CEE Management/Business
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Here you find studies centering on the CEE economic region and on business issues in CEE. |
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wiiw Spring Seminar 2012: Russian economic policies after the election Prof. Pekka Sutela is a specialist in Russian and Soviet economic thought, policies and developments. He worked in the Bank of Finland Institute for Economies in Transition (BOFIT) since 1990, initially as a senior researcher and later as an Adviser to the Board and Acting Head of Department.
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wiiw Policy Note (Jan.2012): A Comparison of Transitions in MENA (Middle East North Africa) and CESEE This Policy Note compares changes in the Middle East and North Africa (MENA) with the processes of reforms and change that took place in the socialist world from 1956 to 1989. It is hard to time the current turmoil in the MENA region in comparison with the long process of reforms and transition in CESEE, but it could be argued that in most cases the 1989 moment is yet to come to the former region.
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wiiw Research Note (Jan.2012): The Hungarian Economy: A Hostage of Populism Once the model economy of transition, Hungary has been struggling with much higher public and private debt and a significantly worse growth performance than its peers in the region. A deteriorating exchange rate, increasing yields on government securities and soaring CDS spreads have recently forced the Hungarian government to seek financial assistance from the IMF and the European Union. This research note has the intention to discuss the current problems of the Hungarian economy from a historical perspective.
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OECD – Economic Survey of Hungary 2012 (March 2012): Hungary’s economy faces severe headwinds 
The global economic slowdown and heightened financial market stress have pushed an already fragile and highly indebted economy towards recession. Controversial domestic policies have also contributed to uncertainty thereby hurting confidence. Stabilising the economy is the first most pressing priority. Strengthening the credibility and predictability of domestic policies is essential to develop an environment which is conducive to growth.
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UNCTAD – Investment Country Profiles (Feb.2012): FDI profile for Ukraine Despite its sizable relatively large market, Ukraine's performance in attracting FDI has been below its potential. In 2010 its inward FDI stock reached $58 billion – a volume equivalent to 42 percent of the GDP, lower than other neighbouring countries. The FDI outward stock of the country also remained modest – $8 billion. During the financial and economic crisis, FDI inflows dropped to roughly $5 billion in 2009 as Ukraine was one of the countries worst hit by the crisis. In 2010, however, FDI flows rose to $6.5 billion, though short of the record level of 2008.
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EBRD – Regional Economic Prospects Report (Jan.2012): EBRD winds back 2012 growth forecasts for emerging Europe The EBRD has reduced its economic growth forecasts for 2012 for central and south eastern Europe, as well as eastern Europe and the Caucasus, and warned that a further deterioration of conditions in the euro-zone could have a substantial further impact on the whole of the EBRD region. The report sees a significant overall slowdown in growth across the EBRD’s 29 countries of operations from central and south Europe to central Asia – to an average 3.1 per cent in 2012 from 4.8 per cent in 2011.
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EBRD: Transition Report 2011 (Dec. 2011): Crisis and Transition – The People’s Perspective This report focuses on understanding both the 2008-10 crisis and its longer-term implications. It looks beyond the crisis for sources of growth that are less sensitive to changes in the external environment than the capital-inflow driven boom of the pre-crisis years. But
it does so from a fresh perspective: that of households and individuals in the
transition countries in Eastern Europe and CIS, based on a new round of the
EBRD – World Bank Life in Transition Survey, conducted in late 2010.
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UniCredit CEE Quarterly 01/2012: CEE – Testing Times With much of the developed world in the midst of multi-year adjustment process, we enter 2012 facing a lower growth environment. At least the start of 2012 will be a particularly testing period for the CEE region. The primary uncertainty at this stage stems from EMU via a number of channels such as weaker external demand for CEE exports and reduced capital inflows. The good news is that to date economic activity in the region is holding up relatively well. We have opted to leave our full year forecast of 4.4% for the CEE region unchanged.
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OECD – Economic Survey of the Russian Federation (Dec. 2011): Russian economy is recovering, but faster modernization is needed Russia must
further modernize its economy to meet long-term development and income
inequality challenges, according to the OECD. A combination of sound
macroeconomic management, improved business climate, effective social policies
and greater energy efficiency is required.
