Remarks by Angel Gurría
OECD, France - 24 April 2018
(As prepared for delivery)
Dear Deputy Prime Minister Birchall, Dear Ministers, Dear Ambassadors, Ladies and Gentlemen,
I am delighted to welcome you to the OECD and to open this High-Level Conference on A New Reform Agenda for a More Competitive South East Europe.
Over the past two decades, economies from South East Europe have undergone a profound transformation. GDP has expanded by almost 70% and growth rates are picking up after the sluggish post-crisis years; foreign direct investment inflows increased more than tenfold , and political stability is improving. Romania, Bulgaria and Croatia are members of the European Union and other economies from the region are eager to follow suit. Romania, Bulgaria and Croatia have also requested OECD Membership and are stepping up their efforts for deeper engagement and alignment with our instruments and standards.
This conference is taking place in a new context full of promise.
Acknowledging economic and political progress, and the need to strengthen the conditions for stability in the region, last February the European Commission issued a Strategy for the Western Balkans. The Strategy signals the EU commitment to co-operation and provides a credible enlargement perspective.
This is a historic opportunity and the OECD is fully equipped to help the SEE region make the most of this momentum. Our work on South East Europe, which has benefitted from the generosity of the European Union, is closely aligned with the needs of the region, the new European Commission Strategy and the priorities of current and future presidencies of the EU Council - Bulgaria, followed by Austria, Romania and Croatia.
Our work builds on our almost twenty-year strong partnership within the South East Europe programme, as well as on our experience in collaborating with countries who joined the OECD before their accession to the EU, for example, Hungary, Poland and the Slovak Republic. Our joint work helped them accelerate and lock-in progress with reforms and supported their EU accession.
Compelling evidence about the region’s progress is provided by the OECD flagship publication Competitiveness in South East Europe: A Policy Outlook. I am delighted to launch its second edition today. Let me focus on four key areas.
First, trade and economic integration with the EU have been major growth factors in the 6 Western Balkan economies covered in the Competitiveness Outlook. From 2007 to 2015, total external trade expanded by about 30%, mainly driven by an exports increase of almost 60% . Trade with the EU accounted on average for 70% of all trade in 2015. Progress in removing technical barriers and broader trade integration are on track: all economies are signatories of the Central European Free Trade Agreement and three [Albania, the Former Yugoslav Republic of Macedonia and Montenegro] are WTO members.
Second, the 6 Western Balkan economies are among the most open to foreign direct investment by OECD standards. The cumulative stock of inward FDI relative to GDP at over 60% significantly exceeds the OECD average of 38% . Sound legal frameworks for investment , along with promotion strategies and proactive investor outreach are implemented across the region.
Third, job creation has picked up fueled by faster growth. Employment has nearly recovered to pre-2008 levels across the region . Policy makers have established comprehensive employment frameworks and relevant institutions, and implemented activation policies. Social enterprises are also being considered to foster innovation and inclusion of vulnerable groups.
Finally, digital, energy and transport connectivity are gradually improving. All six economies have committed to the Western Balkans Connectivity Agenda to improve the transport and energy links within the Western Balkans as well as with the EU. Transport and energy investment is also increasingly aligned with long-term spending goals and more sound legislative and regulatory frameworks. Access to e-business and e-commerce is expanding along with broadband, which is projected to cover 100% of the population by 2020.These trends bode well for the success of EU pledges for around a billion euro investments in connectivity in the region over the next few years.
The Competitiveness Outlook also highlights significant challenges.
Among the six assessed economies, GDP per capita is still only at one third (34.3%) of the EU average. Unemployment remains high hovering over 20% . The share of young people not in employment, education or training is almost double the EU and OECD averages, both at 14.6% in 2015.
Productivity is constrained by underinvestment in science, technology and innovation, and by difficulties to access finance for SMEs. Increased import competition, insufficient access to export markets and concentration on lower-value added activities in global value chains put additional pressure on productivity.
Environmental sustainability is still not fully integrated in sectoral policies. Carbon productivity has not improved in the past years and continues to fall significantly short of the OECD average.
To overcome these challenges and catch-up with the OECD and EU levels of well-being, the Western Balkan economies require a new inclusive and sustainable growth model based on boosting competitiveness. To this end, policy makers need to anchor their action in EU and OECD standards and progress with comprehensive structural reforms.
Policy makers need to address human capital and labour market deficiencies, and barriers to business financing. Most economies need to further level the playing field for fair trade, and for transport and energy integration. The transition to a knowledge-based and low-carbon economy needs to accelerate.
Ladies and gentlemen,
The renewed momentum towards EU accession is an opportunity to boost the competitiveness of the SEE economies within a regional growth strategy. The Competitiveness Outlook is a unique tool which can guide and assist policy makers in leveraging EU resources along the way.
We are eager to work with you in today’s special European context. Now is the time to step up reforms and economic cooperation to design, develop and deliver better policies for better lives in South East Europe. Thank you.