Clusters and regional value chains in the Danube Region
Presentation by Alan PaicHead, OECD Investment Compact for SEEEU STRATEGY FOR THE DANUBE REGION – 2nd Workshop of PA8"Cluster Networking and Development Prospects in the Danube Region“12th and 13th September 2013, VUKOVAR,CROATIA
Overview of the OECD Investment Compact for South East Europe
• Created within the Stability Pact for South East Europe in 2000• A regional programme to support governments to increase growth, investment
and employment through targeted business climate reforms
Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo*, the Former Yugoslav Republic of Macedonia, Republic of Moldova, Montenegro, Romania and Serbia
• Implementation of the “SEE 2020 strategy”, a roadmap which has been adopted at the South East Europe Ministerial Conference in November 2011.
• Smart growth - Support to innovation• Sustainable growth - Support to SME Policy• Integrated growth - Support to free trade under CEFTA2006
Geographical coverage
Areas of work
MethodologyPolicy
assessmentPrioritisation of
reformsSupport for
implementation
Mission
*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.
Next Generation Competitiveness Initiative
ObjectiveSupport competitiveness of clusters in South East Europe by removing barriers to higher value-added investment and monitoring commitments.
Identify sectors and working groups Understand barriers to higher-valued added investment
Methodology
Identify 3 regional sector-specific working groups comprised of Western Balkan clusters, businesses and government officials
Assess the barriers to higher value-added investment both intra-regionally and externally to the Western Balkans
Transfer policy tools and actions to enhance the competitiveness of 3 sectors through pilot projects
Geographic coverage
4
Danube Macro-region
Geographic coverage of Next Generation Competitiveness Initiative
Analysis of export performance and demand growth reveals relative strengths in the Danube region in manufacturing…
-2% 0% 2% 4% 6% 8% 10%
-5%
0%
5%
10%
15%
20%
25%
114772%
81435%
134381%
153334%
10261%
13926%
52775%
126248%
31996%
26437%
267893%
58306%
116574%
33049%
20674%
120173%
Average annual growth rate WB Average annual growth rate EUSDR
Average annual growth in world demand
Aver
age
annu
al g
row
th in
WB
and
EU
SDR
expo
rts
…and in services
-5% -3% -1% 1% 3% 5% 7%
-5%
0%
5%
10%
15%
20%
25%
30%
76609%
89102% 8733%
8268%
9190%
26816%
20950%25040%
94569%2421%
Average annual growth in world demand
Aver
age
annu
al g
row
th in
WB
and
EUSD
R ex
port
s
Supply Chains and Revealed Comparative Advantage
7
An RCA higher than 1 implies that country c has a RCA in industry k. For example, an economy has a RCA in exports of intermediate food products, if its
share in world exports is greater in intermediate food products than in overall manufacturing.
ManufWorld
Manufc
kWorld
kc
X
X
X
X
X
RCAkc
,
,
,
,
,
Market share of country c in world exports in industry k
Market share of country c in world exports in manufacturing
Revealed comparative advantage (RCA) captures relative trade specialisation dividing an industry market share by the manufacturing market share for exports (or imports):
The RCA matrix helps identify economies’ positions in supply chains
No import specialisation in intermediate products
RCA in intermediate good exports
Import specialisation in intermediate products
No evidence of supply chains
First stage supply chains
Final stage supply chains
Intermediate stage supply chains
RCA in final good exports
Source: OECD (2012)8
Example 1: Austria
95
0
5
5,254,860.00
7,754,000.00
5,622,746.002,412,440.00
17,199,000.007,710,675.00
8,099,356.00
6,217,273.00
11,984,950.001,144,190.00
1,655,196.00
9,000,000.001,000,000.00
223,927.003,000,000.00
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final good exports
RCA in intermediate goods exports
Import specialisation in intermediate goods
No import specialisation in intermediate goods
Example 2: Hungary
105
0
5
3,906,086.00
1,474,166.00
3,801,742.00
7,810,341.00
11,897,527.00
401,866.00
1,040,460.00
4,600,000.00
562,428.00
914,230.00
1,600,000.00 217,445.00
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final good exports
RCA in intermediate goods exports
Import specialisation in intermediate goods
No import specialisation in intermediate goods
Example 3: Croatia
118
6
4
2
0
2
4
6
8
283010.88
299621.02
694014.41290852.21
93466.63
128779.99235670.24
4712.46
576728.61641700.60
579419.99
334609.20
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final goods exports
RCA in intermediate goods exports
RCA in intermediate goods importsNo RCA in intermediate goods imports
Example 4: Serbia
124
3
2
1
0
1
2
3
4
352580.75105161.79
790686.83181245.32
269691.91
96091.08
134926.64
153675.05
65830.71
542308.7170822.23801187.89
Manufacturing n.e.c.