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Vale Columbia Center – Columbia FDI Profiles (Nov.2011): Outward FDI from Slovenia and its policy context High export orientation and experience in outward foreign direct investment (OFDI) from the pre-transition period helped Slovenian enterprises to internationalize early on after their country’ s separation from the former Republic of Yugoslavia, making Slovenia one of the first outward investors among transition economies in South-East Europe. This facilitated a reorientation of international trade and investment toward developed economies. OFDI flows increased rapidly after the end of the 1990s. Following the global financial and economic crisis, OFDI flows fell significantly in 2009 and 2010. The foreign expansion of Slovenian enterprises is in line with national strategic priorities that include entrepreneurship, business internationalization and innovation.
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wiiw Presentation (Nov. 2011): Recovery in CEE – in Low Gear across Tough Terrain The Vienna Institute for International Economic Studies (wiiw) has just published its latest growth forecast for the countries of Central, East and Southeast Europe for the period 2010-2013. The wiiw doesn’t expect a recession in the region in the next two years (20112/13), however weak growth. The forecast for the new member states (NMS-10) is with +2.4%/3.4% higher than EU-27’s 0.7%/1.6% but lower than Russia’s 3.5%/3.8%. So the catching-up process nevertheless continues. Another good news is that consumption and fixed investment are slowly gaining momentum.
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SKOLKOVO
Institute for Emerging Market Studies (Nov. 2011): Torturer, victim or somebody
else - Public crises of US-American MNCs in Russia and China
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CEEMAN – Presentations of the Conference on “Hidden Champions in CEE” (Nov. 2011) Inspired by
the bestselling book of Hermann Simon Hidden Champions of the 21st Century, the
conference highlighted business stories, strategies and challenges of “hidden
champions” from Central and Eastern Europe - highly innovative,
differentiated and specialized small to medium size companies holding lead
market positions in narrow market segments internationally. Results from
research on hidden champions from CEE were presented on this conference
(Nov.17-18, 2011) at WKO in Vienna and can be downloaded at the CEEMAN website.
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Deloitte – Top 500 Central Europe 2011: Major themes are growth, performance and innovation This year’s
analysis of Central Europe’s leading 500 companies is especially relevant
because it is unified by the single overriding question of how to grow revenues
after three years of downturn and cost-cutting. A clear majority of the Top 500
were able to grow their revenues in 2010 – in fact, as the report shows, close
to 80% of them earned higher revenues in 2010 than the year before. Today the
question is: how they are going to continue doing so in the years ahead? The
analysis also draws from interviews with 72 senior executives from across the
region who consistently highlighted the question of growth, alongside business
performance and innovation.
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UNCTAD – Investment Country Profiles (Nov.2011): Updated FDI profiles for Czech Republic, Estonia, Latvia and Lithuania Investment Country Profiles presents systematically, at the country level, inward and outward FDI flows and stocks, the activities of transnational corporations (TNCs) and basic information on the largest TNCs in and from these countries. They provide a detailed breakdown by industry and country as well as lists of the largest foreign affiliates of home-based TNCs and of the largest foreign affiliates in the host country.
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Roland Berger Strategy Consultants (Sept.2011): M&A activities in CEE/SEE in 2010 - Waiting for the next growth phase
This 4th
Annual Snapshot Report analyzes the regional M&A activities in CEE/SEE.
M&A activities in CEE have not returned to their peak in 2007
although they are rising again. Russia has been dominating the scene in
the last 10 years on the target and acquirer country side. Energy and power had
the highest share of deal values both on the buying and selling side. M&A
activities in SEE are on a low level. Bulgaria was the most interesting target
in SEE from 2000-2010. Media and consumer staples were the most important
target industries in 2010, telecom and financial services over the 2000-2010
period.
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World Bank & IFC - Doing Business 2012 Report (Oct.2011): Moldova and Macedonia FYR among top-3 reformers The report “Doing Business in a More Transparent World” assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and trading across borders. This year’s report data cover regulations measured from June 2010 through May 2011. Overall in 2010/11, governments in 125 economies implemented 245 institutional and regulatory reforms as measured by Doing Business – 13% more than in the previous year. With 88% of its economies implementing at least one reform “Eastern Europe and Central Asia” is leading the ranking by regions. Moldova and Macedonia FYR are among the top-3 reformers in the 2010-11 period.
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Erste Group Research (Oct.2011): Is CEE better prepared for the new storm? The reaction of the CEE region to the global slowdown should be less severe (in relative terms to the Euro Area) than in the post-Lehman crisis, as CEE economies are in a completely different stage of their economic cycle and have reduced their imbalances.
