Tržište i Politika Na Balkanu

8/11/2019 Trite i Politika Na Balkanu

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Trade and Policies in the Balkans

Vladimir Gligorov


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Contents

Export performance

External imbalances

Trade specialization

Regional FTA and comparative advantages

Real exchange rates and income policies

First vs. second best policies

Catching-up story?


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Exports and FDI

Exports growing after year 2000

FDI growing after 2000

Similar to early experience of the Central European

countries


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Exports in NMS and SEE, 1990-20061990=100

0

100

200

300

400

500

600

19901991199219931994199519961997199819992000200120022003200420052006

Bulgaria Croatia MacedoniaRomania Serbia & Montenegro NMS-5

NMS-5: CZ, HU, PL, SK, SI


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Exports in NMS and SEE, 2000-20062000=100

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006

BG HR MK RO RS ME Al BA NMS-5



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FDI stock, per capita, in NMS and SEEC,1998-2006, EUR

0

500

1000

1500

2000

2500

3000

3500

1998 1999 2000 2001 2002 2003 2004 2005 2006

NMS-5 BG RO SEEC-6

NMS-5: CZ, HU, PL, SK, SISEEC-6: HR, MK, RS, ME AL, BA


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FDI stock, per capita, in NMS and SEEC,1998-2006, EUR


0

500

1000

1500

2000

25003000

3500

4000

4500

1998 1999 2000 2001 2002 2003 2004 2005 2006

BG RO AL BA HR MK ME RS NMS-5


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Trade deficit, 2000-2006in % GDP

Trade deficits continue to be very large

-60

-50

-40

-30

-20

-10

0

HR MK AL BA ME RS

2000 2001 2002 2003 2004 2005 2006


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Current account, 2000-2006in % of GDP

Current account deficits worsening

-20

-10

0

10

HR MK AL BA ME RS

2000 2001 2002 2003 2004 2005 2006


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Trade specialization

Mostly low skilled and labour intensive goods are

exported to the EU

Not necessarily reflecting the human capital

endowment in the Balkan economies


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Technology-driven industries,as % of total manufacturing exports to the EU

0

10

20

30

40

AL BA BG HR MK RO CS NMS-5

2000 2001 2002 2003 2004 2005 2006



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Labour-intensive industries,as % of total manufacturing exports to the EU

0

10

20

30

40

50

60


2000 2001 2002 2003 2004 2005 2006



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Low-skill industries,as % of total manufacturing exports to the EU

0

10

20

30

40

50

60

70

80

90100


2000 2001 2002 2003 2004 2005 2006



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Regional FTA and comparative advantages

CEFTA yet to show results

However, bilateral FTAs seem to contribute to trade

diversification


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SEE export shares 2005, by sector(manufacturing sectors by skills)

0.0

20.0

40.0

60.0

80.0

100.0

AL BA BG HR MK MD RO CS

Export shares, 2005

High skill industries

Medium skill/white collar

Medium skill/blue collar

Low skill industries

Electricity

Mining

Agriculture/Forestry/Fishing

Source: wiiw


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-10.0

-5.0

0.0

5.0

10.0





Electricity

Mining


Change of SEE export shares 2000-2005,in percentage points, by sector (manuf. by skills)

Source: wiiw



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SEE Export shares

Main exports of goods still from low skills industries

Recent development shows a change from low to

medium skills industry exports General skills upgrading


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RCA within SEE & EU-25 region, 2005,top 5 sectors (manufacturing by skills)

0

1

2

3

4

5


Top 5 RCA 2005





Electricity

Mining


Source: wiiw


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RCA within SEE & EU-25 region,recent increases, top 5 sectors (manuf. by skills)

0

1

2

3

4

5


Top 5 RCA increase 2000/2001-2004/2005





Electricity

Mining


Source: wiiw


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RCA within SEE & EU-25 region

Main specialisation in low skills industry,

agriculture/forestry/fishing and mining export sectors

Development in recent years: a bit less specialisationin low skills industry exports and more in medium skills

comparable to the overall export shares picture


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RCA within SEE & NMS-10 region, 2005top 5 sectors (manufacturing by skills)

0

1

2

3

4

5


Top 5 RCA 2005





Electricity

Mining


Source: wiiw


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RCA within SEE & NMS-10 regionrecent increases, top 5 sectors (manuf. by skills)

0

1

2

3

4

5


Top 5 RCA increase 2000/2001-2004/2005





Electricity

Mining


Source: wiiw


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RCA within SEE & NMS-10 region

Main specialisation in low skills industry and mining

export sectors

Development in recent years: a bit less specialisation

in mining exports and more in medium skills white

collar industry exports

Compared to other transition countries more

specialisation in natural resources but first signs of an

upper medium skills catching up


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Revealed Comparative Advantage in SEE, 2005top 5 sectors (manufacturing by skills)

0

1

2

3

4

5


Top 5 RCA 2005





Electricity

Mining


Source: wiiw


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Revealed Comparative Advantage in SEE,recent increases, top 5 sectors (man. by skills)

0

1

2

3

4

5


Top 5 RCA increase 2000/2001-2004/2005





Electricity

Mining


Source: wiiw


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Revealed Comparative Advantage in SEE

Main specialisation in low skills industry, mining and

medium skills white collar export sectors

Development in recent years: much less specialisation

in mining and low skills exports and more in medium

skills white collar and even high skills industry exports

There is a regional diversification in trade

specialisation and labour skills allowing for improved

labour skill content in exports


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Tentative Conclusions

Recent development of export shares and RCAs

suggest a general skills upgrading in SEE export

industries

Stronger SEE regional diversification in trade

specialisation and labour skills might hint at first

structural effects of the regional Free Trade

Agreements in recent years


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Exchange Rates, Wages, and Prices

Wage inflation is the key to competitiveness and

sustainability

Exchange rate policies difficult


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Source: wiiw Monthly Database.

Real appreciation*, 2004-2007NCU per EUR, PPI-deflated, in % against January 2004

90

95

100

105

110

115

120

J n.04 Ju l.04 J n .05 J ul.05 J n .06 J ul.06 J n.07 J u l.07 Jn.08

HR MK TR AL BA RS


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Serbia: real echange rate, inflation and wages 2004-2007

Year on year (%)


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Policy Conclusions

The key issue is whether Balkan economies are

repeating the Central European type of transition

If yes, than first best policies are appropriate

Otherwise, there is scope for second best policy

innovations

Tržište i Politika Na Balkanu

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