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3rd Bilateral Polish-Hungarian Conference
Development pattern of CEE countries after
2007-2009 crisis on the example of Poland
and Hungary, Warsaw, 29 September 2016
Staszic Palace, Nowy Świat 72 Street, Marii
Curie Skłodowska Hall
Changing state interference in the economy
– based on the example of France and
Slovenia
by
Miklós Somai
Centre for Economic and Regional Studies of Hungarian Academy of Sciences
Institute of World Economics, Research Group on European Integration
Postal address: 1535 Budapest Pf. 936 Hungary
e-mail: [email protected]
Reduction of the gap in real per capita GDP terms between the EU15 (100%) and
each of the new members states of Central and Eastern Europe in the period of
1988/90 to 2006/08 (in percentage points, based on 3-year averages)
16.0%
13.9%
14.0%
12.0%
10.0%
10.0%
7.5%
8.0%
6.0%
4.8%
4.0%
2.0%
1.1%
1.0%
1.5%
2.4%
-0.7%
1.1%
0.0%
-2.0%
Source: Author’s calculations based on ERS (2015) statistics.
-1.6%
GRADUALISM
Old elites – anticipated transition by introducing important
changes//influenced their own future position.
High level of development – more cautious approach, not
to undermine positive developments of before transition
Tradition of consensus building – shock of market loss in
Yugo + unstable political situation during the early
independence period
Drawbacks – Stalemate among interest groups// postponed
decisions//less-than-optimal compromises// delayed
structural reforms
First wave (end 1980s-1999)
GRADUAL
DECENTRALISED
COMMERCIAL
MASS
CENTRALISED
DISTRIBUTIVE
PRIVATISATION
LAW OF 1992
Interests of the Interests of the Compromise
old elite
new elite
2/3 of soc.cap.
1400 companies
10% Pension Fund ;10% Restitution Fund; 20% Development Fund;
20% employees (vouchers); 40% companies to decide on
Consolidation: domestic companies, managers (MBOs) and funds
(state and private ones) became the key players
First wave: organic one, managers remained involved
Waves of privatisation
independence
banks’ rehab.
crisis/banks’ rehab.
0.
1.
2.
3.
WSMS
ORGANIC
Managers
quasi owners
Continuity Still
Matters
INSIDER
FORCED
The Original Sin
Under Pressure
of markets and
institutions
end 1980s-1999
2005-2007
1965
2012/13-
Second wave (2006-08)
SLOGANS
REALITY
THIRD PARTIES
Transparent/
opened to foreign
investors,
Reduce State
ownership,
Reconciling big/small
shareholders intrests
Non-transparent/
loyal men to boards
SOB to finance MBOs
Exposing co.s/SOBs
to extreme risks,
Overheating the
economy
Weak framework for
the gov. in SOBs
contributed to poor
credit standards,
excessive risk taking
and misallocation of
credit (OECD)
Key idea = politicians are not profit maximizers,
their primary incentive is to win elections (overemployment)
Reality: “a rent-seeking state”
Leverage (debt/share capital) by sector
Industry
Services
Trade
Total
Construction (right scale)
Source: Bank of Slovenia
Loan to Deposit ratio
State-owned banks
Other domestic banks
Majority foreign-owned banks
Source: Bank of Slovenia
NPL ratio
50
45
40
35
30
NLB
NKBM
Abanka
25
20
15
10
5
0
2007 2008 2009 2010 2011 2012 2013
Source: Arnesen (2014)
https://martindale.cc.lehigh.edu/sites/martindale.cc.lehigh.edu/files/SloveniaArnesen.pdf
House Price Change, Annual (%)
Source: Global Property Guide
Slovenia Stock Market (SBITOP)
Source: Tradingeconomics.com
Number of Bankruptcy Proceedings
Source: Bank of Slovenia
Unemployment rate
(% of active population)
Source: Eurostat
Debt to GDP ratio between 2008
and 2015 in new Member States (%)
Source: Eurostat
Forecasted capital shortfall/Core Tier 1 capital
3.0
2.5
3 biggest Stateowned banks
2.0
1.5
1.0
3 majority foreignowned banks
0.5
0.0
Excluding Inculing new Excluding Inculing new
new propronew proproforma DTA forma DTA forma DTA forma DTA
effects
effects
effects
effects
Base case
Source: Bank of Slovenia
Stress case
5 domestic banks
DTA = deferred tax assets
General gov. deficit (% of GDP)
4.0
Bulgaria
2.0
Czech Rep.
0.0
-2.0
2007 2008 2009 2010 2011 2012 2013 2014
Estonia
Croatia
-4.0
Latvia
-6.0
Lithuania
-8.0
Hungary
Poland
-10.0
Romania
-12.0
Slovenia
-14.0
-15.0
-16.0
Source: Eurostat
Slovakia
Required yields on Slovenian and German 10y gov.bonds
Source: Bank of Slovenia
State ownership network in Slovenia
(%, in terms of book value of assets)
Source: Commission (2015)
End 2014 - 642 SOEs/SCEs, representing :
- 1% of the total number of companies
- excl.banks, fin.services, insurance co.s, in insolvency or newly
established in 2014, the remaining 561 NFCs accounted for:
- 24.8% of net sales,
- 34.2% of assets,
- 41.8% of equity and
- 18.8% of employees.
State involvement was above 50% in: transport, energy, public
utilities, postal services and ICT, tourism, chemical and pharma,
some manufacturing and repair.
State:
- largest corporate debt holder,
- manager of 88% of pension assets
- and 60% of all insurance liabilities.
Reduction of the gap in real per capita GDP terms between the EU15 (100%) and
each of the new members states of Central and Eastern Europe in the period of
2006/08 to 2012/014 (in percentage points, based on 3-year averages)
8.0%
6.8%
6.0%
5.8%
5.2%
4.0%
2.0%
2.4%
2.1%
1.8%
1.6%
1.2%
-2.3%
0.2%
0.0%
-2.0%
-4.0%
Source: Author’s calculations based on ERS (2015) statistics.
-0.7%
Changing role of the State in French
economy
Source: INSEE
State aid to financial institutions between 2008-14
(% GDP)
60.0%
used
52.3%
approved
48.8%
50.0%
40.0%
35.0%
34.0%
30.0%
22.5%
20.0%
17.9%
15.0%
17.0%
14.7%
9.7%
10.0%
6.3%
5.8%
13.9%
5.6%
0.0%
Spain
The
Netherlands
UK
Source Commission, DG Competition
Germany
Italy
France
EU-28
Government’s main shareholdings
Circles: listed companies, each circle being proportionate to the market value of the State’s
stake. Squares: unlisted companies, each square being proportionate to State’s equity.
Colours: orange = energy, red = industry, blue = services & finance, green = transport.
Weight of SOEs in France’s economy
Source: INSEE
Thank you for your
attention!