Go to the
report and presentation
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EBRD – Regional Economic Prospects Report (Oct.2011): Emerging Europe’s growth under threat from eurozone crisis The EBRD’s latest report underlines that economic fundamentals in the EBRD region are stronger in several respects than before the onset of the crisis. But it notes that increased stress in the eurozone could have an even more severe impact on emerging Europe this time around. The report revises down predictions for 2011 economic expansion to 4.5% compared with 4.8% seen in July. Growth in 2012 is now seen at 3.2%.
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Vale Columbia Center – Columbia FDI Profiles (Aug. 2011): Outward FDI from Russia and its policy context Russian outward foreign direct investment (OFDI) increased rapidly in the 2000s. The global economic crisis caused some structural shifts in Russian companies' expansion abroad as several Russian multinational enterprises (MNEs) lost a major part of their foreign assets. However, Russia nevertheless remained among the top 15 countries ranked by OFDI stock. Leading Russian MNEs continued their extensive OFDI activities in 2008-2010 and the main features of this investment have not changed, with round-tripping investments and OFDI in real estate still extremely high as a proportion of the total.
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Vale Columbia Center – Columbia FDI Profiles (June 2011): Outward FDI from Poland and its policy context
Poland's outward foreign direct investment (OFDI) was limited to trade-supporting activities for many years during the transition to a market economy before it took off five or six years ago after the private sector had matured enough to start generating home grown multinational enterprises (MNEs). While some state-owned enterprises (SOEs) began to invest abroad, the government adopted a laissez-faire policy towards the emergence and expansion of private MNEs. Poland became a source and a transit country for large cross-border flows of funds among units of foreign and Polish firms, classified as FDI and thus artificially inflating the OFDI total. In 2008, the first year of the crisis, OFDI flows declined modestly, then in 2009 and 2010 they started growing again.
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DB Research (June 2011): CEE economic outlook in the post-crisis world This presentation of Deutsche Bank Research contains forecasts of selected key macro-economic figures for CEE and CIS countries.
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wiiw Presentation (July 2011): Recovery in CE and SEE – Limp and Battered The Vienna Institute for International Economic Studies (wiiw) has just published its latest forecast for the countries of Central, East and Southeast Europe. In 2011 the recovery will encompass all countries in the CESEE region – even the laggards that did not grow in 2010. However GDP growth will not accelerate much in countries where the recession ended already in 2010. Later on, GDP growth rates will stabilize throughout the whole region at around 4 to 5 per cent, less than the levels recorded prior to the crisis.
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EBRD Report (July 2011): Life in Transition – After the crisis The Life in Transition survey II, conducted jointly by the European Bank for Reconstruction and Development and the World Bank in late 2010, surveyed almost 39,000 households in 34 countries to assess public attitudes, well-being and the impacts of economic and political change. The Survey provides vivid evidence of precisely how lives have been affected by the global economic crisis and its aftermath.
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Financial Times (May 2011): Special report on “Banking & Finance in CEE”
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Financial Times (June 2011): Special report on “Doing Business in the Czech Republic”
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Financial Times (June 2011): Special report on “Russia and the World”
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IFC/World Bank – Doing Business in South East Europe 2011 Doing Business in South East Europe 2011 is the second in a series of reports comparing business regulations across 22 cities in the region. The report covers Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Moldova, Montenegro, and Serbia. The report focuses on national and local regulations that affect 4 stages in the life of a small to medium-size domestic firm: starting a business, dealing with construction permits, registering property and enforcing contracts. The report finds that all cities have improved business regulations since 2008, but there is still ample room for reform.
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World Economic Forum (June 2011): The Russia Competitiveness Report 2011 The Russia Competitiveness Report 2011 is being released at a time of great promise for the Russian Federation. Almost two decades after transitioning from a planned to a market economy, and following a decade of buoyant growth, the country was hit hard by the financial and economic crisis of 2008 and 2009. Oil prices collapsed and Russia’s financial sector suffered greatly from limited international liquidity. The government moved rapidly to protect the economy through stimulus measures and, since then, recovery has been slowly underway.
