About the OECD Investment Compact for South East Europe

 

The OECD Investment Compact for South East Europe supports the seven economies of the Western Balkans to improve their investment climate and foster private sector development. Launched in 2000, its members are: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, the Republic of Moldova, Montenegro, Romania and Serbia, with Kosovo as an observer.

 

The Investment Compact works with policy makers and key stakeholders to:

  • Build political support for economic reforms - Ministerial level conferences are organised to endorse strategic regional actions.
  • Share good practice - OECD tools and instruments are tailored to help develop policies that encourage economic growth and competitiveness. They are shared in forums such as the Western Balkan Innovation Working Group.
  • Monitor and assessing policy reforms - SEE investment climates are assessed based on the OECD Policy Framework for Investment using tools such as the Investment Reform Index and the SME Policy Index.
  • Facilitate reform prioritisation - Strategies are designed to help governments set priorities for reform - For example Sector Specific Sources of Competitiveness.
  • Support the implementation of reforms - The implementation of reforms are supported through projects such as the Regional Competitiveness Initiative.

 

 

Challenges of the region

 

Current challenges to private sector development still facing the region include:

>> Limited export capacity: The region suffers from an underdeveloped tradable sector due to years of deindustrialisation. This limits the export capacity of the economy, leading to substantial trade and current account deficits and increasing foreign indebtedness.

>> Structural vulnerabilities and lagging industrial production: The recent financial and economic crisis seriously impacted the region. The drop in demand from the EU as the main trading partner was dramatic and exports in 2009 were 21% lower than in 2008. FDI also declined by 50% between 2008 and 2009.

>> Need to transition from low-cost to knowledge-based economy:  With increasing global competition from emerging economies in Asia, for example, South East Europe can no longer compete for market shares based on low cost production. If the region is to set a path for long-term growth and prosperity, it will have to build a new economic model based on knowledge-intensive production underpinned by innovation and human capital.

                                                                                       

 

More information on the work of the Investment Compact: