c

apac

ity?

Are

prof

essi

onal

bod

ies

or r

epre

sent

ativ

es o

f tra

de

and

com

mer

cial

inte

rest

s in

volv

ed in

spe

cify

ing

or e

nfor

cing

ent

ry r

egul

atio

ns?

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

Pric

e co

ntro

ls (

road

tran

spor

t)Ar

e re

tail

pric

es o

f roa

d fr

eigh

t ser

vice

s in

any

way

reg

ulat

ed b

y th

e go

vern

men

t? D

oes

the

gove

rnm

ent p

rovi

de p

rici

ng g

uide

lines

to r

oad

frei

ght c

ompa

nies

? Ar

e pr

ofes

sion

al b

odie

s or

rep

rese

ntat

ives

of t

rade

and

com

mer

cial

inte

rest

s in

volv

ed in

spe

cify

ing

or e

nfor

cing

pri

cing

gu

idel

ines

or r

egul

atio

ns?

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

Publ

ic o

wne

rshi

p of

air

tran

spor

tW

hat p

erce

ntag

e of

sha

res

in th

e la

rges

t car

rier

(do

mes

tic a

nd in

tern

atio

nal t

raff

ic c

ombi

ned)

are

ow

ned

by n

atio

nal,

stat

e or

pro

vinc

ial

auth

oriti

es?

Sou

rce:

OEC

D, I

nd

icat

ors

of

Pro

du

ct M

ark

et R

egu

lati

on

.

Reg

iona

l air

agr

eem

ent

Doe

s th

e ec

onom

y pa

rtic

ipat

e in

a r

egio

nal a

gree

men

t?So

urc

e: O

ECD

, In

dic

ato

rs o

f P

rod

uct

Ma

rket

Reg

ula

tio

n.

TR

AN

SPO

RT

MA

RK

ET

(con

t.)In

dica

tors

of

sta

te o

f pla

ySt

ruct

ural

ob

stac

les

Impa

ct o

n co

mpe

titi

vene

ss

and

grow

th




Sectoral developmentPolicy area indicators, structural obstacles and impact on competitiveness and growth



I. SI

ZE A

ND S

IGNI

FICA

NCE

OF T

HE S

ECTO

R

Agri

cult

ure

(% o

f GD

P, g

row

th)

The

first

indi

cato

r mea

sure

s th

e co

ntrib

utio

n of

agr

icul

ture

to to

tal g

ross

dom

estic

pro

duct

(G

DP)

, sho

win

g th

e im

port

ance

of a

gric

ultu

re fo

r ov

eral

l out

put.

The

seco

nd in

dica

tor m

easu

res

the

grow

th o

r dec

line

in v

alue

of a

gric

ultu

ral p

rodu

ctio

n ye

ar-o

n-ye

ar.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Agro

-foo

d se

ctor

(%

of v

alue

add

ed in

man

ufac

turi

ng, g

row

th)

The

agro

-foo

d se

ctor

ref

ers

to th

e su

bset

of m

anuf

actu

ring

that

pro

cess

es r

aw m

ater

ials

and

inte

rmed

iate

pro

duct

s de

rive

d fr

om th

e ag

ricu

ltura

l se

ctor

. The

firs

t ind

icat

or m

easu

res

agro

-foo

d pr

oduc

tion

as a

sha

re o

f ove

rall

man

ufac

turin

g. It

dem

onst

rate

s ho

w m

uch

proc

essi

ng th

ere

is

beyo

nd b

asic

agr

icul

ture

and

giv

es a

n id

ea o

f lev

els

of a

gric

ultu

ral p

rodu

ct s

peci

alis

atio

n. T

he s

econ

d in

dica

tor m

easu

res

the

cont

ribut

ion

of th

e ag

ro-f

ood

sect

or to

the

valu

e ad

ded

in m

anuf

actu

ring,

whi

ch g

iven

an

indi

catio

n of

the

impo

rtan

ce o

f thi

s se

ctor

for t

he e

cono

my.

So

urc

e: N

atio

na

l sta

tist

ics.

Empl

oym

ent i

n ag

ricu

ltur

e (%

of t

otal

em

ploy

men

t)M

easu

res

the

shar

e of

em

ploy

men

t gen

erat

ed b

y th

e ag

ricu

ltura

l sec

tor,

indi

catin

g th

e im

port

ance

of t

he s

ecto

r for

em

ploy

men

t cre

atio

n.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Empl

oym

ent i

n ag

ro-f

ood

indu

stry

(%

of t

otal

em

ploy

men

t)M

easu

res

the

shar

e of

peo

ple

empl

oyed

in th

e ag

ro-f

ood

sect

or c

ompa

red

to to

tal e

mpl

oym

ent.

It de

mon

stra

tes

the

impo

rtan

ce o

f the

agr

o-fo

od

sect

or fo

r ove

rall

empl

oym

ent.

So

urc

e: F

oo

d a

nd

Ag

ricu

ltu

re O

rga

niz

atio

n o

f th

e U

nit

ed N

atio

ns

(FA

O).

Shar

e of

cen

tral

gov

ernm

ent e

xpen

ditu

re o

n ag

ricu

ltur

e (%

of t

he to

tal b

udge

t, p

er h

ead,

per

hec

tare

)M

easu

res

the

shar

e of

tota

l gov

ernm

ent b

udge

t dire

cted

to th

is s

ecto

r. W

hen

benc

hmar

ked

agai

nst c

ompa

rato

r eco

nom

ies,

it in

dica

tes

how

wel

l th

e se

ctor

is s

uppo

rted

by

the

gove

rnm

ent c

ompa

red

to r

elev

ant p

eers

. So

urc

e: N

atio

na

l sta

tist

ics.

II. S

TRUC

TURE

OF

THE

SECT

OR

Agri

cult

ural

pro

duct

ion

(by

diff

eren

t com

mod

ity

grou

ps)

Tota

l agr

icul

tura

l pro

duct

ion

brok

en d

own

by c

omm

odity

gro

up, i

ndic

atin

g th

e st

ruct

ure

of a

gric

ultu

ral p

rodu

ctio

n.

Sou

rce:

FA

OS

TA

T h

ttp

://f

aost

at3.

fao.

org

/sea

rch

/ag

ricu

ltu

ral%

20p

rod

uct

ion

%20

by

%20

com

mo

dit

y%

20g

rou

ps%

20/E

.

Live

stoc

k pr

oduc

tion

(%

of o

vera

ll ag

ricu

ltur

al p

rodu

ctio

n)

Live

stoc

k pr

oduc

tion

as a

per

cent

age

of to

tal a

gric

ultu

ral p

rodu

ctio

n.

Sou

rces

: FA

OS

TA

T, n

atio

na

l sta

tist

ics.

Ara

ble

land

(%

of t

otal

agr

icul

tura

l lan

d)M

easu

res

how

muc

h of

the

tota

l agr

icul

tura

l lan

d ar

ea is

ara

ble

land

, ind

icat

ing

how

favo

urab

le c

ondi

tions

are

for a

gric

ultu

ral p

rodu

ctio

n.

Sou

rce

: Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Agri

cult

ural

are

a un

der u

se (

% o

f the

tota

l agr

icul

tura

l are

a)M

easu

res

the

ratio

of a

gric

ultu

ral l

and

unde

r use

to to

tal a

gric

ultu

ral l

and,

indi

catin

g th

e po

tent

ial f

or e

xpan

sion

of t

he a

gric

ultu

ral s

ecto

r int

o ot

her c

urre

ntly

unu

sed

land

. So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

AG

RIC

ULT

UR

E

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. H

ighl

y de

cent

ralis

ed a

gric

ultu

ral

prod

ucti

on in

volv

ing

smal

l-sc

ale

agri

cultu

re w

ith m

ixed

pro

duct

ion

syst

ems,

pro

duci

ng o

nly

smal

l qu

antit

ies

of m

arke

tabl

e su

rplu

s.

Frag

men

ted

prod

uctio

n an

d la

ck o

f m

echa

nisa

tion

and

know

-how

mak

es

it di

ffic

ult f

or fa

rmer

s to

ach

ieve

ec

onom

ies

of s

cale

in p

rodu

ctio

n an

d pr

oduc

e th

e qu

antit

ies

requ

ired

for s

ome

mar

kets

, con

stra

inin

g ag

ricu

ltura

l gro

wth

. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•sm

all a

vera

ge s

ize

of fa

rms

(u

nder

5 h

a, s

omet

imes

und

er 1

ha)

•lo

w s

hare

of i

rrig

ated

land

.

2. L

ow s

tand

ards

for f

ood

safe

ty

and

qual

ity,

and

und

erde

velo

ped

rela

ted

legi

slat

ion.

Sym

ptom

s of

this

ob

stac

le in

clud

e on

e or

mor

e of

the

follo

win

g: •lo

w n

umbe

r of H

ACCP

and

ISO

22

000

cert

ifica

tes

issu

ed

•fr

agm

ente

d le

gisl

atio

n; m

ultip

le

juri

sdic

tions

; and

wea

knes

ses

in s

urve

illan

ce, m

onito

ring

and

enfo

rcem

ent o

f nat

iona

l foo

d co

ntro

l sy

stem

s.

3. W

eak

inst

itut

iona

l and

ad

min

istr

ativ

e fr

amew

ork

for t

he

deve

lopm

ent a

nd im

plem

enta

tion

of

agri

cult

ural

and

rur

al d

evel

opm

ent

polic

ies.

Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g:

•no

mar

ket-

base

d an

alys

is o

f the

po

tent

ial n

eeds

of t

he s

ecto

r or

polic

ies

tailo

red

acco

rdin

gly

•lit

tle in

volv

emen

t of a

gric

ultu

ral

facu

lties

and

res

earc

h in

stitu

tes

in

the

polic

y an

alys

is a

nd fo

rmul

atio

n pr

oces

s.

1. S

mal

l-sc

ale

agri

cultu

ral p

rodu

ctio

n re

sults

in o

ne o

r mor

e of

the

follo

win

g:

•ou

tdat

ed te

chno

logy

/ m

echa

nisa

tion

and

insu

ffic

ient

and

po

orly

des

igne

d ir

riga

tion

sys

tem

s (i

f any

) •lo

w le

vels

of c

apac

ity

utili

sati

on •lo

w p

rodu

ct s

peci

alis

atio

n •la

ck o

f sta

ndar

ds fo

r foo

d sa

fety

•lo

w p

rodu

ctiv

ity

•lim

ited

add

ed v

alue

and

co

ntrib

utio

n to

GD

P •hi

gher

info

rmal

em

ploy

men

t in

the

sect

or •hi

gh s

hare

of a

gric

ultu

ral l

and

left

un

cult

ivat

ed •ri

sing

trad

e de

fici

t.2.

Eco

nom

ies

that

rely

on

food

exp

orts

fo

r for

eign

exc

hang

e ha

ve a

par

ticul

ar

inte

rest

in s

tren

gthe

ning

nat

iona

l foo

d co

ntro

l sys

tem

s, h

arm

onis

ing

natio

nal

food

regu

latio

ns w

ith in

tern

atio

nal

stan

dard

s, a

nd e

stab

lishi

ng im

port

and

ex

port

food

insp

ectio

n an

d ce

rtifi

catio

n sy

stem

s to

ens

ure

conf

orm

ity w

ith th

e W

orld

Tra

de O

rgan

izat

ion’

s ag

reem

ents

re

gard

ing

sani

tary

and

phy

tosa

nita

ry

mea

sure

s an

d te

chni

cal b

arrie

rs to

tr

ade.

Low

food

saf

ety

and

qual

ity

stan

dard

s an

d un

derd

evel

oped

rela

ted

legi

slat

ion

thus

resu

lt in

lim

ited

expo

rt

capa

city

and

can

lead

to o

utda

ted

tech

nolo

gy a

nd/o

r mec

hani

satio

n as

w

ell a

s lo

wer

pro

duct

ivit

y. T

hese

in

turn

aff

ect p

rosp

ects

for g

row

th a

nd

the

com

petit

iven

ess

of th

e se

ctor

.

3. A

d ho

c ag

ricu

ltura

l pol

icy

resu

lts in

in

adeq

uate

sup

port

for a

gric

ultu

ral

prod

ucer

s, lo

w p

rodu

ctiv

ity

and

low

ex

port

cap

acit

y, a

mon

g ot

her i

ssue

s.



Labo

ur p

rodu

ctiv

ity

(GD

P/w

orke

r in

USD

, as

% o

f the

EU

ave

rage

and

as

% o

f the

SEE

ave

rage

)M

easu

res

outp

ut p

er a

gric

ultu

ral w

orke

r com

pare

d to

: 1) t

he E

U a

vera

ge a

nd 2

) the

Sou

th E

ast E

urop

e (S

EE) a

vera

ge.

Sou

rce:

In

tern

atio

na

l Lab

ou

r O

rga

niz

atio

n (

ILO

) htt

p:/

/ww

w.i

lo.o

rg/g

lob

al/

stat

isti

cs-a

nd

-dat

aba

ses/

lan

g--e

n/i

nd

ex.h

tm.

Rur

al p

opul

atio

n (%

of t

he to

tal p

opul

atio

n)

Mea

sure

s th

e ru

ral p

opul

atio

n as

a s

hare

of t

he o

vera

ll po

pula

tion

and

can

be u

sed

as a

pro

xy fo

r the

labo

ur a

vaila

ble

to th

e ag

ricu

ltura

l sec

tor.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Aver

age

size

of i

ndiv

idua

l agr

icul

tura

l hol

ding

(in

ha)

Mea

sure

s th

e av

erag

e fa

rm s

ize,

indi

catin

g po

tent

ial s

mal

l-sc

ale

prod

uctio

n an

d th

e le

vel o

f con

solid

atio

n. In

the

EU, h

oldi

ngs

with

less

than

5

ha o

f lan

d un

der c

ultiv

atio

n ar

e co

nsid

ered

sm

all.

So

urc

e: N

atio

na

l sta

tist

ics.

Irri

gate

d ag

ricu

ltur

al la

nd (

% o

f tot

al a

gric

ultu

ral l

and)

Irri

gate

d ag

ricu

ltura

l lan

d re

fers

to a

gric

ultu

ral a

reas

pur

pose

ly p

rovi

ded

with

wat

er, i

nclu

ding

land

irri

gate

d by

con

trol

led

flood

ing.

The

sha

re o

f irr

igat

ed a

gric

ultu

ral l

and

as a

per

cent

age

of o

vera

ll la

nd u

nder

cul

tivat

ion

give

s an

idea

of h

ow d

evel

oped

irri

gatio

n is

. The

mor

e it

is d

evel

oped

, th

e be

tter

the

pros

pect

s fo

r lar

ge-s

cale

pro

duct

ion

and

high

er p

rodu

ctiv

ity, b

ut ir

riga

tion

is a

maj

or d

rivi

ng fo

rce

behi

nd w

ater

abs

trac

tion,

m

eani

ng s

usta

inab

le w

ater

man

agem

ent h

as to

be

in p

lace

.So

urc

e: W

orl

d B

an

k.

Agri

cult

ural

exp

orts

(%

of t

otal

exp

orts

)Ex

port

s of

agr

icul

tura

l pro

duct

s as

a s

hare

of t

otal

exp

orts

, ind

icat

ing

thei

r im

port

ance

to th

e ec

onom

y’s

over

all e

xpor

t per

form

ance

. So

urc

e: N

atio

na

l sta

tist

ics.

Agri

cult

ural

trad

e (e

xpor

t/im

port

) wit

h EU

(%

of t

otal

trad

e)

Mea

sure

s ag

ricu

ltura

l tra

de w

ith E

U c

ount

ries

as

a sh

are

of o

vera

ll tr

ade.

Thi

s in

dica

tes

the

stre

ngth

of a

gric

ultu

ral t

rade

link

s w

ith th

e EU

.So

urc

e: N

atio

na

l sta

tist

ics.

Non

-pro

cess

ed a

gro-

food

exp

orts

/im

port

s (%

tota

l tra

de)

Mea

sure

s no

n-pr

oces

sed

agro

-foo

d pr

oduc

ts a

s a

shar

e of

tota

l exp

orts

or i

mpo

rts.

Eco

nom

ies

shou

ld a

im to

pro

cess

as

muc

h ag

ricu

ltura

l pr

oduc

e th

emse

lves

as

poss

ible

and

exp

ort l

ess

raw

agr

icul

tura

l pro

duct

s, s

ince

that

tran

slat

es in

to m

ore

dom

estic

val

ue a

dded

and

hen

ce m

ore

job

crea

tion

and

inco

me

gene

ratio

n.So

urc

e: N

atio

na

l sta

tist

ics.

Agro

-foo

d tr

ade

bala

nce

(%

of G

DP)

Mea

sure

s th

e di

ffer

ence

bet

wee

n ex

port

s an

d im

port

s of

agr

o-fo

od p

rodu

cts

and

whe

ther

the

econ

omy

is a

net

exp

orte

r or i

mpo

rter

of t

hese

pr

oduc

ts.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Fore

ign

dire

ct in

vest

men

t (FD

I) in

flow

s to

agr

icul

ture

(%

of a

ll FD

I inf

low

s)M

easu

res

the

shar

e of

FD

I inf

low

s to

agr

icul

ture

as

a pe

rcen

tage

of t

otal

inflo

ws.

Indi

cate

s ho

w a

ttra

ctiv

e th

is s

ecto

r is

for i

nves

tors

. So

urc

e: F

AO

ST

AT

.

AG

RIC

ULT

UR

E (c

ont.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

4. L

imit

ed in

vest

men

t in

hum

an

reso

urce

s ne

eded

to e

nhan

ce th

e te

chni

cal,

mar

ketin

g an

d m

anag

eria

l ca

pabi

litie

s of

the

tota

l lab

our f

orce

. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•vo

catio

nal e

duca

tion

and

trai

ning

(V

ET) c

urri

cula

are

out

date

d an

d ar

e no

t in

line

with

labo

ur m

arke

t nee

ds •w

eak

capa

city

of e

mpl

oym

ent

serv

ices

with

und

erfu

nded

and

un

ders

taff

ed p

rogr

amm

es •no

or l

imite

d se

ctor

trai

ning

nee

ds

anal

ysis

(TN

A) •lo

w p

artic

ipat

ion

in li

felo

ng le

arni

ng.

5. D

elay

s in

res

truc

turi

ng a

nd

priv

atis

atio

n of

sta

te o

wne

d ag

ricu

ltur

al fi

rms.

Sym

ptom

s in

clud

e:

•la

ck o

f a c

ompr

ehen

sive

pr

ivat

isat

ion

stra

tegy

•lo

w c

apac

ity u

tilis

atio

n

4. L

imite

d in

vest

men

t in

hum

an

reso

urce

s re

sults

in in

adeq

uate

hu

man

cap

ital

at a

ll le

vels

, mea

ning

th

e se

ctor

lack

s su

ffic

ient

num

bers

, ca

paci

ty, k

now

ledg

e an

d re

leva

nt

expe

rtis

e to

mee

t the

cha

lleng

es o

f a

mod

ern,

com

petit

ive

agro

-foo

d sy

stem

or t

he d

iver

sity

of p

robl

ems

faci

ng u

nder

deve

lope

d ru

ral a

reas

. Th

is h

as d

irect

neg

ativ

e ef

fect

s on

em

ploy

men

t and

its

qual

ity,

prod

uctiv

ity, i

nter

nal c

onsu

mpt

ion

and

pove

rty

redu

ctio

n.5.

Del

ays

in th

e pr

ivat

isat

ion

of fi

rms

resu

lt in

the

brea

king

-up

of m

arke

ting

ch

anne

ls a

nd s

ervi

ces

for s

mal

l-sc

ale

prod

ucer

s, c

oupl

ed w

ith th

e sl

ow e

mer

genc

e of

new

mar

keti

ng

mec

hani

sms.

Add

ition

ally

, a

sign

ific

ant s

hare

of a

gric

ultu

ral l

and

mig

ht b

e le

ft u

ncul

tiva

ted

or u

sed

for

urba

n us

es. T

his

dete

rs in

vest

men

ts

in a

gric

ultu

re, p

rodu

ctiv

ity g

row

th,

empl

oym

ent,

etc.



Agri

cult

ural

mac

hine

ry (

num

ber o

f tra

ctor

s pe

r 100

km

2, a

vera

ge a

ge o

f tra

ctor

s)Th

e fir

st in

dica

tor i

s a

prox

y fo

r the

agr

icul

tura

l sec

tor’s

leve

l of m

echa

nisa

tion.

The

sec

ond

mea

sure

s ho

w o

bsol

ete

the

trac

tors

use

d m

ight

be

, ind

icat

ing

the

stat

e of

mec

hani

satio

n an

d po

tent

ial e

ffec

ts o

n pr

oduc

tivity

. Bot

h ca

n be

use

d as

pro

xies

for t

he le

vel o

f pro

duct

ivity

in

agri

cultu

re.

Sou

rces

: Wo

rld

Ba

nk

, Dat

aba

se o

f A

gri

cult

ura

l In

dic

ato

rs; n

atio

na

l sta

tist

ics.

Aver

age

age

of p

roce

ssin

g eq

uipm

ent i

n th

e ag

ro-f

ood

indu

stry

M

easu

res

the

leve

l of o

bsol

esce

nce

of th

e eq

uipm

ent u

sed,

indi

catin

g th

e st

ate

of m

echa

nisa

tion

and

pote

ntia

l eff

ects

on

prod

uctiv

ity. C

an b

e us

ed a

s pr

oxy

for l

abou

r pro

duct

ivity

in th

e fo

od p

roce

ssin

g in

dust

ry in

the

abse

nce

of o

ther

dat

a.So

urc

e: N

atio

na

l sta

tist

ics.

Org

anic

pro

duct

ion

as a

sha

re o

f tot

al a

gro-

food

pro

duct

ion

Dem

and

for o

rgan

ic p

rodu

cts

is g

row

ing,

esp

ecia

lly in

EU

cou

ntri

es a

nd o

rgan

ic p

rodu

ctio

n ca

n re

pres

ent a

n av

enue

for d

iver

sific

atio

n in

to

high

er-v

alue

pro

duct

s an

d ov

eral

l exp

ort g

row

th in

the

sect

or.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Num

ber o

f foo

d sa

fety

and

qua

lity

cert

ific

ates

issu

ed in

the

prev

ious

yea

r (H

ACCP

, ISO

220

00) c

ompa

red

to a

cer

tain

ben

chm

ark

(thi

s w

ill

depe

nd o

n th

e ec

onom

y)

Mea

sure

s th

e le

vel o

f alig

nmen

t with

inte

rnat

iona

l foo

d st

anda

rds.

The

impl

emen

tatio

n of

sta

ndar

ds h

as th

e po

tent

ial t

o ea

se a

cces

s to

the

EU

sing

le m

arke

t and

libe

ralis

e in

tern

atio

nal t

rade

. Th

e gr

eate

r the

num

ber o

f cer

tific

ates

issu

ed, t

he g

reat

er th

e ex

pect

ed le

vel o

f com

petit

iven

ess

whe

n ex

port

ing

to th

e EU

mar

ket.

Sou

rce:

Nat

ion

al s

tati

stic

s (e

.g. c

ha

mb

ers

of

com

mer

ce).

AG

RIC

ULT

UR

E (c

ont.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth



I. SI

ZE A

ND S

IGNI

FICA

NCE

OF T

HE S

ECTO

R

Valu

e ad

ded

by in

dust

ry (

% o

f GD

P)

Indu

stry

rep

rese

nts

the

part

of t

he e

cono

my

devo

ted

to p

rodu

cing

goo

ds, a

s op

pose

d to

agr

icul

tura

l out

put a

nd s

ervi

ces.

It c

ompr

ises

, am

ong

othe

rs, m

inin

g, m

anuf

actu

ring,

con

stru

ctio

n an

d el

ectr

icity

gen

erat

ion.

Thi

s in

dica

tor m

easu

res

the

shar

e of

val

ue a

dded

by

indu

stry

as

a pe

rcen

tage

of G

DP.

So

urc

e: W

orl

d B

an

k.

Valu

e ad

ded

by m

anuf

actu

ring

(%

of t

otal

val

ue a

dded

, % g

row

th)

Mea

sure

s m

anuf

actu

ring’

s sh

are

of to

tal v

alue

add

ed a

nd it

s gr

owth

or d

eclin

e.. I

t ind

icat

es th

e co

ntrib

utio

n of

this

sec

tor t

o th

e to

tal v

alue

ad

ded.

So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

; Wo

rld

Ba

nk

.

Empl

oym

ent i

n m

anuf

actu

ring

(%

of t

otal

em

ploy

men

t)M

easu

res

the

shar

e of

em

ploy

men

t gen

erat

ed in

the

man

ufac

turin

g se

ctor

, ind

icat

ing

the

impo

rtan

ce o

f thi

s se

ctor

to e

mpl

oym

ent c

reat

ion.

So

urc

e: N

atio

na

l sta

tist

ics.

Stat

e ai

d to

indu

stry

exc

ludi

ng tr

ansp

ort,

agr

icul

ture

and

fish

erie

s (%

GD

P)M

easu

res

the

shar

e of

bud

get d

evot

ed to

this

sec

tor a

s a

shar

e of

GD

P, in

dica

ting

the

leve

l of s

uppo

rt p

rovi

ded

by th

e go

vern

men

t. So

urc

e: N

atio

na

l sta

tist

ics.

Shar

e of

cen

tral

gov

ernm

ent e

xpen

ditu

re o

n m

anuf

actu

ring

(%

of t

he to

tal b

udge

t, p

er h

ead,

per

ha)

M

easu

res

the

shar

e of

bud

geta

ry fu

nds

to th

is s

ecto

r out

of t

he o

vera

ll bu

dget

, ind

icat

ing

the

leve

l of s

uppo

rt p

rovi

ded

by th

e go

vern

men

t. So

urc

e: N

atio

na

l sta

tist

ics.

Nat

iona

l ind

ustr

y de

velo

pmen

t str

ateg

y an

d ac

tion

pla

nA

natio

nal s

trat

egy

and

actio

n pl

an e

nabl

es p

olic

y m

aker

s to

ass

ess

the

area

s of

gre

ates

t com

petit

ive

pote

ntia

l and

dire

ct th

eir e

ffor

ts m

ore

effe

ctiv

ely

to c

aptu

re th

e ec

onom

ic a

nd w

ider

soc

ial b

enef

its o

f ind

ustr

y. M

easu

red

as a

yes

/no,

with

sco

ring

base

d on

cri

teri

a in

clud

ing

qual

ity,

deve

lopm

ent p

roce

sses

, evi

denc

e ba

se, d

eliv

ery

thro

ugh

co-o

rdin

ated

act

ion

plan

ning

with

par

tner

s ov

er ti

me

and

inte

grat

ion

with

a n

atio

nal

stra

tegy

and

gov

ernm

ent a

ppro

pria

tions

for i

ndus

try.

The

exi

sten

ce o

f an

actio

n pl

an d

oes

not o

n its

ow

n gu

aran

tee

effe

ctiv

e as

sist

ance

to

impr

ove

the

com

petit

iven

ess

of th

e ec

onom

y’s

indu

stry

. Ass

essm

ent o

f thi

s in

dica

tor w

ill r

equi

re a

car

eful

and

dee

per c

onsi

dera

tion

of th

e co

ntex

t and

com

pone

nts

for t

he p

lan

and

wha

t it s

eeks

to d

eliv

er in

term

s of

impr

ovin

g co

mpe

titiv

enes

s. S

ome

plan

s m

ay b

e ge

nera

l whe

n m

ore

deta

iled

segm

ent-

spec

ific

actio

ns m

ight

be

need

ed to

impr

ove

com

petit

iven

ess.

Thi

s is

esp

ecia

lly im

port

ant g

iven

the

pace

of e

xter

nal f

acto

rs

such

as

cris

es. w

hich

can

hav

e ke

y im

pact

s on

com

petit

iven

ess.

Thi

s ca

n re

quire

act

ion

plan

s to

be

adju

sted

at s

hort

not

ice,

bas

ed o

n ev

iden

ce,

and

the

plan

ning

pro

cess

, act

ors

and

colla

bora

tion

mus

t be

stro

ng e

noug

h to

allo

w s

uch

adju

stm

ents

.So

urc

e: M

inis

try

resp

on

sib

le f

or

ind

ust

ry.

II. S

TRUC

TURE

OF

THE

SECT

OR

Man

ufac

turi

ng p

rodu

ctio

n (i

ndex

: 201

0=10

0)M

easu

res

chan

ges

in th

e pr

ice-

adju

sted

out

put o

f man

ufac

turin

g ov

er a

giv

en r

efer

ence

per

iod,

exp

ress

ed a

s an

inde

x w

ith a

bas

e of

201

0=10

0.

It pr

ovid

es in

sigh

ts in

to th

e tr

ends

in m

anuf

actu

ring

prod

uctio

n ov

er ti

me.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

IND

US

TR

Y A

ND

MA

NU

FAC

TU

RIN

G

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. S

low

res

truc

turi

ng o

f the

sec

tor

follo

win

g de

indu

stri

alis

atio

n in

the

1990

s an

d 20

00s.

Sym

ptom

s of

this

ob

stac

le in

clud

e: •lo

w le

vels

of c

apac

ity u

tilis

atio

n •lo

w le

vels

of i

ndus

tria

l pro

duct

ion

•in

suff

icie

nt in

vest

men

t in

the

sect

or

•hi

gh p

erce

ntag

e of

uns

ucce

ssfu

l pr

ivat

isat

ions

and

the

lack

of a

co

mpr

ehen

sive

priv

atis

atio

n st

rate

gy.

2. A

lack

of t

arge

ted

indu

stri

al

deve

lopm

ent a

nd in

effi

cien

t m

anag

emen

t of s

tate

sup

port

for

the

prom

otio

n of

inve

stm

ents

and

ex

port

s. S

ympt

oms

of th

is o

bsta

cle

incl

ude:

•in

dust

rial

pol

icy

fails

to ta

rget

the

mos

t sev

ere

obst

acle

s to

indu

stri

al

deve

lopm

ent

•st

ate

inve

stm

ent a

nd e

xpor

t pr

omot

ion

is fr

agm

ente

d,

unsy

nchr

onis

ed, i

nsuf

ficie

ntly

tr

ansp

aren

t and

lack

s ad

equa

te

eval

uatio

n m

echa

nism

s •in

dust

rial s

tate

aid

ofte

n di

scrim

inat

es

agai

nst s

mal

ler p

rivat

ely

owne

d pr

oduc

tion

com

pani

es, w

ith to

o m

uch

stat

e ai

d gr

ante

d to

unp

rofit

able

pub

lic

com

pani

es o

r to

non-

tran

spar

ent F

DI

proj

ects

.

3. L

imit

ed k

now

ledg

e tr

ansf

er

betw

een

univ

ersi

ties

and

indu

stry

.

Sym

ptom

s of

this

obs

tacl

e in

clud

e:

•lim

ited

ince

ntiv

es fo

r aca

dem

ics

to

cond

uct r

esea

rch

of c

omm

erci

al v

alue

•lit

tle o

r no

co-o

pera

tion

betw

een

the

rese

arch

inst

itute

s an

d in

dust

ry.

4. L

imit

ed in

vest

men

t in

hum

an

reso

urce

s, w

hich

res

ults

in a

n in

adeq

uate

ly s

kille

d in

dust

rial

w

orkf

orce

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •an

edu

catio

n sy

stem

not

alig

ned

with

labo

ur m

arke

t nee

ds

1., 2

. Slo

w r

estr

uctu

ring

of t

he s

ecto

r fo

llow

ing

the

dein

dust

rial

isat

ion

of

the

1990

s an

d 20

00s

has

cont

ribu

ted

to d

efic

ienc

ies

in th

e te

chno

logi

cal

leve

l of i

ndus

tria

l cap

acit

ies

and

skill

s ba

se, u

nfav

oura

ble

expo

rt

stru

ctur

es, u

nfav

oura

ble

leve

ls o

f sp

ecia

lisa

tion

of i

ndus

tria

l pro

duct

s an

d ov

eral

l low

pro

duct

ivit

y in

the

sect

or. A

lthou

gh d

eind

ustr

ialis

atio

n ap

pear

s to

hav

e st

oppe

d, th

e le

vel

of p

rodu

ctiv

ity in

the

sect

or r

emai

ns

very

low

(40

% b

elow

leve

ls in

Cen

tral

an

d Ea

ster

n Eu

rope

).

Sust

aine

d in

vest

men

t in

indu

stry

an

d m

anuf

actu

ring

is n

eede

d to

saf

egua

rd a

nd u

pgra

de s

kills

, im

prov

e pr

oduc

tivity

and

so

enab

le

the

inte

grat

ion

of m

ore

firm

s in

to

glob

al v

alue

cha

ins.

Pri

vatis

atio

n on

its

own

is u

nlik

ely

to p

rom

ote

econ

omic

gro

wth

in th

e ab

senc

e of

a

com

preh

ensi

ve in

dust

rial

pol

icy

to g

uide

the

repl

acem

ent o

f the

old

in

dust

rial

str

uctu

res.

Fur

ther

, the

lack

of

a p

olic

y do

es n

ot c

ompl

y w

ith th

e EU

acq

uis.

Lack

of i

nves

tmen

t tra

nsla

tes

into

un

derd

evel

oped

indu

stry

pro

duci

ng

undi

ffer

enti

ated

and

bas

ic p

rodu

cts

and

a la

rge

shar

e of

raw

mat

eria

ls

and

unco

mpe

titi

ve e

xpor

ts, l

eadi

ng

to lo

w in

com

es a

nd o

vera

ll lo

w

prod

uctiv

ity o

f the

sec

tor.

Poor

ly d

efin

ed s

tate

aid

res

ults

in

a fa

ilur

e to

targ

et a

id e

ffic

ient

ly

whe

re it

will

cre

ate

the

mos

t gro

wth

. Th

is a

ffec

ts in

dust

ry’s

cap

acity

to

inve

st a

nd in

nova

te a

nd in

dire

ctly

le

ads

to lo

w p

rodu

ctiv

ity a

nd a

wea

k ex

port

bas

e.



Indu

stri

al p

rodu

ct e

xpor

ts (

% o

f tot

al e

xpor

ts, g

row

th)

Mea

sure

s th

e pe

rcen

tage

of i

ndus

tria

l pro

duct

s as

a s

hare

of t

otal

exp

orts

, ind

icat

ing

thei

r im

port

ance

to th

e ec

onom

y’s

over

all e

xpor

t bas

e.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Inte

rmed

iate

indu

stri

al p

rodu

cts,

exp

orts

/im

port

s (%

of t

otal

trad

e)M

easu

res

inte

rmed

iate

indu

stri

al p

rodu

cts

as a

sha

re o

f tot

al e

xpor

ts o

r im

port

s, in

dica

ting

the

leve

l of s

peci

alis

atio

n in

the

indu

stri

al s

ecto

r. Th

e hi

gher

the

shar

e of

inte

rmed

iate

indu

stri

al p

rodu

cts

in to

tal e

xpor

ts, a

nd th

e lo

wer

thei

r sha

re o

f tot

al im

port

s, th

e le

ss s

peci

alis

ed th

e in

dust

rial

sec

tor.

A hi

gh s

hare

of i

nter

med

iate

indu

stri

al p

rodu

cts

in to

tal e

xpor

ts s

igna

ls th

e ne

ed to

shi

ft o

utpu

t to

high

er v

alue

, spe

cial

ist

prod

ucts

. So

urc

e: N

atio

na

l sta

tist

ics.

Fi

nal i

ndus

tria

l pro

duct

s ex

port

s/im

port

s (%

of t

otal

trad

e)

Mea

sure

s th

e sh

are

of fi

nal i

ndus

tria

l pro

duct

s in

the

tota

l exp

ort o

r im

port

. Ind

icat

es th

e le

vel o

f spe

cial

isat

ion

in th

e in

dust

rial

sec

tor.

The

high

er th

e sh

are

of fi

nal i

ndus

tria

l pro

duct

s of

tota

l exp

orts

and

the

low

er th

eir s

hare

of t

otal

impo

rts,

the

mor

e sp

ecia

lised

the

indu

stri

al s

ecto

r. So

urc

e: N

atio

na

l sta

tist

ics.

Hig

h te

chno

logy

exp

orts

(%

of t

otal

exp

orts

) M

easu

res

high

tech

nolo

gy p

rodu

cts

as a

sha

re o

f ove

rall

expo

rts,

indi

catin

g th

e le

vel o

f sop

hist

icat

ion

of th

e co

untr

y’s

expo

rts.

So

urc

e: W

orl

d B

an

k.

III. C

APAC

ITY

AND

POTE

NTIA

L

Labo

ur p

rodu

ctiv

ity

in m

anuf

actu

ring

(in

dex:

201

0=10

0)M

easu

res

chan

ges

in th

e va

lue

adde

d pe

r per

son

empl

oyed

in th

e m

anuf

actu

ring

sect

or e

xpre

ssed

as

an in

dex

with

bas

e 20

10=1

00. I

ndic

ates

ch

ange

s in

labo

ur p

rodu

ctiv

ity o

ver t

ime.

So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

Com

peti

tive

Indu

stri

al P

erfo

rman

ce (

CIP)

inde

xTh

e CI

P in

dex

cons

ists

of e

ight

sub

-indi

cato

rs a

long

thre

e di

men

sion

s of

indu

stri

al c

ompe

titiv

enes

s. T

he fi

rst d

imen

sion

des

crib

es a

n ec

onom

y’s

capa

city

to p

rodu

ce a

nd e

xpor

t man

ufac

ture

d go

ods

and

is c

aptu

red

by it

s m

anuf

actu

ring

valu

e ad

ded

(MVA

) per

cap

ita (

MVA

pc)

and

its m

anuf

actu

red

expo

rts

per c

apita

(M

Xpc)

. The

sec

ond

dim

ensi

on c

over

s an

eco

nom

y’s

leve

ls o

f tec

hnol

ogic

al d

eepe

ning

and

upg

radi

ng.

The

third

dim

ensi

on is

the

econ

omy’

s im

pact

on

wor

ld m

anuf

actu

ring,

bot

h in

term

s of

val

ue-a

dded

sha

re o

f wor

ld M

VA (

ImW

MVA

) and

of w

orld

m

anuf

actu

ring

trad

e (I

mW

MT)

.So

urc

e: U

nit

ed N

atio

ns

Ind

ust

ria

l Dev

elo

pm

ent

Org

an

izat

ion

(U

NID

O),

CIP

, un

ido.

org

/dat

a1/S

tati

stic

s/R

esea

rch

/cip

.htm

l.

Net

fina

ncia

l res

ult o

f man

ufac

turi

ng in

the

over

all e

cono

my

(tot

al, %

, by

sect

or)

Mea

sure

s th

e pr

ofita

bilit

y of

the

man

ufac

turin

g se

ctor

, whi

ch c

an s

erve

as

a pr

oxy

for i

ts r

elat

ive

com

petit

iven

ess.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Indu

stri

al p

rodu

cts

trad

ed (

expo

rt/i

mpo

rt) w

ith

the

EU a

nd w

ith

SEE

(im

port

/exp

ort,

% o

f tot

al tr

ade)

Mea

sure

s th

e sh

are

of tr

ade

in th

e in

dust

rial

pro

duct

s di

rect

ed to

: 1) E

U c

ount

ries

and

2) S

EE c

ount

ries

, out

of o

vera

ll tr

ade.

It in

dica

tes

the

stre

ngth

of i

ndus

tria

l tra

de li

nks

with

the

EU a

nd S

EE e

cono

mie

s.So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

IND

US

TR

Y A

ND

MA

NU

FAC

TU

RIN

G (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•w

eak

capa

city

of e

mpl

oym

ent

serv

ices

to m

atch

peo

ple

with

jobs

w

ith u

nder

fund

ed a

nd u

nder

staf

fed

prog

ram

mes

•no

or l

imite

d se

ctor

trai

ning

nee

ds

anal

ysis

(TN

A) r

esul

ting

in li

mite

d ac

cess

to th

e tr

aini

ng n

eede

d •lo

w p

artic

ipat

ion

in li

felo

ng le

arni

ng.

5. L

ack

of in

stit

utio

nal s

uppo

rt fo

r en

viro

nmen

tall

y fr

iend

ly in

dust

rial

pr

oduc

tion

. •ou

tdat

ed “

dirt

y” te

chno

logy

in u

se •lo

w n

umbe

r of e

co-s

tand

ards

im

plem

ente

d or

cer

tific

ates

issu

ed •In

suff

icie

nt fi

nanc

ial s

uppo

rt

prov

ided

for e

co-f

rien

dly

prod

uctio

n (l

ack

of s

ubsi

dies

/tax

ince

ntiv

es)

•Li

mite

d no

n-fin

anci

al s

uppo

rt

prov

ided

, suc

h as

was

te

man

agem

ent p

rogr

amm

es, w

ater

co

nser

vatio

n pr

ogra

mm

es, t

rain

ing

on th

e ci

rcul

ar e

cono

my.

Stat

e su

ppor

t sys

tem

s sh

ould

ens

ure

that

fina

ncia

l aid

is g

rant

ed o

n th

e ba

sis

of c

lear

cri

teri

a in

line

with

EU

an

d St

abili

satio

n an

d As

soci

atio

n Ag

reem

ent (

SAA)

sta

te a

id r

ules

, an

d ac

cord

ing

to fu

lly tr

ansp

aren

t pr

oced

ures

.

3. L

imite

d kn

owle

dge

tran

sfer

bet

wee

n ac

adem

ia a

nd in

dust

ry re

duce

s th

e ca

paci

ty o

f the

sec

tor t

o in

nova

te

and

dete

rs p

oten

tial i

n-co

untr

y te

chno

logy

dev

elop

men

t. Th

is in

tu

rn le

ads

to lo

w le

vels

of p

rodu

ct

spec

ialis

atio

n, a

nd a

wea

k ex

port

bas

e an

d ha

mpe

rs p

oten

tial i

nves

tmen

ts in

th

e se

ctor

and

lim

its it

s gr

owth

.