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Roland Berger Strategy Consultants (May 2011): CEE after the crisis – Back to business as usual? In this study Roland Berger Strategy Consultants analyzed data of almost 1,200 mainly large companies in 13 countries from 2004-2010 - the financial data were provided by Erste Group. The objective was to study the immediate impact of the recent economic crisis on companies in CEE, assess their growth potential and identify success factors. Most companies in CEE have managed the recent crisis well and sales have on average already reached pre-crisis levels again. However, EBIT-levels are still below their pre-crisis levels but could catch up in 2011. Small companies have been hit hardest by the crisis what could result from a later response to the changing business environment. Significant performance gap exist between best and worst performers. Best performers managed to realize growth in the crisis. Low performers managed no growth since 2004. In the country comparison, Polish, Austrian and Czech companies outperformed other countries.
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World Bank – EU10 April 2011 Report: Recovery and Beyond
In early 2011, about two and a half years after the global financial crisis broke, economic output in the EU10 had returned to the pre-crisis level. Helped by aligned business cycles and close trade and production linkages, economic activity in the EU10 rebounded in parallel with the EU15. Growth strengthened in the second half of 2010, supported by restocking, a double-digit expansion of industry, and a rebound in consumption. The economic sentiment in the EU10 exceeded its long-term average in December 2010 for the first time in 26 months. The pace of the recovery in the EU10 is set to accelerate in 2011 and 2012 although it will differ across EU10.
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UniCredit CEE Quarterly 02/2011: CEE - Holding its own against some gusty headwinds
The region enjoys a continued recovery in
economic activity as 2011 progresses. The region is on track to show GDP gains
of almost 4% this year. Just as is the case in the developed world, CEE
is weathering this list of headwinds well. From the data released on 4Q GDP to
date, all economies except for Latvia showed qoq gains. Romania and Croatia are
the only two economies in the region where GDP growth in yoy terms in 4Q was
negative. We continue to expect GDP gains this year for CEE as a whole of
almost 4%, with all countries in our group posting positive gains for the first
time in 4 years.
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UNODC (May 2011) – Corruption in the Western Balkans
On the
basis of a survey of more than 28,000 people in the Western Balkans in 2010,
UNODC – the United Nations Office on Drugs and Crime – has released its new
public sector bribery survey for the area. The report finds that corruption is
a major concern among citizens of that area, ranking a high third in the list
of most pressing issues after unemployment and poverty but well ahead of
security and education. Highlighting how corruption affects everyday life, the
report details the extent and levels of bribes paid for basic services.
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UNCTAD (April 2011): Outward FDI from developing and transition economies has reached a record high in 2010 The latest issue of UNCTAD’s Global Investment Trends Monitor shows that developing and transition economies have become important investors with their share in global outflows increasing to 28% in 2010, up from 15% in 2007. The outward FDI flows of $ 377 billion in 2010 are a record high, both in absolute terms and as a share of the global total volume. Investors from Latin America and Asia were the major source for this strong upsurge in FDI outflows. Also FDI flows from the transition economies of South-East Europe and CIS grew by 24%, reaching an estimated all-time record of $ 61 billion. Most of the investments were carried out by Russian firms, followed by those from Kazakhstan.
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TOL - Transitions Online (May 2011): Is Europe’s democratic revolution over? In January, TOL hosted a discussion with some leading experts on Central Europe, asking whether the new EU members are playing a productive role in contemporary Europe and can still serve as democratic models for their neighbors farther east. The speakers were Pavol Demes, the German Marshall Fund's director for CEE; Robert Cottrell, former CEE correspondent for The Economist; Martin Ehl, foreign editor of Hospodarske noviny, a leading Czech newspaper; Miklos Haraszti, former OSCE representative on freedom of the media; Jiri Pehe, director of New York University in Prague and former adviser to Vaclav Havel; Vlad Sobell, an independent analyst; and Christopher Walker, director of studies for Freedom House. The event was moderated by Jeremy Druker, executive director and editor in chief of TOL. A summary of the discussion is available at the following link.
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Vale Columbia Center (Feb. 2011): MNEs from Emerging Markets – New Players in the World FDI Market This report contains basic statistics of the activities of the leading outward investors from 11 emerging markets including the major investors from Brazil, China, Russia, Hungary and Slovenia.
