Western Balkans and Europe 2020

1

• Western Balkans and Europe 2020
• Does the Western Balkan need a new Growth Model?
• Peter Sanfey
• Lead Economist, EBRD
• Regional Coordination Meeting, Regional
  Cooperation Council
• Brussels, March 31 2011

2
The growth model of the Transition Region
(incl. the Western Balkans)

• Market-oriented reforms
• Trade integration
• Financial integration with the West
• Political integration (for EU or near-EU
  countries).
• Rapid catch up and growing prosperity
• But also important weaknesses and gaps

3
Is a new approach to development needed after the
crisis?

• The EBRD answer in a nutshell
• No new growth model needed, but region must
  address its key weaknesses
• Need both stronger and safer growth

• New reform agenda
• Close sector-level reform gaps
• Develop local currency finance
• Strengthen export capacity
• Improve business environment

4
Weakness (1) Incomplete Reforms
5
Weakness (2) Financial Sector Fragility
6
Weakness (3) Unbalanced Growth
7
Exports ? Innovation ? Growth
Firm level RD Spending
Export activity significantly raises probability
of RD
Non-exporter
Exporter
8
Top priorities to improve export-friendliness
9
Weakness (4) persistent business environment
problems
BEEPS Top three constraints in each country