4. L

imite

d in

vest

men

t in

hum

an

reso

urce

s, w

hich

res

ults

in

inad

equa

te h

uman

cap

ital

at a

ll le

vels

, mos

tly

lack

ing

suff

icie

nt

capa

city

, kno

wle

dge

and

rele

vant

ex

pert

ise

to m

eet t

he c

halle

nges

of a

m

oder

n, c

ompe

titiv

e m

anuf

actu

ring

se

ctor

or t

o ta

ckle

the

rang

e of

pr

oble

ms

faci

ng u

nder

deve

lope

d ru

ral

area

s. T

his

has

dire

ct n

egat

ive

effe

cts

on e

mpl

oym

ent a

nd it

s qu

ality

, pr

oduc

tivity

, int

erna

l con

sum

ptio

n an

d p

over

ty r

educ

tion.

5.

Lac

k of

inst

itutio

nal s

uppo

rt to

en

viro

nmen

tally

frie

ndly

indu

stri

al

prod

uctio

n le

ads

to u

nsus

tain

able

gr

owth

and

an

expo

rt s

truc

ture

th

at d

oes

not m

eet i

nter

nati

onal

de

man

d.



Indu

stri

al p

rodu

cts

trad

e ba

lanc

e (%

of G

DP)

M

easu

res

the

defic

it or

sur

plus

in in

dust

rial

pro

duct

s tr

aded

, ind

icat

ing

if th

e ec

onom

y is

a n

et e

xpor

ter o

r net

impo

rter

of i

ndus

tria

l pro

duct

s.So

urc

e: N

atio

na

l sta

tist

ics.

FDI i

nflo

ws

to m

anuf

actu

ring

(%

of a

ll FD

I inf

low

s)M

easu

res

the

shar

e of

FD

I inf

low

s to

man

ufac

turin

g as

a p

erce

ntag

e of

tota

l inf

low

s. I

t ind

icat

es h

ow a

ttra

ctiv

e th

is s

ecto

r is

for i

nves

tors

. So

urc

e: N

atio

na

l sta

tist

ics.

Inve

stm

ent i

n m

achi

nery

and

equ

ipm

ent,

inve

stm

ent i

n fi

xed

asse

ts (

% o

f G

DP)

Mea

sure

s th

e le

vel o

f inv

estm

ent i

n m

achi

nery

and

equ

ipm

ent a

nd th

e le

vel o

f inv

estm

ent i

n fix

ed a

sset

s as

a p

erce

ntag

e of

GD

P. C

an s

erve

as

a pr

oxy

for t

he le

vel o

f sop

hist

icat

ion

of m

achi

nery

/cap

ital a

vaila

bilit

y in

the

man

ufac

turin

g se

ctor

.So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

; nat

ion

al s

tati

stic

s.

Prod

ucti

on c

erti

fica

tion

(nu

mbe

r of C

E-m

arke

d pr

oduc

ts)

By a

ffix

ing

the

CE m

arki

ng to

a p

rodu

ct, m

anuf

actu

rers

dec

lare

on

thei

r sol

e re

spon

sibi

lity

that

the

prod

uct i

s in

con

form

ity w

ith th

e es

sent

ial

requ

irem

ents

of t

he a

pplic

able

EU

har

mon

isat

ion

legi

slat

ion,

and

that

the

rele

vant

con

form

ity a

sses

smen

t pro

cedu

res

have

bee

n fu

lfille

d.

Prod

ucts

bea

ring

the

CE m

arki

ng a

re p

resu

med

to b

e in

com

plia

nce

with

the

appl

icab

le E

U h

arm

onis

atio

n le

gisl

atio

n an

d he

nce

bene

fit fr

om fr

ee

circ

ulat

ion

in th

e Eu

rope

an s

ingl

e m

arke

t. So

urc

e: N

atio

na

l sta

tist

ics.

Num

ber o

f qua

lity

cert

ific

ates

issu

ed

Mea

sure

s th

e le

vel o

f alig

nmen

t with

inte

rnat

iona

l qua

lity

stan

dard

s. T

he im

plem

enta

tion

of s

tand

ards

con

trib

utes

to e

asin

g th

e ac

cess

to th

e EU

sin

gle

mar

ket a

nd li

bera

lisin

g in

tern

atio

nal t

rade

.So

urc

e: N

atio

na

l sta

tist

ics.

Eco-

frie

ndly

tech

nolo

gies

as

a sh

are

of o

vera

ll te

chno

logy

use

d Ec

o-fr

iend

ly te

chno

logy

can

hel

p pr

eser

ve th

e en

viro

nmen

t thr

ough

ene

rgy

effic

ienc

y an

d re

duct

ion

of h

arm

ful w

aste

. Pot

entia

l are

as fo

r suc

h te

chno

logy

incl

ude

gree

n en

ergy

, eco

-fri

endl

y te

xtile

s, g

reen

bui

ldin

g co

nstr

uctio

n, a

nd m

anuf

actu

ring

prod

ucts

and

mat

eria

ls to

sup

port

gre

en

busi

ness

. Dem

and

for t

hese

pro

duct

s is

gro

win

g, e

spec

ially

in E

U c

ount

ries

and

suc

h pr

oduc

tion

can

repr

esen

t an

aven

ue fo

r div

ersi

ficat

ion

into

hi

gher

-val

ue in

dust

rial

pro

duct

s an

d ov

eral

l exp

ort g

row

th in

the

sect

or.

Sou

rce:

Nat

ion

al s

tati

stic

s.

IND

US

TR

Y A

ND

MA

NU

FAC

TU

RIN

G (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth



I. SI

ZE A

ND S

IGNI

FICA

NCE

OF T

HE S

ECTO

R

Tour

ism

(%

GD

P)

Mea

sure

s th

e sh

are

of G

DP

gene

rate

d by

tour

ism

. Tou

rism

is o

ne o

f the

wor

ld’s

mos

t im

port

ant i

ndus

trie

s in

term

s of

GD

P. A

s to

uris

m d

eman

d co

ntin

ues

to r

ise

over

all,

tour

ism

GD

P in

crea

ses

but c

ompe

titio

n is

als

o in

crea

sing

with

the

grow

th o

f em

ergi

ng e

cono

mie

s an

d th

e re

sulti

ng

new

pre

ssur

es o

n th

e m

arke

t pos

ition

of d

evel

oped

eco

nom

ies.

Sou

rce:

Wo

rld

Tra

vel a

nd

To

uri

sm C

ou

nci

l (W

TT

C).

Tour

ism

em

ploy

men

t (%

tota

l em

ploy

men

t)

Empl

oym

ent i

n to

uris

m a

s a

shar

e of

tota

l em

ploy

men

t. So

urc

e: W

TT

C.

Tour

ism

exp

orts

(%

of t

he to

tal e

xpor

t)To

uris

m e

xpor

t ear

ning

s as

a s

hare

of o

vera

ll ex

port

s.

Sou

rce:

WT

TC

.

Expo

rts

of to

uris

m s

ervi

ces

(% a

nnua

l gro

wth

)M

easu

res

the

grow

th o

r dec

line

year

-on-

year

in v

alue

of t

ouri

sm e

xpor

ts, i

n th

e lo

cal c

urre

ncy,

exp

ress

ed a

s a

perc

enta

ge c

hang

e. A

s a

year

-on

-yea

r ind

icat

or, t

his

mea

sure

sho

ws

chan

ges

in p

erfo

rman

ce r

efle

ctin

g co

mpe

titio

n in

term

s of

bra

ndin

g, v

alue

aw

aren

ess

and

inte

rnat

iona

l ap

peal

. Int

erna

tiona

l com

pari

sons

usi

ng th

is in

dica

tor w

ill in

form

pol

icy

mak

ers

of th

e ec

onom

y’s

perf

orm

ance

rel

ativ

e to

the

leve

l of i

nves

tmen

t w

hich

, in

com

bina

tion

with

oth

er p

erfo

rman

ce in

dica

tors

cou

ld in

form

the

deba

te o

n w

hat w

orks

to in

crea

se to

uris

m c

ompe

titiv

enes

s.So

urc

es: O

ECD

; In

tern

atio

na

l Mo

net

ary

Fu

nd

(IM

F).

Budg

et a

lloca

ted

to to

uris

m

Hig

h le

vels

of g

over

nmen

t fin

anci

al c

omm

itmen

t to

the

tour

ism

sec

tor (

espe

cial

ly in

the

area

s of

pre

serv

atio

n of

nat

ural

, cul

tura

l and

his

tori

c he

rita

ge, a

nd to

uris

m in

fras

truc

ture

) sho

uld,

if p

rope

rly

targ

eted

, con

trib

ute

to im

prov

ing

its c

ompe

titiv

enes

s. L

ow o

r vol

atile

fina

ncia

l spe

ndin

g fr

om g

over

nmen

t ove

r tim

e w

ill r

esul

t in

a su

bopt

imal

per

form

ance

and

mar

ket f

ailu

res,

and

res

ult i

n a

long

-ter

m lo

ss o

f glo

bal c

ompe

titiv

enes

s.So

urc

e: N

atio

na

l sta

tist

ics.

Budg

et o

f the

nat

iona

l tou

rism

age

ncy

The

size

of t

he a

genc

y’s

budg

et r

efle

cts

its c

apac

ity to

con

duct

its

wor

k on

tour

ism

pro

mot

ion

and

deve

lopm

ent.

An u

nder

fund

ed a

nd

unde

rsta

ffed

age

ncy

will

hav

e di

ffic

ulty

in fu

lfilli

ng it

s m

anda

te.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Nat

iona

l tou

rism

str

ateg

y an

d ac

tion

pla

nA

natio

nal s

trat

egy

and

actio

n pl

an e

nabl

es p

olic

y m

aker

s to

ass

ess

the

area

s of

gre

ates

t com

petit

ive

pote

ntia

l and

dire

ct th

eir e

ffor

ts m

ore

effe

ctiv

ely

to c

aptu

re th

e ec

onom

ic a

nd w

ider

soc

ial b

enef

its fr

om to

uris

m. M

easu

red

as a

yes

/no,

with

a s

corin

g ba

sed

on c

rite

ria

incl

udin

g qu

ality

, dev

elop

men

t pro

cess

es, e

vide

nce

base

, del

iver

y th

roug

h co

-ord

inat

ed a

ctio

n pl

anni

ng w

ith p

artn

ers

over

tim

e, a

nd in

tegr

atio

n w

ith a

nat

iona

l str

ateg

y an

d go

vern

men

t app

ropr

iatio

ns fo

r tou

rism

. The

exi

sten

ce o

f a to

uris

m a

ctio

n pl

an d

oes

not o

n its

ow

n gu

aran

tee

effe

ctiv

e as

sist

ance

to im

prov

e th

e co

mpe

titiv

enes

s of

the

econ

omy’

s to

uris

m. A

sses

smen

t of t

his

indi

cato

r will

req

uire

a c

aref

ul a

nd d

eepe

r co

nsid

erat

ion

of th

e co

ntex

t and

com

pone

nts

of th

e pl

an a

nd w

hat i

t see

ks to

del

iver

in te

rms

of im

prov

ing

com

petit

iven

ess.

Som

e pl

ans

may

be

gene

ral w

here

mor

e de

taile

d se

gmen

t-sp

ecifi

c ac

tions

mig

ht b

e ne

eded

to im

prov

e co

mpe

titiv

enes

s. T

his

is e

spec

ially

impo

rtan

t giv

en th

e pa

ce

of e

xter

nal f

acto

rs s

uch

as c

rise

s w

hich

can

hav

e ke

y im

pact

s on

com

petit

iven

ess.

The

se c

an r

equi

re a

ctio

n pl

ans

to b

e ad

just

ed a

t sho

rt n

otic

e,

base

d on

evi

denc

e, a

nd th

e pl

anni

ng p

roce

ss, a

ctor

s an

d co

llabo

ratio

n m

ust b

e st

rong

eno

ugh

to a

llow

suc

h ad

just

men

ts.

Sou

rce:

Min

istr

y r

esp

on

sib

le f

or

tou

rism

.

SER

VIC

ES

: Tou

rism

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. In

suff

icie

nt/i

nade

quat

e in

stit

utio

nal s

uppo

rt to

the

sect

or.

Sym

ptom

s of

this

obs

tacl

e in

clud

e:

•la

ck o

f a c

ompr

ehen

sive

tour

ism

st

rate

gy ta

king

into

con

side

ratio

n en

viro

nmen

tal p

rote

ctio

n an

d ne

w

tren

ds in

tour

ism

suc

h as

cul

tura

l an

d le

isur

e, c

ulin

ary,

and

eco

-tou

rism

•fe

w s

tudi

es o

n cr

eatin

g an

att

ract

ive

tour

ism

off

er •lim

ited

co-o

pera

tion

betw

een

the

rele

vant

min

istr

ies

(min

istr

ies

of

tour

ism

, cul

ture

and

infr

astr

uctu

re)

•la

ck o

f one

-sto

p sh

ops

prov

idin

g a

sing

le s

ourc

e of

info

rmat

ion

for

tour

ists

•fe

w p

rom

otio

n ca

mpa

igns

•la

ck o

f reg

ular

dat

a co

llect

ion

on

tour

ism

•lo

w r

anki

ng b

rand

str

ateg

y ra

ting.

2. T

he la

ck o

f an

appr

opri

atel

y sk

illed

wor

kfor

ce h

inde

rs th

e de

velo

pmen

t of a

hig

h-qu

ality

tour

ism

of

fer.

Rel

evan

t mar

ket-

driv

en s

kills

(e

.g. a

naly

sing

mar

ket n

eeds

to

crea

te n

ew o

ffer

s an

d th

e ab

ility

to

iden

tify

and

empl

oy o

ptim

al m

arke

ting

stra

tegi

es) a

nd s

ervi

ce d

eliv

ery

skill

s (e

.g. g

athe

ring,

ana

lysi

ng a

nd

inte

rpre

ting

cust

omer

feed

back

) can

be

rat

her s

carc

e. S

ympt

oms

of th

is

obst

acle

incl

ude:

•fe

w ta

rget

ed tr

aini

ng p

rogr

amm

es

and

pers

iste

nt s

kills

mis

mat

ches

•no

trai

ning

on

e-to

uris

m a

nd o

ther

in

nova

tive

serv

ices

.

3. L

imit

ed c

o-op

erat

ion

betw

een

nati

onal

tour

ism

org

anis

atio

ns a

nd

the

priv

ate

sect

or. S

ympt

oms

of th

e ob

stac

le in

clud

e: •lo

w n

umbe

r of p

rogr

amm

es to

tr

ansm

it th

e m

ain

goal

s of

tour

ism

de

velo

pmen

t and

hel

p sh

ape

the

tour

ism

off

er p

rovi

ded

by th

e pr

ivat

e se

ctor

.

1., 3

., 4

., 5

. The

se o

bsta

cles

res

ult

in in

effi

cien

t use

of a

vaila

ble

reso

urce

s, a

d ho

c m

easu

res

to

supp

ort t

ouri

sm, a

nd d

isjo

inte

d pr

omot

ion

and

mar

keti

ng, w

hich

all

ham

per t

he d

evel

opm

ent o

f str

ateg

ies

targ

etin

g hi

gh-g

row

th to

uris

m

mar

kets

with

a g

ood

regi

onal

fit.

This

, in

turn

, aff

ects

em

ploy

men

t and

pr

ivat

e in

vest

men

ts in

the

sect

or, a

nd

cons

eque

ntly

det

ers

its g

row

th a

nd

deve

lopm

ent p

oten

tial.

2. A

wel

l-ed

ucat

ed a

nd s

kille

d w

orkf

orce

is c

ruci

al to

pro

vidi

ng

tour

ists

with

a h

igh-

qual

ity o

ffer

. To

uris

m is

a h

ighl

y la

bour

inte

nsiv

e se

rvic

e se

ctor

and

nee

ds a

co

mpr

ehen

sive

poo

l of e

mpl

oyee

sk

ills

to k

eep

pace

wit

h m

arke

t de

velo

pmen

ts. I

f an

econ

omy

fails

to

dev

elop

this

poo

l, it

has

a ne

gativ

e im

pact

on

empl

oym

ent,

prod

uctiv

ity,

com

petit

iven

ess.

Indi

rect

ly, t

his

affe

cts

inve

stm

ents

and

dom

estic

co

nsum

ptio

n.

6. In

tern

atio

nal t

ouri

sm d

eman

d ha

s be

en s

how

n to

be

high

ly

depe

nden

t on

the

ease

of r

each

ing

the

dest

inat

ion,

cro

ssin

g bo

rder

s an

d en

teri

ng o

ther

cou

ntri

es. A

cces

s in

fras

truc

ture

, saf

ety

and

secu

rity

, an

d cu

stom

s pr

oced

ures

are

som

e of

the

issu

es th

at c

an a

ffec

t eas

e of

tr

avel

. Fa

cilit

atin

g tr

avel

to a

nd w

ithin

a

coun

try,

in p

artic

ular

to to

uris

t si

tes,

is a

n es

sent

ial e

lem

ent o

f a

dest

inat

ion’

s ov

eral

l com

petit

iven

ess.

So

und

air a

nd g

roun

d tr

ansp

ort

infr

astr

uctu

re (

e.g.

roa

ds, r

ailw

ays

and

airp

orts

) can

enc

oura

ge to

uris

ts

to c

hoos

e on

e de

stin

atio

n ov

er

anot

her.



II. C

APAC

ITY

AND

POTE

NTIA

L1

Inbo

und

tour

ism

rev

enue

s pe

r vis

itor

by

sour

ce m

arke

t (%

ann

ual g

row

th)

Mea

sure

s th

e pe

rcen

tage

gro

wth

or d

eclin

e ye

ar-o

n-ye

ar in

inbo

und

tour

ism

rev

enue

s pe

r vis

itor b

y so

urce

mar

ket.

This

mea

sure

is a

mor

e di

rect

indi

cato

r of e

cono

mic

ret

urns

than

oth

er “

activ

ity”

mea

sure

s su

ch a

s vi

sito

r num

bers

and

it p

rovi

des

polic

y m

aker

s w

ith a

per

spec

tive

on

whe

ther

the

inte

rnat

iona

l com

petit

iven

ess

of th

e to

uris

m s

ecto

r is

impr

ovin

g or

dec

linin

g.So

urc

es: N

atio

na

l sta

tist

ics;

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Ove

rnig

hts

in a

ll ty

pes

of a

ccom

mod

atio

n (%

ann

ual g

row

th)

Perc

enta

ge g

row

th o

r dec

line

year

-on-

year

in o

vern

ight

sta

ys in

all

type

s of

acc

omm

odat

ion

or, i

f not

ava

ilabl

e, in

hot

els

and

sim

ilar

esta

blis

hmen

ts. T

his

indi

cato

r foc

uses

on

the

inte

rnal

(in

boun

d an

d do

mes

tic) t

ouri

sm e

cono

my.

The

per

cent

age

chan

ge is

an

impo

rtan

t m

easu

re o

f rec

ent t

rend

s in

the

sect

or a

nd s

houl

d be

par

ticul

arly

use

d in

the

ERP

if th

ere

is a

not

able

dec

line

or u

ptur

n in

tour

ism

, and

sho

uld

be

acco

mpa

nied

by

som

e ex

plan

atio

n as

to w

hy th

is m

ight

be

the

case

.So

urc

e: N

atio

na

l sta

tist

ics.

Occ

upan

cy r

ate

in c

omm

erci

al a

ccom

mod

atio

n fa

cilit

ies,

per

mon

th, a

vera

ge fo

r the

yea

r, %

cha

nge

The

aver

age

leng

th o

f tou

rist

s’ s

tay

is o

ne o

f the

mos

t im

port

ant i

ndic

ator

s fo

r acc

omm

odat

ion

busi

ness

es. L

onge

r sta

ys r

esul

t in

high

er

occu

panc

y ra

tes,

whi

ch is

the

othe

r key

indi

cato

r for

acc

omm

odat

ion.

The

long

er to

uris

ts s

tay,

the

high

er th

e re

turn

on

inve

stm

ent f

or m

arke

ting

and

sale

s an

d gr

eate

r im

pact

for h

ospi

talit

y bu

sine

sses

. As

with

the

prev

ious

indi

cato

r, th

e pe

rcen

tage

cha

nge

year

-on-

year

is im

port

ant f

or

obse

rvin

g tr

ends

in th

e se

ctor

. So

urc

e: N

atio

na

l sta

tist

ics.

Visi

tor s

atis

fact

ion

rati

ng a

nd in

tent

ion

to m

ake

repe

at v

isit

sA

cons

iste

ntly

hig

h cu

stom

er s

atis

fact

ion

ratin

g ac

ross

a r

ange

of c

rite

ria,

and

hig

h le

vels

of s

tate

d in

tent

ion

to r

etur

n in

dica

tes

a co

mpe

titiv

e de

stin

atio

n, b

oth

now

and

in th

e fo

rese

eabl

e fu

ture

. Evi

denc

e of

abi

lity

to c

onve

rt in

tere

st a

nd s

atis

fact

ion

into

add

ition

al v

isits

, eco

nom

ic

bene

fits

and

soci

al in

fluen

ce a

re a

ssoc

iate

d w

ith a

hig

h le

vel o

f com

petit

iven

ess.

Eco

nom

ies

that

do

not g

athe

r evi

denc

e of

vis

itor s

atis

fact

ion

or

scor

e lo

w in

term

s of

the

agre

ed c

rite

ria

are

asso

ciat

ed w

ith lo

w le

vels

of c

ompe

titiv

enes

s.So

urc

e: N

atio

na

l sta

tist

ics

(vis

ito

r sa

tisf

acti

on

su

rvey

s).

Num

ber o

f rec

ogni

sed

natu

ral h

erit

age

site

sEc

onom

ies

with

a la

rge

num

ber o

f nat

ural

her

itage

site

s, a

hig

h de

gree

of b

iodi

vers

ity a

nd a

net

wor

k of

nat

ural

ass

ets,

form

al a

nd in

form

al, c

an

prom

ote

thes

e at

trac

tions

as

part

of a

tour

ism

com

petit

iven

ess

stra

tegy

. For

mal

ly d

esig

nate

d si

tes

can

be a

n im

port

ant i

ngre

dien

t in

effe

ctiv

e pl

ace

mak

ing

to d

evel

op s

tron

g m

arke

ting

mes

sage

s an

d at

trac

t vis

itors

, whi

le in

form

al s

ites

and

natu

ral a

ttra

ctio

ns c

an a

lso

atta

in s

tatu

s,

incl

udin

g th

roug

h so

cial

med

ia n

etw

orks

, and

att

ract

vis

itors

, im

prov

ing

inte

rnat

iona

l com

petit

iven

ess.

Sou

rces

: U

nit

ed

Nat

ion

s In

du

stri

al

Dev

elo

pm

ent

Org

an

izat

ion

(U

NE

SC

O);

In

tern

atio

na

l U

nio

n

for

Co

nse

rvat

ion

o

f N

atu

re

(IU

CN

),

bio

div

ersi

ty i

nd

icat

ors

.

Tota

l pro

tect

ed a

reas

(%

of t

otal

terr

itor

ial a

rea)

The

indi

cato

r sho

uld

be ta

ken

in c

onju

nctio

n w

ith in

form

atio

n on

bio

dive

rsity

and

eco

syst

ems

and

inte

rpre

ted

in li

ght o

f lev

els

of e

cono

mic

de

velo

pmen

t and

the

stru

ctur

e of

the

tour

ism

eco

nom

ic p

atte

rns.

Geo

grap

hica

l loc

atio

n an

d po

pula

tion

dens

ity a

lso

play

a r

ole.

So

urc

e: W

orl

d B

an

k.

Num

ber o

f cul

tura

l att

ract

ions

(U

NES

CO c

ultu

ral d

atab

ase)

Coun

trie

s w

ith a

vib

rant

and

/or d

istin

ct c

ultu

ral i

dent

ity a

nd r

ange

of c

reat

ive

activ

ities

and

eve

nts

can

attr

act m

ore

visi

tors

and

eco

nom

ic

bene

fits.

Thi

s m

easu

re in

dica

tes

the

impo

rtan

ce o

f cul

tura

l ass

ets

in th

e ec

onom

y’s

tour

ism

off

er.

Sou

rce:

UN

ES

CO

htt

p:/

/wh

c.u

nes

co.o

rg/e

n/l

ist/

.

SER

VIC

ES

: Tou

rism

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

4. U

nder

deve

lope

d m

easu

res

to

pres

erve

the

regi

on’s

nat

ural

and

cu

ltur

al h

erit

age.

Sym

ptom

s of

the

obst

acle

incl

ude:

•lo

w n

umbe

r of m

onum

ents

on

the

Wor

ld H

erita

ge L

ist i

n D

ange

r •N

o pa

rtne

rshi

p w

ith U

NES

CO o

n th

e pr

eser

vatio

n of

the

natu

ral a

nd

cultu

ral h

erita

ge (

norm

ally

the

min

istr

y of

tour

ism

or c

ultu

re w

ould

fo

rm th

is p

artn

ersh

ip)

•fin

anci

ng o

f cul

ture

her

itage

pr

ojec

ts c

omes

mai

nly

out o

f go

vern

men

t bud

gets

with

litt

le to

no

fina

ncin

g fr

om E

urop

ean

pre-

acce

ssio

n fu

nds,

the

priv

ate

sect

or,

corp

orat

e ph

ilant

hrop

y or

cor

pora

te

soci

al r

espo

nsib

ility

lack

of r

egul

ar

envi

ronm

ent r

isk

scre

enin

g an

d ca

tego

risa

tion,

and

env

ironm

ent r

isk

asse

ssm

ent

5. In

adeq

uate

tour

ism

infr

astr

uctu

re.

Sym

ptom

s of

the

obst

acle

incl

ude:

•lo

w n

umbe

r of p

roje

cts

to im

prov

e in

fras

truc

ture

aro

und

hist

oric

site

s •lo

w-q

ualit

y tr

ansp

ort i

nfra

stru

ctur

e,

limite

d ro

ad s

afet

y an

d w

eak

inte

rmod

al c

onne

ctiv

ity (w

eak

conn

ectiv

ity o

f tou

rist

des

tinat

ions

w

ith m

ain

tran

spor

t cor

rido

rs, l

ack

of m

edia

n st

rips,

sm

all n

umbe

r of

ove

rtak

ing

lane

s, n

arro

w r

oad

shou

lder

s, a

nd lo

w n

umbe

rs o

f ai

rline

con

nect

ions

esp

ecia

lly to

m

ajor

citi

es)

•lim

ited

or n

o co

-ope

ratio

n am

ong

natio

nal g

over

nmen

ts, r

egio

ns a

nd

mun

icip

aliti

es to

fina

nce

com

mon

in

fras

truc

ture

pro

ject

s (s

uch

as

thro

ugh

publ

ic-p

riva

te p

artn

ersh

ips

or th

roug

h so

me

inno

vativ

e ap

proa

ches

to in

fras

truc

ture

fin

anci

ng (

infr

astr

uctu

re b

onds

).

1. T

o av

oid

repl

icat

ion,

som

e re

leva

nt in

dica

tors

reg

ardi

ng th

e ov

eral

l qua

lity

of to

uris

m in

fras

truc

ture

and

des

tinat

ion

acce

ssib

ility

can

be

foun

d un

der t

he tr

ansp

ort p

art o

f the

ener

gy a

nd tr

ansp

ort m

arke

t ref

orm

sec

tion.


Num

ber o

f cre

ativ

e at

trac

tion

sAs

with

the

prev

ious

indi

cato

r, th

is in

dica

tes

the

impo

rtan

ce o

f cre

ativ

e at

trac

tions

for t

he p

rom

otio

n of

the

econ

omy

and

can

form

par

t of a

to

uris

m s

trat

egy,

dev

elop

ing

thes

e as

sets

to im

prov

e co

mpe

titiv

enes

s

Sou

rce:

Nat

ion

al s

tati

stic

s.

Entr

y vi

sa r

equi

rem

ents

and

num

bers

Mea

sure

s: 1

) the

num

ber o

f cou

ntri

es o

n th

e vi

sa-r

equi

red

list a

nd h

ow v

isas

are

issu

ed, i

nclu

ding

pap

er v

isas

, eVi

sas

or v

isa

on a

rriv

al; 2

) the

nu

mbe

r of v

isas

issu

ed e

ach

year

as

a sh

are

of in

boun

d to

uris

m a

rriv

als.

Vis

a re

quire

men

ts a

re p

art o

f an

econ

omy’

s to

uris

m c

ompe

titiv

enes

s en

viro

nmen

t. Th

is in

dica

tor h

elps

pol

icy

mak

ers

achi

eve

a ba

lanc

e be

twee

n ot

her p

olic

y co

nsid

erat

ions

and

the

oppo

rtun

ity to

att

ract

mor

e hi

gh-s

pend

ing

visi

tors

from

mai

n so

urce

s of

inbo

und

tour

ism

by

asse

ssin

g vi

sa r

equi

rem

ents

, the

ir co

sts

and

the

pote

ntia

l eff

ects

on

tour

ism

co

mpe

titiv

enes

s.

Sou

rces

: Fo

reig

n a

ffa

irs

an

d i

nte

rio

r m

inis

trie

s, n

atio

na

l to

uri

sm a

dm

inis

trat

ion

s.

Num

ber o

f bed

s av

aila

ble

in c

omm

erci

al v

isit

or a

ccom

mod

atio

n fa

cilit

ies

per 1

00 r

esid

ents

Mea

sure

s th

e ac

com

mod

atio

n ca

paci

ties

of a

des

tinat

ion.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Coun

try

bran

d st

rate

gy r

atin

g (r

anki

ng)

The

indi

cato

r act

s as

a p

roxy

for t

he e

ffec

tiven

ess

of th

e ec

onom

y’s

mar

ketin

g an

d br

andi

ng to

att

ract

tour

ists

, and

indi

cate

s th

e qu

ality

of t

he

tour

ism

off

er.

Sou

rces

: Nat

ion

al s

tati

stic

al a

gen

cies

/go

vern

men

t d

epa

rtm

ents

; pri

vat

e se

cto

r su

rvey

s.

Use

of e

-tou

rism

and

oth

er in

nova

tive

ser

vice

sN

umbe

r of b

usin

esse

s de

mon

stra

ting

inno

vatio

n an

d de

liver

ing

e-to

uris

m s

ervi

ces.

Mea

sure

s th

e pr

opor

tion

of b

usin

esse

s w

ithin

the

sect

or

that

sho

w th

e ch

arac

teri

stic

s of

inno

vatio

n as

def

ined

in in

nova

tion

surv

eys.

Incr

easi

ng b

usin

ess

inno

vatio

n, a

focu

s on

e-t

ouri

sm a

nd r

elat

ed

tech

nolo

gica

l too

ls in

dica

te th

e co

mpe

titiv

enes

s of

the

busi

ness

bas

e an

d its

abi

lity

to c

aptu

re in

tern

et a

nd e

-ser

vice

s bu

sine

ss.

Sou

rces

: Nat

ion

al s

tati

stic

al a

gen

cies

/go

vern

men

t d

epa

rtm

ents

; pri

vat

e se

cto

r su

rvey

s.

Labo

ur p

rodu

ctiv

ity

in to

uris

m

Mea

sure

s th

e le

vel o

f and

cha

nge

in p

rodu

ctiv

ity o

f tho

se e

mpl

oyed

in to

uris

m a

nd th

e pr

oduc

tive

pote

ntia

l of t

he to

uris

m e

cono

my.

Pro

duct

ivity

is

one

key

dim

ensi

on o

f com

petit

iven

ess.

The

cha

lleng

e w

ith th

is in

dica

tor i

s th

e di

ffic

ulty

of m

easu

rem

ent,

part

icul

arly

add

ress

ing

qual

ity

issu

es, a

nd th

e sp

ecifi

city

of t

he to

uris

m s

ecto

r, in

clud

ing

the

smal

l siz

e of

bus

ines

ses.

Sou

rce:

Nat

ion

al s

tati

stic

s

Perc

enta

ge o

f tou

rism

ent

erpr

ises

pro

vidi

ng s

tude

nt in

tern

ship

sTh

e sk

ill le

vel o

f tou

rism

em

ploy

ees

is in

dica

tive

of th

e qu

ality

of e

mpl

oym

ent.

This

indi

cato

r hel

ps a

sses

s ho

w m

any

loca

l tou

rism

ent

erpr

ises

ar

e he

lpin

g to

trai

n th

e ne

xt g

ener

atio

n of

trav

el a

nd to

uris

m p

rofe

ssio

nals

.

Sou

rce:

Nat

ion

al s

tati

stic

s

SER

VIC

ES

: Tou

rism

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth



Business environment and reduction of the informal economyPolicy area indicators, structural obstacles and impact on competitiveness and growth




I. GE

NERA

L BU

SINE

SS E

NVIR

ONM

ENT

Ease

of d

oing

bus

ines

sM

easu

res

how

eas

y it

is in

gen

eral

to o

pera

te a

bus

ines

s in

the

econ

omy.

Thi

s in

dica

tor c

over

s th

e tim

e ta

ken

and

ease

of s

tart

ing

a bu

sine

ss,

deal

ing

with

con

stru

ctio

n pe

rmits

, get

ting

elec

tric

ity, r

egis

terin

g pr

oper

ty, g

ettin

g cr

edit,

pay

ing

taxe

s, tr

adin

g ac

ross

bor

ders

, enf

orci

ng

cont

ract

s an

d re

solv

ing

inso

lven

cy, a

nd h

ow s

tron

g th

e pr

otec

tions

for m

inor

ity in

vest

ors

are.

The

inde

x al

so s

how

s fo

r eac

h of

thes

e in

dica

tors

w

heth

er th

e bu

rden

is m

ostly

reg

ulat

ory

and

adm

inis

trat

ive,

fina

ncia

l, or

bot

h, a

nd th

e di

agno

stic

sec

tion

shou

ld m

ake

this

exp

licit

in th

e ER

P do

cum

ent.

Not

e: s

ub

-co

mp

on

ents

of

this

in

dex

ca

n b

e u

sed

as

rele

va

nt

for

the

eco

no

my.

Th

is d

iag

no

stic

ca

n h

igh

ligh

t th

e a

rea

s w

her

e th

e ec

on

om

y is

do

ing

wel

l b

ut

sho

uld

mo

stly

fo

cus

on

th

e a

rea

s w

her

e it

is

lag

gin

g b

ehin

d, b

ase

d o

n t

he

glo

ba

l ra

nk

ing

s a

s w

ell

as

the

ran

kin

gs

wit

h

rega

rd t

o p

eer

eco

no

mie

s (E

uro

pe

an

d C

entr

al A

sia,

So

uth

Ea

st E

uro

pe

etc.

).

Sou

rce:

Wo

rld

Ba

nk

, Do

ing

Bu

sin

ess,

htt

p:/

/dat

a.w

orl

db

an

k.o

rg/i

nd

icat

or/

IC.B

US

.EA

SE

.XQ

.

Glo

bal C

ompe

titi

vene

ss In

dex

(GCI

)Th

is in

dex

atte

mpt

s to

qua

ntify

the

impa

ct o

f a n

umbe

r of k

ey fa

ctor

s w

hich

con

trib

ute

to th

e ec

onom

y’s

com

petit

iven

ess,

with

par

ticul

ar

focu

s on

the

mac

roec

onom

ic c

ondi

tions

, the

qua

lity

of it

s in

stitu

tions

, and

the

stat

e of

its

tech

nolo

gy a

nd s

uppo

rtin

g in

fras

truc

ture

. In

othe

r w

ords

, the

GCI

mea

sure

s “t

he s

et o

f ins

titut

ions

, fac

tors

and

pol

icie

s th

at s

et th

e su

stai

nabl

e cu

rren

t and

med

ium

-ter

m le

vels

of e

cono

mic

pr

ospe

rity

”(G

loba

l Com

petit

iven

ess

Inde

x), i

.e. t

hose

fact

ors

that

faci

litat

e or

dri

ve p

rodu

ctiv

ity.

Sou

rce:

Wo

rld

Eco

no

mic

Fo

rum

, Glo

ba

l Co

mp

etit

iven

ess

Ind

ex, h

ttp

://w

ww

.gap

ort

al.

org

/glo

ba

l-in

dic

ato

rs/g

lob

al-

com

pet

itiv

enes

s-in

dex

.

Legi

slat

ive

sim

plif

icat

ion

and

regu

lato

ry im

pact

ana

lysi

s As

sess

es th

e m

echa

nism

s fo

r leg

isla

tive

sim

plifi

catio

n an

d re

gula

tory

impa

ct a

sses

smen

t (R

IA),

incl

udin

g w

heth

er th

ere

is a

test

to e

nsur

e th

at th

e sp

ecifi

c im

pact

of n

ew la

ws

and

regu

latio

ns o

n sm

all a

nd m

ediu

m-s

ized

ent

erpr

ises

(SM

Es),

for e

xam

ple,

is p

rope

rly

mea

sure

d an

d m

itiga

ted.

Sou

rce:

OEC

D, S

ME

Poli

cy I

nd

ex.

Rul

e of

law

indi

cato

rM

easu

res

the

tran

spar

ency

and

con

sist

ency

of t

he le

gisl

atio

n sy

stem

. Ind

icat

es h

ow tr

ansp

aren

t rul

es a

nd le

gisl

atio

n ar

e, h

ow p

redi

ctab

le

chan

ges

in le

gisl

atio

n ar

e fo

r the

pub

lic, h

ow o

ften

law

s ch

ange

etc

.So

urc

e: W

orl

d B

an

k, G

ove

rna

nce

In

dic

ato

rs.

II.FI

SCAL

AND

PAR

A-FI

SCAL

BUR

DEN

Tota

l tax

rat

e (%

of c

omm

erci

al p

rofi

ts)

Mea

sure

s th

e am

ount

of t

axes

and

man

dato

ry c

ontr

ibut

ions

pay

able

by

busi

ness

es a

fter

acc

ount

ing

for a

llow

able

ded

uctio

ns a

nd e

xem

ptio

ns a

s a

shar

e of

com

mer

cial

pro

fits.

Sou

rce:

Wo

rld

Ba

nk

, Wo

rld

Dev

elo

pm

ent

Ind

icat

ors

.

Tax

filin

g an

d pa

ymen

t pro

cedu

res

Asse

sses

the

smoo

thne

ss o

f the

tax

paym

ent f

orm

aliti

es a

nd w

heth

er e

ffor

ts h

ave

been

mad

e to

str

eam

line

them

thro

ugh

the

use

of s

impl

ified

or

pre

-fill

ed ta

x re

turn

s, c

lear

and

use

r-fr

iend

ly m

etho

ds fo

r cal

cula

ting

the

tax

due,

and

the

prov

isio

n of

e-f

iling

and

e-p

aym

ents

.So

urc

e: O

ECD

, Co

mp

etit

iven

ess

in S

ou

th E

ast

Eu

rop

e.

Firm

s id

enti

fyin

g ta

x ra

tes

and

proc

edur

es a

s a

maj

or c

onst

rain

t (%

)Th

e pe

rcen

tage

of f

irms

iden

tifyi

ng ta

x ra

tes

as a

“m

ajor

” or

“ve

ry s

ever

e” o

bsta

cle,

on

a se

ven-

poin

t Lik

ert s

cale

.So

urce

: Wor

ld B

ank

and

Euro

pea

n B

ank

for R

econ

stru

ctio

n a

nd

Dev

elop

men

t (EB

RD

), Bu

sin

ess

Envi

ron

men

t an

d En

terp

rise

Per

form

ance

Su

rvey

(BEE

PS).

BU

SIN

ES

S E

NV

IRO

NM

ENT

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. A

n in

cons

iste

nt, u

npre

dict

able

an

d un

frie

ndly

legi

slat

ive

envi

ronm

ent.

Sym

ptom

s in

clud

e: •la

rge

degr

ee o

f col

lisio

n of

pur

port

s be

twee

n la

ws

•la

ws

chan

ge fr

eque

ntly

, with

lim

ited

cons

ulta

tion

with

the

priv

ate

sect

or •bu

sine

sses

rep

ort h

avin

g a

hard

tim

e ke

epin

g up

with

rul

es a

nd

regu

latio

ns

•no

mec

hani

sms

for l

egis

lativ

e si

mpl

ifica

tion

or th

ey a

re n

ot

impl

emen

ted

regu

larl

y an

d co

nsis

tent

ly •th

e ch

ance

of s

elec

tive

law

en

forc

emen

t is

high

, cre

atin

g an

un

even

pla

ying

fiel

d fo

r bus

ines

ses.

2. H

igh

fisc

al a

nd p

ara-

fisc

al b

urde

n.

This

obs

tacl

e is

ass

ocia

ted

with

one

or

mor

e of

the

follo

win

g sy

mpt

oms:

•hi

gh ta

x ch

arge

s as

a %

of t

otal

ch

arge

s •he

avy

adm

inis

trat

ive

burd

en

of ta

xatio

n pr

oced

ures

, with

bu

sine

sses

faci

ng a

larg

e nu

mbe

r of

pro

cedu

res

whe

n ha

ving

to p

ay

taxe

s •a

high

and

ris

ing

shar

e of

firm

s id

entif

y ta

x ra

tes

as a

maj

or

busi

ness

con

stra

int

•a

larg

e sh

are

of fi

rms

iden

tify

freq

uent

cha

nges

in ta

xatio

n la

w a

s a

maj

or c

onst

rain

t •pa

ra-f

isca

l cha

rges

are

hig

h an

d nu

mer

ous

and/

or u

ncle

arly

spe

cifie

d to

the

know

ledg

e of

the

busi

ness

es •pa

ra-f

isca

l cha

rges

rep

rese

nt a

su

bsta

ntia

l sha

re o

f sub

natio

nal

juri

sdic

tions

’ rev

enue

.

3. A

n in

effi

cien

t leg

al s

yste

m,

addi

ng to

the

diff

icul

ty o

f enf

orce

men

t pr

oces

ses

and

the

trad

abili

ty o

f ow

ners

hip

righ

ts. S

ympt

oms

incl

ude:

•co

mm

erci

al d

ispu

tes

are

time

cons

umin

g an

d co

stly

com

pare

d to

1. A

n in

cons

iste

nt le

gisl

ativ

e en

viro

nmen

t com

bine

d w

ith

freq

uent

and

sile

nt c

hang

es o

f la

ws

and

regu

latio

ns w

ill in

crea

se

inve

stor

s’ r

eluc

tanc

e to

mak

e ne

w

inve

stm

ents

. An

unpr

edic

tabl

e le

gisl

ativ

e en

viro

nmen

t and

sel

ectiv

e la

w e

nfor

cem

ent i

ncre

ases

bot

h op

erat

iona

l cos

ts a

nd th

e di

ffic

ulty

of

cor

pora

te p

lann

ing.

Thi

s ca

n be

a

maj

or d

eter

rent

for f

orei

gn in

vest

ors

if th

ey d

on’t

cons

ider

the

econ

omy

to b

e a

pred

icta

ble

and

safe

wor

king

en

viro

nmen

t. 2.

Hig

h ta

xes

and

a la

ck o

f sup

port

fo

r the

sim

plifi

catio

n of

tax

proc

esse

s re

duce

inve

stm

ent,

pro

duct

ivit

y an

d em

ploy

men

t due

to th

e as

soci

ated

hi

gher

inve

stm

ent,

oper

atio

nal

and

empl

oym

ent c

osts

, and

low

er

expe

cted

pro

fits.

Hig

h ta

x ra

tes

also

dis

cour

age

wor

k, s

avin

g an

d en

trep

rene

ursh

ip a

nd e

ncou

rage

ta

xpay

ers

to r

earr

ange

thei

r tax

ob

ligat

ions

to r

ecei

ve m

ore

of th

eir

com

pens

atio

n in

less

hea

vily

taxe

d fo

rms.

Rel

ativ

ely

high

par

a-fis

cal c

harg

es

dete

r inv

estm

ent b

ecau

se th

ey

gene

rate

con

side

rabl

e un

cert

aint

y ab

out t

he c

osts

ass

ocia

ted

with

in

vest

ing

and

oper

atin

g in

a s

peci

fic

loca

lity.

3. In

effic

ient

con

trac

t enf

orce

men

t pr

oced

ures

als

o in

crea

se in

vest

or

unce

rtai

nty

and

dete

r inv

estm

ent.

The

rule

of l

aw a

nd e

ffec

tive

pro

tect

ions

fo

r inv

esto

rs’ r

ight

s ar

e ke

y pr

e-re

quis

ites

for a

wel

l-fu

ncti

onin

g an

d pr

ospe

rous

eco

nom

y. B

oth

requ

ire

a w

ell-f

unct

ioni

ng ju

dici

ary

that

re

solv

es c

ases

in a

rea

sona

ble

time

and

is p

redi

ctab

le a

nd a

cces

sibl

e to

th

e pu

blic

.



Para

-fis

cal c

harg

esAs

sess

es th

e nu

mbe

r of s

epar

ate

para

-fis

cal c

harg

es a

nd th

eir s

ize

rela

tive

to th

e ec

onom

y. S

ourc

e: V

ario

us (f

orei

gn in

vest

ors

coun

cil,

cham

bers

of c

omm

erce

etc

.)

III. P

ROPE

RTY

RIGH

TS A

ND C

ONTR

ACT

ENFO

RCEM

ENT

Coun

try

Polic

y an

d In

stit

utio

nal A

sses

smen

t (CP

IA) p

rope

rty

righ

ts a

nd r

ule-

base

d go

vern

ance

Asse

sses

the

exte

nt to

whi

ch p

riva

te e

cono

mic

act

ivity

is fa

cilit

ated

by

an e

ffec

tive

lega

l sys

tem

and

rul

e-ba

sed

gove

rnan

ce s

truc

ture

in w

hich

pr

oper

ty a

nd c

ontr

act r

ight

s ar

e re

liabl

y re

spec

ted

and

enfo

rced

.So

urc

e: W

orl

d B

an

k G

rou

p, C

PIA

.

Smal

l- a

nd la

rge-

scal

e pr

ivat

isat

ion

Mea

sure

s th

e pe

rcen

tage

of e

nter

pris

e as

sets

tran

sfer

red

from

pub

lic to

pri

vate

ow

ners

hip.

Sou

rce:

EB

RD

, Tra

nsi

tio

n I

nd

icat

ors

.

Cont

ract

enf

orce

men

t M

easu

res

the

time

take

n an

d co

st o

f res

olvi

ng a

com

mer

cial

dis

pute

thro

ugh

a lo

cal f

irst

-inst

ance

cou

rt.

Sou

rce:

Wo

rld

Ba

nk

, Do

ing

Bu

sin

ess

rep

ort

.

IV. C

OMPE

TITI

ON

Com

peti

tion

pol

icy

Mea

sure

s th

e re

stri

ctio

ns fa

ced

by n

ew m

arke

t ent

rant

s, a

buse

of m

arke

t pow

er a

nd th

e pr

omot

ion

of c

ompe

titiv

e en

viro

nmen

t.So

urc

e: E

BR

D, T

ran

siti

on

In

dic

ato

rs.

V. C

ORRU

PTIO

N AN

D TH

E IN

FORM

AL E

CONO

MY

Corr

upti

on P

erce

ptio

ns In

dex

(Tra

nspa

renc

y In

tern

atio

nal)

& C

ontr

ol o

f Cor

rupt

ion

Inde

x (W

orld

Ban

k)

Mea

sure

s pe

rcep

tions

of t

he e

xten

t to

whi

ch p

ublic

pow

er is

exe

rcis

ed fo

r pri

vate

gai

n, in

clud

ing

both

pet

ty a

nd g

rand

form

s of

cor

rupt

ion,

as

wel

l as

“cap

ture

” of

the

stat

e by

elit

es a

nd p

riva

te in

tere

sts.

So

urc

es: T

ran

spa

ren

cy I

nte

rnat

ion

al,

Co

rru

pti

on

Per

cep

tio

ns

Ind

ex; W

orl

d B

an

k, C

on

tro

l of

Co

rru

pti

on

In

dex

. In

form

al e

mpl

oym

ent (

% o

f tot

al e

mpl

oym

ent;

and

% o

f GD

P)Fi

rstly

, thi

s in

dica

tor s

erve

s to

mea

sure

s in

form

al e

mpl

oym

ent a

s a

shar

e of

tota

l em

ploy

men

t. It

also

look

s at

the

wor

king

pov

erty

rat

e in

the

econ

omy,

whi

ch is

oft

en d

irect

ly a

ssoc

iate

d w

ith in

form

al e

mpl

oym

ent a

nd p

oor w

orki

ng c

ondi

tions

, inf

orm

al s

ecto

ral e

mpl

oym

ent a

nd fo

rmal

em

ploy

men

t in

the

info

rmal

sec

tor a

s a

perc

enta

ge o

f tot

al e

mpl

oym

ent.

Addi

tiona

lly, a

n es

timat

e ca

lcul

atio

n of

the

tota

l siz

e of

the

info

rmal

eco

nom

y, a

s a

perc

ent o

f the

nat

iona

l GD

P, c

ould

hel

p un

ders

tand

the

actu

al

dept

h of

info

rmal

ity in

an

econ

omy.

Sou

rce:

In

tern

atio

na

l La

bo

ur

Org

an

izat

ion

, co

un

try-

spec

ific

stu

die

s a

nd

ass

essm

ents

; N

atio

na

l B

an

k C

alc

ula

tio

ns,

WB

, O

ther

IFI

P

ub

lica

tio

ns.

Firm

s id

enti

fyin

g th

e pr

acti

ces

of in

form

al c

ompe

tito

rs a

s a

maj

or c

onst

rain

t (%

)M

easu

res

the

perc

enta

ge o

f firm

s id

entif

ying

the

prac

tices

of c

ompe

titor

s in

the

info

rmal

sec

tor a

s a

“maj

or”

obst

acle

on

a se

ven-

poin

t Lik

ert

scal

e.So

urc

e: W

orl

d B

an

k, E

nte

rpri

se S

urv

eys

BU

SIN

ES

S E

NV

IRO

NM

ENT

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

EU a

vera

ges,

som

etim

es b

ecau

se

ther

e is

no

sepa

rate

com

mer

cial

se

ttle

men

t circ

uit a

nd c

omm

erci

al

disp

utes

are

stil

l set

tled

by c

ivil

cour

ts •th

ere

is n

o cl

earl

y es

tabl

ishe

d w

ay

of r

esol

ving

dis

pute

s, a

ddin

g to

the

unce

rtai

nty

and

unpr

edic

tabi

lity

of

the

lega

l sys

tem

•pr

oper

ty r

ight

s ar

e un

clea

r and

di

ffic

ult t

o en

forc

e •no

cle

ar le

gal m

easu

res

to m

inim

ise

liabi

lity

expo

sure

, esp

ecia

lly fo

r sm

all b

usin

esse

s.

4. N

o ef

fici

ent p

olic

ies

to e

nhan

ce

com

peti

tion

hav

e be

en im

plem

ente

d.

Som

e as

pect

s w

orth

men

tioni

ng a

re:

•lim

ited

oppo

rtun

ities

to r

estr

uctu

re

ente

rpri

ses

or le

gal p

roce

dure

s fo

r res

truc

turin

g ar

e un

clea

r and

co

mpl

ex •co

nsum

er p

rote

ctio

n or

ant

itrus

t le

gisl

atio

n is

wea

k, p

artic

ular

ly fo

r sm

all b

usin

esse

s •ne

w m

arke

t ent

rant

s fa

ce h

igh

barr

iers

to e

ntry

•do

min

ant m

arke

t pos

ition

s ar

e ab

used

in m

any

sect

ors

•lit

tle g

uida

nce

is a

vaila

ble

to

exte

rnal

par

ticip

ants

abo

ut

the

com

petit

ion

auth

oriti

es’

enfo

rcem

ent p

ract

ices

•pu

blic

pro

cure

men

t is

not d

one

in a

tr

ansp

aren

t and

obj

ectiv

e m

anne

r.

5. T

he in

form

al s

ecto

r mak

es u

p a

rela

tive

ly la

rge

shar

e of

the

tota

l ec

onom

y. S

ympt

oms

of th

is o

bsta

cle

incl

ude:

•a

larg

e sh

are

of e

nter

pris

es

oper

atin

g in

the

shad

ow e

cono

my

•a

larg

e sh

are

of e

nter

pris

es c

ite

stro

ng a

nd u

nfai

r com

petit

ion

from

th

e in

form

al e

cono

my

(unc

ontr

olle

d se

ason

al e

mpl

oym

ent,

no s

ocia

l pr

otec

tion

requ

ired,

etc

.)

Effe

ctiv

e pr

otec

tion

and

enfo

rcem

ent

of p

rope

rty

righ

ts is

als

o as

soci

ated

w

ith

bett

er a

cces

s to

ext

erna

l fi

nanc

e. C

lear

pro

pert

y ri

ghts

mak

e it

easi

er fo

r firm

s to

mee

t col

late

ral

requ

irem

ents

and

to r

ecei

ve b

ank-

and

no

n-ba

nk fi

nanc

ing.

4. C

ompe

titio

n po

licie

s lie

at t

he

hear

t of a

suc

cess

ful t

rans

ition

to a

w

ell-f

unct

ioni

ng m

arke

t eco

nom

y.

Inef

fect

ive

com

petit

ion

polic

ies

resu

lt in

mon

opol

ies

and

rest

rict

ive

trad

e pr

acti

ces,

whi

ch s

tifl

e pr

ivat

e se

ctor

gro

wth

. As

a co

nseq

uenc

e,

the

ubiq

uito

us r

ole

of th

e st

ate

in

the

plan

ned

econ

omy

may

sim

ply

be r

epla

ced

by d

omin

ant f

irms

cont

rolli

ng s

egm

ents

of a

dis

tort

ed

mar

ket e

cono

my.

O

n th

e ot

her h

and,

eff

ectiv

e co

mpe

titio

n po

licie

s al

low

for m

arke

t en

try

dere

gula

tion

whi

ch c

an d

rive

pr

oduc

tivi

ty g

row

th b

y sh

ifti

ng

mar

ket s

hare

tow

ards

mor

e ef

fici

ent

prod

ucer

s, a

nd in

duci

ng fi

rms

to

beco

me

mor

e ef

ficie

nt s

o to

sur

vive

.

5. A

larg

e in

form

al e

cono

my

rela

tive

to

the

tota

l eco

nom

y is

ass

ocia

ted

with

: •La

ck o

f pro

tect

ion

in th

e ev

ent o

f no

n-pa

ymen

t of w

ages

, com

puls

ory

over

time

or e

xtra

shi

fts, l

ay-o

ffs

with

out n

otic

e or

com

pens

atio

n,

unsa

fe w

orki

ng c

ondi

tions

and

the

abse

nce

of s

ocia

l ben

efits

suc

h as

pen

sion

s, s

ick

pay

and

heal

th

insu

ranc

e (IL

O, T

rans

ition

ing

from

the

info

rmal

to th

e fo

rmal

eco

nom

y, 2

014)

. •Lo

ss o

f bud

get r

even

ues

by

redu

cing

taxe

s an

d so

cial

sec

urity

co

ntrib

utio

ns p

aid

to th

e st

ate,

w

hich

impa

cts

the

avai

labi

lity

and

qual

ity o

f pub

lic g

oods

and

ser

vice

s.

It in

vari

ably

lead

s to

a h

igh

tax

burd

en o

n re

gist

ered

labo

ur (

The

Wor

ld B

ank)

.



Publ

ic p

rocu

rem

ent

Mea

sure

s th

e de

gree

of t

rans

pare

ncy

to w

hich

pub

lic a

utho

ritie

s, s

uch

as g

over

nmen

t dep

artm

ents

or l

ocal

aut

hori

ties,

pur

chas

e w

orks

, goo

ds

and

serv

ices

to b

oost

eco

nom

ic g

row

th, a

nd w

heth

er s

uch

arra

ngem

ents

are

mor

e or

less

pro

ne to

cor

rupt

ion

(e.g

. if c

ontr

acts

are

neg

otia

ted

with

out p

rior

pub

lishe

d no

tice

or th

orug

h a

call

for t

ende

r),

on a

sca

le fr

om 0

to 5

. So

urc

e: O

ECD

, Co

mp

etit

iven

ess

in S

ou

th E

ast

Eu

rop

e.

VI. A

CCES

S TO

FIN

ANCE

Dom

esti

c cr

edit

to p

riva

te s

ecto

r (%

of G

DP)

M

easu

res

the

finan

cial

res

ourc

es a

s a

shar

e of

gro

ss d

omes

tic p

rodu

ct (

GD

P) p

rovi

ded

to th

e pr

ivat

e se

ctor

by

finan

cial

cor

pora

tions

thro

ugh

loan

s, p

urch

ases

of n

on-e

quity

sec

uriti

es, a

nd tr

ade

cred

its a

nd o

ther

acc

ount

s re

ceiv

able

that

est

ablis

h a

clai

m fo

r rep

aym

ent.

Sou

rce:

Wo

rld

Ba

nk

, Wo

rld

Dev

elo

pm

ent

Ind

icat

ors

.

Rea

l int

eres

t rat

e (%

)M

easu

res

the

lend

ing

inte

rest

rat

e ad

just

ed fo

r inf

latio

n as

mea

sure

d by

the

GD

P de

flato

r.So

urc

e: W

orl

d B

an

k, W

orl

d D

evel

op

men

t In

dic

ato

rs.

Bank

non

perf

orm

ing

loan

s to

tota

l gro

ss lo

ans

(%)

Mea

sure

s th

e va

lue

of n

onpe

rfor

min

g lo

ans

divi

ded

by th

e to

tal v

alue

of t

he lo

an p

ortf

olio

(in

clud

ing

nonp

erfo

rmin

g lo

ans

befo

re th

e de

duct

ion

of s

peci

fic lo

an-lo

ss p

rovi

sion

s). T

he lo

an a

mou

nt r

ecor

ded

as n

onpe

rfor

min

g sh

ould

be

the

gros

s va

lue

of th

e lo

an a

s re

cord

ed o

n th

e ba

lanc

e sh

eet,

not j

ust t

he a

mou

nt th

at is

ove

rdue

.So

urc

e: W

orl

d B

an

k, W

orl

d D

evel

op

men

t In

dic

ato

rs.

Valu

e of

col

late

ral r

equi

rem

ents

(%

of l

oan

amou

nt)

Mea

sure

s th

e va

lue

of c

olla

tera

l nee

ded

for a

loan

or l

ine

of c

redi

t as

a pe

rcen

tage

of t

he lo

an v

alue

or t

he v

alue

of t

he li

ne o

f cre

dit.

Sou

rce:

Wo

rld

Ba

nk

, En

terp

rise

Su

rvey

s.

Mar

ket c

apit

alis

atio

n of

dom

esti

c lis

ted

com

pani

es (

% o

f GD

P)M

easu

res

the

mar

ket v

alue

of t

he c

ompa

nies

list

ed o

n th

e do

mes

tic s

tock

mar

ket a

s a

perc

enta

ge o

f GD

P.So

urc

e: T

he

Wo

rld

Ba

nk

Gro

up

.

Fina

ncia

l lit

erac

y an

d in

vest

men

t rea

dine

ss

The

finan

cial

lite

racy

indi

cato

r con

side

rs w

heth

er a

nat

iona

l str

ateg

y is

in p

lace

for a

sses

sing

fina

ncia

l lite

racy

leve

ls a

nd p

rom

otin

g fin

anci

al

educ

atio

n. It

als

o de

term

ines

whe

ther

the

gove

rnm

ent r

uns

any

finan

cial

edu

catio

n pr

ogra

mm

es a

nd w

heth

er fi

nanc

ial i

nfor

mat

ion

is w

idel

y av

aila

ble

to th

e pu

blic

. The

inve

stm

ent r

eadi

ness

indi

cato

r loo

ks a

t bus

ines

ses’

fam

iliar

ity w

ith e

quity

fina

nce

and

thei

r kno

wle

dge

of h

ow to

“se

ll”

thei

r ide

as to

pot

entia

l inv

esto

rs.

Sou

rce:

OEC

D, C

om

pet

itiv

enes

s in

So

uth

Ea

st E

uro

pe.

Firm

s us

ing

bank

s to

fina

nce

inve

stm

ent (

% o

f fir

ms)

M

easu

res

the

perc

enta

ge o

f firm

s us

ing

bank

s to

fina

nce

inve

stm

ents

.So

urc

e: W

orl

d B

an

k, W

orl

d D

evel

op

men

t In

dic

ato

rs

Entr

epre

neur

s ci

ting

acc

ess

to fi

nanc

e as

a c

onst

rain

t (%

of e

ntre

pren

eurs

) In

dica

tes

to w

hat e

xten

t acc

ess

to fi

nanc

e is

per

ceiv

ed a

s a

cons

trai

nt b

y en

trep

rene

urs

com

pare

d to

oth

er c

onst

rain

ts b

ased

on

BEEP

S, a

firm

-le

vel s

urve

y of

a r

epre

sent

ativ

e sa

mpl

e of

the

econ

omy’

s pr

ivat

e se

ctor

. So

urc

e: W

orl

d B

an

k a

nd

EB

RD

, BE

EP

S.

BU

SIN

ES

S E

NV

IRO

NM

ENT

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•hi

gh c

osts

of o

pera

ting

in th

e fo

rmal

ec

onom

y •lim

ited

enfo

rcem

ent o

f leg

al

oblig

atio

ns in

the

info

rmal

sec

tor

and

a la

ck o

f eff

ectiv

e sa

nctio

ning

of

info

rmal

pra

ctic

es.

6. C

orru

ptio

n is

stil

l a p

robl

em fo

r bo

th th

e pu

blic

and

pri

vate

sec

tor

(i.e.

the

gove

rnm

ent a

nd p

riva

te

cont

ract

ors)

. Sym

ptom

s in

clud

e: •a

sign

ifica

nt s

hare

of c

ontr

acts

not

go

ing

to th

e be

st-q

ualif

ied

supp

liers

, fr

eque

ntly

infla

ted

pric

es to

cov

er

brib

e pa

ymen

ts, e

nviro

nmen

tal

requ

irem

ents

not

bei

ng e

nfor

ced

and

taxe

s no

t bei

ng c

olle

cted

•la

rge

info

rmal

pay

men

ts m

ade

to

publ

ic o

ffic

ials

to “

get t

hing

s do

ne”

•in

tern

al a

uditi

ng in

stitu

tions

ar

e un

able

to tr

igge

r rel

iabl

e in

vest

igat

ions

of g

over

nmen

t op

erat

ions

.

7. L

imit

ed a

cces

s to

fina

nce

rem

ains

on

e of

the

bigg

est p

robl

ems

for

firm

s, e

spec

iall

y fo

r inn

ovat

ive

com

pani

es. T

his

obst

acle

has

a

num

ber o

f dim

ensi

ons.

Firm

s’ a

cces

s to

fina

nce

is c

onst

rain

ed b

y un

cert

ain

pros

pect

s of

suc

cess

, lon

g tim

e ho

rizo

ns, a

lack

of t

angi

ble

asse

ts

to b

e us

ed a

s co

llate

ral a

nd a

lim

ited

oper

atin

g hi

stor

y. K

ey c

onst

rain

ts in

th

is a

rea

incl

ude:

•ca

dast

re s

yste

ms

are

only

par

tially

in

pla

ce, a

nd n

ot fu

lly fu

nctio

nal a

nd

acce

ssib

le b

y ba

nks

and

othe

r cre

dit

inst

itutio

ns •co

llate

ral r

equi

rem

ents

, as

a ke

y pr

e-co

nditi

on fo

r obt

aini

ng fu

ndin

g,

are

still

hig

h •in

tere

st r

ates

are

hig

h co

mpa

red

to

rele

vant

ben

chm

arks

•no

n-pe

rfor

min

g lo

ans

are

high

co

mpa

red

to r

elev

ant b

ench

mar

ks

•R

elat

ive

adva

ntag

es fo

r inf

orm

al

firm

s, i.

e. w

hen

labo

ur c

osts

/tax

es/

soci

al c

ontr

ibut

ions

are

too

high

, th

us c

reat

ing

unfa

ir co

mpe

titio

n to

en

terp

rise

s op

erat

ing

in th

e fo

rmal

se

ctor

.

6. C

orru

ptio

n ha

s a

sign

ifica

nt

nega

tive

effe

ct o

n gr

owth

driv

ers,

su

ch a

s in

vest

men

t, in

clud

ing

fore

ign

dire

ct in

vest

men

t (FD

I); c

ompe

titio

n;

entr

epre

neur

ship

; gov

ernm

ent

effic

ienc

y, in

clud

ing

gove

rnm

ent

expe

nditu

re a

nd re

venu

e; a

nd

hum

an c

apita

l for

mat

ion.

Hig

h-le

vel

corr

uptio

n le

ads

to in

effic

ienc

y an

d re

sour

ce m

isal

loca

tion.

Cor

rupt

ion

will

als

o af

fect

oth

er im

port

ant

indi

cato

rs o

f eco

nom

ic d

evel

opm

ent

such

as

the

qual

ity o

f the

env

ironm

ent,

pers

onal

hea

lth a

nd s

afet

y, e

quity

(in

com

e di

strib

utio

n), a

nd v

ario

us

type

s of

soc

ial o

r civ

ic c

apita

l (“t

rust

”)

– w

hich

sig

nific

antly

aff

ect e

cono

mic

w

elfa

re a

nd, i

n th

e ca

se o

f tru

st, a

lso

the

econ

omy’

s de

velo

pmen

t pot

entia

l.

7. L

imite

d ac

cess

to fi

nanc

e is

one

of

the

mos

t pro

noun

ced

barr

iers

to

effo

rts

to b

uild

pro

duct

ive

capa

city

an

d co

mpe

titiv

enes

s, th

us h

ampe

ring

jo

b cr

eati

on, s

ocia

l inc

lusi

on a

nd

sust

aina

ble

grow

th. T

he r

easo

ns fo

r th

is in

clud

e:

•Po

or q

ualit

y fin

anci

al in

term

edia

tion

(i.e.

the

inab

ility

of i

nstit

utio

ns to

su

cces

sful

ly in

term

edia

te b

etw

een

lend

ers

and

borr

ower

s) re

sults

in h

igh

tran

sact

ion

cost

s, h

igh

leve

ls o

f non

-pe

rfor

min

g lo

ans,

and

lim

ited

acce

ss

for s

mal

l firm

s an

d ho

useh

olds

to

finan

cial

ser

vice

s. Id

eally

, eco

nom

ies

shou

ld a

im t

o im

prov

e in

term

edia

tion

to e

nsur

e pr

oper

and

pre

cise

fund

al

loca

tion,

boo

stin

g do

mes

tic

inve

stm

ents

and

thus

pro

duct

ivity

and

ec

onom

ic g

row

th.



BU

SIN

ES

S E

NV

IRO

NM

ENT

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•ba

nkru

ptcy

pro

cedu

res

are

inef

ficie

nt, s

low

and

poo

rly

defin

ed

•fin

anci

al li

tera

cy le

vels

are

ver

y lo

w a

nd n

o na

tiona

l fin

anci

al

educ

atio

n st

rate

gy h

as b

een

impl

emen

ted

•cr

edit

guar

ante

e sc

hem

es a

re

limite

d in

num

ber a

nd s

cope

, go

vern

men

t cre

dit r

atin

g is

low

an

d th

ere

are

no r

isk

shar

ing

mec

hani

sms

avai

labl

e •de

velo

pmen

t ban

ks a

re n

ot fi

lling

in

the

gap

left

by

priv

ate

bank

s,

eith

er d

ue to

lim

ited

finan

ce,

poor

targ

etin

g of

ent

erpr

ises

, or

beca

use

ther

e ar

e no

dev

elop

men

t ba

nks

in th

e ec

onom

y.

7.1.

Lim

ited

acc

ess

to e

quit

y fi

nanc

e, w

ith e

quity

fina

ncin

g un

deve

lope

d in

the

econ

omy.

Sy

mpt

oms

incl

ude:

•un

derd

evel

oped

cap

ital m

arke

ts

(sto

ck m

arke

t cap

italis

atio

n an

d liq

uidi

ty is

low

rel

ativ

e to

be

nchm

ark)

•ve

ntur

e ca

pita

l act

ivity

is in

its

infa

ncy

and

lack

s cl

ear l

egal

de

finiti

ons

•lim

ited

ange

l inv

estm

ent a

ctiv

ity,

ofte

n w

ith n

o le

gal f

ram

ewor

k to

go

vern

ing.

7.2.

Lim

ited

alt

erna

tive

sou

rces

of

fina

ncin

g. S

ympt

oms

incl

ude:

•lim

ited

use

of fa

ctor

ing

and

a la

ck

of e

xplic

it fa

ctor

ing

law

s •cr

owdf

undi

ng h

ardl

y ex

ists

or i

s in

th

e ea

rly

stag

es o

f dev

elop

men

t •m

icro

finan

ce la

cks

a w

ell-

esta

blis

hed

regu

lato

ry fr

amew

ork.

•Po

orly

func

tion

ing

cred

it m

arke

ts

with

hig

h co

llate

ral r

equi

rem

ents

re

duce

dem

and

in th

e ec

onom

y du

e to

hig

h co

sts

or th

e in

abili

ty o

f fir

ms

to m

eet l

ende

rs’ t

erm

s. B

anks

us

ually

res

ort t

o ov

er-c

olla

tera

lisin

g w

hen

ther

e ar

e pr

oble

ms

asso

ciat

ed

with

fore

clos

ure

and

loan

-rec

over

y pr

oced

ures

. Ine

ffic

ient

ban

krup

tcy

proc

edur

es (w

hich

are

of g

reat

im

port

ance

if b

usin

esse

s ar

e to

be

abl

e to

acc

ess

finan

ce a

nd

thus

sur

vive

) as

wel

l as

the

lack

of

sec

ond

chan

ce o

ppor

tuni

ties

will

furt

her w

orse

n th

e te

rms

of

borr

owin

g an

d re

duce

inve

stm

ent.

•U

ndev

elop

ed c

adas

tre

syst

ems

mea

n cr

edit

info

rmat

ion

regi

ster

s ar

e of

littl

e us

e to

ban

ks. T

hey

also

m

ean

bank

s w

ill n

ot b

e ab

le to

ef

ficie

ntly

ass

ess

the

risk

asso

ciat

ed

with

bor

row

ers,

thus

redu

cing

the

avai

labi

lity

of b

ank

finan

ce to

the

priv

ate

sect

or a

nd h

ence

inve

stm

ent.

•La

ck o

f rel

evan

t leg

isla

tion

co

veri

ng v

entu

re c

apit

al a

nd

ange

l inv

estm

ents

leav

es in

vest

ors

inad

equa

tely

pro

tect

ed, r

educ

ing

both

the

supp

ly a

nd d

eman

d of

su

ch in

vest

men

ts. T

his

limits

th

e us

e of

fund

ing

chan

nels

for

high

-pot

entia

l bus

ines

s st

art-

ups

such

as

crow

dfun

ding

. Fai

lure

to

expl

oit s

uch

pote

ntia

l sou

rces

of

inve

stm

ent d

irect

ly r

educ

es th

e ec

onom

y’s

prod

uctiv

ity, i

nnov

atio

n an

d in

vest

men

t pot

entia

l. •La

ck o

f fin

anci

al li

tera

cy a

nd

inve

stm

ent r

eadi

ness

con

trib

utes

to

the

unde

ruse

of t

he fi

nanc

ial

sect

or a

s a

sour

ce o

f fun

ds. L

ack

of a

na

tiona

l fin

anci

al e

duca

tion

stra

tegy

af

fect

s pe

ople

’s u

nder

stan

ding

of

how

the

finan

cial

sys

tem

wor

ks, t

he

diff

eren

t typ

es o

f fin

ance

ava

ilabl

e an

d ho

w to

acc

ess

it.


Trade-related reformsPolicy area indicators, structural obstacles and impact on competitiveness and growth




I. GE

NERA

L TR

ADE

INDI

CATO

RS

Tota

l tra

de in

goo

ds a

nd s

ervi

ces

(% o

f GD

P, %

cha

nge)

Trad

e in

goo

ds a

nd s

ervi

ces

is d

efin

ed a

s th

e tr

ansf

er in

ow

ners

hip

of m

ater

ial r

esou

rces

and

ser

vice

s be

twee

n on

e ec

onom

y an

d an

othe

r. It

is

mea

sure

d as

a p

erce

ntag

e of

gro

ss d

omes

tic p

rodu

ct (

GD

P) fo

r net

trad

e an

d al

so a

nnua

l gro

wth

of e

xpor

ts a

nd im

port

s.So

urc

es: N

atio

na

l sta

tist

ics

agen

cies

; Wo

rld

Ba

nk

, Wo

rld

Dev

elo

pm

ent

Ind

icat

ors

.

Ope

nnes

s to

trad

e (t

rade

-to-

GD

P ra

tio

for l

ates

t ava

ilabl

e ye

ar)

Mea

sure

s op

enne

ss to

trad

e as

the

trad

e-to

-GD

P ra

tio. I

t wei

ghs

the

com

bine

d im

port

ance

of e

xpor

ts a

nd im

port

s of

goo

ds a

nd s

ervi

ces

in a

n ec

onom

y, g

ivin

g an

insi

ght i

nto

the

over

all a

cces

s to

fore

ign

mar

kets

by

dom

estic

firm

s, a

s w

ell a

s th

e ex

tent

of f

orei

gn p

enet

ratio

n in

to th

e na

tiona

l mar

ket.

So

urc

es: N

atio

na

l sta

tist

ics

agen

cies

; Wo

rld

Ba

nk

, Wo

rld

Dev

elo

pm

ent

Ind

icat

ors

.

Trad

e ba

lanc

e de

fici

t/su

rplu

s (%

of G

DP,

tim

e se

ries

, las

t 10

year

s)In

dica

tes

the

degr

ee to

whi

ch d

omes

tic d

eman

d ex

ceed

s do

mes

tic s

uppl

y, o

r vic

e ve

rsa.

Pro

vide

s an

indi

catio

n of

the

econ

omy’

s in

tern

atio

nal

com

petit

iven

ess.

So

urc

es: N

atio

na

l sta

tist

ics

agen

cies

; cen

tra

l ba

nk

s; W

orl

d B

an

k, W

orl

d I

nte

gra

ted

Tra

de

So

luti

on

(W

ITS

).

Curr

ent a

ccou

nt d

efic

it/s

urpl

us (

% o

f GD

P; ti

me

seri

es, l

ast 1

0 ye

ars,

indi

cati

ng th

e sh

are

of n

et tr

ade

in g

oods

, net

trad

e in

ser

vice

s, n

et

inco

me

and

net c

urre

nt tr

ansf

ers

in th

e fi

nal f

igur

e)

The

curr

ent a

ccou

nt c

over

s al

l tra

nsac

tions

(ex

clud

ing

finan

cial

item

s) th

at in

volv

e ec

onom

ic v

alue

s a

nd o

ccur

bet

wee

n re

side

nts

and

non-

resi

dent

ent

ities

. It i

nclu

des

som

e of

the

indi

cato

rs o

bser

ved

in th

e ba

lanc

e of

trad

e (p

lus/

min

us tr

ade

leve

ls o

f goo

ds a

nd s

ervi

ces)

but

it g

ives

a

bett

er/f

ulle

r ins

ight

into

the

over

all h

ealth

and

inte

rnat

iona

l com

petit

iven

ess

of a

n ec

onom

y.

Pers

iste

nt c

urre

nt a

ccou

nt d

efic

its o

r sur

plus

es in

dica

te a

mac

roec

onom

ic im

bala

nce

that

is n

ot c

ondu

cive

to s

usta

ined

eco

nom

ic g

row

th a

nd,

ther

efor

e, s

usta

ined

impl

emen

tatio

n of

sus

tain

able

dev

elop

men

t goa

ls.

Sou

rces

: Nat

ion

al s

tati

stic

s ag

enci

es; W

orl

d B

an

k; I

nte

rnat

ion

al M

on

eta

ry F

un

d (

IMF)

.

Expo

rts

of g

oods

and

ser

vice

s (%

of G

DP,

by

sect

or [

agri

cult

ure,

indu

stry

, ser

vice

s])

Mer

chan

dise

trad

e, c

ompr

isin

g go

ods

and

serv

ices

leav

ing

the

stat

istic

al te

rrito

ry, a

s a

shar

e of

GD

P. T

his

indi

cato

r hel

ps to

bet

ter u

nder

stan

d th

e le

vel o

f ext

erna

l dem

and

for d

omes

tic g

oods

and

ser

vice

s, th

us a

lso

illus

trat

ing

the

inte

rnat

iona

l com

petit

iven

ess

of g

oods

and

ser

vice

s pr

oduc

ed in

the

econ

omy.

Sou

rce:

Nat

ion

al s

tati

stic

s ag

enci

es.

Impo

rts

of g

oods

and

ser

vice

s (%

of G

DP,

by

sect

or [

agri

cult

ure,

indu

stry

, ser

vice

s])

Mer

chan

dise

trad

e, c

ompr

isin

g go

ods

and

serv

ices

ent

erin

g th

e st

atis

tical

terr

itory

, as

a sh

are

of G

DP.

Indi

cate

s ho

w d

epen

dent

an

econ

omy

is

on g

oods

(raw

mat

eria

ls, f

oods

tuff

s, m

achi

nery

, etc

.) an

d se

rvic

es c

omin

g fr

om it

s tr

ade

part

ners

.So

urc

e: N

atio

na

l sta

tist

ics

agen

cies

.

Mai

n tr

ade

part

ners

(ra

nked

as

a sh

are

of to

tal t

rade

and

in a

bsol

ute

term

s)

This

indi

cato

r pro

vide

s an

insi

ght i

nto

the

gene

ral t

rade

dyn

amic

s of

an

econ

omy:

whe

ther

it h

as a

div

erse

ran

ge o

f tra

ding

par

tner

s or

is ti

ed to

ju

st a

han

dful

. Dep

ende

nce

on a

few

trad

ing

part

ners

sug

gest

s he

ight

ened

vul

nera

bilit

y to

eco

nom

ic d

evel

opm

ents

(pa

rtic

ular

ly s

hock

s) in

thos

e co

untr

ies,

esp

ecia

lly if

they

are

all

part

of t

he s

ame

trad

ing

bloc

k.

Sou

rces

: Nat

ion

al s

tati

stic

s ag

enci

es; U

nit

ed N

atio

ns,

Co

mtr

ade

Dat

aba

se; W

orl

d B

an

k, W

ITS

.

TR

AD

E-R

ELA

TED

REF

OR

MS

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. L

ow le

vel o

f ope

nnes

s to

trad

e an

d lo

w le

vel o

f int

egra

tion

into

the

mul

tilat

eral

trad

ing

syst

em

•tr

ade

as a

sha

re o

f GD

P is

low

•lit

tle p

artic

ipat

ion

in b

ilate

ral a

nd

mul

tilat

eral

trad

e ag

reem

ents

•la

rge

and

num

erou

s ta

riff

s an

d ot

her

barr

iers

to tr

ade.

2. L

ow q

ualit

y of

trad

e

infr

astr

uctu

re a

nd lo

gist

ics

•lo

w q

ualit

y of

tran

spor

t and

oth

er

trad

e-re

late

d in

fras

truc

ture

, as

dem

onst

rate

d by

rel

evan

t ind

ices

•lim

ited

conn

ectiv

ity to

mai

n tr

ansp

ort c

orri

dors

and

mai

n tr

adin

g pa

rtne

rs •lo

w s

core

on

the

LPI.

3. S

low

, exp

ensi

ve a

nd c

umbe

rsom

e cu

stom

s pr

oced

ures

. Sym

ptom

s of

th

is o

bsta

cle

incl

ude:

•cl

earin

g ex

port

s th

roug

h cu

stom

s ta

kes

a si

gnifi

cant

num

ber o

f day

s (w

ith n

o si

gnifi

cant

red

uctio

ns in

re

cent

yea

rs)

•a

belo

w r

egio

nal a

vera

ge p

ositi

on in

th

e D

oing

Bus

ines

s Tr

adin

g Ac

ross

Bo

rder

s ra

nkin

g, a

s w

ell a

s an

y sp

ecifi

c su

b-in

dica

tors

in w

hich

an

econ

omy

does

par

ticul

arly

poo

rly

com

pare

d w

ith r

egio

nal o

r oth

er

aver

ages

•a

low

sco

re fo

r the

LPI

Dim

ensi

on 1

in

dica

tor (

effic

ienc

y of

the

clea

ranc

e pr

oces

s).

4. L

ow le

vel o

f har

mon

isat

ion

wit

h in

tern

atio

nal s

tand

ards

res

ultin

g in

lo

w e

xpor

ts a

s w

ell a

s pa

rtic

ipat

ion

in

trad

ing

bloc

ks. S

ympt

oms

incl

ude:

•Fe

w q

ualit

y an

d ec

o-st

anda

rds

are

impl

emen

ted

or c

ertif

icat

es

issu

ed (

HAC

CP a

nd IS

O 2

2000

in

the

agri

cultu

ral s

ecto

r; IS

O/

TS 1

6949

, ISO

900

0/90

01; C

E m

arki

ng in

man

ufac

turin

g, e

tc.)

1. A

low

leve

l of o

penn

ess

to tr

ade

is

ofte

n as

soci

ated

with

a lo

wer

leve

l of

eco

nom

ic g

row

th. T

his

is d

ue to

a

num

ber o

f rea

sons

: •in

effi

cien

t allo

cati

on o

f res

ourc

es

(inab

ility

to b

enef

it fr

om a

focu

s on

com

para

tive

adva

ntag

e an

d re

sulti

ng g

ains

from

trad

ing

with

ot

her e

cono

mie

s) •in

abili

ty to

rea

lise

econ

omie

s of

sc

ale

and

scop

e an

d th

e re

sulti

ng

effic

ienc

y ga

ins

•in

abili

ty to

ben

efit

from

dif

fusi

on

of k

now

ledg

e an

d, a

s a

resu

lt,

fost

erin

g of

tech

nolo

gica

l pro

gres

s •lim

ited

com

peti

tion

from

fore

ign

mar

kets

whi

ch a

ffec

ts d

omes

tic

prod

uctiv

ity a

s w

ell a

s pr

ices

.

2. L

ow q

ualit

y tr

ade

infr

astr

uctu

re a

nd

logi

stic

s re

duce

the

econ

omy’

s ex

tern

al

com

petit

iven

ess

and

trad

ing

capa

city

. En

terp

rise

s ne

ed c

heap

and

rel

iabl

e ac

cess

to a

net

wor

k of

hig

h-qu

alit

y in

fras

truc

ture

to b

e m

ore

com

petit

ive.

N

o or

low

-qua

lity

infr

astr

uctu

re m

ay

canc

el o

ut a

n ec

onom

y’s

pote

ntia

l co

mpa

rativ

e ad

vant

age

in th

e pr

oduc

tion

of a

pro

duct

.

3. S

low

, exp

ensi

ve a

nd c

umbe

rsom

e cu

stom

s pr

oced

ures

als

o de

ter t

rade

. Th

e lo

nger

it ta

kes

to c

ompl

ete

a tr

ansa

ctio

n, th

e gr

eate

r the

tend

ency

fo

r tra

de v

olum

es to

be

redu

ced.

Le

ngth

y pr

oced

ures

for e

xpor

ts a

nd

impo

rts

redu

ce th

e pr

obab

ility

that

fir

ms

will

ent

er e

xpor

t mar

kets

for

time-

sens

itive

pro

duct

s.

4. L

ow le

vels

of h

arm

onis

atio

n w

ith in

tern

atio

nal s

tand

ards

lim

its

econ

omie

s’ e

xpor

t cap

acit

ies

and

abili

ty to

link

up

to g

loba

l val

ue

chai

ns.

Inad

equa

te a

lignm

ent w

ith

inte

rnat

iona

l sta

ndar

ds a

nd p

ract

ices



Mai

n ex

port

and

impo

rt p

rodu

cts

(HS-

6 D

igit

Leve

l, p

rodu

ct s

hare

and

tota

l val

ue)

Iden

tifie

s th

e m

ain

prod

uct c

ateg

orie

s co

ncer

ned

in th

e ec

onom

y’s

impo

rt a

nd e

xpor

t tra

de u

sing

the

Nom

encl

atur

e st

atis

tique

des

act

ivité

s éc

onom

ique

s da

ns la

Com

mun

auté

eur

opée

nne

(NAC

E) R

evis

ion

2, o

r the

Har

mon

ized

Com

mod

ity D

escr

iptio

n an

d Co

ding

Sys

tem

(HS-

4 or

HS-

6).