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EBRD – Quarterly Economic Report (Jan. 2011): Good growth prospects in emerging Europe, overshadowed by downside risks Growth in 2011 in the transition economies of CEE and CIS is likely to remain reasonably strong, showing average expansion of a little over 4 percent despite continued regional divergences. Estonia (+3.6%), Poland (+3.9%) and the Slovak Republic (+3.7%) are expected to show strong growth in 2011, based on the prospect of only slightly slower growth in Germany this year, while economic expansion in Hungary (+2%) and Slovenia (+1.7%) remains weak. The recovery in south eastern Europe (+1.9%) continues to lag behind other transition economies with the exception of Turkey (+5%). In eastern Europe and the Caucasus, the Ukrainian economy (+4%) has continued to recover from the 15 percent contraction seen in 2009. In Russia, growth momentum is expected to pick up again with a growth rate of 4.6%. Downside risks may result from a tightened monetary policy in the advanced countries, turmoil surrounding Eurozone sovereign and related bank debt, and a drying up of FDI inflows due to worsened foreign investor sentiment.
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The autumn 2010 issue of Transform – the magazine of PwC in CEE: Capital projects and infrastructure in CEE Most governments across the region now realize that investing in infrastructure cannot be delayed for much longer. As part of a 12-page special report on Capital Projects and Infrastructure, we look at the two sectors where most investment opportunities lie – energy and transport.
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UniCredit CEE Banking Study (Jan. 2011): Banking in CEE – The New Growth Model In the post-crisis environment, the higher cost of liquidity and risk necessitate a reshaping of the banking model, toward diversified lending strategies and a focus on sustainable growth. The "economic convergence" and the "financial penetration gap" stories still apply, remaining the drivers of upside potential for CEE banking. Access to capital and funding, good positioning and risk appetite are decisive for success in CEE banking. Challenges ahead for the region’s banking industry include growing national and international regulatory pressures. Link to report
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UNCTAD Global Investment Trends Monitor (Jan. 2011): While global FDI flows remain stagnant in 2010, FDI to South-East Europe continued decline
Global
inflows of foreign direct investment (FDI) rose only marginally by 1%, from
$1,114 billion in 2009 to some $1,122 billion in 2010. The good news is that
developing and transition economies, for the first time, attracted more than
half of global FDI. A strong rebound in FDI flows to developing Asia and Latin America
offset a further decline in inflows to developed countries. The transition
economies of South-East Europe and the Commonwealth of Independent States (CIS)
registered a marginal increase in FDI inflows, of roughly 1%, in 2010 to $71
billion, after falling more than 40% in the previous year. FDI flows to
South-East Europe continued their decline with a further negative 31% due to
sluggish investments from European Union countries. In contrast, the CIS
economies saw flows increase by 5% on the back of stronger commodity prices, a
faster
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BRUEGEL Blueprint 11 (Nov.2010): Whither growth in CEE? Policy lessons for an integrated Europe. In this report, economists of two European think tanks - Bruegel and the Vienna Institute for International Economic Studies (wiiw) - argue that in view of the depth of integration in Europe, the development model of the central, eastern and south-eastern Europe region, despite its shortcomings, should be preserved. But it should be reformed, with major implications for policymaking both at national and EU levels.
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UniCredit CEE Quarterly 01/2011: CEE - An opportunity to turn divergence to convergence UniCredit research expects GDP growth in the region in 2011 of 3.8%, up from 3.6% last year, with every country in our group to show gains for the first time in four years. Budget deficits continue to consolidate but on the whole remain wider than in other emerging market regions and pre-crisis ratios.
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EBRD: Transition Report 2010 (Dec. 2010): Recovery and Reform The CEE and CIS regions are emerging from the crisis but there can be no return to its pre-crisis dynamism without new reform to the region’s growth model. The Transition Report 2010 focuses on two main reform areas: the development of domestic capital markets and local currency finance, and the improvement of the business environment. It also unveils a new set of sectoral transition indicators.
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Financial Times – Special Report on CEE (Dec. 1, 2010): Central and Eastern Europe - the region’s factory Although diverse, CEE has established itself as a manufacturing hot spot, particularly in the automobile and electronics industries.
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World Bank - EU10 Regular Economic Report (Nov.2010): The economic rebound is visible in the EU10 Year-on-year output growth in EU10 increased from 0.6 percent in the first quarter of 2010 to 2.2 percent in the second quarter of 2010. Growth improved not only due to the base effect but also due a strong dynamism of the economies, with quarter-on-quarter growth rising from 0.4 percent to 0.8 percent. The upswing is taking root across the region. Slovakia and Poland, which managed to avoid much overheating in the run up to the crisis, were growing fastest in the region in the second quarter 2010. Only Latvia and Romania are projected to contract in 2010.
