Transcript Human Face of Development - EU Strategy for the Danube Region

Human Face of Development
Vladimir Gligorov
Contents
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River and peoples
Mobility
Dealing with institutions
Diverging development
Dealing with transition and crisis
Labour demand and skills
Conclusion
River and Peoples
• River is like an infrastructure investment
• It is a source of externalities and
agglomeration
• Favours urbanisation and diversity
• Supports industry and services, especially
trade and finance
Mobility and labour market
• Danube provides for increased advantages to
mobility of goods, capital, services, ideas and
people
• Migration provides for larger labour market
and better allocation of capabilities
• Also, traditionally, and escape route
Dealing with Institutions
• Externalities and human agglomeration are
supportive of development with the right
institutions
• However, distributional problems can be hard
to solve
• Both in the case of the common goods and
common bads
• Traditionally, institutions mismanaged
Diverging Development
• The difference in development (human
capital, structure of production, income levels)
is quite high and persistent
• In a sense, development does not seem to
travel downstream
Dealing with Transition and Crisis
• Transition has not brought tremendous
successes in convergence
• It has been hard on employment
• It has not supported industrialisation in a
number of Danube countries
• It has favoured capital cities over the rest of
the countries
• Crisis has reversed some of the gains and
added to the institutional problems
Transition and Crisis
• Convergence limited (not sustained) and often
divergence
• Uneven industrial development
• Significant imbalances – especially in external
balances in most countries
• Labour market underperformance: low
employment levels and high unemployment
levels
• Strong effects of the crisis
• Capital flow reversal
De- and re-industrialization processes continue to be decisive
(Industrial production – level relative to 1989: 1995, 2000, 2008)
20
Development of GDP and gross industrial production,
2008-2011
10
KZ
TR
Industrial production
contracting more strongly
than GDP
PL
MK
0
SK
ME
RU
CZ
RS
PT
ES IT
BG
HU
IE
RO EE
UA
SI
HR
-10
BA
LT
GR
-20
LV
-40
-20
0
Cumulated gross industrial production growth 2008-2011
Source: wiiw Database incorporating national and Eurostat statistics, own calculations.
20
0
EU-27
BG
Source: Eurostat.
CZ
EE
LV
LT
HU
PL
RO
SI
SK
HR
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
3Q 2008
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
youth (15-24)
long-term
total
Youth unemployment (15-24) and long-term unemployment
(more than 12 months) have increased strongly
35
3Q 2011
30
25
20
15
10
5
External imbalances: composition of the current account of the balance of
payments, 2000-2010, in % of GDP
Source: wiiw Database incorporating national and Eurostat statistics.
Foreign banks reduce their balance sheets in Southeast
Europe, Russia and Ukraine
Consolidated foreign claims on banks, USD million
Source: BIS.
Labour Demand and Skills
• In a number of countries skill levels are higher
than the GDP per capita warrants
• In addition to this structural problem, the overall
demand for employment is low
• The policy of austerity is contributing negatively
to the labour market
• Employment falling fast in most countries
• And long-term unemployment is increasing,
which suggests significant loss in human capital
Conclusion
• There are significant convergence potentials
• Policy framework inadequate
• High human cost