No import specialisation in intermedi-ate products
No Evident InternationalSupply Chains
RCA in final goods exports
Final StageSupply Chains
Import specialisation in intermediate products
First StageSupply Chains
Intermediate StageSupply Chains
RCA in intermediate goods exports
Example 7: Romania
135
0
5
1821916
25955834390000
15657052541797
5659108
3900409
150109
647834
12000003893294646
1400000
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final good exports
RCA in intermediate goods exports
Import specialisation in intermediate goods
No import specialisation in intermediate goods
The Danube region economies present supply chain complementarities in selected sectors
Economies’ positions in supply chains
14
First stage of supply chains
Intermediate stage of supply chains
Final stage of supply chains
Food, Beverages and Tobacco RS BG, MD BG, RO, HR, BA, MD, ME
Textiles, Apparel, Leather and Footwear RO BG, RO, BA, HR, MD, RS
Wood and Products of Wood and Cork BG, SK, CZ, RO AT, SI, BA, HR, ME, RS BAPulp, Paper, Paper Products, Printing and Publishing AT, CZ, SI, BA, HR, RS CZ, SI, BA, RSCoke, Refined Petroleum Products and Nuclear Fuel HR BG Chemicals and Chemical Products SKRubber and Plastics Products SK, SI, RO, AT, CZ, HU, RS AT, SI, CZ, HU, SK
Other Non-Metallic Mineral Products SK, SI, AT, BG, CZ, HU, BA, HR, MD, RS BG, AT, CZ, SI, RO
Basic Metals RO, SK, BA, ME AT, SI, BG, CZ, RS
Fabricated Metal Products BA AT, SI, CZ, RO, SK, HR, RS CZ, RS
Machinery and Equipment, n.e.c. SI AT, HU, CZ, RO, SK CZ, HUOffice, Accounting and Computing Machinery CZ CZElectrical Machinery and Apparatus, n.e.c. HR, RS SK, SI, RO, HU, AT, BG,
CZ, MD HURadio, Television and Communication Equipment HUMedical, Precision and Optical Instruments Motor Vehicles, Trailers and Semi-Trailers BA CZ, HU, RO, SK, AT SI
Other Transport Equipment AT, CZ, SI, HU, RO
Manufacturing n.e.c.; Recycling AT, HU, RO CZ, SK, SI, HR, RS SI, BA, MD
Examples of pilot projects to be implemented
• Cluster policy review according to best practice• Skills gap analysis for one sector across the Western Balkans
potentially complemented by an internship scheme• Developing a regional investment promotion strategy for a
specific sector. • A region-wide Triple Helix partnership project which would result
in concrete innovative products and services;• Identifying non-tariff barriers to trade in the sector which would
allow better flow of goods and services across the region, and design measures to remove those barriers;
• Improving mobility of professionals across the region to allow skill pooling,
Moving from lower to higher value-added activities
Expected outcomes of the project
• Connect clusters, develop regional value chains and strengthen the competitiveness of key economic sectors This involves expedited implementation of policy reforms with a focus on three
specific sectors deemed to possess comparative advantage, and reinforcing that advantage in the global marketplace.
• Positive macro-economic benefits: improved trade performance (through increased export sophistication), increased government receipts from a more productive business sector, and positive developments as regards labour market outcomes (which would in turn
have positive impacts on government accounts).• Officials with enhanced capacity to conduct competitiveness-related reforms;• Enhanced dialogue between the policy makers and the private sector.
Next steps
• Project duration: April 2013 – April 2016
• Financing secured: 5 million euros from EC DG ELARG and OECD
• Project is part of Danuclus within PA 8 of Danube Strategy
• Inclusion of Northern Danube countries Immediately: For expertise and good practice transfer 2014: potential to expand full scope of project through complementary
financing
Thank you for your attention
Alan Paić[email protected]
HeadOECD Investment Compact for South East Europe
Next Generation Competitiveness Initiative in context
20
Sector Specific Sources of Competitiveness (SSSC)
• Identified barriers to sector competitiveness in three sectors with policy recommendations.