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Roland Berger Strategy Consultants (Dec. 2010): CEE in 2020 – Trends and Perspectives for the Next Decade In this new scenario analysis based on interviews with 320 managers from the CEE region the Roland Berger Strategy Consultants, a leading business consultancy in this region, highlight the strengths and weaknesses and growth opportunities and risks of the economies of CEE. CEE will remain a growth region, however, with lower economic growth rates than before 2009. A reorientation in the industry focus is necessary as the leading industries such as automotive, chemical industry and exploration of natural resources will become less important, while energy and IT will be booming in the next 10 years. Moreover, they spot a divergence in the patterns of the economic development between the Central and South-East European countries. The Central European countries will develop into more innovation-driven economies, whereas the South-Eastern European countries will have to compete as production sites against the BRIC countries. As a result of this process, heterogeneity in the economic model and growth perspectives will increase within the CEE region. Its geographic location as a bridge between Western Europe and Russia on the one hand as well as Turkey and Asia on the other hand will remain a competitive advantage. Human capital and its education system are other strengths although the brain drain to Western Europe and the U.S.A. and the decline in population present risks to the economies. Excessive bureaucracy, weak institutions and poor infrastructure are major weaknesses that have to be tackled by the countries.
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COFACE CEE Top 500 (Oct. 2010): The Flagships in CEE could not sail against the wind in 2009 The CEE Top 500 mirrors economic development in the countries of CEE, where the effects of the economic crisis differed in 2009. 2008 was a year of growth for the top players in CEE, but 2009 brought a 16.6% decline in revenues for the 500 largest companies in the region. Profits fell by 27%, or by nearly EUR 7 billion. The economic crisis hit the automobile industry particularly hard with a drop of almost 39% in revenues and the metal industry with a minus of 40%. In contrast, transportation recorded sound growth – which was reflected in 11 new entries in the CEE Top 500 ranking.
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IMF – Regional Economic Outlook for Europe (Oct. 2010): Emerging Europe – Toward Self-Sustained Growth For the first time, the REO devotes a separate chapter to the outlook for emerging Europe, where, after a deep recession, an export-led recovery is under way. GDP in the region is likely to grow by 3.9% in 2010 and3.8% in 2011. However, the rebound is uneven across the region, and policymakers face the difficult challenge of dealing with the legacies of the crisis, while not hurting the recovery. Beyond the short term, the REO argues that the region will need to find new growth engines, as the capital inflows-driven and credit-fueled domestic demand boom needs to give way to more balanced growth. Indeed, the REO emphasizes that active fiscal policy and coordinated prudential measures are key to avoiding a repeat of the boom-bust cycle the region has just endured.
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CEEMAN – Presentations of Annual Conference (Oct. 2010): New Global Performance Challenges and Implications for Management Development CEEMAN is an international management development association with the aim of accelerating the growth in quality of management development in Central and Eastern Europe. Annual Conferences are organized around topics of particular relevance to management and leadership development in dynamically changing environments The theme of the 18th Annual Conference was New Global Performance Challenges and Implications for Management Development. Selected presentations can be downloaded on the website.
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UNCTAD – World Investment Prospects Survey 2010-12 (Sept.2010): Confidence in FDI recovery growing as transnational corporations look beyond the crisis Transnational corporations (TNCs) are increasingly optimistic about the international investment environment and their own prospects for foreign direct investment (FDI) this year and beyond, this year´s World Investment Prospects Survey 2010-2012 (WIPS) shows. The results point to a recovery in global FDI flows in 2010 and further growth in 2011 and 2012. This year´s results are based on the responses of 236 TNCs and 116 investment promotion agencies to an UNCTAD questionnaire. The results from the survey also suggest that the crisis was less destructive to FDI than had been feared. While investment budgets, including those for FDI, were squeezed during the crisis, TNCs did not engage in wholesale divestment of their foreign affiliates. The crisis did, however, accentuate one recent trend, namely the shifting of TNCs´ geographical focus to developing and transition economies. Nine of the top 15 priority FDI destinations for the period ending 2012 are developing or transition economies. Russia stayed at rank 5 as top priority host economy for FDI for the 2010-12 period, Poland climbed from rank 13 up to 12. The top 3 destinations are China, India and Brazil. UNCTAD estimates the level of FDI inflows in 2011 will fall in the range of $1.3-1.5 trillion, rising in 2012 to between $1.6 and 2 trillion.