Dep

ende

nce

on a

few

exp

ort p

rodu

cts

mak

es a

n ec

onom

y vu

lner

able

and

indi

cate

s th

at s

cope

for d

iver

sific

atio

n is

hig

h. T

his

indi

cato

r can

als

o gi

ve a

sen

se o

f the

sop

hist

icat

ion

of e

xpor

ts a

nd th

e sc

ope

for m

ovin

g up

the

valu

e ch

ains

/incr

easi

ng v

alue

add

ed. L

ast b

ut n

ot le

ast,

it ca

n h

elp

to id

entif

y cu

rren

tly im

port

ed p

rodu

cts

that

cou

ld b

e re

plac

ed b

y do

mes

tical

ly p

rodu

ced

good

s.So

urc

es: N

atio

na

l sta

tist

ics

agen

cies

; Un

ited

Nat

ion

s, C

om

trad

e D

atab

ase

; Wo

rld

Ba

nk

, WIT

S.

Perc

enta

ge o

f fir

ms

expo

rtin

g di

rect

ly o

r ind

irec

tly

(at l

east

1%

of s

ales

)Ca

lcul

ates

the

shar

e of

firm

s pr

oduc

ing

good

s an

d se

rvic

es th

at a

re u

ltim

atel

y co

nsum

ed in

fore

ign

mar

kets

. It p

rovi

des

insi

ghts

into

the

exte

nt

to w

hich

dom

estic

ent

erpr

ises

mee

t th

e qu

ality

, saf

ety

and

othe

r sta

ndar

ds n

eede

d to

exp

ort t

o fo

reig

n m

arke

ts.

Sou

rce:

Wo

rld

Ba

nk

, En

terp

rise

Su

rvey

Logi

stic

s Pe

rfor

man

ce In

dex

(LPI

) sco

re a

nd r

ank

(tim

e se

ries

, las

t 10

year

s)Th

e LP

I ran

ks 1

60 c

ount

ries

on

6 di

men

sion

s of

trad

e –

incl

udin

g pe

rfor

man

ce, i

nfra

stru

ctur

e qu

ality

and

tim

elin

ess

of s

hipm

ents

– th

at a

re

incr

easi

ngly

rec

ogni

sed

as im

port

ant t

o de

velo

pmen

t. Th

e da

ta u

sed

in th

e ra

nkin

g co

me

from

a s

urve

y of

logi

stic

s pr

ofes

sion

als.

The

LPI

pr

ovid

es in

sigh

ts o

n th

e ov

eral

l qua

lity

of a

ll tr

ade-

rela

ted

logi

stic

s in

a p

artic

ular

eco

nom

y, th

us d

eter

min

ing

its o

vera

ll tr

adin

g co

nditi

ons.

Sou

rce:

Wo

rld

Ba

nk

, LP

I.

II. C

USTO

MS-

RELA

TED

INDI

CATO

RS

Day

s to

cle

ar d

irec

t exp

orts

thro

ugh

cust

oms

(tim

e se

ries

, las

t 10

year

s)Sp

ecifi

es th

e av

erag

e nu

mbe

r of d

ays

to c

lear

dire

ct e

xpor

ts th

roug

h cu

stom

s as

repo

rted

by

the

firm

s su

rvey

ed in

the

Wor

ld B

ank’

s En

terp

rise

Surv

ey.

Sou

rce:

Wo

rld

Ba

nk

, En

terp

rise

Su

rvey

Doi

ng B

usin

ess

Trad

ing

Acro

ss B

orde

rs in

dica

tors

, ove

rall

rank

ing

and

spec

ific

topi

cs (

time

seri

es, l

ast 1

0 ye

ars)

•ov

eral

l ran

k in

Tra

ding

Acr

oss

Bord

ers

•tim

e to

exp

ort:

bord

er c

ompl

ianc

e (h

ours

) •co

st to

exp

ort:

bord

er c

ompl

ianc

e (U

SD)

•tim

e to

exp

ort:

docu

men

tary

com

plia

nce

(hou

rs)

•co

st to

exp

ort:

docu

men

tary

com

plia

nce

(USD

) •tim

e to

impo

rt: b

orde

r com

plia

nce

(hou

rs)

•co

st to

impo

rt: b

orde

r com

plia

nce

(USD

) •tim

e to

impo

rt: d

ocum

enta

ry c

ompl

ianc

e (h

ours

) •co

st to

impo

rt: d

ocum

enta

ry c

ompl

ianc

e (U

SD)

A se

ries

of i

ndic

ator

s ba

sed

on a

sam

ple

impo

rt/e

xpor

t pro

cedu

re in

one

bor

der g

ate

to e

stim

ate

the

bure

aucr

atic

and

mon

etar

y bu

rden

of

impo

rtin

g an

d ex

port

ing.

So

urc

e:

Wo

rld

B

an

k,

Do

ing

Bu

sin

ess

– M

easu

rin

g B

usi

nes

s R

egu

lati

on

s “T

rad

ing

Acr

oss

B

ord

ers”

w

ww

.do

ingb

usi

nes

s.o

rg/d

ata

/ex

plo

reto

pic

s/tr

adin

g-ac

ross

-bo

rder

.

LPI s

core

and

ran

k (t

ime

seri

es, l

ast 1

0 ye

ars)

•ov

eral

l pos

ition

in th

e ra

nkin

g •D

imen

sion

1: E

ffic

ienc

y of

the

clea

ranc

e pr

oces

s (i.

e. s

peed

, sim

plic

ity a

nd p

redi

ctab

ility

of f

orm

aliti

es) b

y bo

rder

con

trol

age

ncie

s, in

clud

ing

cust

oms.

Indi

cato

rs b

ased

on

var

ious

lo

gist

ical

asp

ects

of t

rade

(fro

m in

fras

truc

ture

to b

urea

ucra

tic p

roce

dure

s), i

nclu

ding

a s

peci

fic in

dica

tor o

n th

e ef

ficie

ncy

of th

e im

port

/exp

ort c

lear

ance

pro

cess

. So

urc

e: W

orl

d B

an

k, L

PI.

TR

AD

E-R

ELA

TED

REF

OR

MS

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

See

the

rele

vant

indi

cato

rs in

the

Sect

oral

Dev

elop

men

t pol

icy

area

di

agno

stic

s. •Fr

agm

ente

d le

gisl

atio

n, m

ultip

le

juri

sdic

tions

, and

wea

knes

ses

in s

urve

illan

ce, m

onito

ring

and

enfo

rcem

ent o

f nat

iona

l sta

ndar

ds

offic

e co

ntro

l sys

tem

s. •D

omes

tic c

ompa

nies

do

not w

idel

y pa

rtic

ipat

e in

glo

bal v

alue

cha

ins.

5. L

ow e

xpor

t div

ersi

fica

tion

and

so

phis

tica

tion

•fe

w e

xpor

t pro

duct

s an

d po

tent

ial

mar

kets

•hi

gh fi

nal s

core

in th

e H

erfin

dahl

-H

irsc

hman

pro

duct

con

cent

ratio

n in

dex

•lo

w v

alue

for t

he e

xpor

t mar

ket

pene

trat

ion

mea

sure

•a

rela

tivel

y hi

gh s

hare

of r

esou

rce-

base

d an

d pr

imar

y pr

oduc

t exp

orts

, co

mpa

red

to lo

w, m

ediu

m a

nd h

igh

tech

nolo

gy e

xpor

ts •lo

w le

vel o

f exp

ort s

ophi

stic

atio

n fo

r the

eco

nom

y’s

mai

n ex

port

s,

whi

ch u

ltim

atel

y re

sults

in a

n ov

eral

l lo

w e

xpec

ted

GD

P pe

r cap

ita r

esul

t –

indi

catin

g a

less

sop

hist

icat

ed

expo

rt p

ortf

olio

.

clos

es p

rosp

ectiv

e m

arke

ts to

the

agri

cultu

ral a

nd in

dust

rial

sec

tors

. St

anda

rds

are

also

a m

ajor

obs

tacl

e to

th

e in

tegr

atio

n of

dom

estic

com

pani

es

into

glo

bal v

alue

cha

ins,

whi

ch in

turn

re

duce

s th

eir s

cope

for g

row

th a

nd

prod

uctiv

ity g

ains

.

5. L

ow e

xpor

t div

ersi

fica

tion

mak

es

econ

omie

s vu

lner

able

to p

rice

vo

latil

ity.

A b

road

enin

g of

the

expo

rt

base

thro

ugh

a m

ore

dive

rsifi

ed

natio

nal t

rade

por

tfol

io c

an h

elp

mai

ntai

n st

abili

ty in

exp

ort r

ecei

pts,

th

us fo

ster

ing

long

-ter

m e

cono

mic

gr

owth

. As

Acem

oglu

and

Zili

bott

i (“

Was

Pro

met

heus

unb

ound

by

chan

ce?

Ris

k di

vers

ifica

tion

and

grow

th”,

Jour

nal o

f Pol

itica

l Eco

nom

y 10

5(4)

: 709

-751

, 199

7) a

rgue

, di

vers

ifica

tion

may

incr

ease

inco

me

by s

prea

ding

ris

ks o

ver a

wid

er e

xpor

t po

rtfo

lio o

f goo

ds a

nd s

ervi

ces.

Expo

rt s

ophi

stic

atio

n he

lps

mov

e ec

onom

ies

away

from

a r

elia

nce

on p

rim

ary

com

mod

itie

s –

whi

ch

usua

lly

tran

slat

es in

to d

eclin

ing

term

s of

trad

e, lo

w v

alue

add

ed, a

nd

slow

er p

rodu

ctiv

ity

grow

th.



III. T

RADE

LIB

ERAL

ISAT

ION/

MAR

KET

ACCE

SS IN

DICA

TORS

Num

ber o

f reg

iona

l and

bila

tera

l fre

e tr

ade

agre

emen

ts (

FTA

s)N

otes

the

num

ber o

f reg

iona

l or b

ilate

ral f

ree

trad

e ag

reem

ents

cur

rent

ly in

forc

e in

an

econ

omy.

FTA

s ha

ve p

rove

d cr

ucia

l in

the

redu

ctio

n of

tr

ade

barr

iers

, and

the

crea

tion

of m

ore

stab

le a

nd tr

ansp

aren

t tra

ding

and

inve

stm

ent e

nviro

nmen

ts, a

llow

ing

for i

ncre

ased

exp

orts

of p

rodu

cts

and

serv

ices

to p

artn

er c

ount

ries

.

Sou

rce:

Nat

ion

al t

rad

e o

r ec

on

om

y m

inis

try.

Tari

ffs

by p

rodu

ct g

roup

s (s

umm

ary

and

duty

ran

ges)

Sum

mar

ises

the

stat

e of

pla

y fo

r tar

iffs

on a

gric

ultu

ral a

nd in

dust

rial

pro

duct

s, in

clud

ing

the

shar

e of

dut

y-fr

ee p

rodu

cts,

and

the

aver

age

and

max

imum

fina

l bou

nd d

utie

s, a

s w

ell a

s th

e sa

me

cate

gori

es fo

r tra

de p

artn

ers

gran

ted

mos

t-fa

vour

ed n

atio

n st

atus

. So

urc

e: W

orl

d T

rad

e O

rga

niz

atio

n, S

tati

stic

s d

atab

ase

(ta

riff

pro

file

s).

Info

rmat

ion

on n

on-t

arif

f bar

rier

s (N

TBs)

, num

ber o

f NTB

mea

sure

s, a

nd n

umbe

r of a

ffec

ted

prod

ucts

(H

S-6

Dig

it)

Spec

ifies

the

num

ber o

f dis

tinct

NTB

mea

sure

s in

eff

ect i

n a

give

n ye

ar, a

s w

ell a

s th

e nu

mbe

r of s

peci

fic p

rodu

cts

(at t

he H

S 6-

digi

t lev

el)

affe

cted

in a

giv

en y

ear.

Sou

rce:

Wo

rld

Ba

nk

, WIT

S.

Qua

ntit

ativ

e re

stri

ctio

ns (

num

ber a

nd ty

pes

of q

uota

s)D

etai

ls th

e lim

its, i

f any

, im

pose

d on

the

valu

e or

vol

ume

of g

oods

trad

ed.

Sou

rce:

Wo

rld

Tra

de

Org

an

izat

ion

, Qu

an

tita

tive

Res

tric

tio

ns

dat

aba

se.

IV. E

XPOR

T DI

VERS

IFIC

ATIO

N AN

D SO

PHIS

TICA

TION

1. D

iver

sific

atio

n

Num

ber o

f pro

duct

s an

d m

arke

tsLi

sts

all t

radi

ng p

artn

ers

and

give

s th

e nu

mbe

r of p

artn

er m

arke

ts a

nd n

umbe

r of p

rodu

cts

expo

rted

, cla

ssifi

ed a

t the

6-d

igit

HS

leve

l.So

urc

e: W

orl

d B

an

k, W

ITS

.

Her

find

ahl-

Hir

schm

an p

rodu

ct c

once

ntra

tion

inde

xM

easu

res

the

dist

ribut

ion

of tr

ade

valu

e ac

ross

an

expo

rter

’s p

artn

ers.

An

econ

omy

with

mos

t of i

ts tr

ade

valu

e co

ncen

trat

ed in

a v

ery

few

mar

kets

will

hav

e an

inde

x va

lue

clos

e to

1. I

ndic

ates

the

expo

rter

’s d

epen

denc

y on

its

trad

ing

part

ners

and

the

dang

er it

face

s sh

ould

its

par

tner

s in

crea

se tr

ade

barr

iers

, fac

e do

wnw

ard

busi

ness

cyc

les

or o

ther

ris

ks. M

easu

red

over

tim

e, a

fall

in th

e in

dex

may

indi

cate

a

dive

rsifi

catio

n of

trad

ing

part

ners

hips

. So

urc

e: W

orl

d B

an

k, W

ITS

.

Inde

x of

exp

ort m

arke

t pen

etra

tion

Mea

sure

s th

e ex

tent

to w

hich

an

econ

omy’

s ex

port

s re

ach

alre

ady

prov

en m

arke

ts. C

alcu

late

d as

the

num

ber o

f cou

ntri

es to

whi

ch th

e ec

onom

y ex

port

s a

part

icul

ar p

rodu

ct, d

ivid

ed b

y th

e nu

mbe

r of c

ount

ries

that

rep

ort i

mpo

rtin

g th

e pr

oduc

t tha

t yea

r. A

low

val

ue m

ay s

igna

l the

pre

senc

e of

bar

rier

s to

trad

e th

at a

re p

reve

ntin

g fir

ms

from

exp

andi

ng th

eir e

xpor

t mar

kets

. So

urc

e: W

orl

d B

an

k, W

ITS

.

TR

AD

E-R

ELA

TED

REF

OR

MS

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth



2. S

ophi

stic

atio

n

Tech

nolo

gica

l cla

ssif

icat

ion

of e

xpor

tsPr

ovid

es a

per

cent

age

brea

kdow

n of

an

econ

omy’

s ex

port

s ac

cord

ing

to fi

ve b

road

tech

nolo

gica

l cat

egor

ies

of fi

nal p

rodu

cts:

hig

h te

ch, m

ediu

m

tech

, low

tech

, prim

ary

prod

ucts

and

res

ourc

e-ba

sed

prod

ucts

. Whi

le th

e as

sign

men

t of p

rodu

cts

to s

peci

fic c

ateg

orie

s is

not

unc

ontr

over

sial

, an

alys

ing

how

an

econ

omy’

s ex

port

bas

ket h

as c

hang

ed o

ver t

he y

ears

may

giv

e in

sigh

t int

o th

e pa

tter

n of

its

econ

omic

dev

elop

men

t.So

urc

e: W

orl

d B

an

k, W

ITS

.

Soph

isti

cati

on o

f exp

orts

(EX

PY)

Estim

ates

the

leve

l of t

echn

olog

ical

sop

hist

icat

ion

embo

died

in a

n ec

onom

y’s

expo

rt p

ortf

olio

, ind

icat

ing

its e

cono

mic

dev

elop

men

t. Th

is m

easu

re is

bas

ed o

n th

e as

sum

ptio

n th

at if

a p

rodu

ct is

mos

tly p

rodu

ced

by d

evel

oped

cou

ntri

es, t

hen

it is

rev

eale

d to

be

a “r

ich”

or

soph

istic

ated

pro

duct

. The

exp

ort s

ophi

stic

atio

n fig

ure

is c

alcu

late

d as

a w

eigh

ted

aver

age

of p

er c

apita

GD

P of

cou

ntri

es p

rodu

cing

that

pr

oduc

t, w

ith w

eigh

ts d

eriv

ed fr

om r

evea

led

com

para

tive

adva

ntag

e. T

he e

cono

my’

s ex

pect

ed G

DP

per c

apita

, EXP

Y, is

cal

cula

ted

by s

umm

ing

all t

he e

xpor

t sop

hist

icat

ion

valu

es fo

r the

pro

duct

s it

expo

rts,

wei

ghte

d by

the

prod

uct’s

sha

re o

f tot

al e

xpor

ts.

Sou

rces

: Wo

rld

Ba

nk

, WIT

S; H

arv

ard

, Atl

as

of

Eco

no

mic

Co

mp

lex

ity

; MIT

, Ob

serv

ato

ry o

f E

con

om

ic o

f E

con

om

ic C

om

ple

xit

y.

TR

AD

E-R

ELA

TED

REF

OR

MS

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth



I. GE

NERA

L IN

DICA

TORS

Fore

ign

dire

ct in

vest

men

t (FD

I) fl

ows

(% o

f GD

P, ti

me

seri

es, l

ast 1

0 ye

ars)

Asse

sses

the

dyna

mic

s of

inve

stm

ent (

incl

udin

g pr

e- a

nd p

ost-

finan

cial

cri

sis

flow

s), a

s w

ell a

s to

und

erst

and

the

natu

re o

f the

FD

I (fo

r exa

mpl

e no

ticea

ble

peak

s m

ay b

e lin

ked

to la

rge-

scal

e pr

ivat

isat

ions

, rat

her t

han

new

gre

enfie

ld in

vest

men

ts).

Sou

rce:

Nat

ion

al c

entr

al b

an

ks.

FDI f

low

s, in

mill

ion

EUR

, cla

ssif

ied

by ty

pe o

f act

ivit

y (N

ACE

Rev

2)

Hel

ps d

isce

rn w

heth

er th

e m

ajor

ity o

f FD

I goe

s to

the

non-

trad

able

sec

tor,

part

icul

arly

fina

ncia

l ope

ratio

ns a

nd r

eal e

stat

e.

Sou

rce:

Nat

ion

al c

entr

al b

an

ks.

FDI s

tock

s in

mill

ion

EUR

, by

inve

stor

cou

ntri

es a

nd ty

pe o

f act

ivit

y (N

ACE

Rev

2, t

ime

seri

es, l

ast 2

0 ye

ars)

Th

e fir

st ti

me

seri

es s

how

s th

e pa

tter

ns in

inve

stm

ent r

elat

ions

with

diff

eren

t cou

ntri

es a

nd c

an a

lso

help

det

erm

ine

if th

e ec

onom

y is

dep

ende

nt

on F

DI f

rom

a li

mite

d nu

mbe

r of e

cono

mie

s. T

his

seco

nd ti

me

seri

es w

ill fu

rthe

r hel

p in

und

erst

andi

ng w

here

FD

I flo

ws

have

gon

e in

the

last

two

deca

des

– co

verin

g th

e en

tire

tran

sitio

n to

mar

ket e

cono

mie

s of

thes

e ec

onom

ies.

So

urc

e: N

atio

na

l cen

tra

l ba

nk

s.

Cum

ulat

ive

GD

P of

eco

nom

ies

wit

h w

hich

bila

tera

l inv

estm

ent a

gree

men

ts a

re in

forc

e In

dica

tes

the

exte

nt to

whi

ch a

n ec

onom

y ha

s si

gned

inve

stm

ent a

gree

men

ts w

ith s

izea

ble

fore

ign

econ

omie

s (e

.g. F

ranc

e, G

erm

any,

Ital

y an

d th

e U

nite

d St

ates

),w

hich

tend

to a

lso

be th

e bi

gges

t sou

rces

of F

DI.

Suc

h ag

reem

ents

are

cru

cial

faci

litat

ors

for f

orei

gn in

vest

men

t, si

nce

they

hi

ghlig

ht th

e w

illin

gnes

s of

an

econ

omy

to a

pply

inte

rnat

iona

l arb

itrat

ion

and

disp

ute

sett

lem

ent m

echa

nism

s w

ith p

oten

tial f

orei

gn in

vest

ors.

So

urc

es:

UN

CT

AD

(20

15),

htt

p:/

/un

ctad

.org

/en

/Pag

es/D

IAE

/FD

I%20

Sta

tist

ics/

Inte

ract

ive-

dat

aba

se.a

spx

; O

ECD

, C

om

pet

itiv

enes

s in

So

uth

Ea

st E

uro

pe

(Ch

apte

r 1,

Su

b-d

imen

sio

n 1

).

Inve

stm

ent f

reed

om r

anki

ng (

Inde

x of

Eco

nom

ic F

reed

om)

Star

ting

from

an

idea

l sco

re o

f 100

, the

Inve

stm

ent F

reed

om in

dex

dedu

cts

poin

ts fo

r eac

h re

stric

tion

foun

d in

an

econ

omy’

s in

vest

men

t reg

ime,

app

lyin

g to

: 1) n

atio

nal t

reat

men

t of f

orei

gn in

vest

men

t; 2)

rest

rictio

ns o

n la

nd o

wne

rshi

p; a

nd 3

) the

exp

ropr

iatio

n of

inve

stm

ents

with

out f

air c

ompe

nsat

ion.

Sou

rces

: U

NC

TA

D (

2015

), h

ttp

://u

nct

ad.o

rg/e

n/P

ages

/DIA

E/F

DI%

20S

tati

stic

s/In

tera

ctiv

e-d

atab

ase

.asp

x;

OEC

D,

Co

mp

etit

iven

ess

in S

ou

th

East

Eu

rop

e (C

hap

ter

1, S

ub

-dim

ensi

on

1).

Inve

stin

g Ac

ross

Bor

ders

indi

cato

rs o

n FD

I reg

ulat

ion

The

Inve

stin

g Ac

ross

Bor

ders

indi

cato

rs a

sses

s th

e la

ws,

regu

latio

ns a

nd p

ract

ices

that

affe

ct fo

reig

n di

rect

inve

stm

ent.

The

met

hodo

logy

is b

ased

on

that

of t

he

Wor

ld B

ank

Grou

p’s

Doin

g Bu

sine

ss p

roje

ct. T

he in

dica

tors

hig

hlig

ht d

iffer

ence

s in

eco

nom

ies’

regu

lato

ry tr

eatm

ent o

f FDI

to id

entif

y go

od p

ract

ices

, fac

ilita

te

lear

ning

opp

ortu

nitie

s, s

timul

ate

refo

rms

and

prov

ide

annu

al cr

oss-

coun

try

data

. The

indi

cato

rs c

over

four

mai

n ar

eas:

1) i

nves

ting

acro

ss s

ecto

rs (f

rom

min

ing,

oi

l and

gas

to h

ealth

car

e an

d w

aste

man

agem

ent);

2) s

tart

ing

a fo

reig

n bu

sine

ss; 3

) acc

essi

ng in

dust

rial la

nd; a

nd 4

) arb

itrat

ing

com

mer

cial

disp

utes

.So

urc

e: W

orl

d B

an

k, I

nve

stin

g A

cro

ss B

ord

ers.

II. Q

UALI

TY O

F IN

VEST

MEN

T, IN

VEST

MEN

T PO

LICY

AND

PRO

MOT

ION

Exis

tenc

e of

inve

stor

-tar

geti

ng s

trat

egie

sM

easu

res

the

exte

nt to

whi

ch n

atio

nal i

nves

tmen

t pro

mot

ion

agen

cies

effe

ctiv

ely

scre

en p

oten

tial i

nves

tors

in o

rder

to id

entif

y th

e m

ost s

uita

ble

ones

.So

urc

e: N

atio

na

l so

urc

es.

FDI a

nd s

mal

l and

med

ium

-siz

ed e

nter

pris

e (S

ME)

link

ages

Mea

sure

s th

e ex

tent

to w

hich

spe

cific

pub

lic p

olic

ies

aim

to b

oost

link

ages

bet

wee

n FD

I and

a lo

cal s

uppl

ier b

ase.

Sou

rce:

Nat

ion

al s

ou

rces

.

Afte

rcar

e se

rvic

esM

easu

res

the

supp

ort o

ffer

ed to

inve

stor

s on

ce th

ey h

ave

set u

p th

eir b

usin

ess

oper

atio

ns.

Sou

rce:

Nat

ion

al s

ou

rces

.

INV

ES

TM

ENT

FA

CIL

ITA

TIO

N

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. U

nfav

oura

ble

busi

ness

and

in

vest

men

t clim

ate.

See

indi

cato

rs a

nd o

bsta

cles

iden

tifie

d in

the

busi

ness

env

ironm

ent p

olic

y ar

ea ta

ble.

If th

ey a

re e

xpla

ined

in

deta

il in

that

sec

tion,

onl

y ge

nera

l re

fere

nce

to th

e ke

y ob

stac

les

shou

ld b

e m

ade

here

, in

one

or tw

o se

nten

ces.

2. L

ack

of o

r ine

ffic

ient

FD

I-ta

rget

ing

polic

ies

(i.e.

with

an

emph

asis

on

spec

ific

sect

ors

or s

peci

alis

ing

in a

pa

rtic

ular

typo

logy

of i

nves

tmen

t).

Sym

ptom

s in

clud

e: •La

ck o

f a s

trat

egic

and

focu

sed

appr

oach

to in

vest

men

t pro

mot

ion

(no

stra

tegi

c se

ctor

targ

etin

g,

insu

ffic

ient

ly a

naly

tical

app

roac

h to

iden

tific

atio

n of

str

ateg

ic s

ecto

rs

etc.

). In

vest

men

t una

ble

to e

stab

lish

back

war

d an

d fo

rwar

d lin

kage

s w

ith

dom

estic

firm

s, r

iski

ng is

olat

ing

FDI

from

the

rest

of t

he e

cono

my,

and

lim

ited

gove

rnm

ent i

nitia

tives

and

po

licie

s to

sup

port

suc

h lin

kage

s. •La

ck o

f aft

erca

re s

ervi

ces,

leav

ing

fore

ign

inve

stor

s al

one

to d

eal w

ith

a se

mi-u

nkno

wn

mar

ket.

1. A

n un

favo

urab

le b

usin

ess

and

inve

stm

ent c

limat

e m

eans

the

follo

win

g be

nefit

s ar

e no

t rea

lised

: •In

crea

sed

exte

rnal

inve

stm

ent i

n tr

adab

le s

ecto

rs d

irect

ly e

xpan

ds

an e

cono

my’

s pr

oduc

tive

capa

city

, w

hich

is re

flect

ed a

n ex

pans

ion

of jo

b cr

eatio

n ra

tes

and

econ

omic

gro

wth

. •In

crea

sed

inve

stm

ent f

low

s af

fect

ec

onom

ic g

row

th n

ot o

nly

beca

use

inve

stm

ent f

unct

ions

as

a m

easu

re

of in

crea

sed

capi

tal a

ccum

ulat

ion

but a

lso

beca

use

of th

e re

sulti

ng

tran

sfer

of t

echn

olog

y an

d sk

ills,

not

just

har

d sk

ills,

but

al

so e

ntre

pren

euri

al o

nes.

An

expa

nded

tran

sfer

of t

echn

olog

y ca

n be

tran

slat

ed in

to a

ris

e in

the

prod

uctio

n of

cap

ital g

oods

and

thus

m

ore

expo

rts.

•FD

I als

o he

lps

in th

e pr

oces

s of

te

chno

logi

cal p

rogr

ess,

mai

nly

by

mea

ns o

f “ca

pita

l dee

peni

ng”

that

co

mes

alo

ng w

ith th

e in

trod

uctio

n of

ne

w v

arie

ties

of c

apita

l goo

ds.

•Th

e in

itial

FD

I inv

estm

ent i

s m

arke

d as

is a

cre

dit i

nto

the

curr

ent

acco

unt.

Stea

dy F

DI i

nflo

ws

thus

ca

n he

lp to

low

er a

cre

dit a

ccou

nt

defi

cit.

•FD

I inf

low

s ca

n al

so in

crea

se c

apita

l ac

cum

ulat

ion

and

augm

ente

d hu

man

cap

ital t

hrou

gh e

duca

tion,

tr

aini

ng a

nd n

ew m

anag

emen

t. M

ore

prod

ucti

ve fo

reig

n fi

rms

stim

ulat

e in

dust

ry c

ompe

titi

on, w

hich

is

ofte

n us

eful

for d

omes

tic fi

rms.

Th

us, d

omes

tic fi

rms

with

fore

ign

inve

stm

ent h

ave

high

er-q

ualit

y ou

tput

, whi

ch r

equi

res

mar

kets

to

mat

ch th

is q

ualit

y, d

rivi

ng u

p pr

oduc

tion

sta

ndar

ds in

oth

er

com

petit

ive

dom

estic

firm

s an

d su

pple

men

tary

bus

ines

s. S

imila

r sp

illov

ers

can

be c

reat

ed th

roug

h su

pplie

r lin

kage

s be

twee

n FD

I and

lo

cal S

MEs

.



INV

ES

TM

ENT

FA

CIL

ITA

TIO

N (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

2. L

ack

of o

r ine

ffic

ient

pol

icie

s ta

rget

ing

FDI

•Po

or r

esou

rce

allo

catio

n an

d m

anag

emen

t of i

nves

tmen

t at

trac

tion

polic

ies

have

a n

egat

ive

impa

ct n

ot o

nly

due

to th

e ov

eral

l fi

scal

bur

den

they

impo

se, b

ut a

lso

prev

ent a

dequ

ate

inve

stm

ents

that

ar

e m

ore

likel

y to

suc

ceed

com

ing

in

the

coun

try.

•Br

oad

FDI p

olic

ies

may

incr

ease

th

e ri

sk o

f a r

ace

to th

e bo

ttom

w

ith n

eigh

bour

ing

econ

omie

s or

co

mpe

titor

s du

e to

the

lack

of

long

-ter

m p

olic

y ap

proa

ches

. In

vest

men

ts b

ased

pur

ely

on

shor

t-te

rm fi

scal

hol

iday

s, w

ith

no p

re-s

elec

tion

mec

hani

sm, a

re

a no

ticea

ble

drai

n on

nat

iona

l bu

dget

s, a

nd th

e in

itia

l adv

anta

ges

such

as

new

jobs

may

qui

ckly

be

reve

rsed

whe

ther

bec

ause

the

inve

stin

g co

rpor

atio

n de

cide

s to

re

allo

cate

or b

ecau

se th

e co

mbi

ned

cost

s ex

ceed

the

perc

eive

d be

nefit

s of

the

inve

stm

ent.

•Af

terc

are

serv

ices

are

ess

entia

l to

build

a s

olid

rel

atio

n w

ith

exis

ting

in

vest

ors

and

incr

ease

trus

t am

ong

pros

pect

ive

ones

. Thu

s, g

ood

afte

rcar

e se

rvic

es m

ay fu

nctio

n as

a

pull

fact

or fo

r fut

ure

inve

stm

ents

, in

crea

sing

the

pros

pect

of f

utur

e,

mor

e va

luab

le e

xpor

ts.


Research, development and innovation (RDI) and Digital EconomyPolicy area indicators, structural obstacles and impact on competitiveness and growth




I. RE

SEAR

CH B

ASE

Gro

ss d

omes

tic

expe

ndit

ure

on r

esea

rch

and

deve

lopm

ent (

GER

D),

% o

f gro

ss d

omes

tic

prod

uct (

GD

P)M

easu

res

the

leve

l of e

xpen

ditu

re (

both

pub

lic a

nd p

riva

te) o

n re

sear

ch a

nd d

evel

opm

ent.

Inno

vatio

n ha

s co

nsid

erab

le p

ositi

ve e

xter

nalit

ies

for

the

econ

omy

and

soci

ety,

and

ther

efor

e its

fina

ncin

g is

nee

ded

to s

uppo

rt a

nd s

timul

ate

rese

arch

, dev

elop

men

t and

inno

vatio

n (R

DI)

act

iviti

es.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Busi

ness

ent

erpr

ise

rese

arch

and

dev

elop

men

t (BE

RD

) exp

endi

ture

M

easu

res

the

amou

nt o

f bus

ines

s ex

pend

iture

on

RD

I in

mill

ions

of e

uros

or l

ocal

cur

renc

y. It

sig

nals

firm

s’ c

omm

itmen

t to

the

syst

emat

ic

gene

ratio

n an

d co

mm

erci

al a

pplic

atio

n of

new

idea

s, a

lthou

gh it

is n

ot a

dire

ct m

easu

re o

f inn

ovat

ion

perf

orm

ance

(qu

ality

of e

xpen

ditu

re).

Sou

rce:

Nat

ion

al s

tati

stic

s.

Num

ber o

f org

anis

atio

ns in

volv

ed in

Hor

izon

202

0H

oriz

on 2

020

is th

e bi

gges

t EU

res

earc

h an

d in

nova

tion

prog

ram

me

ever

with

nea

rly

EUR

80

billi

on o

f fun

ding

ava

ilabl

e ov

er 7

yea

rs (

2014

-20)

. A

solid

num

ber o

f elig

ible

app

licat

ions

from

the

econ

omy

sugg

est l

ocal

inno

vato

rs a

re a

war

e of

the

poss

ibili

ties

offe

red

by th

e EU

to s

uppo

rt

inno

vatio

n.

Sou

rce:

Nat

ion

al s

tati

stic

s.

RD

I per

sonn

el, p

er m

illio

n pe

ople

Mea

sure

s th

e nu

mbe

r of r

esea

rche

rs in

rel

atio

n to

the

popu

latio

n. A

n ad

equa

te n

umbe

r of r

esea

rche

rs a

re n

eede

d to

per

form

RD

I act

iviti

es.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Pate

nt a

pplic

atio

ns, r

esid

ents

Mea

sure

s w

orld

wid

e pa

tent

app

licat

ions

file

d th

roug

h th

e Pa

tent

Coo

pera

tion

Trea

ty p

roce

dure

or w

ith a

nat

iona

l pat

ent o

ffic

e fo

r exc

lusi

ve

righ

ts fo

r an

inve

ntio

n –

i.e. a

pro

duct

or p

roce

ss th

at p

rovi

des

a ne

w w

ay o

f doi

ng s

omet

hing

or o

ffer

s a

new

tech

nica

l sol

utio

n to

a p

robl

em.

A pa

tent

pro

vide

s pr

otec

tion

for t

he in

vent

ion

to th

e ow

ner o

f the

pat

ent f

or a

lim

ited

peri

od, g

ener

ally

20

year

s. It

is a

rel

evan

t ind

icat

or o

f the

nu

mbe

r of d

isco

veri

es w

ith a

pra

ctic

al a

pplic

atio

n an

d co

mm

erci

al p

oten

tial.

Sou

rce:

Wo

rld

Ba

nk

, Dat

a B

an

k, h

ttp

://d

atab

an

k.w

orl

db

an

k.o

rg/.

II. IN

NOVA

TION

SUP

PORT

ORG

ANIS

ATIO

NS

Maj

or R

DI i

nfra

stru

ctur

e in

the

coun

try

(inc

ubat

ors,

acc

eler

ator

s, te

chno

logi

cal p

arks

etc

.)Su

ch in

fras

truc

ture

is c

ruci

al to

sta

rt-u

ps w

ith li

mite

d fin

anci

al c

apac

ity to

con

duct

bot

h th

eir b

usin

ess

and

RD

I act

iviti

es d

urin

g di

ffer

ent

phas

es o

f the

ir lif

e cy

cle.

It a

lso

has

the

effe

ct o

f put

ting

inno

vativ

e bu

sine

sses

in d

irect

con

tact

with

eac

h ot

her,

with

pos

itive

spi

llove

r eff

ects

.So

urc

e: N

atio

na

l sta

tist

ics.

Num

ber o

f sta

rt-u

ps a

ctiv

e in

incu

bato

rs/p

arks

Tota

l num

ber o

f act

ive

busi

ness

es in

incu

bato

rs a

nd te

chno

logi

cal p

arks

. Ind

icat

es th

e re

leva

nce

and

dem

and

for s

uch

serv

ices

in th

e ec

onom

y.So

urc

e: N

atio

na

l sta

tist

ics.

Serv

ices

off

ered

by

the

publ

ic s

ecto

r to

inno

vati

ve e

nter

pris

es

Mea

sure

s th

e ra

nge

of s

ervi

ces

the

publ

ic s

ecto

r off

ers

to in

nova

tive

busi

ness

es, b

eyon

d ha

rd in

fras

truc

ture

. Thi

s ca

n in

clud

e tr

aini

ng,

men

torin

g, in

nova

tion

prom

otio

n, in

vest

ors

netw

orki

ng a

nd m

atch

ing.

So

urc

e: N

atio

na

l sta

tist

ics.

RE

SE

AR

CH

, DE

VEL

OPM

ENT

AN

D I

NN

OV

AT

ION

(R

DI)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. In

suff

icie

nt fi

nanc

ing

for

inno

vatio

n. L

imite

d fu

nds

to c

ondu

ct

and

supp

ort R

DI a

ctiv

ities

acr

oss

the

spec

trum

, fro

m b

asic

rese

arch

to

app

lied

rese

arch

and

fina

l tes

ting.

Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•lo

w le

vels

of R

DI e

xpen

ditu

re (l

ow

GER

D as

a s

hare

of G

DP

com

pare

d to

re

leva

nt b

ench

mar

ks)

•R

DI i

s m

ostly

pub

licly

fund

ed w

ith

very

lim

ited

cont

ribut

ion

from

the

priv

ate

sect

or (p

rivat

e G

ERD,

BER

D,

and

SME

prod

uct i

nnov

atio

n ar

e lo

w

com

pare

d to

rele

vant

ben

chm

arks

) •pu

blic

RD

I pro

gram

mes

are

lim

ited

to s

hort

tim

e pe

riods

(1-2

yea

rs)

and

not r

enew

ed in

tim

e ca

usin

g di

srup

tion

in p

rogr

amm

e ac

tiviti

es •lim

ited

or n

on-e

xist

ent t

ax in

cent

ives

fo

r priv

ate

sect

or R

DI e

xpen

ditu

re o

r fo

r pub

lic p

rocu

rem

ent o

f inn

ovat

ion.

2. L

imite

d ha

rd a

nd s

oft

infr

astr

uctu

re. B

y “h

ard”

in

fras

truc

ture

we

mea

n th

e fa

cilit

ies

and

labo

rato

ries

in w

hich

inno

vatio

n ta

kes

plac

e, w

hile

“so

ft”

infr

astr

uctu

re

is m

ainl

y re

late

d to

the

skill

s ne

eded

to

impl

emen

t and

per

form

inno

vatio

n.

Thes

e in

clud

e th

e av

aila

bilit

y of

exp

ert

cons

ulta

nts

in to

pics

of R

DI,

busi

ness

de

velo

pmen

t, IP

law

s an

d ot

her.

3. L

imite

d in

ter-

inst

itutio

nal

co-o

rdin

atio

n: p

oorly

dev

elop

ed in

ter-

min

iste

rial R

DI p

olic

y co

-ord

inat

ion

and

mon

itorin

g an

d ev

alua

tion

prac

tices

, due

to a

lack

of d

edic

ated

st

ate-

leve

l str

ateg

ic d

ocum

ents

cle

arly

ou

tlini

ng g

over

nanc

e st

ruct

ures

an

d re

spon

sibi

litie

s ac

ross

diff

eren

t in

stitu

tions

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •ov

erla

ppin

g R

DI s

uppo

rt a

ctiv

ities

ac

ross

diff

eren

t min

istr

ies

and

inst

itutio

ns •no

cle

ar g

over

nanc

e st

ruct

ure

for

inno

vatio

n-re

late

d ac

tiviti

es a

t the

st

ate

leve

l

1. a

nd 2

. Low

RD

I exp

endi

ture

re

duce

s th

e ra

te o

f inn

ovat

ion

in

good

s an

d se

rvic

es in

the

econ

omy.

Le

ss in

nova

tive

pro

duct

s im

ply

a le

ss c

ompe

titi

ve e

cono

my,

whi

ch in

tu

rn is

ref

lect

ed in

a tr

ade

defic

it an

d lo

w p

rodu

ctiv

ity, w

hich

in tu

rn fe

eds

into

low

wag

es. O

vera

ll, G

DP

grow

th

is s

low

ed.

3. a

nd 4

. Lac

k of

inst

itutio

nal

co-o

rdin

atio

n le

ads

to s

ubop

timal

ut

ilisa

tion

of s

carc

e pu

blic

res

ourc

es

in th

e fi

eld

of R

DI,

risk

ing

dupl

icat

ion

of e

ffor

t acr

oss

diff

eren

t ins

titut

ions

. Su

ppor

t may

not

cov

er th

e fu

ll lif

e cy

cle

of th

e in

nova

tion

proc

ess,

oft

en

faili

ng to

link

bas

ic r

esea

rch

and

deve

lopm

ent t

o th

e fin

al in

nova

tive

outp

ut, a

n in

nova

tive

prod

uct o

n th

e m

arke

t. Th

is a

lso

redu

ces

the

leve

l of

inno

vatio

n in

the

econ

omy.

5. a

nd 6

. Lac

k of

co-

oper

atio

n ac

ross

th

e p

riva

te s

ecto

r, pu

blic

sec

tor

and

acad

emia

pre

vent

s ef

fect

ive

know

ledg

e tr

ansf

er, l

eadi

ng to

m

isse

d op

port

unit

ies

for e

cono

mic

de

velo

pmen

t. Ba

sic

rese

arch

doe

sn’t

tran

slat

e in

to n

ew d

isco

veri

es, w

hile

pr

ivat

e bu

sine

sses

rem

ain

unaw

are

of

the

late

st r

esea

rch,

and

thus

can

not

prov

ide

insi

ght i

nto

its a

pplic

abili

ty to

th

e m

arke

t.



