Transcript The Hellenic Republic`s Fiscal Policies

HELLENIC REPUBLIC
COMPETITIVENESS
AND
WORLD TRADE
1
HELLENIC REPUBLIC
A New Global Environment
• Globalisation means that the flows of goods, services,
capital, technologies and people are spreading worldwide,
as countries everywhere open up to wider contact with
each other
• So globalisation can boost economic growth. But it can
also be disruptive. If left unharnessed, it may widen the
gap between rich and poor countries and further sideline
the poorest economies.
• Individual nation States cannot deal with the problem.
When business goes global, the rules of fair play must also
be set globally, through international agreements
2
HELLENIC REPUBLIC
A New Global Environment
Global markets are changing the way in which the world
economy operates:
• New limits to governments' influence over what were previously
regarded as national issues mean that international cooperation will
become more common.
• Global companies are most likely to locate in countries where barriers
to entry and exit are low, and where the labour force is well educated
and flexible.
• People and ideas will achieve greater prominence as a source of
national competitive advantage, as labour remains less mobile than
capital or technology.
3
HELLENIC REPUBLIC
Competitiveness in Global Markets
•
Competition from Western industrialised nations and from the Asian tigers,
Latin America and Eastern Europe is becoming even more fierce and the
diffusion of technological advances more rapidly.
•
Improvements in transport and telecommunications have cut costs, while
governments and international institutions have played a significant role
by promoting open markets, business-friendly foreign investment regimes,
and common rules and standards.
•
These changes are imposing the need to improve competitiveness.
•
Improving competitiveness is central to raising the underlying rate of
growth of the economy and enhancing living standards
•
Competitiveness is about removing impediments to investment and
creating a high skills, high productivity and therefore high wage economy
where enterprise can flourish
4
HELLENIC REPUBLIC
Governments have an important role to play
Governments have an important role to play in
encouraging a friendly climate of enterprise by:
• providing a stable macroeconomic framework based
on low inflation and sound public finances
• deregulation and lower corporate tax rates
• enhancing
market
liberalisation,
extending
privatisation and reducing trade barriers
• helping business through the provision of high quality
business support services
• modernize education and upgrade skills through lifelong learning.
5
HELLENIC REPUBLIC
The EU and World trade
•
The EU accounts for a large share of global imports and exports, making
the Union one of the world’s biggest traders.
•
Trade was one of the first areas in which EU countries agreed to pool their
sovereignty, transferring to the European Commission the responsibility
for handling trade matters, including negotiating international trade
agreements on their behalf.
•
This means that the EU’s 25 Member States negotiate as one, both with
their trading partners and at the WTO, thus maximising their influence on
the international scene.
•
Nevertheless the EU lacks competitiveness vis-à-vis the U.S. Therefore the
Member States are implementing a 10 years reform programme known as
the Lisbon strategy to make the EU “The most competitive and
dynamic knowledge-based economy in the world, capable of
sustainable economic growth with more and better jobs and
greater social cohesion”.
6
HELLENIC REPUBLIC
Foreign Trade in 2003 (USD billions)
3.000
2.500
2.000
1.500
1.000
500
0
2.848,0
4.000
3.025,0
3.000
1.047,0
US
2.000
477,0
EU25
1.250,0
597,0
1.000
Japan
0
Total imports
Total exports
World Trade in 2003 (Percentage, %)
25
20
15
10
22,9
25
20
14,0
15
6,8
10
5
5
0
0
World import share
13,8
US
13,1
8,5
EU25
Japan
World export share
7
HELLENIC REPUBLIC
Foreign Direct Investment
FDI in the US in 2003
70
US FDI Abroad in 2003
50
62,1
45
60
37,9
40
Share of Total (%)
Share of Total (%)
47,2
50
40
30
18,7
20
11,6
10
7,6
35
30
25
20
15
10,8
10
4,1
5
0
0
EU15
Other
Japan
Canada
EU15
Other
Japan
Canada
8
HELLENIC REPUBLIC
The Lisbon Strategy
To improve competitiveness, the member states agreed to
implement necessary reforms in five broad policy areas:
1. Economic reform
-Objectives: Complete the internal market, further
opening of regulated markets (energy, ports), reduce red
tape, promote quality pubic services, lower the cost of
doing business.
2. Employment
- Objectives: Improve the quality of work and increase
employment rate to 70% by 2010.
9
HELLENIC REPUBLIC
The Lisbon Strategy
3. Education, innovation and research
- Objectives: Speed up the transition towards
a knowledge driven economy, increase R&D
spending to 3% of GDP by 2010
4. Social cohesion
- Objectives: Promote equal opportunities and
reduce regional disparities (according to the
social policy agenda)
5. Environment/sustainable development
- Objectives: Apply Kyoto protocol, promote
eco-innovation and eco-business
10