Transcript the danube region

Reflections on the State of the
Danube Region
Rumen Dobrinsky
Senior Research Associate
Vienna Institute for International Economic Studies
1st Annual Forum of the EU Strategy for Danube Region
Regensburg, 27-28 November 2012
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STRUCTURE OF THE PRESENTATION
1. Overview of recent economic
performance in the Danube Region
2. The broader picture: What is
happening to growth in Europe?
3. Policy implications for the Danube
Region and the EUDRS
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PART 1
Overview of recent
economic performance
in the Danube Region
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THE DANUBE REGION
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THE DANUBE REGION ECONOMY
GDP of countries and regions at PPS in 2011, bn €
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THE DANUBE REGION ECONOMY
GDP of countries and regions as % of the region's aggregate GDP in 2011
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THE DANUBE REGION ECONOMY
Per capita GDP in countries and regions in 2011, ths. € in PPS
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GDP growth in the Danube region economies, %,
2001-2012
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Unemployment rates in the Danube region
economies, %, 2001-2012
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General government balances in the Danube region
economies, % of GDP, 2001-2012
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Public debt in the Danube region economies, % of
GDP, 2001-2012
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PART 2
The broader picture:
What is happening to
growth in Europe?
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Main indicators of EU-27 economic performance in
2001-2011
2001-2007
2008-2011
Annual rate of GDP growth, %
2.3
-0.1
Annual rate of growth of hourly labour productivity, %
1.7
0.3
Annual rate of growth of the GDP deflator, %
2.3
1.6
Gross fixed capital formation, % of GDP
19.9
18.9
Annual net inflow of FDI, % of GDP
3.3
1.3
100.0
88.3
Annual rate of growth of nominal ULC, %
1.8
2.1
Annual rate of growth of real ULC, %
-0.5
0.5
Private sector annual credit flow as % of GDP
11.0
3.9
Private consolidated gross debt, % of GDP
100.0
118.3
Total general government revenue, % of GDP
42.5
41.2
Total general government expenditure, % of GDP
44.7
46.3
Annual general government balance, % of GDP
-2.2
-5.1
Government consolidated gross debt, % of GDP
61.3
75.7
Change in world export share, index, beginning of period=100
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FACTORS OF GROWTH
Gross fixed capital formation and GDP growth in the EU-27, 2001-2007
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FACTORS OF GROWTH
Attracted FDI and GDP growth in the EU-27, 2001-2011
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FACTORS OF GROWTH
Exports and GDP growth in the EU-27, 2001-2007
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FACTORS OF GROWTH
Real unit labour costs and GDP growth in the EU-27, 2001-2007
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FACTORS OF GROWTH
Real unit labour costs and export growth in the EU-27, 2001-2011
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FACTORS OF GROWTH
Innovation and GDP growth in the EU-27, 2001-2007
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FACTORS OF GROWTH
Domestic+foreign savings and GDP growth in the EU-27, 2001-2007
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FACTORS OF GROWTH
Private credit flow and GDP growth in the EU-27, 2001-2007
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The model of growth in the EU, 2001-2011
Summary of stylized facts
Factors
2001-2007
2008-2011
Productivity of labour
++
..
Fixed investment
++
..
FDI
+
..
Exports
++
..
-
..
++
..
..
..
Attracted foreign savings (current account balance)
++
..
Domestic and foreign savings
++
..
General government balance
..
-
Total tax burden
..
..
Total banking sector liabilities
++
..
Private sector credit flow
+
+
Private sector debt
++
..
-
-
++
..