Priv

ate

sect

or s

elf-

sust

aina

ble

init

iati

ves

Spec

ial a

tten

tion

shou

ld b

e gi

ven

to p

riva

te s

ecto

r act

iviti

es a

imed

at s

uppo

rtin

g in

nova

tion,

incl

udin

g th

e pr

ovis

ion

of in

fras

truc

ture

and

se

rvic

es o

n a

mar

ket b

asis

. Whe

re th

ese

exis

t, st

ate

inte

rven

tion

can

have

a n

egat

ive

impa

ct, c

row

ding

out

sus

tain

able

mar

ket-

led

proj

ects

with

pu

blic

ly fi

nanc

ed a

ctiv

ities

. The

se fu

nds

coul

d be

bet

ter s

pent

on

area

s no

t cov

ered

by

priv

ate

prov

isio

n. T

here

fore

, an

initi

al m

appi

ng o

f all

activ

ities

com

ing

from

pri

vate

inst

itutio

ns c

an b

e be

nefic

ial (

busi

ness

ang

el n

etw

orks

, pri

vate

incu

bato

rs a

nd a

ccel

erat

ors,

pri

vate

sou

rces

of

RD

I fun

ding

, ven

ture

cap

itals

, etc

.).

Sou

rce:

Nat

ion

al s

tati

stic

s.

III. I

NCEN

TIVE

S FO

R RD

I

RD

I gra

nts

for b

usin

esse

sD

irect

fina

ncia

l sup

port

for R

DI g

ives

firm

s a

rele

vant

ince

ntiv

e to

con

duct

res

earc

h an

d in

trod

uce

inno

vativ

e go

ods

and

serv

ices

into

the

mar

ket,

such

as

vouc

her s

chem

es.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Avai

labi

lity

of fi

scal

sup

port

for R

DI a

ctiv

itie

sIn

dire

ct fo

rms

of fi

nanc

ial s

uppo

rt to

RD

I in

the

priv

ate

sect

or c

an in

clud

e va

riou

s ta

x in

cent

ives

– fi

scal

form

s of

mon

etar

y su

ppor

t aim

ed a

t fa

cilit

atin

g R

DI a

ctiv

ities

con

duct

ed b

y th

e pr

ivat

e se

ctor

.So

urc

e: N

atio

na

l sta

tist

ics.

Pres

ence

of p

ublic

pro

cure

men

t for

inno

vati

onPu

blic

pro

cure

men

t can

pla

y a

rele

vant

rol

e in

dri

ving

dem

and

for i

nnov

ativ

e so

lutio

ns. P

rovi

sion

s ta

rget

ing

smal

l and

med

ium

-siz

ed e

nter

pris

es

(SM

Es),

or s

peci

fical

ly in

nova

tive

solu

tions

, can

hel

p bu

sine

sses

ach

ieve

the

econ

omie

s of

sca

le th

ey n

eed

to m

ake

thei

r inn

ovat

ions

sus

tain

able

an

d gi

ve th

em w

ide

publ

ic r

ecog

nitio

n.So

urc

e: N

atio

na

l sta

tist

ics.

IV. C

OMM

ERCI

ALIS

ATIO

N OF

RDI

Smal

l bus

ines

ses

intr

oduc

ing

prod

uct o

r pro

cess

inno

vati

ons

(% o

f tot

al fi

rms)

Mea

sure

s th

e sh

are

of in

nova

tive

SMEs

out

of t

he to

tal n

umbe

r in

the

econ

omy.

SM

Es a

re o

ften

mor

e fle

xibl

e th

an la

rger

firm

s, a

nd a

ble

to a

dopt

ne

w s

olut

ions

mor

e qu

ickl

y, in

bot

h th

eir p

rodu

ctio

n an

d th

eir p

roce

sses

. How

ever

, SM

Es m

ight

lack

the

finan

cial

inst

rum

ents

to fo

llow

up

on

thei

r inn

ovat

ive

idea

s; a

low

sha

re o

f inn

ovat

ive

SMEs

mig

ht s

igna

l the

nee

d to

inte

rven

e in

sup

port

of S

MEs

and

thei

r RD

I act

ivity

.So

urc

e: N

atio

na

l sta

tist

ics.

Inno

vati

ons

intr

oduc

ed b

y fi

rms

brok

en d

own

by ty

pe (

such

as

tech

nolo

gica

l, m

arke

ting

or o

rgan

isat

iona

l inn

ovat

ions

)M

easu

res

the

shar

e of

inno

vatio

n by

type

of i

nnov

atio

n. T

hese

incl

ude

je p

rodu

ct, p

roce

ss, o

rgan

isat

iona

l or m

arke

ting

inno

vatio

ns. P

ublic

su

ppor

t sho

uld

addr

ess

all t

ypes

of i

nnov

atio

n.So

urc

e: N

atio

na

l sta

tist

ics.

RE

SE

AR

CH

, DE

VEL

OPM

ENT

AN

D I

NN

OV

AT

ION

(R

DI)

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•no

co-

ordi

natio

n bo

dy fo

r inn

ovat

ion

activ

ities

at t

he s

tate

leve

l •lim

ited

to n

o co

mm

unic

atio

n be

twee

n sc

ienc

e- a

nd e

cono

my-

rela

ted

min

istr

ies

and

inst

itutio

ns.

4. F

ragm

ente

d su

ppor

t and

act

iviti

es.

Lack

of c

o-or

dina

tion,

and

dep

ende

nce

on d

onor

and

ext

erna

l fun

ds, w

hich

are

lim

ited

in s

cope

and

tim

e, o

ften

lead

to

the

segm

enta

tion

of th

e in

nova

tion

proc

ess:

firm

s ar

e no

t sup

port

ed o

ver

the

entir

e cy

cle

of in

nova

tion,

from

th

e id

ea to

its

com

mer

cial

isat

ion,

and

th

eref

ore

thei

r inn

ovat

ions

oft

en d

ie

befo

re re

achi

ng th

e m

arke

t, ev

en a

fter

su

ppor

t in

the

initi

al p

hase

thro

ugh

priv

ate

and/

or p

ublic

cha

nnel

s.

5. L

ack

of in

form

atio

n an

d aw

aren

ess

abou

t inn

ovat

ion.

A la

ck o

f up-

to-d

ate

and

com

preh

ensi

ve c

hann

els

(Inte

rnet

, ne

wsp

aper

s, te

levi

sion

) offe

ring

conc

rete

in

form

atio

n an

d in

crea

sing

aw

aren

ess

amon

g th

e ge

nera

l pub

lic a

bout

in

nova

tion

redu

ces

the

gene

ral i

nclin

atio

n to

atte

mpt

to in

nova

te. I

t als

o m

eans

al

loca

ted

fund

s an

d re

sour

ces

ofte

n re

mai

n un

deru

sed,

redu

cing

thei

r im

pact

.

6. L

imite

d bu

sine

ss-a

cade

mia

co

llabo

ratio

n: jo

int i

nitia

tives

bet

wee

n pu

blic

rese

arch

bod

ies

and

busi

ness

es

are

limite

d, re

duci

ng th

e ca

paci

ty o

f bu

sine

sses

to in

nova

te. S

ympt

oms

of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •lim

ited

ince

ntiv

es fo

r aca

dem

ics

to

cond

uct r

esea

rch

of c

omm

erci

al v

alue

, or

in s

ome

case

s ev

en re

stric

tions

•no

con

veni

ent o

r ade

quat

e ve

hicl

es

for b

usin

esse

s to

see

k he

lp fr

om

rese

arch

inst

itutio

ns to

tack

le

busi

ness

pro

blem

s •no

ince

ntiv

es fo

r stu

dent

s to

eng

age

in k

now

ledg

e tr

ansf

er a

ctiv

ities

•no

ince

ntiv

es fo

r the

pro

mot

ion

of

on-c

ampu

s st

art-

up a

ctiv

ities

•lo

w s

hare

of s

cien

tific

pub

licat

ions

si

gnifi

cant

for e

cono

mic

act

ivity

.



I. SI

GNIF

ICAN

CE A

ND C

APAC

ITY

Perc

enta

ge o

f the

ICT

sect

or o

n G

DP

(%, %

gro

wth

by

ICT

sec-

tor)

Mea

sure

s IC

T’s

shar

e of

tota

l val

ue a

dded

and

its

grow

th o

r dec

line.

It in

dica

tes

the

cont

ribut

ion

of th

is s

ecto

r to

GDP

. So

urce

: Eu

rop

ean

Com

mis

sion

, Eu

rost

at d

atab

ase,

htt

p:/

/ec.

euro

pa.

eu/e

uro

stat

/dat

a/d

atab

ase

Perc

enta

ge o

f the

ICT

pers

onne

l in

tota

l em

ploy

men

tM

easu

res

the

shar

e of

em

ploy

men

t gen

erat

ed in

the

ICT

sect

or, i

ndic

atin

g th

e im

-por

tanc

e of

this

sec

tor t

o em

ploy

men

t cre

atio

n.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

Inve

stm

ent i

n te

leco

mm

unic

atio

ns in

fras

truc

ture

(% o

f GD

P)M

easu

res

the

leve

l of i

nves

tmen

t in

tele

com

mun

icat

ions

in th

e ec

onom

y. B

eing

a h

ighl

y te

chno

logi

cal s

ecto

r, it

is a

rele

vant

indi

cato

r of t

he e

cono

my’

s co

mm

itmen

t to

keep

ing

up w

ith it

s in

tern

atio

nal p

eers

, esp

ecia

lly in

the

field

of b

road

band

tele

-com

mun

icat

ion.

Sour

ce: N

atio

nal

sta

tist

ics

Inve

stm

ent i

n te

leco

ms

with

pri

vate

par

ticip

atio

n (c

urre

nt U

SD)

Mea

sure

s th

e va

lue

of te

leco

m p

roje

cts

that

hav

e re

ache

d fin

anci

al c

losu

re a

nd d

irect

-ly o

r ind

irect

ly s

erve

the

publ

ic, i

nclu

ding

ope

ratio

n an

d m

anag

emen

t con

trac

ts w

ith m

ajor

cap

ital e

xpen

ditu

re, g

reen

field

pro

ject

s (in

whi

ch a

priv

ate

entit

y or

pub

lic-p

rivat

e jo

int v

entu

re b

uild

s an

d op

erat

es a

ne

w fa

cilit

y), a

nd d

ives

titur

es. I

t is

an in

dica

tor o

f the

leve

l of i

nter

est a

mon

g pr

ivat

e in

vest

ors

in th

e ec

onom

y’s

tele

com

-mun

icat

ions

mar

ket.

Sour

ce: W

orld

Ban

k, O

pen

Dat

a, h

ttp

://d

atab

ank

.wor

ldba

nk

.org

/

Pene

trat

ion

rate

of f

ixed

tele

phon

y (%

)M

easu

red

as th

e ra

tio b

etw

een

the

num

ber o

f act

ive

fixed

tele

phon

e lin

es a

nd th

e po

pula

tion.

Diff

eren

ces

acro

ss e

cono

mie

s co

uld

sugg

est d

iffer

ent

mar

ket c

ondi

tions

for f

ixed

and

mob

ile te

leph

ony

(ope

nnes

s to

war

ds d

iffer

ent o

pera

tors

), m

akin

g it

mor

e co

nven

ient

for u

sers

to o

pt fo

r one

or t

he

othe

r.So

urce

: Nat

ion

al s

tati

stic

s

Pene

trat

ion

rate

of m

obile

tele

phon

y (%

)M

easu

red

as th

e ra

tio b

etw

een

the

num

ber o

f act

ive

mob

ile p

hone

s an

d th

e po

pula

-tio

n. A

hig

h sh

are

mig

ht b

e th

e re

sult

of s

peci

fic li

fest

yles

, low

pr

ices

for m

obile

ser

vice

s or

bet

ter i

nfra

stru

ctur

e co

mpa

red

to fi

xed

tele

phon

e lin

es.

Sour

ce: N

atio

nal

sta

tist

ics

Fixe

d br

oadb

and

pene

trat

ion

rate

(%)

Num

ber o

f fas

t Int

erne

t fix

ed li

nes

divi

ded

by th

e na

tiona

l pop

ulat

ion.

Acc

ess

to b

road

band

is re

leva

nt to

the

com

petit

iven

ess

of a

n ec

onom

y an

d its

en

terp

rises

, as

it al

low

s fa

ster

and

mor

e w

ides

prea

d co

llect

ion

and

diss

emin

atio

n of

info

rmat

ion

and

serv

ices

.So

urce

: Nat

ion

al s

tati

stic

s

Mob

ile w

irel

ess

broa

dban

d pe

netr

atio

n ra

te (%

)N

umbe

r of f

ast I

nter

net m

obile

line

s di

vide

d by

the

natio

nal p

opul

atio

n.

Sour

ce: N

atio

nal

sta

tist

ics

Perc

enta

ge o

f hou

seho

lds

with

Inte

rnet

acc

ess

at h

ome

(all

form

s of

Inte

rnet

usa

ge a

re in

clud

ed. T

he p

opul

atio

n co

nsid

ered

is a

ged

16 to

74)

Mea

sure

s In

tern

et p

enet

ratio

n at

a h

ouse

hold

leve

l. It

is a

lso

an in

dica

tor o

f how

tech

-sav

vy h

ouse

hold

s ar

e re

gard

ing

Inte

rnet

use

.So

urce

: Eu

rop

ean

Com

mis

sion

, Eu

rost

at d

atab

ase,

htt

p:/

/ec.

euro

pa.

eu/e

uro

stat

/dat

a/d

atab

ase

DIG

ITA

L EC

ON

OM

Y

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. L

imit

ed a

vaila

bilit

y of

ICTs

: th

e sp

read

of I

CT

infr

astr

uctu

re is

lim

ited

, and

ther

efor

e th

e po

pula

tion

do

es n

ot p

arti

cipa

te in

the

bene

fits

of

ICTs

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •lo

w in

vest

men

t in

ICT

tech

nolo

gies

•lo

w b

road

band

pen

etra

tion

rate

•lo

w fr

eque

ncy

of in

tern

et u

se.

Stal

led

loca

l loo

p un

bund

ling

(LLU

). T

he le

ast r

eplic

able

el

emen

t in

the

esta

blis

hmen

t of a

co

nnec

tion

to a

n en

d-us

er lo

catio

n is

the

loca

l loo

p: th

e ac

cess

from

th

e lo

cal t

elep

hone

exc

hang

e to

th

e cu

stom

er’s

pre

mis

es (

also

ca

lled

“the

last

mile

”). A

cces

s ne

twor

ks r

epre

sent

ove

r hal

f of

the

inve

stm

ent b

y a

fixed

net

wor

k op

erat

or a

nd a

lthou

gh c

ompe

titiv

e ac

cess

tech

nolo

gies

are

em

ergi

ng,

the

copp

er a

cces

s ne

twor

k in

fras

truc

ture

is s

till d

iffic

ult

to d

uplic

ate.

Sym

ptom

s of

this

ob

stac

le in

clud

e on

e or

mor

e of

the

follo

win

g: •lim

ited

num

ber o

f alte

rnat

ive

prov

ider

s •hi

gh s

hare

of p

opul

atio

n w

ith n

o In

tern

et s

kills

.

2. L

imit

ed a

cces

s to

Fin

Tech

for

busi

ness

es r

educ

es th

e ac

cess

to

alte

rnat

ive

fund

ing

sour

ces

for

supp

ortin

g ca

sh fl

ow a

nd r

isk

capi

tal

need

s of

bus

ines

ses

(incl

udin

g st

art-

up a

nd s

cale

-up

com

pani

es).

The

mai

n

1. L

imit

ed a

vaila

bilit

y of

ICTs

ne

gati

vely

impa

cts

prod

ucti

vity

and

ov

eral

l GD

P gr

owth

, by

redu

cing

th

e co

ntrib

utio

n of

ICT

good

s an

d se

rvic

es to

tota

l val

ue a

dded

. It

also

has

a n

egat

ive

impa

ct o

n in

divi

dual

s’ li

ves.

Impr

oved

ICT

diff

usio

n ca

n he

lp a

ddre

ss s

ocia

l ch

alle

nges

, with

opp

ortu

nitie

s to

war

ds p

rom

otin

g in

clus

iven

ess;

m

itiga

te r

isks

of e

nerg

y sh

orta

ges,

le

adin

g to

a m

ore

incl

usiv

e so

ciet

y,

whi

ch in

turn

ben

efits

all

citiz

ens.

Acce

ss to

ICTs

allo

ws

fast

er a

nd

mor

e w

ides

prea

d co

llect

ion

and

diss

emin

atio

n of

info

rmat

ion

and

serv

ices

. The

mob

ility

, eas

e of

use

, fle

xibl

e de

ploy

men

t, an

d re

lativ

ely

low

and

dec

linin

g ro

llout

cos

ts o

f te

chno

logi

es, e

spec

ially

mob

ile a

nd

wire

less

one

s, e

nabl

es th

em to

rea

ch

rura

l pop

ulat

ions

with

low

leve

ls o

f in

com

e an

d lit

erac

y.

Seve

ral k

ey d

rive

rs o

f hou

seho

ld

inco

me

are

belie

ved

to b

e lin

ked

to In

tern

et a

cces

s sp

eed

and

the

avai

labi

lity

of In

tern

et a

cces

s in

ge

nera

l: •fa

ster

bro

adba

nd b

oost

s pe

rson

al

prod

ucti

vity

and

allo

ws

for m

ore

flexi

ble

wor

k ar

rang

emen

ts •hi

gher

spe

eds

also

ope

n up

po

ssib

iliti

es fo

r mor

e ad

vanc

ed

hom

e-ba

sed

busi

ness

es, r

epla

cing

or

sup

plem

entin

g or

dina

ry jo

bs •gr

eate

r spe

ed e

nabl

es p

eopl

e to

be

mor

e in

form

ed, b

ette

r edu

cate

d an

d so

cial

ly a

nd c

ultu

rall

y en

rich

ed –

ulti

mat

ely

lead

ing

to a

m

ore

rew

ardi

ng c

aree

r pat

h.

2. L

ack

FinT

ech

is p

artic

ular

ly

hind

erin

g de

velo

pmen

t and

gro

wth

of

digi

tal s

tart

-ups

. How

ever

, its

impa

ct

is m

uch

broa

der a

nd a

ffec

ts th

e ec

onom

y as

a w

hole

as

FinT

ech

has

a po

sitiv

e im

pact

on

incr

easi

ng th

e



Inte

rnet

acc

ess

in h

ouse

hold

s by

deg

ree

of u

rban

isat

ion

(% o

f all

hous

ehol

ds)

Mea

sure

s th

e pe

rcen

tage

of h

ouse

hold

s ha

ving

inte

rnet

acc

ess

base

d on

thei

r loc

atio

n (d

ense

ly-p

opul

ated

are

a, in

term

edia

te u

rban

ized

are

a, s

pars

ely

popu

late

d ar

ea).

It in

dica

tes

the

degr

ee o

f dig

ital d

ivid

e w

ithin

the

econ

omy.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

Ente

rpri

ses

with

bro

adba

nd a

cces

s (%

of e

nter

pris

es w

ith a

t lea

st 1

0 pe

rson

s em

ploy

ed)

Mea

sure

s th

e pe

rcen

tage

of e

nter

pris

es th

at h

ave

broa

dban

d ac

cess

, inc

ludi

ng fi

xed

and

mob

ile c

onne

ctio

ns.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

Ente

rpri

se h

avin

g re

ceiv

ed o

rder

s on

line

(% o

f ent

erpr

ises

with

at l

east

10

pers

ons

empl

oyed

)M

easu

res

the

perc

enta

ge o

f ent

erpr

ises

that

hav

e re

ceiv

ed o

rder

s on

line

in th

e la

st c

alen

dar y

ear.

This

impl

ies

that

thes

e en

terp

rises

hav

e a

cert

ain

degr

ee o

f ICT

ski

lls.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

Acce

ss to

Fin

Tech

for b

usin

esse

sFi

nTec

h de

scrib

es te

chno

logy

-ena

bled

inno

vatio

n in

fina

ncia

l ser

vice

s, re

gard

less

of t

he n

atur

e or

siz

e of

the

prov

ider

of t

he s

ervi

ces.

Wha

t is

the

shar

e of

ent

erpr

ises

that

hav

e ac

cess

to F

inTe

ch?

Wha

t is

the

pace

at w

hich

this

sha

re is

evo

lvin

g?

Sour

ce: N

atio

nal

sta

tist

ics

II. R

EGUL

ATOR

Y FR

AMEW

ORK

Entr

y re

gula

tion

Is fr

ee e

ntry

per

mitt

ed in

at l

east

one

mar

ket i

n th

e se

ctor

(i.e

. can

any

one

ente

r the

mar

ket,

prov

ided

they

mee

t lic

ensi

ng c

riter

ia)?

Do

law

s or

re

gula

tions

rest

rict,

in a

t lea

st o

ne m

arke

t in

the

sect

or, t

he n

umbe

r of c

ompe

titor

s al

low

ed to

ope

rate

a b

usi-n

ess

(e.g

. by

esta

blis

hing

a le

gal m

onop

oly

or d

uopo

ly, o

r a li

mite

d nu

mbe

r of f

ranc

hise

s or

lice

nses

)? Is

unb

undl

ing

of th

e lo

cal l

oop

requ

ired?

Is m

obile

pho

ne in

terc

onne

ctio

n m

anda

ted?

Sour

ce: O

ECD

, In

dic

ator

s of

Pro

du

ct M

arke

t R

egu

lati

on, N

atio

nal

sta

tist

ics

Free

flow

of d

ata

Are

ther

e ru

les

and

regu

latio

ns im

pedi

ng th

e fr

ee fl

ow o

f dat

a? Is

ther

e a

legi

slat

ive

fram

ewor

k on

acc

ess

to a

nd tr

ansf

er o

f dat

a, d

ata

port

abili

ty a

nd

liabi

lity

of n

on-p

erso

nal,

mac

hine

-gen

erat

ed d

igita

l dat

a? T

o w

hat e

xten

t is

the

exis

ting

legi

slat

ion

in th

is d

omai

n al

igne

d w

ith th

e EU

legi

slat

ion

in th

is

area

? So

urce

: Nat

ion

al le

gisl

atio

n, N

atio

nal

sta

tist

ics

Publ

ic o

wne

rshi

p (%

of s

hare

s)W

hat p

erce

ntag

e of

sha

res

does

the

gove

rnm

ent o

wn,

eith

er d

irect

ly o

r ind

irect

ly, i

n th

e la

rges

t firm

? Si

mpl

e av

erag

e ov

er fo

ur s

egm

ents

(fix

ed-li

ne

netw

ork,

fixe

d-lin

e se

rvic

es, m

obile

ser

vice

s, In

tern

et s

ervi

ces)

.So

urce

: OEC

D, I

nd

icat

ors

of P

rod

uct

Mar

ket

Reg

ula

tion

, Nat

ion

al s

tati

stic

s

Mar

ket s

truc

ture

How

man

y fir

ms

com

pete

in th

e sa

me

mar

ket?

Sim

ple

aver

age

over

two

segm

ents

(fix

ed-li

ne s

ervi

ces,

mob

ile s

ervi

ces)

. Wha

t is

the

perc

enta

ge m

arke

t sh

are

of n

ew e

ntra

nts

in th

e se

ctor

?So

urce

: OEC

D, I

nd

icat

ors

of P

rod

uct

Mar

ket

Reg

ula

tion

, Nat

ion

al s

tati

stic

s

DIG

ITA

L EC

ON

OM

Y (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

sym

ptom

of t

his

obst

acle

is :

•lo

w te

chno

logy

-ena

bled

inno

vatio

n in

fina

ncia

l ser

vice

s.

3. L

ow c

apac

ity

of th

e na

tion

al

regu

lato

ry a

utho

rity

(N

RA)

to

effe

ctiv

ely

perf

orm

its

regu

lato

ry

func

tion

s. D

espi

te c

ontin

uing

al

ignm

ent o

f nat

iona

l ele

ctro

nic

com

mun

icat

ions

legi

slat

ion

to th

e EU

acq

uis,

the

curr

ent i

nstit

utio

nal

fram

ewor

k of

ten

falls

sho

rt o

f en

surin

g an

ade

quat

e le

vel o

f fin

anci

al

and

oper

atio

nal i

ndep

ende

nce

for

the

NR

A. S

ympt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•lim

ited

budg

et fo

r per

form

ing

its

dutie

s •lo

w n

umbe

r of e

mpl

oyee

s in

ad

min

istr

atio

n •go

vern

men

t int

erfe

renc

e in

its

reso

lutio

ns.

Des

pite

the

mar

ket b

eing

ope

ned

to

com

peti

tors

, the

incu

mbe

nt o

pera

tor

rem

ains

the

dom

inan

t ope

rato

r, es

peci

ally

in fi

xed-

line

tele

phon

y.

Even

whe

n th

e in

cum

bent

has

low

er

mar

ket s

hare

s, it

oft

en s

uppl

ies

100%

of

bits

trea

m c

onne

ctio

ns to

alte

rnat

ive

oper

ator

s in

the

who

lesa

le m

arke

t. Sy

mpt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•lo

w in

vest

men

t in

new

infr

astr

uctu

re •lo

w b

road

band

pen

etra

tion

rate

•hi

gh a

cces

s co

sts.

Dif

fere

nt fo

rms

of p

rice

con

trol

on

fixe

d-lin

e te

leph

ony

tari

ffs

for

incu

mbe

nt o

pera

tors

. In

econ

omie

s w

here

mon

opol

y pr

ovid

ers

kept

m

onth

ly r

enta

l and

loca

l cal

l cha

rges

lo

w in

ord

er to

mak

e ba

sic

serv

ice

mor

e af

ford

able

, thi

s w

as tr

aditi

onal

ly

subs

idis

ed b

y ex

cess

ive

pric

es o

n

com

petit

iven

ess

of th

e lo

cal m

arke

t, th

roug

h lo

wer

ing

barr

iers

to e

ntry

fo

r new

com

ers,

whi

le p

rese

rvin

g fa

ir co

mpe

titio

n, a

leve

l pla

ying

fiel

d an

d in

cent

ives

to in

nova

te.

3. L

ow a

dmin

istr

ativ

e ca

paci

ty

prev

ents

the

adeq

uate

mon

itor

ing

of o

pera

tors

wit

h si

gnif

ican

t mar

ket

pow

er, u

sual

ly th

e in

cum

bent

. Thi

s ef

fect

ivel

y pr

even

ts a

fair

open

ing

of

the

mar

ket t

o al

tern

ativ

e op

erat

ors,

re

duci

ng c

ompe

titi

on o

n th

e m

arke

t, an

d th

us m

aint

aini

ng h

igh

pric

es th

at le

ad to

low

er a

cces

s to

te

leco

mm

unic

atio

ns.



Tele

com

mun

icat

ion

mar

ket r

efor

ms

(whe

re 1

= fu

ll st

ate

cont

rol,

4+ =

full

liber

alis

atio

n)Th

is E

BRD

indi

cato

r pro

vide

s a

quan

titat

ive

foun

datio

n fo

r ana

lysi

ng p

rogr

ess

in th

e re

form

of t

he te

leco

mm

unic

atio

ns m

arke

t. It

capt

ures

law

s, m

arke

t re

gula

tion

and

pric

e co

ntro

l fac

tors

to a

sses

s th

e sc

ore.

Sour

ce:

EBR

D,

Tra

nsi

tion

In

dic

ator

s, h

ttp

://w

ww

.ebr

d.c

om/w

hat

-we-

do

/eco

nom

ic-r

esea

rch

-an

d-d

ata

/dat

a/f

orec

asts

-mac

ro-d

ata-

tran

siti

on-

ind

icat

ors.

htm

l

Fixe

d br

oadb

and

Inte

rnet

mon

thly

acc

ess

fee

in e

uros

, inc

ludi

ng V

alue

-add

ed ta

x (V

AT) (

incu

mbe

nt v

s. a

ltern

ativ

e)Av

erag

e co

st o

f a m

onth

ly s

ubsc

riptio

n to

bro

adba

nd In

tern

et, p

er u

ser.

In g

ener

al, m

ore

com

petit

ive

tele

com

mun

icat

ions

mar

kets

will

hav

e lo

wer

ac

cess

fees

than

oth

-ers

, dep

endi

ng a

lso

on th

e di

ffusi

on a

nd q

ualit

y of

tele

com

mun

icat

ions

infr

astr

uctu

re in

the

coun

try

(hig

h m

aint

enan

ce c

osts

will

pr

obab

ly le

ad to

hig

her u

sage

cos

ts a

s w

ell).

Sour

ce: N

atio

nal

sta

tist

ics

Res

iden

tial c

harg

es fo

r: a

10-

min

ute

loca

l cal

l, a

10-m

inut

e fix

ed to

long

-dis

tanc

e ca

ll, a

10-

min

ute

fixed

to m

obile

cal

l and

a 1

0-m

inut

e fix

ed to

in

tern

atio

nal c

all i

n eu

ros,

incl

udin

g VA

T (i

ncum

bent

VS

alte

rnat

ive)

Pric

e is

an

indi

cato

r of o

penn

ess

of th

e m

arke

t. Ef

fect

ive

com

petit

ion

will

redu

ce p

rices

, and

the

rem

oval

of r

egul

ator

y an

d ph

ysic

al b

arrie

rs to

alte

rnat

ive

prov

ider

s sh

ould

allo

w th

em to

kee

p pr

ices

low

and

ena

ble

them

to m

ake

mor

e ag

gres

sive

pric

e of

fers

than

the

incu

mbe

nt o

r sta

te-o

wne

d op

erat

or.

Sour

ce: N

atio

nal

sta

tist

ics

III. D

IGIT

AL S

KILL

SIn

divi

dual

s’ le

vel o

f com

pute

r ski

lls (%

of t

he to

tal n

umbe

r of i

n-di

vidu

als

aged

16

to 7

4)U

sing

a s

elf-a

sses

smen

t app

roac

h, it

mea

sure

s w

heth

er in

divi

dual

s ha

ve c

arrie

d ou

t spe

cific

task

s re

late

d to

com

pute

r use

. Tas

ks in

clud

e th

e ab

ility

to

copy

or m

ove

files

and

fold

ers,

cop

y an

d pa

ste

tool

s, u

se b

asic

arit

hmet

ic fo

rmul

as in

spr

eads

heet

s, c

ompr

ess

files

, con

nect

and

inst

all n

ew d

evic

es,

and

writ

e a

com

pute

r pro

gram

me.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

Indi

vidu

als’

leve

l of i

nter

net s

kills

(% o

f the

tota

l num

ber o

f ind

i-vi

dual

s ag

ed 1

6 to

74)

Usi

ng a

sel

f-ass

essm

ent a

ppro

ach,

it m

easu

res

whe

ther

indi

vidu

als

have

car

ried

out s

peci

fic ta

sks

rela

ted

to in

tern

et u

se. T

asks

incl

ude

the

use

of

sear

ch e

ngin

es to

find

info

rmat

ion,

sen

ding

em

ails

with

att

achm

ents

, pos

ting

mes

sage

s to

cha

troo

ms,

us-

ing

the

inte

rnet

to m

ake

tele

phon

e ca

lls,

usin

g pe

er-to

-pee

r file

sha

ring

for e

xcha

ng-in

g m

ovie

s an

d m

usic

, etc

.So

urce

: Eu

rop

ean

Com

mis

sion

, Eu

rost

at d

atab

ase,

htt

p:/

/ec.

euro

pa.

eu/e

uro

stat

/dat

a/d

atab

ase

Activ

ities

per

form

ed o

ver t

he In

tern

et b

y in

divi

dual

s ov

er th

e la

st 1

2 m

onth

sTh

ese

can

incl

ude

findi

ng o

ut in

form

atio

n on

goo

ds a

nd s

ervi

ces,

hea

lth s

ervi

ces,

or p

ublic

ser

vice

s in

gen

eral

; eng

agem

ent w

ith p

ublic

aut

horit

ies;

e-

mai

ls; v

oice

ove

r Int

erne

t pro

toco

l (VO

IP) c

alls

; ins

tant

mes

sagi

ng; e

-trad

e; e

-ban

king

ser

vice

s; s

tudy

-ing;

and

kno

wle

dge-

rela

ted

activ

ities

. Thi

s is

an

indi

cato

r of g

ener

al In

tern

et li

tera

cy in

the

coun

try.

Sour

ce: N

atio

nal

sta

tist

ics

Freq

uenc

y of

inte

rnet

use

(% o

f ind

ivid

uals

age

d 16

to 7

4)M

easu

res

how

ofte

n in

divi

dual

s ac

cess

the

Inte

rnet

. It i

s an

indi

cato

r of t

he in

tegr

a-tio

n of

Inte

rnet

into

dai

ly li

fe a

s w

ell a

s th

e fa

mili

arity

of u

sers

with

th

e In

tern

et. T

he p

erce

ntag

es a

re p

rese

nted

bas

ed o

n w

heth

er u

sers

acc

ess

the

Inte

rnet

on

a da

ily b

ase,

at l

east

onc

e a

wee

k (b

ut n

ot e

very

day

) or a

t le

ast o

nce

in th

e la

st th

ree

mon

ths.

Sour

ce: E

uro

pea

n C

omm

issi

on, E

uro

stat

dat

abas

e, h

ttp

://e

c.eu

rop

a.eu

/eu

rost

at/d

ata

/dat

abas

e

ICT

in s

choo

l cur

ricu

laAs

sess

es IC

T cu

rric

ula

in s

choo

l, w

heth

er c

ompu

ters

and

Inte

rnet

acc

ess

are

in p

lace

, and

whe

ther

ther

e is

suf

ficie

nt p

rofic

ient

teac

hing

cap

acity

.So

urc

e: N

atio

na

l sta

tist

ics

DIG

ITA

L EC

ON

OM

Y (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

natio

nal a

nd in

tern

atio

nal c

alls

. The

en

ding

of m

onop

olie

s ha

s m

eant

that

in

cum

bent

ope

rato

rs h

ave

to b

ring

thei

r tar

iffs

mor

e in

to li

ne w

ith th

e un

derl

ying

cos

ts o

f pro

vidi

ng th

eir

serv

ices

. Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g: •lo

w lo

cal c

all p

rice

s fo

r the

in

cum

bent

ope

rato

r com

pare

d to

al

tern

ativ

es •hi

gh lo

ng-d

ista

nce

call

pric

es fo

r the

in

cum

bent

com

pare

d to

alte

rnat

ives

•hi

dden

cos

ts s

uch

as m

onth

ly fi

xed

fees

.

4. U

njus

tifi

ed o

r dis

prop

orti

onat

e da

ta lo

cati

on r

estr

icti

ons

refe

r to

rul

es o

r pra

ctic

es th

at s

peci

fy

a pa

rtic

ular

, oft

en g

eogr

aphi

cally

de

fined

, are

a w

here

spe

cific

dat

a ne

eds

to b

e co

llect

ed, p

roce

ssed

or

stor

ed. S

ympt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of th

e fo

llow

ing:

•ba

rrie

rs a

roun

d ac

cess

to a

nd

tran

sfer

of n

on-p

erso

nal m

achi

ne-

gene

rate

d da

ta •lim

ited

port

abili

ty o

f non

-per

sona

l da

ta •in

tero

pera

bilit

y of

dat

a •la

ck o

f sta

ndar

ds

5. U

nder

deve

lope

d IC

T sk

ills

in th

e po

pula

tion

: a la

rge

shar

e of

the

popu

latio

n ha

s lit

tle o

r no

unde

rsta

ndin

g of

ICTs

. Sym

ptom

s of

th

is o

bsta

cle

may

incl

ude:

•lo

w p

ublic

inve

stm

ent i

n IC

T ed

ucat

ion

•ab

senc

e or

lim

ited

num

ber o

f ICT

co

urse

s an

d tr

aini

ngs

in s

choo

l •ab

senc

e or

lim

ited

num

ber o

f ICT

co

urse

s an

d tr

aini

ngs

at w

ork.

4. F

ree

flow

of d

ata

is n

eces

sary

for

the

deve

lopm

ent a

nd u

se o

f inn

ovat

ive

data

tech

nolo

gies

and

ser

vice

s.

Smal

l and

med

ium

ent

erpr

ises

in

clud

ing

rese

arch

ers

and

inno

vato

rs

part

icul

arly

ben

efit

from

impr

oved

bu

sine

ss c

ondi

tions

. SM

Es c

an b

oth

bene

fit a

s pr

ovid

ers

and

user

s of

da

ta a

nd d

ata

tech

nolo

gies

and

se

rvic

es th

at c

an b

e us

ed fo

r the

co

llect

ion,

pro

cess

ing

and

stor

age

of

data

. Unj

ustif

ied

or d

ispr

opor

tiona

te

rest

rict

ions

of f

low

of d

ata

can

have

ne

gativ

e im

pact

on

econ

omic

gro

wth

, co

mpe

titiv

enes

s, in

nova

tion,

job

crea

tion

and

soci

etal

pro

gres

s in

ge

nera

l.

5. L

imite

d IC

T sk

ills

impl

y th

at

the

scho

ol c

urri

cula

are

not

wel

l de

velo

ped

enou

gh. S

tude

nts

fini

sh

scho

ol w

itho

ut r

elev

ant s

kills

th

at th

ey w

ould

nee

d in

the

labo

ur

mar

ket.

As a

con

sequ

ence

, the

se

stud

ents

will

be

less

pro

duct

ive

and

less

fam

iliar

with

ICTs

whe

n en

terin

g th

e la

bour

mar

ket,

whi

ch w

ill in

turn

ne

gativ

ely

impa

ct th

e pr

oduc

tivity

of

firm

s fo

r whi

ch th

ey w

ill w

ork.



IV. E

-GOV

ERNM

ENT

E-G

over

nmen

t Dev

elop

men

t Ind

ex (

EGD

I)M

easu

res

the

read

ines

s an

d ca

paci

ty o

f nat

iona

l adm

inis

trat

ions

to u

se IC

T to

del

iver

pub

lic s

ervi

ces.

The

EG

DI is

bas

ed o

n an

exp

ert a

sses

smen

t su

rvey

of t

he o

nlin

e pr

esen

ce o

f all

Uni

ted

Nat

ions

Mem

ber S

tate

s, w

hich

ass

esse

s na

tiona

l web

site

s an

d ho

w e

-gov

ernm

ent p

olic

ies

and

stra

tegi

es a

re

appl

ied

in g

ener

al a

nd in

spe

cific

sec

-tors

for t

he d

eliv

ery

of e

ssen

tial s

ervi

ces.

Sou

rce:

Un

ited

Nat

ion

s E-

Go

vern

men

t S

urv

ey

E-Pa

rtic

ipat

ion

Inde

x (E

PI)

Ref

lect

s th

e e-

part

icip

atio

n m

echa

nism

s th

at a

re d

eplo

yed

by a

gov

ernm

ent a

s co

m-p

ared

to a

ll ot

her c

ount

ries.

Thi

s m

easu

re o

ffers

insi

ghts

on

the

avai

labi

lity

and

rele

vanc

e of

par

ticip

ator

y se

rvic

es a

vaila

ble

on g

over

nmen

t web

site

s.So

urc

e: U

nit

ed N

atio

ns

E-G

ove

rnm

ent

Su

rvey

Indi

vidu

als

usin

g th

e in

tern

et fo

r int

erac

tion

wit

h pu

blic

aut

hori

-tie

sM

easu

res

whe

ther

, with

in th

e la

st 1

2 m

onth

s, in

divi

dual

s us

ed in

tern

et to

inte

ract

with

pub

lic a

utho

ritie

s fo

r one

of t

he fo

llow

ing

reas

ons:

obt

aini

ng

info

rmat

ion

from

pub

lic a

utho

ritie

s’ w

ebsi

tes,

dow

nloa

ding

offi

cial

form

s, s

ubm

ittin

g co

mpl

eted

form

s.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se

DIG

ITA

L EC

ON

OM

Y (

cont

.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

6. L

imit

ed n

umbe

r of e

-gov

ernm

ent

serv

ices

: bot

h ci

tizen

s an

d en

terp

rise

s ca

nnot

con

sult

law

s,

decr

ees

and

natio

nal s

trat

egie

s on

th

e In

tern

et, o

r hav

e on

ly a

cces

s to

a

limite

d nu

mbe

r of t

hem

.Sy

mpt

oms

of th

is o

bsta

cle

may

in

clud

e:

•di

ffic

ulty

in a

cces

sing

gov

ernm

ent

info

rmat

ion

•cu

mbe

rsom

e bu

reau

crat

ic

proc

edur

es to

obt

ain

licen

ces,

in

form

atio

n an

d do

cum

enta

tion

•in

crea

sed

cost

s fo

r pri

vate

op

erat

ors

and

busi

ness

es.

Mor

eove

r, lim

ited

unde

rsta

ndin

g of

ICTs

in e

nter

pris

es n

egat

ivel

y im

pact

s th

eir p

rodu

ctiv

ity a

nd a

bilit

y to

ens

ure

effe

ctiv

e an

d ef

ficie

nt

com

mun

icat

ions

with

cus

tom

ers

and

supp

liers

, and

pre

vent

s th

em fr

om

acce

ssin

g re

gion

al a

nd g

loba

l val

ue

chai

ns. T

his

in tu

rn n

egat

ivel

y im

pact

s th

e co

mpe

titiv

enes

s of

the

econ

omy

as a

who

le.

6. T

he d

evel

opm

ent o

f e-g

over

nmen

t pl

atfo

rms

can

fost

er p

arti

cipa

tory

ap

proa

ches

to p

olic

y m

akin

g.

