Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the Ministerial Meeting of the SEE Investment Compact
Paris, 24 November 2011
(As prepared for delivery)
Ministers, Secretary-General, Ambassadors, Ladies and Gentlemen,
It is my pleasure to welcome you to this Ministerial Conference on “Building a 2020 Vision for South East Europe” and to celebrate the Investment Compact’s 10th Anniversary.
The Investment Compact was set up by nine South East European Governments, ten years ago, in recognition that private sector development and international co-operation are powerful drivers of economic growth in the region. Since then, governments, business leaders and civil society have worked together to design and implement reforms to attract more and better investment, to raise living standards and to improve the wellbeing of their people.
Some of the Investment Compact’s achievements are highlighted in this commemorative book, which I am delighted to present to you today.
For example, the Compact’s support to South East European economies to move towards OECD standards has led to Romania’s adhesion to the OECD Declaration on International Investment and Multinational Guidelines in 2005. Albania has implemented a medium-term action plan to tackle the informal economy on the basis of the recommendations of an Investment Compact report. Through the Regional Competitiveness Initiative, the Compact has developed a policy toolkit to boost competitiveness in the region, including a financial scheme to support local SMEs in Montenegro and initiatives to build partnerships between entrepreneurs and local research institutions in Bosnia and Herzegovina.
These initiatives have contributed to the profound economic and social transformations of South East Europe over the last ten years. The region’s GDP has more than doubled. Inflows of foreign direct investment have increased tenfold. Countries have signed an ambitious regional trade agreement to deepen their integration into the world economy and to strengthen their institutions.
Yet, the region needs to rise to new challenges. With economic growth slowing, public budgets tightening and social pressures mounting, countries must find new and sustainable sources of growth urgently.
This leads me to an important deliverable of today’s meeting: the Investment Compact’s “2020 Vision for South East Europe”, which is to be endorsed today by Ministers. This document could serve as a roadmap to help the region meet its growth challenge by placing innovation, skills and economic integration at centre stage. So, let me outline the four key pillars of this document.
First, the 2020 Vision on “integrated growth” is about creating trade and investment linkages among the South East European economies to maximise gains from economic integration and raise the efficiency of value chains. The Central European Free Trade Agreement (CEFTA) has already accomplished much, not least by abolishing tariff barriers among the signatory countries. But more needs to be done, especially to overcome non tariff barriers and move towards an integrated market for talent and services.
Second, “smart growth” means using knowledge as a lever for wealth creation. South East European countries can only climb the value added ladder by fostering innovation and developing and using skills to their fullest potential. There is much room in the region for using knowledge to boost competitiveness.
Let me remind you of just a few innovations which we owe to South East Europeans: alternating current generators and motors are due to Nikola Tesla; the first airplane with a tubular fuselage is due to Rodrig Goliescu; work on organic chemistry has earned Lavoslav Ruzicka a Nobel Prize; the fountain pen was developed by Slavoljub Penkala. Yet, high technology products account for only 5% of South East Europe’s exports, against 10% in Central and Eastern Europe and 20% among OECD countries on average.
Third, the Vision calls for “sustainable growth” through competitiveness and entrepreneurship, while taking the environmental dimension into account. South East European countries can become more competitive by capitalising on their proximity to European and Mediterranean markets, upgrading the skills of their workforce, and making the most of the region’s enormous potential for tourism in a sustainable manner.
Fourth, the Vision rightly focuses on “inclusive growth”, which refers to the social aspects of growth. South East Europe already has relatively well developed welfare states, although as in other parts of the world it is becoming increasingly difficult to finance social safety nets in a constrained fiscal environment. However, poverty is still widespread in some countries, and policies should be designed to ensure that a fair share of the wealth created through strong growth actually contributes to poverty reduction.
For the Vision to come to fruition, these pillars need strong foundations. Sound governance, including accountability and transparency, is paramount and needs to be strengthened at all levels of public administration and civil society.
Indeed, these priorities of the “2020 Vision” make it an important document that can help promote consistent implementation of economic reforms. In the next decade, the OECD Investment Compact will support the countries in the region to put this ambitious strategy into practice. Future work will include capacity building in policy areas related to innovation and human capital development. It will also focus on supporting the Parties to the Central European Free Trade Agreement (CEFTA) in monitoring the elimination of non-tariff barriers.
Last but not least, we are transferring the management of the South East Europe Investment Committee to the Regional Cooperation Council, based in Sarajevo. This morning, Secretary-General Biščević and I signed a Memorandum of Understanding to this effect. From now on, the Committee will be co-chaired by the Regional Co-operation Council and a country from the region, starting with Albania. We at the OECD look forward to deepening this rewarding partnership in the coming years by prioritising key reforms, supporting their implementation and monitoring progress.
Ladies and Gentlemen,
This is a good day for the region. I congratulate the Investment Compact on its achievements and commend South East European governments and programme donors for their commitment to working with the OECD towards our common goals.
Let me also thank the Government of Slovenia for co-organising this important event and for hosting the opening dinner yesterday. As a member of the European Union and the OECD, and a strong partner of the Investment Compact, Slovenia has valuable experiences that can be shared with South East European partners. So, let me invite Mr. Samuel Žbogar, Minister of Foreign Affairs of Slovenia, to make his introductory remarks.
Mr. Žbogar, the floor is yours.
>> Learn more about the Investment Compact for South East Europe : www.investmentcompact.org