Real ULC/ Competitiveness
Innovation
Gross domestic savings
Government debt
Government + private debt
« + » positive correlation ; « - » negative correlation ; « .. » no correlation
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Government and private debt in the EU-27,
% of GDP, 2000-2011
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GDP growth and growth of indebtedness in the EU,
2001-2011
EU-27
EU-17 (“Old” EU)
EU-10 (CEE)
20012007
20082011
20012011
20012007
20082011
20012011
20012007
20082011
20012011
17.5
-0.4
16.9
16.3
-0.8
15.3
39.3
6.4
47.6
18.2
31.9
50.1
17.5
32.1
49.7
31.5
26.3
57.8
Cumulative growth of
government debt, % of GDP
-1.5
24.0
22.5
-1.7
24.5
22.9
1.7
13.9
15.6
Cumulative growth of
private debt, % of GDP
19.7
7.9
27.6
19.2
7.6
26.8
29.8
12.5
42.2
Cumulative growth of GDP,
%
Cumulative growth of
indebtedness, % of GDP
of which:
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Change in government debt and bond spreads
Selected EU countries, 2008-2011
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PART 3
Policy implications for
the Danube Region and
the EUDRS
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SOME GENERAL CONCLUSIONS ON THE EFFECTS
OF THE CRISIS
• The dominant factor boosting growth in the boom period was the
mobilization of new resources, in the first place financial resources
• EU growth during the past decade has been very “expensive”, and
– comparing mobilized resources and outcomes – rather inefficient
• This model and pattern of growth led to the accumulation of large,
in some cases unsustainable, public and private debt
• The level of public sector indebtedness appears as the single most
important factor that weighs of the growth prospects of individual
countries
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SOME GENERAL IMPLICATIONS FOR DANUBE
REGION ECONOMIES
• The crisis rejected the previous growth model on the grounds of its
unsustainability but a new model has not emerged yet
• Countries (both governments and businesses) will have to learn to
live with less resources (in the first place financial) at their disposal
• One factor for reviving economic activity is raising the efficiency of
resource utilization, including raising the efficiency of utilization of
public funds and the efficiency of public policy
• Thus the policy motto for the foreseeable future is shaping as:
“Doing more with less”
• Nevertheless, being relatively less burdened with public debt,
governments of most DR countries have more degrees of fiscal
freedom than the more indebted EU economies
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HOW TO ADDRESS THE EUDRS CHALLENGES IN
THE CURRENT CONDITIONS?
• The EUDRS and its Action Plan set very ambitious objectives; at
the same time the crisis has generated new challenges
• “Doing more with less” is easier said than done – but not
impossible!
• To address these challenges we need bold new policy approaches
and policy innovation
• I discuss two possible approaches for addressing some EUDRS
objectives against the backdrop of the current challenges:
 Internal restructuring of the set of existing policy instruments with
greater emphasis on non-financial policy instruments and with
a particular focus on those promoting innovation
 Wider application of participatory policies
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“NON-FINANCIAL” POLICY INSTRUMENTS
• “Non-financial” are those instruments that do not involve direct
public financial support to actions implemented by non-public bodies
• They rely on the coordinating capacity and convening power of the
state and its role in stimulating linkages between key stakeholders
• Among the most efficient such instruments are those that promote
connectivity among stakeholders
• Others efficient instrument are those that promote risk sharing
among stakeholders through knowledge sharing among them
• Examples include “information brokerage” (technology forums, fairs,
exhibitions); “innovation intermediaries”; knowledge services; etc.