Invo

lvin

g st

akeh

olde

rs in

dec

isio

n m

akin

g, la

w a

dopt

ion

and,

pub

lic

stra

tegy

form

ulat

ion,

doe

s no

t onl

y se

rve

purp

oses

of t

rans

pare

ncy

and

acco

unta

bilit

y, b

ut it

als

o pr

ovid

es

ente

rpri

ses

and

indi

vidu

als

with

ea

sily

acc

essi

ble

info

rmat

ion

on

the

legi

slat

ive

stat

us q

uo in

thei

r re

spec

tive

fiel

ds, e

nsur

ing

that

ev

eryb

ody

is a

war

e of

the

curr

ent

situ

atio

n. T

his

in tu

rn c

an im

prov

e th

e bu

sine

ss e

nviro

nmen

t and

the

ease

of

doi

ng b

usin

ess,

whi

ch c

an b

oost

pr

oduc

tivity

and

gro

wth

.



Education and skills Policy area indicators, structural obstacles and impact on competitiveness and growth




I. ED

UCAT

ION

ACCE

SS A

ND A

TTAI

NMEN

T

Part

icip

atio

n ra

te in

ear

ly c

hild

hood

edu

cati

on a

nd c

are

(ECE

C) (

% o

f 3-6

yea

r-ol

ds)

Mea

sure

s th

e sh

are

of c

hild

ren

aged

3 to

the

first

yea

r of c

ompu

lsor

y sc

hool

ing

atte

ndin

g EC

EC. E

arly

chi

ldho

od e

duca

tion

and

care

is e

ssen

tial

to b

uild

bas

ic s

kills

and

red

uce

ineq

ualit

ies.

The

re a

re th

ree

broa

d ra

tiona

les

for s

uppo

rtin

g ea

rly

child

hood

car

e an

d ed

ucat

ion.

Fir

st, i

t has

a

sign

ifica

nt e

cono

mic

and

soc

ial i

mpa

ct, r

aisi

ng a

n ec

onom

y’s

educ

atio

nal o

utco

me

and

bene

fitin

g th

e di

sadv

anta

ged

the

mos

t. Se

cond

, it

supp

orts

fam

ilies

and

con

trib

utes

to b

oost

ing

fem

ale

empl

oym

ent.

Third

, it c

an p

lay

a cr

ucia

l rol

e in

com

batin

g ch

ild p

over

ty a

nd h

elpi

ng

child

ren

over

com

e ed

ucat

iona

l dis

adva

ntag

e.So

urc

es:

Euro

pea

n C

om

mis

sio

n,

Euro

stat

dat

aba

se,

edu

cati

on

an

d t

rain

ing

htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/w

eb/e

du

cati

on

-an

d-t

rain

ing

; ed

uca

tio

n m

inis

trie

s.

Hig

hest

edu

cati

onal

att

ainm

ent (

peop

le a

ged

15 a

nd o

ver)

Mea

sure

s th

e ed

ucat

iona

l att

ainm

ent o

f the

who

le p

opul

atio

n br

oken

dow

n in

to fo

ur c

ateg

orie

s: le

ss th

an p

rimar

y, p

rimar

y, s

econ

dary

an

d te

rtia

ry (

plus

the

not d

efin

able

and

not

sta

ted

cate

gori

es).

Edu

catio

n is

an

impo

rtan

t det

erm

inan

t of e

cono

mic

gro

wth

. Hig

her l

evel

s of

ed

ucat

iona

l att

ainm

ent l

ead

to a

mor

e sk

illed

and

pro

duct

ive

wor

kfor

ce a

nd to

a m

ore

effic

ient

pro

duct

ion

of g

oods

and

ser

vice

s. T

his

in tu

rn

form

s th

e ba

sis

for f

aste

r eco

nom

ic g

row

th a

nd r

isin

g liv

ing

stan

dard

s.

Sou

rces

: In

tern

atio

na

l La

bo

ur

Org

an

izat

ion

(IL

O),

Key

In

dic

ato

rs o

f th

e La

bo

ur

Ma

rket

(K

ILM

) d

atab

ase

, w

ww

.ilo

.org

/glo

ba

l/st

atis

tics

-a

nd

-dat

aba

ses/

rese

arc

h-a

nd

-dat

aba

ses/

kil

m/l

an

g--e

n/i

nd

ex.h

tm;

ILO

(20

10),

A S

kil

led

Wo

rkfo

rce

for

Str

on

g, S

ust

ain

able

an

d B

ala

nce

d

Gro

wth

: A G

20 T

rain

ing

Str

ateg

y, w

ww

.oec

d.o

rg/g

20/s

um

mit

s/to

ron

to/G

20-S

kil

ls-S

trat

egy.

pd

f.

Part

icip

atio

n in

life

long

lear

ning

am

ong

25-6

4 ye

ar-o

lds

(%)

Mea

sure

s th

e sh

are

of 2

5-64

yea

r-ol

ds w

ho h

ave

take

n an

y fo

rm o

f life

long

lear

ning

(LL

L) p

rogr

amm

e, w

heth

er in

-job

trai

ning

or s

tate

-sp

onso

red

cour

ses.

Par

ticip

atio

n in

LLL

is a

n im

port

ant d

eter

min

ant o

f lab

our p

rodu

ctiv

ity: w

orke

rs n

eed

to m

aint

ain

and

upgr

ade

skill

s th

roug

h co

ntin

ued

lear

ning

to s

tay

in li

ne w

ith c

hang

es in

labo

ur m

arke

t dev

elop

men

ts a

nd n

eeds

. So

urc

es:

Euro

pea

n C

om

mis

sio

n,

Euro

stat

dat

aba

se,

edu

cati

on

an

d t

rain

ing

htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/w

eb/e

du

cati

on

-an

d-t

rain

ing

; ed

uca

tio

n m

inis

trie

s.

Avai

labi

lity

of o

n-th

e-jo

b tr

aini

ngIn

dica

tor b

ased

on

the

Wor

ld E

cono

mic

For

um (

WEF

) Glo

bal C

ompe

titiv

enes

s su

rvey

whi

ch r

efle

cts

firm

res

pons

es to

the

follo

win

g qu

estio

ns:

“In

your

cou

ntry

, how

ava

ilabl

e ar

e hi

gh-q

ualit

y, p

rofe

ssio

nal t

rain

ing

serv

ices

?” a

nd “

In y

our c

ount

ry, t

o w

hat e

xten

t do

com

pani

es in

vest

in

trai

ning

and

em

ploy

ee d

evel

opm

ent?

” (1

= n

ot a

t all;

7 =

to a

gre

at e

xten

t) fo

r 201

4-15

. Wei

ghte

d av

erag

e of

ove

r 13

213

surv

eys

in 1

34

econ

omie

s. T

his

indi

cato

r pro

vide

s in

sigh

ts o

n th

e av

aila

bilit

y of

opp

ortu

nitie

s fo

r on-

the-

job

skill

dev

elop

men

t and

upg

radi

ng w

hich

are

es

sent

ial t

o co

mpl

emen

t the

edu

catio

n sy

stem

, hel

ping

you

ng p

eopl

e ra

ise

thei

r ski

ll le

vel a

nd g

ain

wor

k ex

peri

ence

. So

urc

es: W

orl

d E

con

om

ic F

oru

m, G

lob

al C

om

pet

itiv

enes

s In

dex

Rep

ort

, ww

w3.

wef

oru

m.o

rg/d

ocs

/gcr

/201

5-20

16/G

lob

al_

Co

mp

etit

iven

ess_

Rep

ort

_201

5-20

16.p

df;

OEC

D (

2015

), A

dap

tin

g to

th

e C

ha

ng

ing

Face

of

Wo

rk, w

ww

.oec

d.o

rg/e

mp

loy

men

t/A

dap

tin

g-to

-th

e-ch

an

gin

g-fa

ce-

of-

wo

rk.p

df.

II. Q

UALI

TY O

F TH

E ED

UCAT

ION

SYST

EM A

ND S

KILL

S

1. R

esou

rces

Gov

ernm

ent e

xpen

ditu

re o

n ed

ucat

ion

(% o

f GD

P)M

easu

res

tota

l gen

eral

(lo

cal,

regi

onal

and

cen

tral

) gov

ernm

ent e

xpen

ditu

re o

n ed

ucat

ion

(cur

rent

, cap

ital a

nd tr

ansf

ers)

, exp

ress

ed a

s a

perc

enta

ge o

f tot

al G

DP.

It s

igna

ls a

sta

te’s

com

mitm

ent t

o th

e sy

stem

atic

impr

ovem

ent o

f the

edu

catio

n sy

stem

, alth

ough

it is

not

a d

irect

m

easu

re o

f bet

term

ent i

n its

elf (

qual

ity o

f exp

endi

ture

).So

urc

es:

Euro

pea

n C

om

mis

sio

n,

Euro

stat

dat

aba

se,

edu

cati

on

an

d t

rain

ing

htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/w

eb/e

du

cati

on

-an

d-t

rain

ing

; W

orl

d B

an

k, W

orl

d D

evel

op

men

t In

dic

ato

rs, h

ttp

://d

ata

.wo

rld

ba

nk

.org

/dat

a-ca

talo

g/w

orl

d-d

evel

op

men

t-in

dic

ato

rs; e

du

cati

on

min

istr

ies

EDU

CA

TIO

N A

ND

SK

ILLS

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. E

duca

tion

al a

ttai

nmen

t and

ski

lls

leve

ls a

re lo

w. A

ttai

nmen

t is

low

be

caus

e th

e re

turn

s on

edu

catio

n ar

e lo

w a

nd p

eopl

e do

not

hav

e th

e in

cent

ive

to r

emai

n in

sch

ool.

Sym

ptom

s in

clud

e:

•H

igh

rate

s of

ear

ly le

aver

s fr

om

educ

atio

n an

d tr

aini

ng a

t all

educ

atio

nal l

evel

s, n

egat

ivel

y af

fect

ing

over

all l

evel

s of

edu

catio

n at

tain

men

t •lo

w p

artic

ipat

ion

rate

s in

ear

ly

child

hood

edu

catio

n •hi

gh n

umbe

rs o

f stu

dent

s dr

oppi

ng

out a

fter

low

er s

econ

dary

sch

ool.

•hi

gher

than

ave

rage

sha

re o

f NEE

Ts •lo

w r

etur

ns a

cros

s di

ffer

ent l

evel

s of

ed

ucat

ion.

Lim

ited

life

long

lear

ning

op

port

unit

ies.

Sca

rcity

of l

ifelo

ng

lear

ning

and

trai

ning

opp

ortu

nitie

s pr

even

ts th

e ef

fect

ive

recy

clin

g of

peo

ple

in th

e w

orkf

orce

(or

pr

ospe

ctiv

e w

orkf

orce

). S

ympt

oms

incl

ude:

•ed

ucat

iona

l ins

titut

ions

pro

vidi

ng

lifel

ong

lear

ning

and

trai

ning

are

no

n-ex

iste

nt, s

carc

e or

har

d to

find

•pu

blic

em

ploy

men

t ser

vice

s la

rgel

y pr

ovid

e pa

ssiv

e m

easu

res

rath

er

than

act

ives

one

s, fo

cusi

ng o

n pr

ovid

ing

unem

ploy

men

t sub

sidi

es

and

supp

ortin

g ea

rly

retir

emen

t sc

hem

es in

stea

d of

trai

ning

and

ot

her e

mpl

oym

ent i

ncen

tives

•th

e pr

ivat

e se

ctor

is u

nabl

e or

un

will

ing

to ta

ke o

n th

e en

tire

burd

en o

f pro

vidi

ng a

dditi

onal

tr

aini

ng.

2. G

over

nmen

t spe

ndin

g on

ed

ucat

ion

is lo

w o

r sub

optim

al.

Gov

ernm

ent e

xpen

ditu

re o

n ed

ucat

ion

does

not

hav

e an

impa

ct o

n ov

eral

l ed

ucat

iona

l qua

lity

if sp

endi

ng is

in

adeq

uate

. Sym

ptom

s in

clud

e:

1. E

duca

tiona

l att

ainm

ent h

as a

cr

itica

l im

pact

on

econ

omic

gro

wth

, co

mpe

titiv

enes

s an

d so

cial

out

com

es:

•In

crea

sed

know

ledg

e an

d sk

ills

have

a d

irec

t ret

urn

in th

e fo

rm o

f in

crea

sed

prod

uctiv

ity.

An

adeq

uate

ed

ucat

ion

and

skill

s-de

velo

pmen

t sy

stem

tran

smits

the

know

ledg

e an

d co

mpe

tenc

ies

that

hel

p ge

nera

te

and

impl

emen

t the

new

idea

s w

hich

dr

ive

inno

vatio

n an

d te

chno

logi

cal

prog

ress

, with

a s

ubse

quen

t pos

itive

im

pact

on

expo

rts,

inve

stm

ent a

nd

cons

umpt

ion.

•In

con

tras

t, an

insu

ffic

ient

ly

educ

ated

wor

kfor

ce w

ill h

ave

a ne

gativ

e im

pact

on

inve

stm

ent

as th

e ec

onom

y be

com

es le

ss

attr

activ

e, e

spec

ially

in th

e kn

owle

dge-

and

cap

ital-i

nten

sive

se

ctor

s. P

rodu

ctiv

ity

per w

orke

r is

like

ly to

be

low

er, a

s w

ill b

e th

e va

lue

adde

d of

the

eco

nom

y’s

expo

rts.

•At

tain

men

t als

o ha

s a

dire

ct im

pact

on

labo

ur m

arke

t out

com

es,

affe

ctin

g no

t jus

t the

leve

l of

empl

oym

ent,

but

als

o w

orki

ng

cond

itio

ns, e

spec

ially

sin

ce h

ighe

r le

vels

of e

duca

tiona

l att

ainm

ent

are

asso

ciat

ed w

ith h

ighe

r sal

arie

s (E

duca

tion

and

labo

ur m

arke

ts,

Anal

ysin

g gl

obal

pat

tern

s w

ith th

e KI

LM, I

LO, 2

015)

. The

se in

turn

ha

ve a

dire

ct e

ffec

t on

inte

rnal

co

nsum

ptio

n as

hig

her i

ncom

es

tran

slat

e in

to m

ore

disp

osab

le

inco

me,

and

pov

erty

red

uctio

n an

d in

equa

lity,

as

inco

me

ineq

ualit

ies

fall

whe

n th

ere

is a

larg

e po

ol o

f ed

ucat

ed w

orke

rs in

ade

quat

ely-

rem

uner

ated

pos

ition

s.

2. In

adeq

uate

res

ourc

es d

evot

ed

to th

e ed

ucat

ion

syst

em h

ave

impl

icat

ions

for c

ompe

titiv

enes

s,

grow

th a

nd s

ocia

l out

com

es:

•G

reat

er p

ublic

spe

ndin

g on

all

educ

atio

nal l

evel

s ha

s a

posi

tive

im

pact

on

educ

atio

n at

tain

men

t an

d qu

alit

y (p

artic

ular

ly in

prim

ary

and

seco

ndar

y ed

ucat

ion)

and

it c

an

help

boo

st o

vera

ll ec

onom

ic g

row

th



Aver

age

mon

thly

teac

her’

s sa

lary

(%

of a

vera

ge s

alar

y)M

easu

res

the

aver

age

mon

thly

sal

ary

of te

ache

rs in

prim

ary

and

seco

ndar

y ed

ucat

ion

as a

per

cent

age

of th

e av

erag

e na

tiona

l sal

ary.

Com

parin

g th

e sa

lari

es o

f pro

fess

iona

ls in

the

educ

atio

n se

ctor

to a

vera

ge s

alar

ies

help

s as

sess

whe

ther

teac

hing

can

be

cons

ider

ed a

n at

trac

tive

care

er,

part

icul

arly

bec

ause

it is

one

of t

he w

ays

in w

hich

tale

nted

pot

entia

l can

dida

tes

can

be a

ttra

cted

to th

e se

ctor

. It a

lso

indi

cate

s w

heth

er te

ache

rs

are

suff

icie

ntly

rew

arde

d an

d en

joy

enou

gh s

uppo

rt in

thei

r wor

k.

Sou

rces

: Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, ed

uca

tio

n a

nd

tra

inin

g, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/web

/ed

uca

tio

n-a

nd

-tra

inin

g;

edu

cati

on

min

istr

ies.

Pupi

l-te

ache

r rat

io in

pri

mar

y an

d se

cond

ary

educ

atio

n (h

eadc

ount

bas

is) a

nd a

vera

ge c

lass

room

siz

eH

igh

pupi

l-tea

cher

rat

ios

tend

to a

ffec

t the

sta

ndar

d of

edu

catio

n by

low

erin

g its

qua

lity

(tea

cher

s ha

ve to

o m

any

stud

ents

as

to d

edic

ate

a re

ason

able

tim

e to

eac

h of

them

to im

prov

e or

cor

rect

thei

r ski

lls) a

nd m

ay r

epre

sent

und

erfu

ndin

g of

the

syst

em. O

n th

e ot

her h

and,

low

pup

il-te

ache

r rat

ios

may

als

o ha

ve n

egat

ive

impa

cts

if th

e to

tal t

each

ers’

pay

roll

is to

o bu

rden

som

e: m

isus

ing

reso

urce

s by

pay

ing

(low

er) s

alar

ies

to

too

man

y st

aff m

embe

rs.

Aver

age

clas

sroo

m s

ize

can

also

be

help

ful t

o ga

uge

the

leve

l of m

isus

e or

und

erfu

ndin

g of

pub

lic r

esou

rces

to e

duca

tion.

Hig

h av

erag

e cl

ass

size

s de

note

an

infr

astr

uctu

re n

eed

in th

e ed

ucat

ion

syst

em, w

hile

an

exce

ssiv

ely

low

ave

rage

cla

ss s

ize

also

den

otes

a m

ism

anag

emen

t of

reso

urce

s, w

ith h

alf-

empt

y bu

ildin

gs th

at s

till i

ncur

all

the

prev

ious

mai

nten

ance

cos

ts.

Sou

rce:

Un

ited

Nat

ion

s E

du

cati

on

, Sci

enti

fic

an

d C

ult

ura

l Org

an

izat

ion

(U

NE

SC

O) I

nst

itu

te f

or

Sta

tist

ics.

2. L

abou

r mar

ket r

espo

nsiv

enes

s

PISA

ave

rage

sco

res

in 2

006,

200

9 an

d 20

12PI

SA (

Prog

ram

me

for I

nter

natio

nal S

tude

nt A

sses

smen

t) is

a tr

ienn

ial i

nter

natio

nal s

urve

y w

hich

eva

luat

es e

duca

tion

syst

ems

wor

ldw

ide

by te

stin

g th

e sk

ills

and

know

ledg

e of

15-

year

-old

stu

dent

s. T

hree

key

sub

ject

s ar

e ex

amin

ed: r

eadi

ng, m

athe

mat

ics

and

scie

nce.

Bei

ng a

st

anda

rdis

ed s

urve

y, P

ISA

test

s ar

e no

t dire

ctly

link

ed to

the

scho

ol c

urri

culu

m. I

nste

ad, t

hey

are

desi

gned

to a

sses

s to

wha

t ext

ent s

tude

nts

at

the

end

of c

ompu

lsor

y ed

ucat

ion

can

appl

y th

eir k

now

ledg

e to

rea

l-life

situ

atio

ns a

nd a

re e

quip

ped

for f

ull p

artic

ipat

ion

in s

ocie

ty. A

n in

crea

se

of 5

0 PI

SA p

oint

s in

edu

catio

nal a

chie

vem

ent c

an tr

ansl

ate

into

an

extr

a 1%

of e

cono

mic

gro

wth

in th

e lo

ng r

un.

Sou

rces

: OEC

D, C

om

pet

itiv

enes

s in

So

uth

Ea

st E

uro

pe

; OEC

D (

2014

), P

ISA

201

2 R

esu

lts

htt

p:/

/dx

.do

i.o

rg/1

0.17

87/9

7892

642

0878

0-e

n.

Not

e: D

ata

for

Bo

snia

an

d H

erze

gov

ina,

Ko

sovo

* a

nd

th

e Fo

rmer

Yu

gosl

av R

epu

bli

c o

f M

aced

on

ia a

re n

ot

ava

ilab

le s

ince

th

ey h

ave

nev

er

pa

rtic

ipat

ed i

n t

he

surv

ey.

Perc

enta

ge o

f fir

ms

repo

rtin

g th

at a

n in

adeq

uate

ly e

duca

ted

wor

kfor

ce is

a “

maj

or o

r ver

y se

vere

obs

tacl

e”Th

e Bu

sine

ss E

nviro

nmen

t and

Ent

erpr

ise

Perf

orm

ance

Sur

vey

(BEE

PS),

join

tly c

arri

ed o

ut b

y th

e W

orld

Ban

k an

d th

e Eu

rope

an B

ank

for

Rec

onst

ruct

ion

and

Dev

elop

men

t (EB

RD

). T

his

indi

cato

r ide

ntifi

es th

e sh

are

of fi

rms

findi

ng th

e w

orkf

orce

’s a

ctua

l and

pro

spec

tive

skill

s an

d ed

ucat

ion

unsa

tisfy

ing

to s

uch

an e

xten

t tha

t it i

s a

maj

or o

r sev

ere

obst

acle

to th

eir e

very

day

func

tioni

ng.

Sou

rce:

EB

RD

, BE

EP

S h

ttp

://e

brd

-bee

ps.

com

/dat

a/.

Shar

e of

em

ploy

ers

havi

ng d

iffi

cult

y in

filli

ng jo

b va

canc

ies,

and

har

dest

-to-

fill j

obs

by c

ateg

ory

Iden

tifie

s 1)

the

prop

ortio

n of

em

ploy

ers

havi

ng d

iffic

ulty

filli

ng p

ositi

ons;

2) w

hich

jobs

are

diff

icul

t to

fill b

y ca

tego

ry, s

uch

as s

kille

d tr

ade

wor

kers

, eng

inee

rs, t

echn

icia

ns, i

nfor

mat

ion

tech

nolo

gy (

IT) s

taff

; 3) a

nd th

e re

ason

s w

hy, b

ased

on

surv

eys

cond

ucte

d am

ong

hirin

g m

anag

ers.

Em

ploy

ers

can

also

be

aske

d ab

out t

he im

pact

tale

nt s

hort

ages

hav

e on

thei

r org

anis

atio

ns a

nd w

hat s

teps

they

are

taki

ng to

add

ress

th

em.

Sou

rce:

Ma

np

ow

er G

rou

p, T

ale

nt

Sh

ort

age

Su

rve.

EDU

CA

TIO

N A

ND

SK

ILLS

(co

nt.

)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•O

vera

ll lo

w le

vels

of g

over

nmen

t ex

pend

iture

, pro

vidi

ng in

suff

icie

nt

reso

urce

s fo

r the

nee

ds o

f the

ed

ucat

ion

syst

em. G

over

nmen

t ex

pend

iture

as

a sh

are

of G

DP

is

low

er th

an c

ompa

rato

r cou

ntri

es.

•M

ism

anag

ed g

over

nmen

t exp

ense

s m

ean

reso

urce

s ar

e no

t dire

cted

to

war

ds th

e ri

ght p

rior

ities

(e

.g. h

igh

curr

ent e

xpen

ditu

res,

in

adeq

uate

str

ateg

ic p

lann

ing

and

corr

espo

ndin

g ex

pend

iture

pl

anni

ng).

3. T

he e

duca

tion

sys

tem

is n

ot

resp

onsi

ve to

the

need

s of

the

labo

ur m

arke

t or u

nabl

e to

pro

vide

a

sati

sfac

tori

ly q

ualif

ied

wor

kfor

ce.

The

educ

atio

n sy

stem

is n

ot c

reat

ing

a w

orkf

orce

equ

ippe

d w

ith th

e sk

ills

need

ed b

y th

e pr

ivat

e se

ctor

, be

they

of

a m

ore

tech

nica

l nat

ure

(e.g

. a la

ck

of m

inin

g en

gine

ers

or p

hysi

cist

s) o

r ot

her,

soft

er s

kills

suc

h as

Eng

lish

and

othe

r for

eign

lang

uage

s. S

ympt

oms

of th

is o

bsta

cle

incl

ude

one

or m

ore

of

the

follo

win

g:

•Ed

ucat

iona

l att

ainm

ent i

s ou

t of

bal

ance

with

the

need

s of

the

econ

omy,

i.e.

ther

e ar

e to

o m

any

or n

ot e

noug

h pe

ople

with

the

righ

t le

vel o

f qua

lific

atio

ns.

•Sc

ores

for P

ISA

and

othe

r in

tern

atio

nal a

sses

smen

ts o

f the

ed

ucat

ion

syst

em a

re lo

wer

than

co

mpa

rato

rs.

•Te

achi

ng c

urri

cula

and

met

hods

are

in

adeq

uate

or o

ld fa

shio

ned,

lagg

ing

behi

nd th

e st

ate

of th

e ar

t. Th

e pr

ivat

e se

ctor

has

ver

y lim

ited

inpu

t in

to c

urri

culu

m d

esig

n. •Th

e go

vern

men

t doe

s no

t con

duct

an

alys

es o

f the

ski

lls n

eede

d by

th

e m

arke

t to

use

whe

n de

finin

g its

edu

catio

n st

rate

gy. E

mpl

oyer

su

rvey

s ha

ve n

ot b

een

rece

ntly

ca

rrie

d ou

t or n

ot r

egul

arly

eno

ugh

(Doe

s H

ighe

r Gov

ernm

ent S

pend

ing

Buy

Bette

r Res

ults

in E

duca

tion

and

Hea

lthca

re, I

MF,

199

9).

•In

con

tras

t, un

ders

pend

ing

on th

e ed

ucat

ion

syst

em h

as im

med

iate

co

nseq

uenc

es o

n th

e qu

ality

of t

he

educ

atio

n sy

stem

, as

a re

sult

of

inad

equa

te te

achi

ng r

esou

rces

(n

umbe

rs a

nd q

ualit

y of

teac

hers

, te

achi

ng/le

arni

ng te

chno

logy

, etc

.) .

•R

esou

rce

mis

man

agem

ent c

an a

lso

affe

ct th

e ou

tcom

es o

f the

edu

catio

n sy

stem

, esp

ecia

lly w

hen

a la

rge

shar

e of

pub

lic fi

nanc

ing

is d

edic

ated

to

cur

rent

exp

endi

ture

s, n

amel

y sa

larie

s. In

this

cas

e, s

igni

fican

t fin

anci

al r

esou

rces

will

not

ne

cess

arily

mea

n an

impr

ovem

ent

in th

e qu

alit

y of

edu

catio

n.

•M

ism

anag

emen

t of r

esou

rces

in

edu

catio

n an

d sk

ills

help

s to

pe

rpet

uate

ineq

ualit

y, s

ince

this

ca

n tr

ansl

ate

into

onl

y th

ose

who

ca

n af

ford

it b

eing

abl

e to

acc

ess

high

-qua

lity

educ

atio

n.

3.

An

educ

atio

n sy

stem

that

is

unre

spon

sive

to la

bour

mar

ket n

eeds

ha

s co

nsid

erab

le n

egat

ive

impa

ct o

n co

mpe

titiv

enes

s an

d gr

owth

: •It

gene

rate

s an

inad

equa

tely

ed

ucat

ed w

orkf

orce

with

a d

irect

im

pact

on

the

quan

tity

and

qual

ity

of in

vest

men

t in

the

econ

omy.

If

com

pani

es c

anno

t fin

d w

orke

rs

wit

h th

e sk

ills

they

nee

d, th

ey

are

mor

e lik

ely

to c

hoos

e no

t to

inve

st. T

his

in tu

rn h

as im

plic

atio

ns

for g

row

th a

nd in

nova

tion

amon

g do

mes

tic e

nter

pris

es a

nd th

e ab

ility

of

the

econ

omy

to a

ttra

ct fo

reig

n di

rect

inve

stm

ent (

FDI)

. Thi

s pa

rtic

ular

ly a

ffec

ts in

vest

men

t in

know

ledg

e-in

tens

ive

and

high

er

valu

e-ad

ded

indu

stri

es, w

hich

ha

s im

plic

atio

ns fo

r the

val

ue

adde

d in

the

econ

omy

and

the

pros

pect

s fo

r str

engt

heni

ng p

rodu

ct

soph

istic

atio

n an

d m

ovin

g up

the

valu

e ch

ain.

•Pr

onou

nced

ski

lls m

ism

atch

es

in th

e ec

onom

y ca

n le

ad

to c

onsi

dera

ble

stru

ctur

al

unem

ploy

men

t. Lo

ng-t

erm



Estim

ated

co-

oper

atio

n le

vels

bet

wee

n vo

cati

onal

edu

cati

on a

nd tr

aini

ng (

VET)

pro

vide

rs a

nd b

usin

ess

Idea

lly, a

n in

dica

tor t

hat w

ould

per

mit

auth

oriti

es a

sses

s to

wha

t ext

ent V

ET in

stitu

tions

wor

k w

ith th

e bu

sine

ss c

omm

unity

(to

impr

ove

curr

icul

a, p

rovi

de in

tern

ship

s an

d tr

aini

ngs

to s

tude

nts

etc.

) and

whe

ther

eff

icie

nt p

olic

y m

easu

res

are

in p

lace

to fa

cilit

ate

such

co-

oper

atio

n.

The

OEC

D’s

Com

petit

iven

ess

in S

outh

Eas

t Eur

ope:

A P

olic

y O

utlo

ok d

evel

oped

a q

ualit

ativ

e in

dica

tor t

o sc

ore

perf

orm

ance

s st

artin

g fr

om a

ba

selin

e of

0 (

no e

xist

ing

fram

ewor

k w

hats

oeve

r for

the

polic

y to

pic

conc

erne

d) to

5 (

exis

ting

fram

ewor

k, m

onito

ring

stru

ctur

es in

pla

ce, a

nd

cont

inuo

us c

orre

ctiv

e m

easu

res

and

inde

pend

ent i

mpa

ct e

valu

atio

n pr

esen

t).

Sou

rce:

O

ECD

, C

om

pet

itiv

enes

s in

S

ou

th

East

Eu

rop

e,

Lab

ou

r M

ark

et

Ali

gn

men

t S

ub

-dim

ensi

on

(p

. 12

2),

htt

p:/

/dx

.do

i.o

rg/1

0.17

87/9

7892

642

5052

9-en

; (ta

ble

: htt

p:/

/dx

.do

i.o

rg/1

0.17

87/8

8893

3322

966

).

Earl

y le

aver

s fr

om e

duca

tion

and

trai

ning

am

ong

18-2

4 ye

ar-o

lds

(%)

Mea

sure

s ea

rly

scho

ol le

aver

s (i.

e. th

ose

who

leav

e fo

rmal

sch

oolin

g or

trai

ning

with

no

offic

ially

rec

ogni

sed

dipl

oma)

as

a sh

are

of a

ll sc

hool

le

aver

s. T

his

indi

cato

r can

be

used

to fo

rese

e la

ter s

ubop

timal

con

ditio

ns in

the

labo

ur m

arke

t for

thos

e w

ith n

o of

ficia

lly r

ecog

nise

d ed

ucat

iona

l at

tain

men

t or o

nly

low

er q

ualif

icat

ions

, who

are

mor

e lik

ely

to e

nd u

p in

sub

optim

al jo

b ca

tego

ries

. Sim

ilarl

y, h

igh

shar

es o

f dro

p-ou

ts a

re a

lso

an in

dica

tor o

f an

educ

atio

nal s

yste

m th

at is

not

res

pons

ive

enou

gh to

the

need

s of

the

stud

ent p

opul

atio

n, a

s w

ell a

s su

gges

ting

the

abse

nce

of

a st

uden

t-ce

ntre

d ap

proa

ch in

the

curr

icul

a.

Sou

rces

: E

uro

pea

n C

om

mis

sio

n,

Euro

stat

dat

aba

se,

can

did

ate

cou

ntr

ies

an

d p

ote

nti

al

can

did

ates

, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/

dat

aba

se?n

od

e_co

de

=cp

c;

Euro

pea

n

Co

mm

issi

on

, Eu

rost

at

dat

aba

se,

edu

cati

on

a

nd

tr

ain

ing

htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/w

eb/

edu

cati

on

-an

d-t

rain

ing

; ed

uca

tio

n m

inis

trie

s.

Rat

e of

you

ng p

eopl

e no

t in

empl

oym

ent,

edu

cati

on o

r tra

inin

g (N

EETs

), 1

5 -3

4 ye

ar-o

lds

Mea

sure

s th

e le

vel o

f you

ng p

eopl

e w

ho a

re d

isen

gage

d fr

om th

e la

bour

mar

ket,

educ

atio

n or

trai

ning

, who

cou

ld p

oten

tially

be

mob

ilise

d to

jo

in th

e la

bour

mar

ket.

Youn

g N

EETs

may

suf

fer f

rom

hig

her r

isks

of l

abou

r de-

activ

atio

n fr

om a

ver

y ea

rly

stag

e, e

ven

at th

e m

omen

t the

y fir

st

ente

r the

labo

ur m

arke

t, th

us b

eing

pus

hed

to c

ondi

tions

of u

nder

empl

oym

ent a

nd jo

b in

secu

rity

, inf

orm

al e

mpl

oym

ent,

and

mar

gina

lisat

ion

and

dise

ngag

emen

t. Th

is m

easu

re c

an b

e us

ed to

iden

tify

stru

ctur

al d

efic

ienc

ies

or e

ven

abse

nces

in th

e ed

ucat

ion

and

skill

s sy

stem

s. T

he s

hare

of

NEE

Ts th

us p

rove

s us

eful

in id

entif

ying

an

educ

atio

n an

d sk

ills

syst

em th

at la

cks

the

capa

city

to s

ucce

ssfu

lly (r

e)ac

tivat

e th

ese

youn

g pe

ople

in

the

labo

ur m

arke

t.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

.

3. N

atio

nal q

ualif

icat

ions

fram

ewor

k

Curr

ent s

tate

of n

atio

nal f

ram

ewor

k le

gisl

atio

nQ

ualif

icat

ions

fram

ewor

ks a

re d

esig

ned

to s

et c

rite

ria

for t

he k

now

ledg

e an

d sk

ills

that

sho

uld

be a

ttai

ned

at a

ny g

iven

edu

catio

n le

vel.

Ther

efor

e th

ey a

re a

imed

at r

aisi

ng th

e st

anda

rds

and

qual

ity a

cros

s al

l lev

els

of th

e ed

ucat

ion

syst

em. W

ell-

deve

lope

d na

tiona

l qua

lific

atio

ns fr

amew

orks

ca

n m

ake

educ

atio

n sy

stem

s m

ore

tran

spar

ent.

So

urc

e: O

ECD

, Co

mp

etit

iven

ess

in S

ou

th E

ast

Eu

rop

e.

4. E

ntre

pren

euri

al le

arni

ng

Prom

otio

n of

ent

repr

eneu

rial

lear

ning

and

ent

erpr

ise

skill

sAs

sess

es th

e ex

tent

to w

hich

ent

repr

eneu

rial

lear

ning

is fo

ster

ed in

edu

catio

n. E

ntre

pren

euri

al le

arni

ng r

epre

sent

s al

l for

ms

of e

duca

tion

and

trai

ning

with

the

goal

of e

nhan

cing

ent

repr

eneu

rial

spi

rit a

nd a

ctiv

ity. T

his

is a

cri

tical

mea

ns o

f cre

atin

g a

mor

e fle

xibl

e w

orkf

orce

.

Sou

rce:

OEC

D, C

om

pet

itiv

enes

s in

So

uth

Ea

st E

uro

pe.

EDU

CA

TIO

N A

ND

SK

ILLS

(co

nt.

)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

for t

he s

tate

to b

e ab

le to

est

imat

e th

e sk

ills

the

labo

ur m

arke

t nee

ds

and

mak

e th

em a

vaila

ble

in th

e sh

ort

or m

ediu

m te

rm.

•Th

e pr

ivat

e se

ctor

iden

tifie

s hu

man

ca

pita

l as

a m

ajor

con

stra

int o

n th

e ec

onom

y. A

sig

nific

ant p

ropo

rtio

n of

em

ploy

ers

find

it pa

rtic

ular

ly

diff

icul

t to

fill s

ome

cate

gori

es o

f job

va

canc

ies.

•Th

e ed

ucat

ion

syst

em d

oes

not

activ

ely

fost

er tr

aini

ng in

the

priv

ate

sect

or: P

riva

te s

ecto

r em

ploy

ers

do n

ot h

ave

a sa

y in

cur

ricu

la a

nd

teac

hing

met

hods

and

thus

pre

fer

to c

herr

y-pi

ck p

rosp

ectiv

e w

orke

rs

rath

er th

an ta

ke o

n th

e bu

rden

of

tran

smitt

ing

the

skill

s ne

eded

in

thei

r sec

tor.

•St

uden

ts d

o no

t rec

eive

en

trep

rene

uria

l edu

catio

n an

d en

terp

rise

ski

lls a

re n

ot p

rom

oted

at

all

leve

ls o

f edu

catio

n.

Entr

epre

neur

ial l

earn

ing

is

not f

ully

inco

rpor

ated

into

the

educ

atio

n sy

stem

, and

ther

e ar

e fe

w c

olla

bora

tive

effo

rts

betw

een

univ

ersi

ties,

bus

ines

ses

and

the

publ

ic s

ecto

r to

prom

ote

entr

epre

neur

ial l

earn

ing.

and

pers

iste

ntly

hig

h st

ruct

ural

un

empl

oym

ent h

as c

onsi

dera

ble

impl

icat

ion

for l

ong-

term

gro

wth

as

it le

ads

to d

eter

iora

tion

of s

kills

, di

scou

rage

d w

orke

rs e

tc.

•Sk

ills

mis

mat

ches

can

als

o re

sult

in s

ubop

timal

em

ploy

men

t ou

tcom

es s

uch

as p

eopl

e ta

king

jo

bs fo

r whi

ch th

ey a

re e

ither

ov

er- o

r und

er-q

ualif

ied.

Thi

s ha

s a

clea

r im

pact

on

labo

ur p

rodu

ctiv

ity,

whi

ch in

turn

aff

ects

wag

es a

nd

cons

umpt

ion.

Alo

ng w

ith s

truc

tura

l un

empl

oym

ent,

unde

rem

ploy

men

t al

so h

as c

onsi

dera

ble

nega

tive

impa

ct o

n so

cial

out

com

es s

uch

as

soci

al e

xclu

sion

, pov

erty

trap

s an

d in

equa

lity.

•An

inad

equa

te (

or a

bsen

t) li

felo

ng

lear

ning

sys

tem

s w

ill r

eleg

ate

a si

gnif

ican

t sha

re o

f tho

se w

illin

g to

w

ork

to in

form

al e

mpl

oym

ent.

•An

edu

catio

n sy

stem

whi

ch is

un

resp

onsi

ve to

labo

ur m

arke

t ne

eds

will

als

o le

ad to

hig

h le

vels

of

yout

h un

empl

oym

ent,

as g

radu

ates

st

rugg

le to

find

jobs

that

mat

ch th

e sk

ills

they

obt

aine

d in

the

educ

atio

n sy

stem

.


Employment and labour marketPolicy area indicators, structural obstacles and impact on competitiveness and growth




I. GE

NERA

L IN

DICA

TORS

Empl

oym

ent r

ate

of 1

5-ye

ar-o

lds

and

over

Mea

sure

s th

e ex

tent

to w

hich

ava

ilabl

e la

bour

res

ourc

es (

i.e. t

he la

bour

forc

e) a

re b

eing

util

ised

in th

e fo

rmal

sec

tor.

Calc

ulat

ed a

s th

e ra

tio o

f th

e em

ploy

ed to

the

wor

king

-age

pop

ulat

ion.

Em

ploy

men

t rat

es a

re s

ensi

tive

to th

e ec

onom

ic c

ycle

, but

in th

e lo

nger

term

they

are

sig

nific

antly

af

fect

ed b

y go

vern

men

ts’ h

ighe

r edu

catio

n an

d in

com

e su

ppor

t pol

icie

s an

d by

pol

icie

s th

at fa

cilit

ate

the

empl

oym

ent o

f wom

en a

nd

disa

dvan

tage

d gr

oups

. So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, L

abo

ur

Forc

e S

urv

ey;

Inte

rnat

ion

al L

abo

ur

Org

an

izat

ion

, Key

In

dic

ato

rs o

f th

e La

bo

ur

Ma

rket

(d

atab

ase

).

Labo

ur fo

rce

part

icip

atio

n ra

te (

% o

f tot

al p

opul

atio

n) a

nd fe

mal

e pa

rtic

ipat

ion

rate

(%

of f

emal

e po

pula

tion

age

d 15

and

ove

r)M

easu

res

the

labo

ur fo

rce

as a

per

cent

age

of th

e w

orki

ng-a

ge p

opul

atio

n, a

nd a

s a

perc

enta

ge o

f the

fem

ale

wor

king

-age

pop

ulat

ion.

Sou

rces

: Wo

rld

Ba

nk

, Wo

rld

Dev

elo

pm

ent

Ind

icat

ors

(W

DI)

; nat

ion

al s

tati

stic

s o

ffic

es.

Une

mpl

oym

ent r

ate

of 1

5-ye

ar-o

lds

and

over

Mea

sure

s th

e nu

mbe

r of u

nem

ploy

ed p

eopl

e as

a p

erce

ntag

e of

the

labo

ur fo

rce,

whe

re th

e la

tter

con

sist

s of

the

unem

ploy

ed p

lus

thos

e in

pai

d or

sel

f-em

ploy

men

t. U

nem

ploy

ed p

eopl

e ar

e th

ose

who

rep

ort t

hat t

hey

are

with

out w

ork,

that

they

are

ava

ilabl

e fo

r wor

k an

d th

at th

ey h

ave

take

n ac

tive

step

s to

find

wor

k in

the

last

four

wee

ks. W

hen

unem

ploy

men

t is

high

, som

e pe

ople

bec

ome

disc

oura

ged

and

stop

look

ing

for w

ork;

th

ey a

re th

en e

xclu

ded

from

the

labo

ur fo

rce.

Thi

s im

plie

s th

at th

e un

empl

oym

ent r

ate

may

fall,

or s

top

risi

ng, e

ven

thou

gh th

ere

has

been

no

unde

rlyi

ng im

prov

emen

t in

the

labo

ur m

arke

t.So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, L

abo

ur

Forc

e S

urv

ey;

Inte

rnat

ion

al L

abo

ur

Org

an

izat

ion

, Key

In

dic

ato

rs o

f th

e La

bo

ur

Ma

rket

(d

atab

ase

).