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Vale Columbia Center – Columbia FDI Profiles (July 2010): Inward FDI in Poland and its policy context By 2009, Poland had attracted the highest inward foreign direct investment stock (US$ 182 billion) among the new members of the European Union (EU) from CEE. Its FDI inflows increased considerably after the country’s accession to the EU. They fell during the crisis, but rather modestly, remaining at higher levels than in other countries of the region. Services accounted for 68% of Poland’s inward FDI stock with trading and financial services as the largest industries. Inward FDI in the primary sector is minimal, in manufacturing the largest industries for FDI are food, metal products and motor vehicles. This FDI pattern is reflected in the list of the parents of the largest foreign affiliates: Metro Group, Telecom France, Fiat, VW Jeronimo Martins, BP, Tesco, T-Mobile, Carrefour and UniCredit. The four largest home countries are the Netherlands, Germany, France and the U.S.
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Deloitte Central Europe Top 500 – 2010 Ranking (Sept. 2010): CE firms must leverage cost advantages for heightened international competition According to the report covering companies in 15 countries indications from the first quarter 2010 suggest that gradual economic recovery is already underway, demonstrated by widespread increases in company revenues following a year of steep decline. Energy companies are leading the ranking with PKN Orlen (Poland) first followed by MOL (Hungary) and CEZ (Czech Republic). Economic stimulus packages from western governments and international organizations, national action to reduce deficits and company programs to streamline and modernize their operations are supporting the recovery. The companies of the region seem to bet on their natural advantages vis-à-vis their West European counterparts. These include a relatively low-cost labour force and new production facilities that are more efficient than older plants in the west.
Go to the
CE Top 500 Ranking and CE Top 500 Industry Insights
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World Economic Forum – Global Competitiveness Report 2010-2011: Mixed picture for CEE economies Estonia (ranked 33rd) and the Czech Republic (#36th) remain the best performers within CEE. Their competitive strengths are based on excellent education and highly efficient and well-developed markets for goods, labor, and financial services, as well as a strong commitment to advancing technological readiness. Poland improves by seven positions to 39th thanks to a relative stronger resistance to the economic crisis. Notable strengths include its large market size and high educational standards. Its transport infrastructure needs substantial upgrading. Russia maintains its 63rd position. Inefficient goods markets and anti-monopoly policies as well as restrictions on trade and foreign ownership stifle competition. These barriers reduce the country’s ability to take advantage of its high innovation potential and its solid performance in terms of higher education and training. Ukraine drops by seven positions to 89th reflecting the daunting challenges faced during the economic crisis. However, a well-educated population, flexible and efficient labor markets, and a large market size form a good basis for the country’s future growth performance.
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COFACE Austria (August 2010): Updated CEE Country Reports 2010 now available
The credit
insurer has updated the country reports for 18 CEE countries covering their
current economic and political situation, legal framework and major aspects of
doing business (market access, attitude towards foreign investors, terms of
payment & delivery, risk assessment, corruption). They can be ordered at
the website of COFACE.
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UNCTAD: World Investment Report 2010 (July 2010): Investing in Low-Carbon Economy Global foreign direct investment (FDI) witnessed a modest, but uneven recovery in the first half of 2010. This sparks some cautious optimism for FDI prospects in the short run and for a full recovery further on. UNCTAD expects global inflows to reach more than $1.2 trillion in 2010, rise further to $1.3–1.5 trillion in 2011, and head towards $1.6–2 trillion in 2012. However, these FDI prospects are fraught with risks and uncertainties, including the fragility of the global economic recovery. Most regions are expected to see a rebound in FDI flows in 2010. Foreign banks play a stabilizing role in South-East Europe, but their large scale presence also raises potential concerns.
Presentation
on trends for South-East Europe and CIS
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Erste Group Research - Special Report (July 2010): Resuscitation of consumption in CEE After the negative contribution of household consumption in 2009 (apart from Poland) and partially in 2010, household growth of consumption is to range about 1-2.5% next year, providing support to GDP growth. The economic revival, which is currently purely export-led, should be more balanced. Furthermore, more sustainable saving ratios and net borrowing/lending ratios should make consumption growth less vulnerable to sentiment swings in the coming years.