• Regional investment promotion for automotive• Internships to address ICT skills• Access to finance for textiles
Regional Competitiveness Initiative (RCI)•Improve competitiveness through innovation and
human capital•Capacity building support via pilot projects•Transfer lessons learned through regional working
groups
Next Generation Competitiveness Initiative (NGCI)•An open, sector-based, regional network of clusters,
businesses and government officials; •Development of transferable policy tools and
actions to sustainably improve competitiveness in specific sectors
• SEE 2020 Monitoring
2010 20122011 201520142013
Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Kosovo*, Montenegro, and Serbia
* This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the ICJ Opinion on the Kosovo Declaration of Independence
2007 20092008
Roadmap
21 21
Greater time and staff commitment
2013 2014 2015
Analysis and short listing of sectors
Identification of 3 sectors and designation of sector working group membership
Launch of first sector working group
Identification of key constraints limiting sector competitiveness
Design regional pilot projects in each sector working group
Implementation of pilot projects in each sector group
Completion of sector-based pilot projects
Review of pilot projects and extraction of lessons learned
Monitoring of reforms as a result of sector-based pilot projects
The OECD is an international organisation with 34 member countries:
• USA, Canada, Japan, Australia, New Zealand, Europe (20 of EU-27, Switzerland, Norway, Iceland)
• Chile, Mexico, Israel, Korea, Turkey
…and a growing number of key partners• Brazil, Russian Federation*, India,
Indonesia, China, South Africa
totaling more than 80% world GDP and 64% of the world’s population.
The OECD’s mission is to promote policies that will improve economic and social well-being*in accession process
The OECD at a glance
Who we are Sharing of good policy practices, peer review and policy dialogue in:
• Anti-corruption• Competition and Financial markets• Corporate governance• Development• Economic growth• Education• Environment• Employment and labour markets• Governance• Health and social care• Industry and Entrepreneurship• Investment• Private Sector Development• Regional, Urban and Rural development• Science, Technology and Innovation• Tax policy• Trade, etc.
Setting international standards on domains ranging from agriculture and tax to the safety of chemicals.
What we do
The Investment Compact supports competitiveness through work on investment, free trade and SME policy
Political support
Policy dialogue Promoting reform
Assessment Strategy Support to implementation
Value-added investment
Investment Ministerial Conference
South East Europe Investment Committee
• Innovation WG•Human capital
WG•Sector specific
WG
Investment Reform Index(monitoring SEE 2020) Next Generation Competitiveness
• Pilot projects to remove sector specific barriers in innovation, skills, trade, investment policy, access to finance,...
Industrial PolicyFacilitating free trade
CEFTA Ministerial
•Budapest round table for non-tariff barriers to trade
•CEFTA subcommittees
•Non-tariff barriers
•Trade in Services• Investment
concentration
SME policy and entrepreneurship
South East Europe Investment Committee
•SME policy working group
SME Policy Index (monitoring Small Business Act and EDIF)
SME reform prioritisation (EDIF)
SME reform support to implementation (EDIF)
Example 5: Bosnia and Herzegovina
2410
5
0
5
10
159794.88
185455.65
326340.75 51223.62
104768.4450380.36
293.31139918.60
1580.14
27532.49
140910.94333774.98
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final goods exports
RCA in intermediate goods exports
RCA in intermediate goods importsNo RCA in intermediate goods imports
Example 6: Montenegro
25
10
5
0
5
10
146694.2211639.69
33607.96
No Evident InternationalSupply Chains
First StageSupply Chains
RCA in final goods exports
RCA in intermediate goods exports
RCA in intermediate goods importsNo RCA in intermediate goods imports
Intermediate StageSupply Chains
Final StageSupply Chains
Example 8: Moldova
268
6
4
2
0
2
4
6
8
40247.65
70395.29
24576.61
22387.305214.64
196981.62212257.65
No Evident InternationalSupply Chains
First StageSupply Chains
Intermediate StageSupply Chains
Final StageSupply Chains
RCA in final goods exports
RCA in intermediate goods exports
RCA in intermediate goods importsNo RCA in intermediate goods imports