Long

-ter

m u

nem

ploy

men

t rat

e (1

2 m

onth

s +

)R

efer

s to

peo

ple

who

hav

e be

en u

nem

ploy

ed fo

r 12

mon

ths

or m

ore.

The

long

-ter

m u

nem

ploy

men

t rat

e sh

ows

the

prop

ortio

n of

the

long

-ter

m

unem

ploy

ed a

s a

shar

e of

all

unem

ploy

ed. L

ong-

term

une

mpl

oym

ent i

s of

par

ticul

ar c

once

rn fo

r pol

icy

mak

ers,

as

high

rat

es o

f lon

g-te

rm

unem

ploy

men

t ind

icat

e th

at la

bour

mar

kets

are

ope

ratin

g in

effic

ient

ly.

Sou

rces

: Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, Lab

ou

r Fo

rce

Su

rvey

; In

tern

atio

na

l Lab

ou

r O

rga

niz

atio

n, K

ey I

nd

icat

ors

of

the

Lab

ou

r M

ark

et (

dat

aba

se).

Yout

h un

empl

oym

ent r

ate

(15-

24 y

ear-

olds

)M

easu

res

the

prop

ortio

n of

15-

24 y

ear-

olds

in th

e to

tal w

orkf

orce

, who

do

not h

ave

a jo

b an

d ar

e av

aila

ble

and

activ

ely

look

ing

for w

ork,

i.e.

the

num

ber o

f tho

se u

nem

ploy

ed d

ivid

ed b

y th

e to

tal (

all a

ges)

of p

eopl

e in

the

labo

ur m

arke

t (em

ploy

ed p

lus

unem

ploy

ed).

So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, L

abo

ur

Forc

e S

urv

ey;

Inte

rnat

ion

al L

abo

ur

Org

an

izat

ion

, Key

In

dic

ato

rs o

f th

e La

bo

ur

Ma

rket

(d

atab

ase

).

Youn

g pe

ople

not

in e

mpl

oym

ent,

edu

cati

on o

r tra

inin

g (N

EET)

(15-

19 y

ear-

old

men

, 15-

19 y

ear-

old

wom

en,

20-2

4 ye

ar-o

ld m

en,

20-2

4 ye

ar-o

ld w

omen

, %)

Mea

sure

s th

e sh

are

of y

oung

peo

ple

who

are

NEE

T, a

s a

perc

enta

ge o

f the

tota

l num

ber o

f you

ng p

eopl

e in

the

corr

espo

ndin

g ag

e gr

oup,

by

gend

er. Y

oung

peo

ple

who

are

nei

ther

in e

mpl

oym

ent n

or in

edu

catio

n or

trai

ning

are

at r

isk

of b

ecom

ing

soci

ally

exc

lude

d –

indi

vidu

als

with

in

com

e be

low

the

pove

rty-

line

and

lack

ing

the

skill

s to

impr

ove

thei

r eco

nom

ic s

ituat

ion

(OEC

D d

ata,

htt

ps:/

/dat

a.oe

cd.o

rg/y

outh

inac

/you

th-

not-

in-e

duca

tion-

or-e

mpl

oym

ent-

neet

.htm

). N

EETs

are

con

side

red

at r

isk

as th

ey a

re jo

bles

s an

d in

activ

e an

d ha

ve li

ttle

acc

ess

to le

arni

ng

oppo

rtun

ities

. So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, L

abo

ur

Forc

e S

urv

ey;

Inte

rnat

ion

al L

abo

ur

Org

an

izat

ion

, Key

In

dic

ato

rs o

f th

e La

bo

ur

Ma

rket

(d

atab

ase

).

EMPL

OY

MEN

T A

ND

LA

BO

UR

MA

RK

ET

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. L

abou

r mar

ket r

igid

itie

s ar

e hi

gh.

Labo

ur m

arke

t rig

iditi

es in

crea

se th

e di

ffic

ulty

of e

nter

ing

and

exiti

ng fo

rmal

em

ploy

men

t. Th

ey c

an b

e ca

used

by:

•co

stly

and

com

plic

ated

hiri

ng a

nd

firin

g pr

oced

ures

•lim

itatio

ns o

n pa

rt-t

ime

cont

ract

s an

d ov

eral

l fle

xibi

lity

in w

orki

ng

arra

ngem

ents

•hi

gh la

bour

taxe

s an

d co

ntrib

utio

ns,

whi

ch a

re o

ften

not

pro

gres

sive

m

eani

ng th

ey im

pose

a h

eavi

er

burd

en a

t low

er w

age

leve

ls.

2. H

igh

leve

ls o

f inf

orm

al

empl

oym

ent.

Sym

ptom

s in

clud

e: •a

larg

e sh

are

of th

e w

orki

ng-a

ge

popu

latio

n is

em

ploy

ed e

ither

full

time

or p

art t

ime

in th

e in

form

al

sect

or c

ompa

red

to r

elev

ant

benc

hmar

ks •la

rge

num

bers

of f

irms

repo

rt u

nfai

r co

mpe

titio

n fr

om th

e in

form

al

sect

or in

the

BEEP

s su

rvey

.

3. P

ublic

labo

ur in

stitu

tions

are

wea

k.Pu

blic

em

ploy

men

t ser

vice

s an

d la

bour

in

spec

tora

tes

lack

the

capa

city

to p

rovi

de

qual

ity s

uppo

rt. S

ympt

oms

incl

ude:

•ve

ry h

igh

staf

f wor

kloa

ds (

up to

600

jo

bsee

kers

for e

ach

PES

offic

er),

se

riou

sly

cons

trai

ning

eff

ectiv

e em

ploy

men

t pol

icie

s (O

ECD,

201

6).

4. H

igh

leve

ls o

f ski

lls m

ism

atch

es

resu

ltin

g in

hig

h st

ruct

ural

(yo

uth)

un

empl

oym

ent.

The

edu

catio

n sy

stem

is

not

res

pons

ive

to th

e ne

eds

of th

e la

bour

mar

ket o

r una

ble

to p

rovi

de a

sa

tisfa

ctor

ily q

ualif

ied

wor

kfor

ce.

Sym

ptom

s of

this

obs

tacl

e in

clud

e on

e or

mor

e of

the

follo

win

g:

•Ed

ucat

iona

l att

ainm

ent i

s ou

t of

bal

ance

with

the

need

s of

the

econ

omy,

i.e.

ther

e ar

e to

o m

any

or n

ot e

noug

h pe

ople

with

the

righ

t le

vel o

f qua

lific

atio

ns.

1. R

igid

labo

ur m

arke

ts d

isco

urag

e in

vest

men

t and

form

al jo

b cr

eati

on,

inhi

bit e

ffic

ient

res

ourc

e al

loca

tion

an

d en

cour

age

info

rmal

ity.

2. In

form

al e

mpl

oym

ent i

s as

soci

ated

w

ith:

•La

ck o

f pro

tect

ion

in th

e ev

ent o

f no

n-pa

ymen

t of w

ages

, com

puls

ory

over

time

or e

xtra

shi

fts,

lay-

offs

w

ithou

t not

ice

or c

ompe

nsat

ion,

un

safe

wor

king

con

ditio

ns a

nd th

e ab

senc

e of

soc

ial b

enef

its s

uch

as p

ensi

ons,

sic

k pa

y an

d he

alth

in

sura

nce

(ILO

, htt

p://

ww

w.il

o.or

g/gl

obal

/top

ics/

empl

oym

ent-

prom

otio

n/in

form

al-e

cono

my/

lang

--en

/inde

x.ht

m).

•Lo

ss o

f bud

get r

even

ues

due

to

redu

ced

taxe

s an

d so

cial

sec

urity

co

ntrib

utio

ns p

aid

to th

e st

ate,

w

hich

red

uces

the

avai

labi

lity

and

qual

ity o

f pub

lic g

oods

and

se

rvic

es. T

his

inva

riab

ly le

ads

to

a hi

gh ta

x bu

rden

on

regi

ster

ed

wor

kers

(W

orld

Ban

k, P

olic

ies

to

Red

uce

Info

rmal

Em

ploy

men

t. An

In

tern

atio

nal S

urve

y, 2

011)

. •In

form

al fi

rms

have

a r

elat

ive

adva

ntag

e, e

spec

ially

whe

n la

bour

cos

ts, t

axes

or s

ocia

l co

ntrib

utio

ns a

re to

o hi

gh, c

reat

ing

unfa

ir co

mpe

titio

n fo

r ent

erpr

ises

op

erat

ing

in th

e fo

rmal

sec

tor.

3. W

eak

publ

ic in

stit

utio

ns

•Pu

blic

em

ploy

men

t ser

vice

s do

not

ef

fect

ivel

y lin

k jo

b se

eker

s to

job

mar

kets

, or p

rovi

de tr

aini

ng a

nd

othe

r em

ploy

men

t inc

entiv

es.

•La

bour

insp

ecto

rate

s ca

nnot

id

enti

fy a

nd e

ffec

tive

ly s

anct

ion

info

rmal

em

ploy

men

t, w

hich

in

turn

res

ults

in th

e gr

owth

of p

oor

qual

ity jo

bs w

ith in

suff

icie

nt s

ocia

l pr

otec

tion,

the

narr

owin

g of

the

tax

base

, etc

.



Info

rmal

em

ploy

men

t rat

eM

easu

res

empl

oym

ent i

n a

dive

rsifi

ed s

et o

f eco

nom

ic a

ctiv

ities

that

are

not

reg

ulat

ed o

r pro

tect

ed b

y th

e st

ate.

Bas

ed o

n th

e Eu

rope

an B

ank

for R

econ

stru

ctio

n an

d D

evel

opm

ent (

EBR

D),

Bus

ines

s En

viro

nmen

t and

Ent

erpr

ise

Perf

orm

ance

Sur

vey

(BEE

PS) i

ndic

ator

on

firm

s re

port

ing

info

rmal

sec

tor c

ompe

titio

n as

an

obst

acle

to th

eir o

pera

tions

.So

urc

es: N

atio

na

l sta

tist

ics

off

ices

; EB

RD

, BE

EP

S.

Empl

oym

ent p

rote

ctio

n le

gisl

atio

n fo

r reg

ular

con

trac

ts a

nd fo

r reg

ular

and

fixe

d-te

rm c

ontr

acts

Qua

litat

ive

indi

cato

rs u

sed

in th

e 20

16 O

ECD

Com

petit

iven

ess

Out

look

. Bot

h ar

e co

mpo

sed

of fo

ur s

ub-in

dica

tors

: 1) r

egul

atio

n of

indi

vidu

al

dism

issa

l of w

orke

rs w

ith r

egul

ar c

ontr

acts

; 2) a

dditi

onal

res

tric

tions

on

colle

ctiv

e di

smis

sal;

3) r

egul

atio

n of

sta

ndar

d fix

ed-t

erm

con

trac

ts;

and

4) r

egul

atio

n of

tem

pora

ry w

ork

agen

cy e

mpl

oym

ent.

Empl

oym

ent p

rote

ctio

n le

gisl

atio

n (E

PL) i

s de

sign

ed to

incr

ease

job

secu

rity

by

prov

idin

g w

orke

rs w

ith s

afeg

uard

s ag

ains

t ris

ks li

ke th

e lo

ss

of e

arni

ngs

and

the

obso

lesc

ence

of t

heir

job-

spec

ific

skill

s an

d ex

peri

ence

. How

ever

, EPL

can

som

etim

es c

onst

rain

firm

s so

muc

h th

at it

di

scou

rage

s jo

b cr

eatio

n an

d th

e ef

ficie

nt r

eallo

catio

n of

res

ourc

es.

Sou

rces

: OEC

D (

2016

), C

om

pet

itiv

enes

s O

utl

oo

k; O

ECD

, In

dic

ato

rs o

f E

mp

loy

men

t P

rote

ctio

n (

dat

aba

se).

Tax

wed

ge a

s a

% o

f an

empl

oyer

’s g

ross

wag

eTh

e “t

ax w

edge

” is

def

ined

as

the

shar

e of

tax

and

soci

al s

ecur

ity c

ontr

ibut

ions

by

empl

oyer

s an

d em

ploy

ees

over

tota

l lab

our c

osts

. The

hig

her

the

wed

ge th

e m

ore

likel

y it

is th

at e

nter

pris

es w

ill h

ire w

orke

rs in

form

ally

. Hig

h ta

x w

edge

s al

so c

ontr

ibut

e to

the

over

all l

abou

r cos

t and

thus

af

fect

s th

e la

bour

cos

t com

petit

iven

ess

of th

e ec

onom

y.

Sou

rces

: Nat

ion

al s

tati

stic

s o

ffic

es, m

inis

trie

s o

f fi

na

nce

.

II. L

ABOU

R GO

VERN

ANCE

Publ

ic e

mpl

oym

ent s

ervi

ces

(PES

s)Q

ualit

ativ

e in

dica

tor u

sed

in th

e O

ECD

201

6 Co

mpe

titiv

enes

s O

utlo

ok to

ass

ess

the

effic

ienc

y an

d ef

fect

iven

ess

of th

e PE

Ss b

y lo

okin

g at

thei

r op

erat

iona

l str

uctu

re a

nd c

apac

ity. N

atio

nal e

mpl

oym

ent a

genc

ies

cate

r prim

arily

to o

ffic

ially

reg

iste

red

jobs

eeke

rs a

nd p

eopl

e w

ho, t

houg

h cu

rren

tly e

mpl

oyed

, are

at r

isk

of in

volu

ntar

y jo

b lo

ss d

ue to

thei

r em

ploy

er’s

eco

nom

ic d

iffic

ultie

s.

Sou

rce:

OEC

D, C

om

pet

itiv

enes

s O

utl

oo

k.

Prog

ram

mes

targ

etin

g yo

uth

unem

ploy

men

tQ

ualit

ativ

e in

dica

tor u

sed

in th

e O

ECD

201

6 Co

mpe

titiv

enes

s O

utlo

ok to

exa

min

e th

e ef

fect

iven

ess

and

scop

e of

pro

gram

mes

spe

cific

ally

ta

rget

ing

yout

h un

empl

oym

ent.

It m

easu

res

whe

ther

ther

e ar

e co

-ord

inat

ed, s

trat

egic

gov

ernm

ent p

rogr

amm

es to

pro

mot

e yo

uth

empl

oym

ent,

how

wid

ely

they

hav

e be

en im

plem

ente

d, h

ow w

ell t

hey

co-o

rdin

ate

with

edu

catio

nal i

nstit

utio

ns a

nd h

ow m

uch

they

are

con

trib

utin

g to

de

crea

sing

the

yout

h un

empl

oym

ent r

ate.

So

urc

e: O

ECD

, Co

mp

etit

iven

ess

Ou

tlo

ok

.

Prog

ram

mes

to r

educ

e in

form

al e

mpl

oym

ent

Empl

oym

ent i

n th

e in

form

al s

ecto

r inc

lude

s al

l job

s in

info

rmal

sec

tor e

nter

pris

es o

r all

pers

ons

who

, dur

ing

a gi

ven

refe

renc

e pe

riod

, wer

e em

ploy

ed in

at l

east

one

info

rmal

sec

tor e

nter

pris

e, ir

resp

ectiv

e of

thei

r sta

tus

in e

mpl

oym

ent a

nd w

heth

er it

was

thei

r mai

n or

a s

econ

dary

job

(ILO

, 200

0). T

his

qual

itativ

e in

dica

tor u

sed

in th

e O

ECD

201

6 Co

mpe

titiv

enes

s O

utlo

ok e

xam

ines

the

effe

ctiv

enes

s an

d sc

ope

of p

rogr

amm

es

spec

ifica

lly ta

rget

ing

info

rmal

em

ploy

men

t.So

urc

e: O

ECD

, C

om

pet

itiv

enes

s O

utl

oo

k;

ILO

(20

00

), R

eso

luti

on

co

nce

rnin

g st

atis

tics

of

emp

loy

men

t in

th

e in

form

al

sect

ori

n:

Cu

rren

t In

tern

atio

na

l. R

eco

mm

end

atio

ns

on

Lab

ou

r S

tati

stic

s.

EMPL

OY

MEN

T A

ND

LA

BO

UR

MA

RK

ET

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•Sc

ores

for t

he P

rogr

amm

e fo

r In

tern

atio

nal S

tude

nt A

sses

smen

t (P

ISA)

and

oth

er in

tern

atio

nal

asse

ssm

ents

of t

he e

duca

tion

syst

em a

re lo

wer

than

com

para

tors

. •Te

achi

ng c

urri

cula

and

met

hods

are

in

adeq

uate

or o

ld fa

shio

ned.

•Th

e go

vern

men

t doe

s no

t con

duct

an

alys

es o

f the

ski

lls n

eede

d by

th

e m

arke

t to

use

whe

n de

finin

g its

ed

ucat

ion

stra

tegy

. •Th

e pr

ivat

e se

ctor

iden

tifie

s hu

man

ca

pita

l as

a m

ajor

con

stra

int o

n th

e ec

onom

y. A

sig

nific

ant p

ropo

rtio

n of

em

ploy

ers

find

it pa

rtic

ular

ly

diff

icul

t to

fill s

ome

cate

gori

es o

f job

va

canc

ies.

•Th

e ed

ucat

ion

syst

em d

oes

not

activ

ely

fost

er tr

aini

ng in

the

priv

ate

sect

or.

•En

trep

rene

uria

l lea

rnin

g is

no

t ful

ly in

corp

orat

ed in

to th

e ed

ucat

ion

syst

em, a

nd th

ere

are

few

col

labo

rativ

e ef

fort

s be

twee

n un

iver

sitie

s, b

usin

esse

s an

d th

e pu

blic

sec

tor t

o pr

omot

e en

trep

rene

uria

l lea

rnin

g.(I

f the

se a

re e

xpla

ined

in d

etai

l in

Educ

atio

n an

d sk

ills

polic

y ar

ea ta

ble,

on

ly g

ener

al re

fere

nce

to th

e ke

y ob

stac

les

shou

ld b

e m

ade

here

, in

one

or tw

o se

nten

ces)

.

5. L

abou

r mob

ility

is h

ampe

red

by

non-

phys

ical

bar

rier

sAd

min

istr

ativ

e pr

oced

ures

for h

iring

fo

reig

n w

orke

rs a

re n

umer

ous

and

com

plic

ated

by:

•la

rge

num

bers

of d

ocum

ents

nee

ded

to c

ertif

y a

fore

ign

qual

ifica

tion

•la

ck o

f agr

eem

ents

with

oth

er

econ

omie

s to

ack

now

ledg

e ea

ch

othe

rs’ q

ualif

icat

ions

•hi

gh fe

es r

equi

red

to c

ertif

y a

fore

ign

qual

ifica

tion.

4. S

kills

mis

mat

ches

hav

e a

cons

ider

able

neg

ativ

e im

pact

on

com

petit

iven

ess

and

grow

th.

•An

unr

espo

nsiv

e ed

ucat

ion

syst

em

gene

rate

s an

inad

equa

tely

edu

cate

d w

orkf

orce

that

has

a d

irec

t im

pact

on

the

quan

tity

and

qua

lity

of

inve

stm

ent i

n th

e ec

onom

y. T

his

in

turn

has

impl

icat

ions

for g

row

th a

nd

inno

vatio

n of

dom

estic

ent

erpr

ises

an

d th

e ex

tern

al c

ompe

titiv

enes

s of

th

e ec

onom

y in

att

ract

ing

fore

ign

dire

ct in

vest

men

t (FD

I). T

his

part

icul

arly

aff

ects

inve

stm

ent i

n kn

owle

dge-

inte

nsiv

e an

d hi

gher

va

lue-

adde

d in

dust

ries

, whi

ch

has

impl

icat

ions

for t

he v

alue

ad

ded

in th

e ec

onom

y an

d th

e pr

ospe

cts

for s

tren

gthe

ning

pro

duct

so

phis

ticat

ion

and

mov

ing

up th

e va

lue

chai

n. •Pr

onou

nced

ski

lls m

ism

atch

es

in th

e ec

onom

y ca

n le

ad

to c

onsi

dera

ble

stru

ctur

al

unem

ploy

men

t.

•Sk

ills

mis

mat

ches

can

als

o re

sult

in

subo

ptim

al e

mpl

oym

ent o

utco

mes

su

ch a

s pe

ople

taki

ng jo

bs fo

r w

hich

they

are

eit

her o

ver-

or

unde

r-qu

alif

ied.

•An

inad

equa

te (

or a

bsen

t) li

felo

ng

lear

ning

sys

tem

will

rel

egat

e a

sign

ific

ant s

hare

of t

hose

will

ing

to

wor

k to

info

rmal

em

ploy

men

t. •An

edu

catio

n sy

stem

whi

ch is

un

resp

onsi

ve to

labo

ur m

arke

t ne

eds

will

als

o le

ad to

hig

h le

vels

of

yout

h un

empl

oym

ent,

as g

radu

ates

st

rugg

le to

find

jobs

that

mat

ch

the

skill

s ob

tain

ed in

the

educ

atio

n sy

stem

. (I

f the

se a

re e

xpla

ined

in d

etai

l in

Educ

atio

n an

d sk

ills

polic

y ar

ea ta

ble,

on

ly g

ener

al re

fere

nce

to th

e ke

y ob

stac

les

shou

ld b

e m

ade

here

, in

one

or tw

o se

nten

ces)

.



III. S

KILL

S

Perc

enta

ge o

f fir

ms

repo

rtin

g th

at a

n in

adeq

uate

ly e

duca

ted

wor

kfor

ce is

a “

maj

or o

r ver

y se

vere

obs

tacl

e” to

the

firm

The

BEEP

S su

rvey

, joi

ntly

car

ried

out

by

the

Wor

ld B

ank

and

the

EBR

D, id

entif

ies

the

shar

e of

firm

s fin

ding

the

skill

s an

d ed

ucat

ion

pres

ent

in th

e ec

onom

y’s

(pro

spec

tive

or a

ctua

l) w

orkf

orce

uns

atis

fyin

g to

suc

h an

ext

ent a

s to

mak

e it

a m

ajor

or s

ever

e ob

stac

le fo

r the

com

pany

’s

ever

yday

func

tioni

ng.

Sou

rce:

EB

RD

, B

EE

PS

dat

ase

ts, h

ttp

://e

brd

-bee

ps.

com

/dat

a/.

Shar

e of

em

ploy

ers

havi

ng d

iffi

cult

y in

filli

ng jo

b va

canc

ies,

and

har

dest

-to-

fill j

obs

by c

ateg

ory

Surv

eys

cond

ucte

d am

ong

hirin

g m

anag

ers

to id

entif

y: 1

) the

pro

port

ion

of e

mpl

oyer

s ha

ving

diff

icul

ty in

filli

ng p

ositi

ons;

2) j

obs

that

are

diff

icul

t to

fill

by c

ateg

ory,

e.g

. ski

lled

trad

e w

orke

rs, e

ngin

eers

, tec

hnic

ians

, inf

orm

atio

n te

chno

logy

(IT)

sta

ff; a

nd 3

) the

reas

ons

behi

nd th

ese

diff

icul

ties.

Em

ploy

ers

can

also

be

aske

d ab

out t

he im

pact

tale

nt s

hort

ages

are

hav

ing

on th

eir o

rgan

isat

ions

and

wha

t ste

ps th

ey a

re ta

king

to a

ddre

ss th

em.

Sou

rce:

Ma

np

ow

er G

rou

p, T

ale

nt

Sh

ort

age

Su

rvey

.

Estim

ated

co-

oper

atio

n le

vels

bet

wee

n vo

cati

onal

edu

cati

on a

nd tr

aini

ng (

VET)

prov

ider

s an

d bu

sine

ss

Idea

lly, a

n in

dica

tor t

hat w

ould

per

mit

auth

oriti

es to

ass

ess

to w

hat e

xten

t VET

inst

itutio

ns w

ork

with

the

busi

ness

com

mun

ity (

to im

prov

e cu

rric

ula,

to p

rovi

de in

tern

ship

s an

d tr

aini

ngs

to s

tude

nts

etc.

) and

whe

ther

eff

icie

nt p

olic

y m

easu

res

are

in p

lace

to fa

cilit

ate

such

co-

oper

atio

n.

The

OEC

D’s

Com

petit

iven

ess

in S

outh

Eas

t Eur

ope:

A P

olic

y O

utlo

ok d

evel

oped

a q

ualit

ativ

e in

dica

tor t

o sc

ore

perf

orm

ance

s st

artin

g fr

om a

ba

selin

e of

0 (

no e

xist

ing

fram

ewor

k w

hats

oeve

r for

the

polic

y to

pic

conc

erne

d) to

5 (

exis

ting

fram

ewor

k, m

onito

ring

stru

ctur

es in

pla

ce, a

s w

ell

as c

ontin

uous

cor

rect

ive

mea

sure

s an

d in

depe

nden

t im

pact

eva

luat

ion

pres

ent)

. So

urc

e: O

ECD

, C

om

pet

itiv

enes

s in

So

uth

Ea

st E

uro

pe

: A

Po

licy

Ou

tlo

ok

, La

bo

ur

Ma

rket

Ali

gn

men

t S

ub

-dim

ensi

on

(p

. 12

2),

htt

p:/

/dx

.do

i.o

rg/1

0.17

87/8

8893

3322

966.

IV. L

ABOU

R M

OBIL

ITY

Out

war

d m

igra

tion

of y

oung

and

hig

hly

skill

ed p

eopl

eM

easu

res

the

econ

omy’

s ca

paci

ty to

ret

ain

tale

nted

peo

ple

on a

sca

le fr

om 1

(no

t at a

ll –

the

best

and

bri

ghte

st le

ave

to p

ursu

e op

port

uniti

es

abro

ad) t

o 7

(to

a gr

eat e

xten

t – th

e be

st a

nd b

righ

test

sta

y an

d pu

rsue

opp

ortu

nitie

s in

the

coun

try)

. Hig

her s

alar

ies,

bet

ter e

mpl

oym

ent

pros

pect

s an

d be

tter

em

ploy

men

t con

ditio

ns a

broa

d ar

e th

e m

ain

driv

ers

of “

brai

n dr

ain”

. The

re is

a s

tron

g di

rect

cor

rela

tion

betw

een

econ

omie

s’ s

alar

ies

and

thei

r ran

king

s fo

r tal

ent r

eten

tion

in th

e G

CI.

Sou

rce:

Wo

rld

Eco

no

mic

Fo

rum

, GC

I.

Inw

ard

mig

rati

on o

f you

ng a

nd h

ighl

y sk

illed

fore

igne

rsM

easu

res

the

econ

omy’

s ca

paci

ty to

att

ract

tale

nted

peo

ple

on a

sca

le fr

om 1

(no

t at a

ll) to

7 (

to a

gre

at e

xten

t – a

ttra

cts

the

best

and

bri

ghte

st

from

aro

und

the

wor

ld).

Apa

rt fr

om g

ener

al e

mpl

oym

ent c

ondi

tions

(su

ch a

s sa

lari

es a

nd e

mpl

oym

ent p

rosp

ects

), a

n ec

onom

y’s

dom

inan

t and

m

ore

dyna

mic

indu

stri

es p

lay

an im

port

ant r

ole

in a

ttra

ctin

g sk

illed

wor

kers

. So

urc

e: W

orl

d E

con

om

ic F

oru

m, G

CI.

Num

ber o

f wor

k pe

rmit

s is

sued

to fo

reig

n w

orke

rsSe

rves

as

a m

easu

re o

f lab

our m

obili

ty. G

reat

er la

bour

mob

ility

allo

ws

a m

ore

effic

ient

allo

catio

n of

reso

urce

s an

d is

an

impo

rtan

t driv

er o

f inn

ovat

ion.

So

urc

es: I

nte

rio

r m

inis

trie

s; n

atio

na

l em

plo

ym

ent

agen

cies

; reg

ion

al c

o-o

per

atio

n c

ou

nci

ls.

Rec

ogni

tion

of f

orei

gn q

ualif

icat

ions

A

qual

itativ

e in

dica

tor u

sed

in th

e O

ECD

201

6 Co

mpe

titiv

enes

s O

utlo

ok in

Sou

th E

ast E

urop

e th

at a

sses

ses

the

prov

isio

n fo

r rec

ogni

sing

fore

ign

cred

entia

ls. I

t gau

ges

whe

ther

ther

e is

a c

o-or

dina

ted,

hol

istic

gov

ernm

ent a

ppro

ach

to la

bour

mig

ratio

n, h

ow w

idel

y it

has

been

impl

emen

ted

and

how

wel

l all

stak

ehol

ders

are

incl

uded

in th

e pr

oces

s.

Sou

rce:

OEC

D, C

om

pet

itiv

enes

s O

utl

oo

k.

EMPL

OY

MEN

T A

ND

LA

BO

UR

MA

RK

ET

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

Hig

h ra

tes

of s

truc

tura

l (yo

uth)

un

empl

oym

ent r

esul

t in:

•Fo

rgon

e pr

oduc

tion,

whi

ch in

turn

bu

rden

s th

e pu

blic

fina

nces

by

incr

easi

ng s

ocia

l spe

ndin

g on

be

nefi

ts fo

r the

jobl

ess

and

can

unde

rmin

ing

soci

al c

ohes

ion

(OEC

D,

2016

). •Yo

ung

peop

le b

ecom

e de

pend

ent

on s

uppo

rt s

yste

ms,

whi

ch r

educ

es

the

econ

omy’

s lo

ng-t

erm

gro

wth

po

tent

ial.

•In

itial

failu

re o

n th

e la

bour

mar

ket

can

have

a p

rofo

und

influ

ence

on

late

r wor

king

life

. Get

ting

off t

o a

good

sta

rt fa

cilit

ates

you

ng p

eopl

e’s

inte

grat

ion

into

the

labo

ur m

arke

t an

d la

ys th

e fo

unda

tion

for a

goo

d ca

reer

, whi

le it

can

be

diff

icul

t to

catc

h up

aft

er a

n in

itial

failu

re.

•Br

ain

drai

n ca

n ha

ve a

pro

foun

dly

nega

tive

effe

ct, w

ith

skill

s sh

orta

ges

redu

cing

the

over

all

qual

ity

of h

uman

cap

ital

in th

e ec

onom

y, w

hich

in tu

rn h

as

impl

icat

ions

for c

ompe

titiv

enes

s an

d in

vest

men

t and

rea

l GD

P gr

owth

.

5. L

imite

d la

bour

mob

ility

res

ults

in

inef

ficie

nt a

lloca

tion

of r

esou

rces

. A

geog

raph

ical

ly m

obile

wor

kfor

ce,

whe

ther

dom

estic

or c

ross

-bor

der,

mea

ns w

orke

rs fr

om r

egio

ns w

ith

an o

vers

uppl

y of

labo

ur c

an m

ove

to th

e re

gion

s w

hich

nee

d. W

ithou

t th

is m

obili

ty, l

abou

r is

inef

ficie

ntly

al

loca

ted,

hin

derin

g pr

oduc

tivity

and

in

com

e ge

nera

tion.


Social inclusion, poverty reduction and equal opportunities Policy area indicators, structural obstacles and impact on competitiveness and growth




I. PO

VERT

Y AN

D IN

COM

E IN

EQUA

LITY

Gin

i coe

ffic

ient

Th

e G

ini c

oeff

icie

nt c

alcu

late

s th

e ra

tio o

f cum

ulat

ive

shar

es o

f the

pop

ulat

ion

arra

nged

acc

ordi

ng to

inco

me,

to th

e cu

mul

ativ

e sh

are

of to

tal

inco

me

rece

ived

by

them

. The

hig

her t

he fi

gure

, the

mor

e un

equa

l the

eco

nom

y is

. So

urc

e: W

orl

d B

an

k G

rou

p.

Ineq

ualit

y of

inco

me

dist

ribu

tion

Calc

ulat

es th

e ra

tio o

f tot

al in

com

e re

ceiv

ed b

y th

e to

p 20

% o

f the

eco

nom

y’s

popu

latio

n by

inco

me

(top

qui

ntile

) to

that

rec

eive

d by

the

low

est

20%

of t

he p

opul

atio

n by

inco

me

(bot

tom

qui

ntile

).So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

Pers

iste

nt r

isk

of p

over

ty r

ate

Calc

ulat

es th

e sh

are

of p

eopl

e liv

ing

in h

ouse

hold

s w

ith a

n in

com

e be

low

the

risk

-of-

pove

rty

thre

shol

d (s

et a

t 60%

of t

he m

edia

n eq

ualis

ed

disp

osab

le in

com

e) in

the

curr

ent y

ear a

nd in

at l

east

two

of th

e pr

eced

ing

year

s (b

roke

n do

wn

by g

ende

r).

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

At r

isk

of p

over

ty b

efor

e so

cial

tran

sfer

s, %

of t

he p

opul

atio

nCa

lcul

ates

the

shar

e of

peo

ple

livin

g in

hou

seho

lds

with

an

inco

me

belo

w th

e ris

k-of

-pov

erty

thre

shol

d be

fore

taki

ng in

to a

ccou

nt s

ocia

l tra

nsfe

rs (b

roke

n do

wn

by a

ge a

nd g

ende

r, m

ost f

requ

ent a

ctiv

ity s

tatu

s, h

ouse

hold

type

, and

tenu

re s

tatu

s, p

lus

illus

trat

ive

valu

es o

f the

risk

-of-p

over

ty th

resh

old)

.So

urc

e: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

.

At r

isk

of p

over

ty a

fter

soc

ial t

rans

fers

, % o

f the

pop

ulat

ion

Calc

ulat

es th

e sh

are

of p

eopl

e liv

ing

in h

ouse

hold

s w

ith a

n in

com

e be

low

the

risk

-of-

pove

rty

thre

shol

d af

ter t

akin

g in

to a

ccou

nt s

ocia

l tra

nsfe

rs

(bro

ken

dow

n by

age

and

gen

der,

mos

t fre

quen

t act

ivity

sta

tus,

hou

seho

ld ty

pe, a

nd te

nure

sta

tus,

plu

s ill

ustr

ativ

e va

lues

of t

he r

isk-

of-p

over

ty

thre

shol

d).

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Mat

eria

l dep

riva

tion

inde

xM

easu

res

the

shar

e of

mat

eria

lly d

epri

ved

peop

le in

the

econ

omy.

It c

over

s th

e sh

are

of p

eopl

e w

hose

livi

ng c

ondi

tions

are

gre

atly

con

stra

ined

by

a la

ck o

f res

ourc

es a

nd c

anno

t aff

ord

at le

ast f

our o

f the

follo

win

g: 1

) to

pay

rent

or u

tility

bill

s; 2

) to

keep

thei

r hom

e ad

equa

tely

war

m; 3

) to

pay

une

xpec

ted

expe

nses

; 4) t

o ea

t mea

t, fis

h or

a p

rote

in e

quiv

alen

t eve

ry s

econ

d da

y; 5

) a w

eek’

s ho

liday

aw

ay fr

om h

ome;

6) a

car

; 7) a

w

ashi

ng m

achi

ne; 8

) a c

olou

r TV;

or 9

) a te

leph

one.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Pove

rty

gap

inde

xM

easu

res

the

inte

nsity

or d

epth

of p

over

ty, d

efin

ed a

s th

e av

erag

e po

vert

y ga

p in

the

popu

latio

n as

a p

ropo

rtio

n of

the

pove

rty

line

(a p

erso

n is

con

side

red

poor

if h

is o

r her

con

sum

ptio

n or

inco

me

leve

l fal

ls b

elow

som

e m

inim

um le

vel n

eces

sary

to m

eet b

asic

nee

ds –

this

min

imum

le

vel o

f per

cap

ita e

xpen

ditu

re is

ref

erre

d to

as

the

pove

rty

line)

. Thi

s in

dica

tor r

efle

cts

the

dept

h of

pov

erty

as

wel

l as

its in

cide

nce.

It is

oft

en

desc

ribed

as

mea

surin

g th

e re

sour

ces

need

ed p

er c

apita

to e

limin

ate

pove

rty,

or r

educ

e th

e nu

mbe

r of p

eopl

e liv

ing

belo

w th

e po

vert

y lin

e to

ze

ro, t

hrou

gh p

erfe

ctly

targ

eted

cas

h tr

ansf

ers.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Soci

al p

rote

ctio

n ex

pend

itur

e, %

of g

ross

dom

esti

c pr

oduc

t (G

DP)

M

easu

res

the

exte

nt to

whi

ch e

xpen

ditu

re p

ower

is d

istr

ibut

ed th

roug

h so

cial

pro

tect

ion

(soc

ial b

enef

its, w

hich

con

sist

of t

rans

fers

, in

cash

or

in k

ind,

to h

ouse

hold

s an

d in

divi

dual

s to

rel

ieve

them

of t

he b

urde

n of

a d

efin

ed s

et o

f ris

ks o

r nee

ds).

Whe

n be

nchm

arke

d ag

ains

t com

para

tor

econ

omie

s, it

indi

cate

s ho

w w

ell t

he g

over

nmen

t sup

port

s so

cial

pro

tect

ion

com

pare

d to

rel

evan

t pee

rs.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

1. P

over

ty a

nd in

com

e in

equa

lity

rate

is h

igh

and/

or c

onti

nuou

sly

incr

easi

ng. S

ympt

oms

incl

ude:

•a

high

and

ris

ing

Gin

i coe

ffic

ient

fo

r the

eco

nom

y •th

e ra

tio

of to

tal i

ncom

e re

ceiv

ed

by th

e to

p 20

% o

f the

pop

ulat

ion

com

pare

d to

the

bott

om 2

0% b

y in

com

e is

pro

gres

sive

ly in

crea

sing

•a

high

sha

re o

f peo

ple

livi

ng b

elow

th

e na

tion

al m

edia

n in

com

e ra

te •a

larg

e w

orki

ng-p

oor p

opul

atio

n w

ith a

n in

com

e be

low

60%

of t

he

natio

nal m

edia

n •lo

w o

r ins

uffi

cien

t mea

sure

s ai

med

at r

educ

ing

pove

rty,

suc

h as

m

inim

um w

ages

or t

rans

fers

•na

tion

al fi

scal

pol

icie

s no

t hel

ping

to

red

uce

ineq

ualit

y an

d po

ssib

ly

even

fost

erin

g it

, par

ticul

arly

whe

n re

dist

ribut

ion

is in

effe

ctiv

e du

e to

- no

or s

carc

e w

ealth

and

pro

pert

y ta

xes

- lac

k of

pro

gres

sive

inco

me

taxa

tion

- too

man

y op

port

uniti

es fo

r tax

av

oida

nce

and

evas

ion

•so

cial

tran

sfer

s ai

med

at r

educ

ing

pove

rty

are

larg

ely

non-

inco

me-

base

d an

d th

eref

ore

inef

ficie

ntly

di

strib

uted

and

do

not s

uffic

ient

ly

targ

et th

e po

ores

t seg

men

t of t

he

popu

latio

n •a

larg

e pr

opor

tion

of t

he

popu

lati

on a

re m

ater

iall

y de

priv

ed

unde

rfun

ded

and

bare

ly fu

ncti

onal

pr

ogra

mm

es fo

r wag

e em

ploy

men

t (s

uppl

emen

ting

exis

ting

livel

ihoo

ds

in r

ural

are

as),

sel

f-em

ploy

men

t, so

cial

sec

urity

and

urb

an p

over

ty

alle

viat

ion

•un

empl

oym

ent b

enef

its,

sta

te-

assi

stan

ce p

rogr

amm

es fo

r job

hu

ntin

g an

d he

alth

ben

efit

s fo

r th

e po

or a

nd u

nem

ploy

ed b

arel

y ex

ist o

r see

m in

effe

ctiv

e at

red

ucin

g

1. In

com

e in

equa

litie

s un

derm

ine

the

econ

omy’

s pe

rfor

man

ce in

the

long

term

. The

rel

atio

nshi

p be

twee

n th

e tw

o is

indi

rect

: Ex

cess

ive

ineq

ualit

y ha

mpe

rs

grow

th. A

s an

Inte

rnat

iona

l M

onet

ary

Fund

(Ca

uses

and

Co

nseq

uenc

es o

f Inc

ome

Ineq

ualit

y:

A G

loba

l Per

spec

tive,

201

5) s

tudy

ha

s sh

own

“[i]

f the

inco

me

shar

e of

the

top

20 p

erce

nt (

the

rich

) in

crea

ses,

then

GD

P gr

owth

act

ually

de

clin

es o

ver t

he m

ediu

m te

rm,

sugg

estin

g th

at th

e be

nefit

s do

no

t tri

ckle

dow

n. In

con

tras

t, an

in

crea

se in

the

inco

me

shar

e of

th

e bo

ttom

20

perc

ent (

the

poor

) is

ass

ocia

ted

with

hig

her G

DP

grow

th.”

Thi

s al

so s

tren

gthe

ns

the

assu

mpt

ion

that

impr

ovin

g th

e in

com

es o

f the

poo

r and

the

mid

dle

clas

s m

atte

rs th

e m

ost f

or

grow

th v

ia a

num

ber o

f int

er-r

elat

ed

econ

omic

, soc

ial,

and

polit

ical

ch

anne

ls.

Ineq

ualit

y no

tice

ably

aff

ects

ed

ucat

ion

outc

omes

and

ski

lls.

Hig

h an

d su

stai

ned

leve

ls o

f in

equa

lity,

esp

ecia

lly in

equa

lity

of o

ppor

tuni

ty (

i.e. i

nequ

ality

at

trib

uted

to v

aria

bles

bey

ond

our c

ontr

ol) c

an e

ntai

l lar

ge

soci

al c

osts

. Roo

ted

ineq

ualit

y of

op

port

unity

can

neg

ativ

ely

affe

ct

an in

divi

dual

’s e

duca

tiona

l and

w

ork

choi

ces.

