The OECD Investment Compact for South East EuropeSupporting Investment Climate Reform for Growth and Employment
Vienna Economic Forum – 10 November 2008
Overview
1. Programme objective, organisation and Strategic
Framework
2. Activities and Achievements
3. Future strategy
Objectives
• Launched in 2000, the OECD Investment Compact for South East Europe is a regional programme designed to improve the investment climate and to encourage private sector development in South East Europe through the implementation of reforms to enhance domestic and foreign investment.
• Based in the OECD, the programme has its own institutional structure, including the South East Europe Investment Committee and an annual Ministerial conference.
Strategic Framework
Annual Ministerial for the SEE Region
Project on Sector Specific Sources of Competitiveness
Thematic Working Groups with policy recommendations
Country specific projects (ex: FDI Strategy in Moldova)
A. Enterprise and SME Development
4. Political Support
1. Monitoring and Evaluation
2. Implemen-tation Support
3. Private Sector Support
B. Policy and Promotion Specific to FDI
Investment Reform Index (IRI)
SME Policy Index
Focus of Investment Compact Program
4 A
reas
Structured Public/Private Debate through OECD tools
Involvement of Business Advisory Council, Regional Foreign Investors Councils and local chambers
Programme Structure
Investment Compact
Regional Office
Croatia
Regional Co-operation Council
Regional Co-operation Council
OECD Directorate for Financial and Enterprise Affairs
OECD Directorate for Financial and Enterprise Affairs
Investment Compact
for South East Europe
Investment Compact
for South East Europe
SEE Investment CommitteeSEE Investment Committee
Investment Compact
Regional Office
Moldova
OECD donor countries
SEE country economic
teams
Internationalorganisations
Private sector
Regional Working Groups:Anti-CorruptionHuman Capital
Investment PromotionRegulatory Reform
Co-chairs:
OECD Country + SEE Country + OECD
Financial contributors to the Investment Compact
• Austria (also co-chair of the initiative)• Belgium Flanders• Bulgaria• Central European Initiative (CEI)• Czech Republic• European Commission• Germany• Hungary• Ireland• Italy• Romania• Slovenia• United States
Overall achievements in the last seven years
• Enhanced the investment environment by:
– Accelerating reforms through identification of priorities and guidance on how to implement them
– Moving countries closer to OECD standards through adherence as observers to OECD Committees
– Improving brand image with sector specific investment promotion events
• Helped increase the capacity of policy makers and engagement of the private sector through the transfer of OECD methodologies, tools and instruments taking into account the specific circumstances of the region.
• Promoted a culture of continuous improvement with the systematic monitoring and evaluation of reforms based the Investment Reform Index and the SME Policy Index
• Encouraged regional ownership of the reform process with the launch of the South East Europe Investment Committee and regional thematic Working Groups to improve policy dialogue and implementation of investment reforms.
Summary of Achievements
Most recent achievement: Strengthening Sector Specific Sources of Competitiveness
The Western Balkans
Regional Study on Sector Competitiveness
Will translate into launch of an ambitious project to support implementation
See www.investmentcompact.org
Example of Findings: Business Process andTechnology Outsourcing (BPTO) advantages
Source: International Labour Organization; zdnetasia; Wall Street Journal, OECD interviews
Leveraging their competitive labour costs in servicesRelative comparison of average monthly labor cost in services (2005)
HungaryHungary PolandPoland CroatiaCroatia Bosnia&H
Bosnia&H
MontenegroMontenegro
SerbiaSerbia MoldovaMoldova IndiaIndia
Index(100:
Hungary)
Index(100:
Hungary)
(1)(1)
Sample of CEE countries WB countries covered by the project Other references
FYR Macedonia
FYR Macedonia
AlbaniaAlbania UNMIKUNMIK
Note: Monthly wages have been calculated on 2003-05 or 2003-06 average; using the LABORSTA Labour Statistics Database and covering, unless specified only the category J (financial intermediation) and K (business activities, real estate and renting). For Albania overall figures are based on category I (transport, storage and communications) due to the absence of statistics on J/K in the ILO databases
(1) average monthly wages in all services
Up to 5 timeslower
Example of findings: Sector specific gaps in Human Capital
Source: OECD RCS, OECD 2007
50% of BPO firms have difficulties finding skilled and educated workers
70% of BPO firms find education and training to be key policy issues
50%
Skills and education of available workersSkills and education of available workers Key issues within human capital policyKey issues within human capital policy
Investment Compact: Promoting Reforms for more and better invesment
Central Europe:
First Wave of FDI
SEE: Second wave of FDI
Eurasia:Third wave?
FDI in USD Million
Source: EBRD Transition report 2007, OECD Analysis
Programme focus 2009-2010
Ministerial planned to end 2009 in collaboration with Regional Cooperation Council
Regional Competitiveness Initiative (RCI)
Selected national business climate strategy projects
A. Enterprise and SME Development
4. Political Support
1. Monitoring and Evaluation
2. Implemen-tation Support
3. Private Sector Support
B. Policy and Promotion Specific to FDI
Investment Reform Index (IRI) 2009
SME Policy Index 2009
Collaboration with private sector around IRI 2009- Business Advisory Council (BAC)
- Foreign Investor Councils- Eurochambers and local chambers of commerce
Focus of Investment Compact Programme
4 A
reas
Collaboration with RCC
Collaboration with the RCC
•CEFTA 2006: the Investment Compact will assist in monitoring the three investment-related clauses of the CEFTA 2006 and incorporate them within the findings of the IRI 2009. Monitoring and evaluation of CEFTA 2006 may be expanded to include contributions by the CEFTA structures to the IRI’s Trade Policy and Administration dimension.
•Other policy dimensions: The RCC priority areas of Infrastructure, Human Capital Development and Justice and Home Affairs will benefit from the IRI evaluation and priority setting process within those dimensions. Strong involvement of the RCC will also enhance both the quality of IRI outputs and its impact on policy reform in SEE.
•Joint Ministerial end 2009: Take stock of achievements and define the roadmap going forward to improve regional competitiveness
Flagship project: Regional Competitiveness Initiative
SustainedCompetitiveness
Match supply and demand• Align ministries• Develop tools to analyse skills gaps and shortages• Review the labour market regime • Develop a mechanism for dialogue with civil society
Remove sector specific policy barriers on a continuous basis• Set-up regional sector specific working groups• Develop sector specific monitoring tools
Channel innovation efforts• Assess the success levels of current cluster initiatives• Develop an organisational structure and governance model at the national level• Map out the objectives and scope of competitive clusters to channel innovation efforts
Flagship project: IRI 2009
Expected Results
•An overview of each SEE country’s performance on business climate policy reform, allowing benchmarking relative to peers
•Jointly defined policy priorities to further improve the business climate
•Recommendations on how to make improvements within each policy dimension and concrete examples of OECD best practices
•Follow up support in implementation of reforms from both the OECD an other international organisations.
Policy Scope
1.Investment policy and promotino
2.Tax policy and administration
3.Trade policy
4.Anti-corruption
5.Financial sector development
6.Human Capital development
7.Infrastructure
8.SME policy
9.Regulatory reform and parliaments
Anthony O’Sullivan
Head of DivisionPrivate Sector Development Organisation for Economic Co-operation and Development (OECD)
www.oecd.org
Contact
THANK YOU FOR YOUR ATTENTION!