• These are relatively “cheap” policies in terms of the claims on épublic
resources
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“NON-FINANCIAL” INSTRUMENTS PROMOTING
INOVATION
• Non-financial policy instruments can be especially effective in
supporting and promoting innovation and innovative activity
• They can have a significant positive effect on firms’ innovative
performance and productive efficiency
• Such policies are already present in national innovation policies as
well as in EU programmes
• The main issue here is that of restructuring the overall policy mix
within the available public funds, assigning greater emphasis on
this type of instruments
• Such a restructuring will raise the overall efficiency of the policy
mix
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THE EU DANUBE STRATEGY AS A VEHICLE FOR
PROMOTING NEW POLICY APPROACHES
• Non-financial policy instruments promoting innovation address
some of EUDRS key objectives and issues: the knowledge society;
research and innovation; the competitiveness of enterprises
• Their wider application will contribute to better connectivity and
more linkages between businesses, R&D institutions and other
stakeholders in the Danube Region
• This will contribute to more innovation and higher productive
efficiency in the Danube Region
• Their wider application will not be ascociated with new claims for
public (national or EU) financial resources; it will only be a matter
of re-prioritizing and internal restructuring of resources
• They can be applied at the European, national or regional levels
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PARTICIPATORY POLICIES: A WAY TO ADDRESS
CURRENT CHALLENGES
• One of the policy answers to the challenge: “Doing more with less”
is through PARTICIPATORY POLICIES
• Participatory policies and policy processes are policies for
empowering stakeholders/people to agree on coordinated actions
of shared interest (or seeking to achieve common goals) and their
implementation
• The most trendy segment of this class of policies - “smart
specialisation” is only one brand of participatory policies
• The same concept can be applied to a range of policy issues at the
national or regional levels
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PARTICIPATORY POLICIES: A WAY TO ADDRESS
CURRENT CHALLENGES (contd.)
• Participatory policies are about sharing the responsibilities both in
the design of policies and in policy implementation with the
stakeholder community and with the expected beneficiaries
• Participatory policies therefore are about further democratisation of
the policy process: giving back more power to the people to deal with
the issues that are important for them
• Introducing and applying participatory policies requires supporting
social innovation and introducing policy innovation to engage a wide
community in the policy process
• Participatory policies and social innovation are usually based on the
new communication opportunities provided by Internet
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SOCIAL INNOVATION
“Social innovations are new practices for addressing societal challenges,
which are adopted and utilized by individuals, social groups and
organizations concerned” (Source: Centre for Social Innovation, Vienna,
2008, 2012)
Examples:
 Wikipedia
 Open innovation
 Social entrepreneurship
 Spontaneous civic initiatives
The common denominator: INTERNET
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HOW SOCIAL INNOVATION WORKS
• Social
inventor
• Users
• Potential
users
Idea
Active
feedback
Disseminate
among
other user
Complementary
ideas
•
Active
participants
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SOCIAL INNOVATION IN POLICY MAKING
The traditional model of policy making
Government
Policy making
Policy
implementation
Population
Voting constituency
Political party 1
Political party 2
Political party N
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SOCIAL INNOVATION IN POLICY MAKING
Newly emerging models of participatory policy making
Government
Policy making
Policy
implementation
Internet community
Population
Voting constituency
Internet community
Political party 1
Political party 2
Political party N
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POLICY INNOVATION: PARTICIPATORY POLICY
MAKING
 Participatory policies are policy innovations amounting to
mainstreaming public initiatives; they usually involve bringing
social innovation into the policy-making process
 This type of policy making enables large constituencies – and
people in general – to implement social practices that are
traditionally considered as a prerogative of politics
 The domains where such new practices policy innovation are
still limited but they are growing. Examples include:
Local communities compel the local authorities to subject local
public investment projects to Internet-based popular vote
Public procurement bids are subject to evaluation by the
population via Internet-based popular vote
Policy agenda setting via Internet-based popular vote
 Ultimately, in the future this may entirely change the landscape
of politics and policy making
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INTEGRATING PARTICIPATORY POLICIES IN THE
EU DANUBE STRATEGY
• Applied at the international level (such as the Danube Region)
participatory policies can make it possible to engage a wide, crossborder community to address issues of common interest
• Such policy processes could include the actual setting of the
agenda for cross-border cooperation
• This aproach provide mechanisms to address some of the main
underlying objectives of the EUDRS:
 They contribute to “connect people, their ideas and needs”
 They contribute to “prioritising inclusion”
 This is a way to empower people and guarantee ownership
• Finally a word of caution: Participatory policy mechanisms are
mostly applicable to socio-economic issues and may not
necessarily be applicable to all aspects of the EUDRS
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THANK YOU!
Thank you!
Rumen Dobrinsky
E-mail: [email protected]
Telephone: +41 79 776 9449
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