In a

dditi

on, g

ener

ally

, lo

w-s

kille

d w

orke

rs a

re fa

r mor

e lik

ely

to b

e un

empl

oyed

than

thos

e w

ith h

ighe

r edu

catio

n. B

y th

e sa

me

toke

n, h

igh

leve

ls o

f ine

qual

ity

can

affe

ct a

n ec

onom

y’s

over

all

hum

an c

apit

al e

ndow

men

t, m

akin

g it

a le

ss a

ttra

ctiv

e pl

ace

for

inve

stm

ent.

In

equa

lity

also

aff

ects

labo

ur

mar

ket o

utco

mes

. Li

mit

ed

skill

s an

d ed

ucat

ion

ham

per



Hea

lth

expe

ndit

ure,

% o

f GD

P M

easu

res

the

shar

e of

GD

P sp

ent o

n he

alth

car

e pr

otec

tion.

Whe

n be

nchm

arke

d ag

ains

t com

para

tor e

cono

mie

s, it

indi

cate

s ho

w w

ell t

he

gove

rnm

ent s

uppo

rts

the

heal

th s

ecto

r com

pare

d to

rel

evan

t pee

rs.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Self

-rep

orte

d un

met

nee

ds fo

r med

ical

exa

min

atio

n (b

y se

x, a

ge, d

etai

led

reas

on, i

ncom

e qu

intil

e, la

bour

sta

tus,

edu

cati

onal

att

ainm

ent

leve

l, d

egre

e of

urb

anis

atio

n)

Indi

cate

s th

e sh

are

of th

e po

pula

tion

aged

16

and

over

rep

ortin

g un

met

nee

ds fo

r med

ical

car

e du

e to

var

ious

rea

sons

(to

o ex

pens

ive,

too

far t

o tr

avel

, wai

ting

list,

etc.

). S

elf-

repo

rted

unm

et n

eeds

con

cern

a p

erso

n’s

own

asse

ssm

ent o

f whe

ther

he

or s

he n

eede

d m

edic

al e

xam

inat

ion

or

trea

tmen

t (ex

clud

ing

dent

al c

are)

, but

did

not

hav

e it

or d

id n

ot s

eek

it be

caus

e of

thes

e re

ason

s.

Sou

rces

: Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se; n

atio

na

l sta

tist

ics.

Pens

ion

expe

ndit

ure

(% o

f GD

P)M

easu

res

the

shar

e of

GDP

spe

nt o

n pe

nsio

ns. P

ensi

ons

com

pris

e pa

rt of

the

perio

dic

cash

ben

efits

und

er th

e di

sabi

lity,

old-

age,

sur

vivo

rs a

nd

unem

ploy

men

t fun

ctio

ns. T

he “p

ensi

ons”

agg

rega

te is

def

ined

as

the

sum

of t

he fo

llow

ing

soci

al b

enef

its: d

isab

ility

pen

sion

, ear

ly re

tirem

ent d

ue to

redu

ced

capa

city

to w

ork,

old

-age

pen

sion

, ant

icip

ated

old

-age

pen

sion

, par

tial p

ensi

on, s

urvi

vors

’ pen

sion

, and

ear

ly re

tirem

ent b

enef

it fo

r lab

our m

arke

t rea

sons

. So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

; nat

ion

al s

tati

stic

s.

Long

-ter

m g

row

th in

pen

sion

exp

endi

ture

, % o

f GD

P (2

010-

60)

Mea

sure

s fo

reca

sted

incr

ease

in p

ublic

pen

sion

exp

endi

ture

ove

r the

per

iod

2010

-60.

The

indi

cato

r is

a m

easu

re o

f the

sus

tain

abili

ty o

f an

econ

omy’

s pe

nsio

n sy

stem

. Pen

sion

cos

ts m

ake

up a

larg

e pa

rt o

f pub

lic e

xpen

ditu

re a

nd a

re a

maj

or fa

ctor

in th

e pr

esen

t and

med

ium

- to

long

er-t

erm

pub

lic b

udge

t pos

ition

. Sus

tain

able

pen

sion

sch

emes

nee

d a

fisca

l and

fina

ncia

l bal

ance

bet

wee

n re

venu

es a

nd li

abili

ties

and

the

ratio

of w

orke

rs/c

ontr

ibut

ors

to p

ensi

oner

s/be

nefic

iari

es.

Sou

rce:

Nat

ion

al s

tati

stic

s.

At r

isk

of p

over

ty r

ate

for p

eopl

e ag

ed 6

5 an

d ov

erM

easu

res

the

perc

enta

ge o

f thi

s po

pula

tion

grou

p w

ith d

ispo

sabl

e in

com

es b

elow

the

risk-

of-p

over

ty th

resh

old,

. Thi

s in

com

e-ba

sed

mea

sure

is li

able

to

over

estim

ate

the

rela

tive

pove

rty

rate

am

ong

olde

r peo

ple

sinc

e it

does

not

take

into

acc

ount

the

wea

lth o

f pen

sion

ers,

giv

en th

e re

lativ

ely

high

er s

hare

of

hous

e ow

ners

and

hig

her p

rivat

e sa

ving

s am

ong

this

gro

up, o

r the

val

ue o

f non

-mon

etar

y be

nefit

s su

ch a

s fre

e or

sub

sidi

sed

heal

th c

are

and

tran

spor

t.So

urc

es: E

uro

pea

n C

om

mis

sio

n, E

uro

stat

dat

aba

se, h

ttp

://e

c.eu

rop

a.e

u/e

uro

stat

/dat

a/d

atab

ase

; nat

ion

al s

tati

stic

s.

II. G

ENDE

R IN

CLUS

ION

1. G

ener

al

Soci

al In

stit

utio

ns a

nd G

ende

r Ind

ex –

SIG

IM

easu

res

the

leve

l of d

iscr

imin

atio

n ag

ains

t wom

en in

soc

ial i

nstit

utio

ns (f

orm

al a

nd in

form

al la

ws,

soc

ial n

orm

s, a

nd p

ract

ices

). A

s un

derl

ying

dr

iver

s of

gen

der i

nequ

ality

, dis

crim

inat

ory

soci

al in

stitu

tions

per

petu

ate

gend

er g

aps

in a

reas

of d

evel

opm

ent s

uch

as e

duca

tion,

em

ploy

men

t an

d he

alth

, and

hin

der p

rogr

ess

tow

ards

rig

hts-

base

d so

cial

tran

sfor

mat

ion.

Sou

rce:

OEC

D, S

IGI.

Gen

der-

Rel

ated

Dev

elop

men

t Ind

ex (

GD

I)M

easu

res

gend

er g

aps

in h

uman

dev

elop

men

t by

acco

untin

g th

e di

spar

ities

bet

wee

n w

omen

and

men

in th

ree

basi

c di

men

sion

s of

hum

an

deve

lopm

ent:

hea

lth, k

now

ledg

e an

d liv

ing

stan

dard

s, u

sing

the

sam

e co

mpo

nent

indi

cato

rs a

s in

the

Hum

an D

evel

opm

ent I

ndex

(HD

I).

The

GD

I gi

ves

the

ratio

of t

he H

DI c

alcu

late

d fo

r fem

ales

as

a pe

rcen

tage

of t

he H

DI c

alcu

late

d fo

r mal

es u

sing

the

sam

e m

etho

dolo

gy a

s in

the

over

all H

DI.

Sour

ce: U

nit

ed N

atio

ns

Dev

elop

men

t Pro

gra

mm

e (U

ND

P), H

ym

an D

evel

opm

ent R

epor

t, h

ttp

://h

dr.

un

dp

.org

/en

/con

ten

t/ge

nd

er-d

evel

opm

ent-

ind

ex-g

di.

SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

inco

me

disp

ariti

es •la

ck o

f job

-rel

ated

sta

te

mec

hani

sms

for s

kills

att

ainm

ent

spec

ifica

lly d

edic

ated

to th

e po

ores

t pe

rcen

tiles

of t

he p

opul

atio

n •an

inef

fici

ent h

ealt

h ca

re s

yste

m,

i.e. t

here

is a

dis

crep

ancy

bet

wee

n in

vest

men

ts in

hea

lth c

are

and

the

expe

cted

out

com

es

•to

tal h

ouse

hold

hea

lth

expe

ndit

ure

can

be c

onsi

dera

ble,

esp

ecia

lly

for t

he p

oor:

tran

spor

tatio

n co

sts

and

info

rmal

pay

men

ts r

epre

sent

a

rela

tivel

y bi

g sh

are

of to

tal h

ealth

ex

pend

iture

and

con

stitu

te a

larg

er

shar

e fo

r the

poo

r tha

n th

e ri

ch

•th

e su

stai

nabi

lity

of th

e pe

nsio

n sy

stem

is q

uest

iona

ble

give

n:

- dem

ogra

phic

age

ing,

com

bini

ng a

st

eady

incr

ease

in li

fe e

xpec

tanc

y w

ith a

dec

line

in th

e pr

opor

tion

of

peop

le o

f wor

king

age

, inc

reas

ing

the

rela

tive

num

ber o

f tho

se r

etire

d- h

igh

man

dato

ry c

ontr

ibut

ion

rate

s th

at r

aise

som

e re

venu

e,

but a

lso

lead

to ta

x ev

asio

n am

ong

indi

vidu

als

and

empl

oyer

s,

som

etim

es r

esul

ting

in a

net

fall

in

reve

nue

to th

e pe

nsio

n sy

stem

- eff

orts

to lo

wer

pen

sion

co

ntri

buti

ons

are

ham

pere

d by

th

e le

vel o

f pen

sion

exp

endi

ture

s to

be

finan

ced.

2. G

ende

r dis

pari

ties

are

per

sist

ent

and

deep

ly e

mbe

dded

in th

e ec

onom

y w

ith li

mite

d in

itiat

ives

to e

mpo

wer

w

omen

and

boo

st th

eir e

cono

mic

and

po

litic

al s

tatu

s. T

hese

dis

pari

ties

can

be m

anife

sted

in m

ultip

le w

ays.

Ove

rall,

wom

en a

re s

yste

mat

ical

ly

excl

uded

from

full

part

icip

atio

n in

so

cial

, pol

itica

l and

eco

nom

ic li

fe:

•lo

w s

core

s fo

r ind

icat

ors

mea

suri

ng w

omen

’s in

clus

ion

in

the

econ

omy’

s so

cial

, pol

itic

al a

nd

indi

vidu

als’

abi

lity

to g

ain

a st

rong

fo

otho

ld in

the

labo

ur m

arke

t. A

disa

dvan

tage

ous

posi

tion

in th

e la

bour

mar

ket p

erpe

tuat

es th

e vi

ciou

s cy

cle

of in

equa

lity

and

limite

d so

cial

mob

ility

.

Ineq

ualit

y fo

ster

s un

prod

ucti

ve

and

rent

-see

king

beh

avio

ur.

Ineq

ualit

y of

out

com

es w

ill p

ush

indi

vidu

als

to d

iver

t the

ir ef

fort

s to

war

ds s

ecur

ing

favo

ured

trea

tmen

t an

d pr

otec

tion,

res

ultin

g in

res

ourc

e m

isal

loca

tion,

cor

rupt

ion,

and

ne

potis

m, w

ith a

tten

dant

adv

erse

so

cial

and

eco

nom

ic c

onse

quen

ces.

Pove

rty

incr

ease

s th

e co

st o

f th

e w

elfa

re s

yste

m. P

oor l

ivin

g co

nditi

ons

as a

res

ult o

f pov

erty

an

d de

priv

atio

n af

fect

the

heal

th

and

wel

l-bei

ng o

f the

pop

ulat

ion

and

incr

ease

the

expe

nses

of t

he w

elfa

re

syst

em, p

artic

ular

ly th

ose

rega

rdin

g th

e na

tiona

l hea

lthca

re s

ervi

ces.

Inef

fici

ent h

ealt

h ca

re s

yste

ms

impe

de g

row

th p

rosp

ects

indi

rect

ly

by ta

king

up

sign

ifica

nt b

udge

t ex

pend

iture

s th

at d

o no

t ful

ly

tran

slat

e in

to e

xpec

ted

outc

omes

.

A fin

anci

ally

sus

tain

able

pen

sion

sy

stem

is in

disp

ensa

ble

if it

is to

mee

t its

key

pur

pose

, whi

ch is

to p

rote

ct

olde

r peo

ple

from

pov

erty

and

to a

llow

th

em to

enj

oy d

ecen

t liv

ing

stan

dard

s an

d ec

onom

ic in

depe

nden

ce w

hen

agei

ng. P

ensi

ons

affe

ct p

ublic

bud

gets

an

d la

bour

sup

ply

in m

ajor

way

s an

d th

ese

impa

cts

mus

t be

cons

ider

ed in

pe

nsio

n po

licy.

Pov

erty

and

inco

me

ineq

ualit

y ha

mpe

r inv

estm

ents

, and

he

nce

grow

th, b

y fu

ellin

g ec

onom

ic,

fina

ncia

l, a

nd p

olit

ical

inst

abili

ty.



Gen

der E

mpo

wer

men

t Mea

sure

(G

EM)

Seek

s to

mea

sure

rel

ativ

e fe

mal

e ec

onom

ic a

nd p

oliti

cal p

ower

. It c

onsi

ders

gen

der g

aps

in p

oliti

cal r

epre

sent

atio

n, a

nd in

pro

fess

iona

l and

m

anag

emen

t pos

ition

s in

the

econ

omy,

as

wel

l as

in in

com

es.

Sou

rce:

Wo

rld

Ba

nk

Gro

up

.

Gen

der G

ap In

dex

(GG

I)M

easu

res

the

follo

win

g di

men

sion

s: 1

) eco

nom

ic p

artic

ipat

ion

(mal

e an

d fe

mal

e un

empl

oym

ent l

evel

s, le

vels

of e

cono

mic

act

ivity

, and

re

mun

erat

ion

for e

qual

wor

k); 2

) eco

nom

ic o

ppor

tuni

ty (

dura

tion

of m

ater

nity

leav

e, n

umbe

r of w

omen

in m

anag

eria

l pos

ition

s, a

vaila

bilit

y of

go

vern

men

t-pr

ovid

ed c

hild

care

, wag

e in

equa

litie

s be

twee

n m

en a

nd w

omen

); 3

) pol

itica

l em

pow

erm

ent (

num

ber o

f fem

ale

min

iste

rs, s

hare

of

seat

s in

par

liam

ent,

wom

en h

oldi

ng s

enio

r leg

isla

tive

and

man

ager

ial p

ositi

ons,

num

ber o

f yea

rs a

fem

ale

has

been

hea

d of

sta

te);

and

4) h

ealth

an

d w

ellb

eing

(ef

fect

iven

ess

of g

over

nmen

ts’ e

ffor

ts to

red

uce

pove

rty

and

ineq

ualit

y, a

dole

scen

t fer

tility

rat

e, p

erce

ntag

e of

bir

ths

atte

nded

by

skill

ed h

ealth

sta

ff, a

nd m

ater

nal a

nd in

fant

mor

talit

y ra

tes)

.So

urc

e: U

nit

ed N

atio

ns

Eco

no

mic

Co

mm

issi

on

fo

r Eu

rop

e (U

NEC

E),

Gen

der

Sta

tist

ics.

2. E

duca

tion

Gen

der P

arit

y In

dex

(GPI

), b

y ed

ucat

ion

leve

lM

easu

res

the

rela

tive

acce

ss to

edu

catio

n fo

r men

and

wom

en, t

he n

umbe

r of s

tude

nts

ente

ring

tert

iary

edu

catio

n, th

e pr

opor

tion

of s

tude

nts

stud

ying

abr

oad

and

the

shar

e of

stu

dent

s tr

ansi

tioni

ng fr

om s

choo

l to

wor

k, a

s a

ratio

of g

irls

to b

oys.

Sou

rce:

Un

ited

Nat

ion

s E

du

cati

on

al,

Sci

enti

fic

an

d C

ult

ura

l O

rga

niz

atio

n (

UN

ES

CO

); U

N M

ille

nn

ium

Dev

elo

pm

ent

Go

als

In

dic

ato

rs

htt

p:/

/un

stat

s.u

n.o

rg/u

nsd

/md

g/M

etad

ata

.asp

x?I

nd

icat

orI

d=

9.

Educ

atio

nal a

ttai

nmen

t by

gend

erLo

oks

at th

e hi

ghes

t lev

el o

f edu

catio

n co

mpl

eted

by

an in

divi

dual

. The

re a

re th

ree

leve

ls: b

elow

upp

er-s

econ

dary

, upp

er s

econ

dary

and

tert

iary

at

tain

men

t. U

pper

sec

onda

ry e

duca

tion

typi

cally

follo

ws

com

plet

ion

of lo

wer

sec

onda

ry s

choo

ling.

Low

er s

econ

dary

edu

catio

n co

mpl

etes

th

e pr

ovis

ion

of b

asic

edu

catio

n, u

sual

ly in

a m

ore

subj

ect-

orie

nted

way

and

with

mor

e sp

ecia

lised

teac

hers

. Thi

s in

dica

tor i

s m

easu

red

as a

pe

rcen

tage

of t

he 2

5-64

yea

r-ol

d po

pula

tion;

for t

ertia

ry, u

pper

sec

onda

ry, a

nd lo

wer

sec

onda

ry, w

ith d

ata

disa

ggre

gate

d by

gen

der.

Sou

rce:

OEC

D, e

du

cati

on

al a

tta

inm

ent

[ad

ult

ed

uca

tio

n le

vel]

(in

dic

ato

r); N

atio

na

l Sta

tist

ics

htt

ps:

//d

ata

.oec

d.o

rg/e

du

att/

adu

lt-e

du

cati

on

-le

vel.

htm

.

Popu

lati

on a

chie

ving

at l

east

a fi

xed

leve

l of p

rofi

cien

cy in

lite

racy

and

num

eric

al s

kills

, by

age

grou

p an

d ge

nder

(%

).Th

e pe

rcen

tage

of y

oung

peo

ple

(15-

24 y

ear-

olds

) and

adu

lts (

aged

15

year

s an

d ab

ove)

who

ach

ieve

or e

xcee

d a

give

n le

vel o

f pro

ficie

ncy

in 1

) lit

erac

y; a

nd 2

) num

erac

y.So

urc

e: U

NE

SC

O.

3. E

mpl

oym

ent

Empl

oym

ent/

unem

ploy

men

t rat

e by

gen

der a

nd a

ge (

%)

Calc

ulat

es th

e pe

rcen

tage

of e

mpl

oyed

/une

mpl

oyed

peo

ple

out o

f the

tota

l lab

our f

orce

, by

gend

er a

nd a

ge. T

he la

bour

forc

e is

the

tota

l num

ber

of p

eopl

e em

ploy

ed a

nd u

nem

ploy

ed. U

nem

ploy

ed p

eopl

e co

mpr

ise

thos

e ag

ed 1

5 to

74

who

wer

e: 1

) with

out w

ork

durin

g th

e re

fere

nce

wee

k; 2

) cu

rren

tly a

vaila

ble

for w

ork,

i.e.

wer

e av

aila

ble

for p

aid

empl

oym

ent o

r sel

f-em

ploy

men

t bef

ore

the

end

of th

e tw

o w

eeks

follo

win

g th

e re

fere

nce

wee

k; a

nd 3

) act

ivel

y se

ekin

g w

ork,

i.e.

had

take

n sp

ecifi

c st

eps

in th

e fo

ur w

eek

peri

od e

ndin

g w

ith th

e re

fere

nce

wee

k to

see

k pa

id e

mpl

oym

ent

or s

elf-

empl

oym

ent o

r who

foun

d a

job

to s

tart

late

r, i.e

. with

in a

per

iod

of, a

t mos

t, th

ree

mon

ths.

Sou

rce:

Eu

rop

ean

Co

mm

issi

on

, Eu

rost

at d

atab

ase

, htt

p:/

/ec.

euro

pa

.eu

/eu

rost

at/d

ata

/dat

aba

se.

Labo

ur fo

rce

part

icip

atio

n ra

te b

y ge

nder

(%

of t

otal

pop

ulat

ion)

M

easu

res

the

labo

ur fo

rce

part

icip

atio

n ra

te o

f men

vs.

wom

en a

s a

perc

enta

ge o

f the

tota

l pop

ulat

ion.

Lab

our f

orce

par

ticip

atio

n ra

te is

the

prop

ortio

n of

the

popu

latio

n ag

es 1

5 an

d ol

der w

ho a

re e

cono

mic

ally

act

ive:

all

peop

le w

ho s

uppl

y la

bour

for t

he p

rodu

ctio

n of

goo

ds a

nd s

ervi

ces

durin

g a

spec

ified

per

iod.

Wom

en a

re m

ore

likel

y th

an m

en to

be

inac

tive

(mai

nly

due

to e

xter

nal r

easo

ns, n

amel

y a

heav

ier f

amily

bur

den

than

men

, so

cial

att

itude

s th

at p

lace

wom

en in

the

role

of h

omem

aker

etc

.), s

o w

ill s

yste

mat

ical

ly s

how

low

er la

bour

par

ticip

atio

n ra

tes

than

men

.

Sou

rce:

In

tern

atio

na

l Lab

ou

r O

rga

niz

atio

n (

ILO

).

SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

econ

omic

dyn

amic

s (S

IGI,

GEM

, G

GI)

•di

scri

min

ator

y at

titu

des

are

still

pr

eval

ent i

n id

eas

abou

t app

ropr

iate

be

havi

our f

or w

omen

, res

tric

tions

on

thei

r ind

epen

denc

e, a

nd th

eir

aptit

udes

.

Ther

e ar

e di

ffer

ence

s in

acc

ess

to

educ

atio

n an

d sk

ills:

•ed

ucat

ion

and

skill

s at

tain

men

t di

ffer

con

side

rabl

y de

pend

ing

on

gend

er

•lo

w s

core

s/ra

nkin

g po

siti

on in

the

Gen

der P

arit

y In

dex.

Labo

ur m

arke

t par

ticip

atio

n an

d em

ploy

men

t rat

es d

iffer

: •Th

e ge

nder

div

isio

n of

labo

ur

with

in th

e ec

onom

y is

hig

h, w

ith

uneq

ual g

ende

r dis

trib

utio

n be

twee

n se

ctor

s an

d oc

cupa

tions

. The

re a

re

high

leve

ls o

f wom

en in

so-

calle

d “f

emin

ine”

car

eers

suc

h as

teac

hing

an

d nu

rsin

g.

•A

larg

e ge

nder

em

ploy

men

t ga

p –

the

degr

ee to

whi

ch th

e pr

opor

tion

of m

en o

f wor

king

age

in

empl

oym

ent e

xcee

ds th

at o

f wom

en.

Wom

en a

re u

nabl

e to

acc

ess

the

sam

e em

ploy

men

t opp

ortu

nitie

s,

earn

the

sam

e sa

lari

es, o

r ris

e up

th

e ra

nks

and

take

on

high

er le

vels

of

res

pons

ibili

ties

as m

en d

o. •W

omen

’s la

bour

par

tici

pati

on

rate

s ar

e m

uch

low

er th

an m

en’s

, or

wom

en a

re m

ore

likel

y th

an m

en

to e

nd u

p in

(in

volu

ntar

y) p

art-

time

posi

tions

. Wom

en a

re m

ore

likel

y to

be

affe

cted

by

time-

rela

ted

unde

rem

ploy

men

t, an

d ob

liged

to

acc

ept (

invo

lunt

ary)

par

t-tim

e po

sitio

ns.

•In

equa

litie

s in

the

dom

esti

c/un

paid

sec

tor,

with

wom

en

dedi

catin

g su

bsta

ntia

lly m

ore

time

to h

ouse

hold

act

iviti

es th

an m

en.

Hig

h in

com

e in

equa

lity

may

in

crea

se s

ocio

-pol

itic

al in

stab

ility

, pr

imar

ily

by fu

ellin

g so

cial

di

scon

tent

(po

litic

al a

nd s

ocia

l un

rest

, crim

inal

ity e

tc.)

Soci

o-po

litic

al in

stab

ility

has

an

impa

ct

on th

e po

litic

al a

nd e

cono

mic

en

viro

nmen

t by

incr

easi

ng th

e le

vel o

f per

ceiv

ed u

ncer

tain

ty,

whi

ch in

turn

red

uces

(pr

ospe

ctiv

e)

inve

stm

ents

.

2. T

he e

cono

mic

em

pow

erm

ent

of w

omen

is a

pre

requ

isite

for

sust

aina

ble

deve

lopm

ent.

The

UN

203

0 Ag

enda

for S

usta

inab

le

Dev

elop

men

t (Tr

ansf

orm

ing

our W

orld

: The

203

0 Ag

enda

for

Sust

aina

ble

Dev

elop

men

t. U

nite

d N

atio

ns, 2

015)

rea

ffirm

ed th

e un

iver

sal c

onse

nsus

on

the

cruc

ial

impo

rtan

ce o

f gen

der e

qual

ity a

nd it

s co

ntrib

utio

n to

the

achi

evem

ent o

f the

17

Sus

tain

able

Dev

elop

men

t Goa

ls.

Gen

der e

qual

ity a

nd e

mpo

wer

ed

wom

en a

re c

atal

ysts

for m

ultip

lyin

g de

velo

pmen

t eff

orts

. Inv

estm

ents

in

gend

er e

qual

ity y

ield

hig

her r

etur

ns

on a

ll de

velo

pmen

t inv

estm

ents

. In

con

tras

t, ge

nder

ineq

ualit

y an

d la

ck o

f wom

en’s

em

pow

erm

ent w

ill

nega

tivel

y af

fect

eco

nom

ic g

row

th

and

deve

lopm

ent b

ecau

se it

lead

s to

th

e pr

oduc

tive

capa

citie

s of

a la

rge

segm

ent o

f the

eco

nom

y’s

popu

latio

n be

ing

unde

ruse

d:

Lack

of a

dequ

ate

jobs

for w

omen

le

ads

to in

crea

sed

cost

s to

the

publ

ic fi

nanc

es, b

oth

dire

ctly

be

caus

e of

the

need

to p

rovi

de

larg

er s

ocia

l ben

efits

, and

indi

rect

ly,

thro

ugh

redu

ced

inco

me

from

la

bour

taxa

tion.



Shar

e of

par

t-tim

e (v

olun

tary

or i

nvol

unta

ry) e

mpl

oym

ent,

by

gend

er a

nd a

ge g

roup

In

dica

tes

the

shar

es o

f vol

unta

ry a

nd in

volu

ntar

y pa

rt-t

ime

wor

k am

ong

part

-tim

e w

orke

rs, a

s w

ell a

s th

e ra

tio o

f vol

unta

ry a

nd in

volu

ntar

y pa

rt-

time

wor

k, a

nd la

bour

forc

e an

d th

e ge

nder

com

posi

tion

of (v

olun

tary

and

invo

lunt

ary)

par

t-tim

e w

orke

rs. A

hig

h sh

are

of in

volu

ntar

y pa

rt-t

ime

empl

oym

ent d

enot

es a

wid

espr

ead

phen

omen

on o

f tim

e-re

late

d un

dere

mpl

oym

ent.

So

urc

es:

OEC

D (

Inci

den

ce o

f in

volu

nta

ry p

art

-tim

e w

ork

ers:

htt

ps:

//st

ats.

oec

d.o

rg/I

nd

ex.a

spx

?Dat

aSet

Co

de

=IN

VP

T_I

); I

LO W

om

en a

t w

ork

, Tre

nd

s (2

016

).

Tim

e sp

ent i

n pa

id a

nd u

npai

d w

ork

for e

mpl

oyed

per

sons

by

gend

erTh

is in

dica

tor p

rovi

des

an in

sigh

tful

glim

pse

of h

ow fa

mily

/hom

e dy

nam

ics

affe

ct e

mpl

oyed

wom

en a

nd m

en. E

ven

whe

n em

ploy

ed fu

ll tim

e w

omen

tend

to b

ear t

he b

runt

of d

omes

tic a

nd fa

mily

res

pons

ibili

ties

(i.e.

unp

aid

wor

k), t

hus

dire

ctly

aff

ectin

g th

eir w

ork

and

earn

ing

patt

erns

. So

urc

es: O

ECD

(T

ime

spen

t in

pa

id a

nd

un

pa

id w

ork

, by

sex

: htt

p:/

/sta

ts.o

ecd

.org

/in

dex

.asp

x?q

uer

yid

=54

757)

; IL

O W

om

en a

t w

ork

, Tre

nd

s (2

016

).

Gla

ss c

eilin

g in

dex

Rat

es e

cono

mie

s on

wom

en’s

cha

nces

of e

qual

trea

tmen

t at w

ork.

It c

ombi

nes

data

on

high

er e

duca

tion,

labo

ur-f

orce

par

ticip

atio

n, p

ay,

child

care

cos

ts, m

ater

nity

rig

hts,

bus

ines

s-sc

hool

app

licat

ions

and

rep

rese

ntat

ion

in s

enio

r job

s.

Sou

rces

: Mu

ltip

le (

OEC

D, I

LO, E

uro

pea

n C

om

mis

sio

n).

4. E

ntre

pren

eurs

hip

Shar

e of

wom

en e

ntre

pren

eurs

in th

e ec

onom

y (%

)Ca

lcul

ates

the

perc

enta

ge o

f wom

en e

ntre

pren

eurs

in th

e to

tal e

cono

my.

A h

ighe

r sha

re te

nds

to in

dica

te w

omen

’s g

reat

er e

ngag

emen

t and

mor

e so

lid p

rese

nce

in th

e ec

onom

ic fa

bric

of s

ocie

ty.

Sou

rce:

ILO

.

III. E

THNI

C IN

CLUS

ION

Educ

atio

nal a

ttai

nmen

t by

ethn

icit

yM

easu

res

the

high

est l

evel

of e

duca

tion

com

plet

ed b

y an

indi

vidu

al fr

om a

spe

cific

eth

nic

grou

p an

d co

mpa

res

it to

the

educ

atio

nal a

ttai

nmen

t le

vel o

f the

maj

ority

gro

up in

the

econ

omy.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Econ

omic

act

ivit

y w

ithi

n et

hnic

gro

ups

(% e

mpl

oyed

, une

mpl

oyed

, ina

ctiv

e)

Mea

sure

s th

e di

ffer

ent s

hare

s of

em

ploy

men

t, un

empl

oym

ent a

nd in

activ

ity p

er e

thni

c gr

oup.

Mem

bers

of e

thni

c m

inor

ities

are

mor

e pr

one

to

end

up e

ither

une

mpl

oyed

or (

even

mor

e lik

ely)

inac

tive.

In c

ontr

ast,

mem

bers

of t

he e

thni

c m

ajor

ity w

ill e

njoy

not

ably

hig

her e

mpl

oym

ent r

ates

, ac

com

pani

ed b

y lo

wer

une

mpl

oym

ent a

nd in

activ

ity r

ates

.

Sou

rce:

Nat

ion

al s

tati

stic

s.

Leve

l of e

thni

c te

nsio

nsM

easu

res

the

leve

l of t

ensi

ons

betw

een

diff

eren

t eth

nic

grou

ps in

the

econ

omy

on a

sca

le o

f 1-1

0. In

crea

sed

leve

ls o

f int

er-e

thni

c m

istr

ust,

acco

mpa

nied

by

fear

and

com

petit

ion

amon

g et

hnic

gro

ups

can

incr

ease

the

likel

ihoo

d of

grie

vanc

e-ba

sed

mob

ilisa

tion

for c

ivil

conf

lict,

as w

ell a

s th

ey h

ave

an a

dver

se im

pact

on

the

stab

ility

of t

he s

tate

in g

ener

al, b

ut a

lso

spec

ific

stat

e ad

min

istr

ativ

e bo

dies

con

trol

led

by th

e et

hnic

maj

ority

. So

urc

es: E

uro

pea

n S

oci

al S

urv

ey; U

NE

SC

O (

dat

a o

n S

ou

th E

ast

Eu

rop

e); U

nit

ed N

atio

ns

Dev

elo

pm

ent

Pro

gra

mm

e (U

ND

P).

Med

ian

hous

ehol

d in

com

e by

rac

e/et

hnic

ity

Mea

sure

s th

e in

com

e le

vels

by

ethn

icity

in th

e ec

onom

y an

d pr

ovid

es a

n in

dica

tion

of th

e su

cces

s of

eff

orts

to e

limin

ate

ethn

ic d

ispa

ritie

s in

ac

cess

to e

mpl

oym

ent a

nd e

duca

tion,

as

wel

l as

in th

e re

duct

ion

of in

com

e ga

ps –

ulti

mat

ely

help

ing

in r

educ

ing

pove

rty

disp

ariti

es b

etw

een

race

s/et

hnic

ities

.So

urc

e: N

atio

na

l Sta

tist

ics.

SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

•N

egat

ive

mot

herh

ood

wag

e ga

ps

and

fath

erho

od p

ay p

rem

ium

s pe

rsis

t due

to th

e (im

pose

d) h

eavi

er

role

of w

omen

in r

epro

duct

ive

labo

ur.

•D

iscr

epan

cies

bet

wee

n ge

nder

s pe

rsis

t in

unem

ploy

men

t,

econ

omic

act

ivit

y an

d re

mun

erat

ion

for e

qual

wor

k.

Ther

e is

sys

tem

atic

dis

crim

inat

ion

agai

nst w

omen

in th

e w

orkp

lace

: •lo

w s

core

s/ov

eral

l ran

king

in th

e G

GI

•a

high

sco

re o

n th

e gl

ass

ceili

ng

inde

x •a

larg

e pa

y ga

p be

twee

n w

omen

an

d m

en a

s w

ell a

s a

cons

ider

able

ga

p in

occ

upan

cy o

f man

ager

ial

posi

tion

s.

Men

and

wom

en h

ave

uneq

ual

acce

ss to

fina

nce

and

inve

stm

ent

oppo

rtun

ities

: •a

low

sha

re o

f wom

en

entr

epre

neur

s in

the

econ

omy

com

pare

d to

men

•w

omen

are

rel

egat

ed to

sm

all a

nd

(mor

e lik

ely)

mic

ro-e

nter

pris

es

due

to li

mite

d ac

cess

to c

redi

t and

in

vest

men

t opp

ortu

nitie

s.

Wom

en a

re u

nabl

e to

acc

ess

posi

tions

of

pol

itica

l pow

er:

•pr

onou

nced

gen

der i

nequ

alit

ies

in p

olit

ical

pow

er –

the

prop

ortio

n of

sea

ts h

eld

by w

omen

in n

atio

nal

parli

amen

ts a

nd lo

cal g

over

nmen

ts

is lo

w; t

here

are

har

dly

any

wom

en

pres

iden

ts, o

r as

min

iste

rs in

the

natio

nal C

abin

ets.

3. In

clus

ion

of s

ome

or a

ll et

hnic

m

inor

itie

s is

a m

ajor

cha

lleng

e.

Not

all

ethn

ic g

roup

s en

joy

equa

l ec

onom

ic o

ppor

tuni

ties

and/

or

polit

ical

rig

hts.

Som

e et

hnic

gro

ups

Gre

ater

labo

ur fo

rce

part

icip

atio

n by

wom

en le

ads

to a

bet

ter

allo

cati

on o

f fem

ale

wor

kers

ac

ross

occ

upat

ions

and

eco

nom

ic

sect

ors

and

thus

furt

her c

ontr

ibut

es

to e

cono

mic

gro

wth

.

Low

er la

bour

par

tici

pati

on r

ates

am

ong

wom

en im

ply

they

hav

e fe

wer

em

ploy

men

t opp

ortu

niti

es

from

thei

r ver

y en

try

into

the

labo

ur

mar

ket,

as w

ell a

s lit

tle jo

b va

riat

ion

late

r, ov

er ti

me,

ulti

mat

ely

affe

ctin

g th

eir e

arni

ng c

apac

ity a

nd e

cono

mic

se

curi

ty, w

hich

in tu

rn h

as a

ne

gativ

e im

pact

on

the

econ

omy.

Low

ent

repr

eneu

rshi

p le

vels

am

ong

wom

en, a

nd th

eir r

eleg

atio

n to

mic

ro-e

nter

pris

es a

nd le

ss

prof

itabl

e ac

tiviti

es, e

xclu

de th

em

from

ent

erin

g th

e m

ore

prod

uctiv

e an

d pr

ofita

ble

sect

ors

of th

e ec

onom

y, r

esul

ting

in th

e un

deru

se

of th

eir p

rodu

ctiv

e po

tent

ial.

3. T

he in

effe

ctiv

e in

clus

ion

of e

thni

c m

inor

itie

s in

to th

e so

cial

fabr

ic h

as

econ

omic

sig

nific

ance

:Th

e hi

gher

pol

itic

al r

isk

deri

ved

from

eth

nic

excl

usio

n, s

egre

gatio

n an

d re

sulti

ng te

nsio

ns tr

ansl

ates

in

hig

her c

ost o

f cap

ital,

low

er

pros

pect

ive

inve

stm

ents

, and

the

econ

omy

over

all b

ecom

ing

a le

ss

attr

activ

e in

vest

men

t des

tinat

ion.

Rec

urre

nt jo

b di

scri

min

atio

n di

scou

rage

s m

embe

rs o

f eth

nic

min

orit

ies

from

inve

stin

g in

ed

ucat

ion

and

skill

s, r

educ

ing

in

thei

r cha

nces

of o

btai

ning

a b

ette

r fo

otho

ld in

the

labo

ur m

arke

t. As

su

ch, t

heir

prod

uctiv

e po

tent

ial

risk

s be

ing

unde

ruse

d, li

miti

ng th

e gr

owth

pot

entia

l of t

he e

cono

my.



SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

may

suf

fer f

rom

one

or m

ore

of th

e fo

llow

ing

disa

dvan

tage

s: •la

ck o

f edu

cati

on (

incl

udin

g hi

gher

th

an a

vera

ge s

hare

s of

illit

erac

y) a

nd

trai

ning

; lac

k of

lang

uage

ski

lls (

i.e.

diff

icul

ties

in s

peak

ing

the

natio

nal,

vehi

cula

r lan

guag

e of

the

ethn

ic

maj

ority

); lo

wer

att

ainm

ent l

evel

s th

an th

e et

hnic

maj

ority

•la

ck o

f kno

wle

dge/

unfa

mili

arit

y w

ith

the

lega

l and

adm

inis

trat

ive

wor

king

s of

the

stat

e •la

ck o

f phy

sica

l mob

ility

from

en

clav

es a

nd c

once

ntra

tion

in

depr

ived

are

as •co

nstr

aine

d ac

cess

to fi

nanc

e an

d in

vest

men

t due

to in

abili

ty to

mee

t co

llate

ral r

equi

rem

ents

, etc

. •lim

ited

acc

ess

to p

olit

ical

pow

er

with

min

ority

gro

ups

unde

r-re

pres

ente

d in

gov

ernm

ent,

parli

amen

t etc

.

Hig

h le

vels

of e

thni

c te

nsio

n

The

leve

l of t

ensi

on b

etw

een

diff

eren

t eth

nic

grou

ps in

the

econ

omy

is h

igh

and

ofte

n in

crea

sing

.

Lack

of p

olic

ies

on a

ffir

mat

ive

actio

n,

non-

disc

rim

inat

ion

and

dive

rsit

y m

anag

emen

t; o

r, if

they

do

exis

t,

ther

e is

litt

le e

ffec

tive

info

rmat

ion

abou

t cur

rent

pol

icie

s fo

r inc

lusi

on o

r it

is n

ot a

dequ

atel

y tr

ansm

itted

:

Min

oriti

es a

re o

ften

una

war

e of

sp

ecif

ic m

easu

res

and

legi

slat

ion

aim

ed a

t sup

port

ing

them

so

they

do

not

take

adv

anta

ge o

f the

m, e

ven

whe

n th

ese

mea

sure

s ar

e in

pla

ce.

Pers

iste

nt c

ultu

ral d

iscr

imin

atio

n ag

ains

t min

orit

ies,

incl

udin

g by

pu

blic

aut

hori

ties,

dis

suad

es th

em

furt

her f

rom

rea

chin

g ou

t to

publ

ic

inst

itutio

ns fo

r sup

port

.

Stro

ng d

ivis

ions

alo

ng e

thni

c an

d cu

ltur

al li

nes

are

mor

e lik

ely

to

lead

to p

oliti

cal v

iole

nce

as w

ell a

s fr

eque

nt b

reak

dow

ns o

f law

and

or

der.



SO

CIA

L IN

CLU

SIO

N, P

OV

ERT

Y R

EDU

CT

ION

AN

D E

QU

AL

OPP

OR

TU

NIT

IES

(co

nt.)

Indi

cato

rs

of s

tate

of p

lay

Stru

ctur

al

obst

acle

sIm

pact

on

com

peti

tive

ness

an

d gr

owth

Ther

e is

a p

ersi

tent

“ge

nera

tion

al

pove

rty

trap

”, b

y w

hich

mem

bers

of

min

oriti

es a

re u

nabl

e to

bre

ak th

e vi

ciou

s cy

cle

of il

liter

acy-

pove

rty-

excl

usio

n ov

er ti

me

and

over

ge

nera

tions

. Thi

s re

sults

in li

mite

d ac

cess

to e

duca

tion

and

heal

th, w

ith

a ne

gativ

e im

pact

on

futu

re c

aree

r pr

ospe

cts,

inte

grat

ion

into

soc

iety

an

d liv

ing

stan

dard

s.

Lack

of l

egal

reg

istr

atio

n/ac

cess

to

citi

zens

hip

M

embe

rs o

f eth

nic

min

oriti

es a

re

mor

e lik

ely

to la

ck a

dec

lare

d re

side

ncy,

or a

re n

ot e

ven

incl

uded

in

the

regi

ster

of b

irth

s, o

r lac

k an

of

ficia

l ide

ntity

num

ber.

Lack

of p

rope

r doc

umen

tati

on

limit

s ac

cess

to p

ublic

ser

vice

s,

incl

udin

g ed

ucat

ion,

hea

lth,

pens

ions

and

soc

ial b

enef

its. T

his

also

mea

ns th

e st

ate

is u

nabl

e to

tr

ack

min

ority

gro

ups

in o

rder

to

activ

ely

enga

ge in

thei

r inc

lusi

on.


Documents

Economic Reform Programme - oecd.org · The ERP Diagnostic Tool identifies key structural obstacles that affect an economys ’ competitiveness and inclusive growth, offering two