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South East Europe: OECD urges policy reforms to support inward investment

Tue, 03/30/2010 - 8:26am
OECD

29/3/2010 - South East Europe (SEE) needs to attract more and better inward investment to pull out of the economic downturn and build the basis for long-term sustainable growth.  Achieving this will require further major policy reforms, according to a new OECD analysis.

The OECD’s Investment Reform Index 2010 provides a quantitative and qualitative assessment of policies and institutions that critically affect the environment for direct investment in 10 economies: Albania, Bulgaria, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, Kosovo under UNSCR 1244/99, the Republic of Moldova, Montenegro, Romania and Serbia.

Based on inputs from governments, independent experts and the private sector, and using over 100 indicators, the IRI 2010 assesses investment-related policy settings and reform against international best practice in the following areas: investment policy and promotion, human capital development, trade policy and facilitation, access to finance, regulatory reform and parliamentary processes, tax policy analysis, infrastructure to support investment and SME policy.

"Particularly in the Western Balkans, the technological content of this region's exports is extremely low, well below the average, for instance, of recent EU member countries.  Among other benefits, new direct investment can help to change this and to build more resilient economies," commented OECD Secretary-General Angel Gurría.

Since the first IRI, in 2006, countries have made important progress, for example in further integrating into the multilateral trading system and improving legal frameworks affecting access to finance and the protection of physical property. But continued reforms are essential. The recommendations in the IRI 2010 draw on the combined experience of OECD countries and should support efforts in the SEE economies to increase investment. The findings show that, for the region as a whole, governments need to:

  • address skills deficits by improving education and training systems in order to match the needs of employers, for instance by ensuring appropriate curricula and intensifying consultations with the private sector.
  • speed the adoption of EU technical regulations and standards as well as sanitary and phytosanitary measures, and increase related commitments of human and financial resources.
  • help companies obtain access to finance by improving the operation of collateral registries, the functioning of credit guarantee arrangements and the regulation of micro-finance. Governments could also explore measures to help develop a market for informal equity finance.
  • work with their neighbours to develop infrastructure, particularly in such areas as highway and rail networks, in order to make individual economies and the entire region more attractive to international investors.
  • do more to better assess the value and impacts of government regulations that affect business. 
  • do more to protect intellectual property rights, combat counterfeiting and improve the transparency of business-related regulations and procedures at the sub-national level.

Following publication of the investment Reform Index 2010, the OECD Investment Compact will be consulting with all governments in the region on how the insights from the study can best be used to assist the policy reform process.

For more information, contact:  Mr. Alistair Nolan, Head of the OECD Investment Compact for South East Europe,  Alistair.nolan@oecd.org,  + 33 61 680 8747 or visit www.oecd.org/daf/psd

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