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wiiw Presentation (July 2010): Forecast for Central, East and Southeast Europe 2010-12: Will exports prevail over austerity? The Central, East and Southeast European economies will experience on average a minor rebound of economic growth to 1% in 2010 which will speed up to 2.5% in 2011 and 3.5% in 2012. GDP growth will be higher in the CIS countries and in Turkey, about average in the Central European NMS and lower in the SEE countries and the Baltics. Growth is currently driven mostly by exports which should outweigh the dampening effects of the austerity measures. Whether the countries will actually benefit from the global trade recovery depends on their exchange rate regime and the strength of their industrial sector. Investment and household consumption will recover in the subsequent years. These are the main results of the new medium-term forecast for the region published by the Vienna Institute for International Economic Studies (wiiw).
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VOX article (June 2010): Germany’s super competitiveness: A helping hand from Eastern Europe Discussions about the current-account imbalance within the Eurozone have focused on the under-competitive periphery and super-competitive Germany. In this column Dalia Marin suggests that the argument ignores one powerful way that Germany lowered its relative unit labour costs. German firms offshored parts of their production to the new member states in Eastern Europe, Russia, and the Ukraine.
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Deloitte - 2010 Global Manufacturing Competitiveness Index (GMCI): Poland, Czech Republic and Russia are the leading manufacturing locations in CEE Poland (ranked 10th) remains an attractive location for a range of manufacturing, including automotive and electronics, due to its cost competitiveness with Western Europe. It also helps that it has a large qualified talent pool, a sizable domestic market, and is within close proximity to customers across Europe. Notably, the most significant move on the entire GMCI belongs to Russia, which jumps from rank 20 to 14 in the 5 year forecast. This may reflect Russia’s current initiative to create an innovative economy supported by an environment where talent and business acumen can be brought together. Government emphasis on the education and development of the workforce will play a critical role in this effort.
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Vale Columbia Center – Columbia FDI Profiles (June 2010): Outward FDI from Hungary and its policy context Outward foreign direct investment (OFDI) from Hungary has weathered the current crisis relatively well, although its volume is still moderate for a country classified as “high income” – but not necessarily if compared with other new European Union (EU) members. The Hungarian OFDI stock is highly concentrated in five big companies. Government policy has so far focused more on a vigorous promotion of inward FDI than on helping outward investors. However, it sometimes protects strategic Hungarian OFDI firms from hostile takeovers. The main question for the future of Hungarian OFDI is how its sustainability can be assured, especially by way of broadening the company base of capital exporters.
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World Bank Group „Investing Across Borders“ (July 2010): New report on how governments can make their countries‘ investment climates more attractive for foreign investors. This is the first World Bank Group report to offer objective data on laws and regulations affecting foreign direct investment that can be compared across 87 countries. The study presents four central indicators related to countries’ laws, regulations, and practices affecting how foreign companies invest across sectors, start businesses, access industrial land, and arbitrate commercial disputes. The report finds that countries in Eastern European and Central Asia have fewer equity restrictions on FDI ownership than economies in other regions of the world and that they have adopted special rules to ensure a speedy and uninterrupted enforcement process in arbitrating commercial disputes.
Go to the website with the full report and access to the data
bank with indicators for 87 economies: http://iab.worldbank.org/
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FIW Policy Brief No.4 (May 2010): Which Growth Model for CEE after the Crisis? In this Policy Brief Michael Landesmann, scientific director of the wiiw, discusses the growth prospects of CEE following the current economic crisis. He argues that the 'integration model of growth' of the CEE region was characterised by a very high degree of external liberalisation. In one group of economies - mostly the Central European economies - the model turned out to be successful. This was quite different in the other group (mostly the Baltic states and the countries in Southeastern Europe) where unsustainable imbalances developed in part traced back to historical weaknesses of the tradable sectors and in part to choices of exchange rate regimes, to the importance of remittances and to missing instruments to deal with cross-border financial market integration.
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IMF Working Paper (May 2010): The Credit Boom in the EU New Member States: Bad Luck or Bad Policies? In the past decade, most of the EU New Member States experienced a severe credit-boom bust cycle. This paper argues that the credit boom-bust cycle was to a large extent the result of factors external to the region (“bad luck”). Rapid credit growth followed from a high liquidity in global markets and the particular attractiveness of “new Europe” for capital flows, while the end of the credit cycle was brought about by a global crisis. However, the fact that some countries managed to avoid most of the excesses, including asset price bubbles and foreign exchange lending, suggests that policies and policy failures (“bad policies”)—in particular overly expansionary macroeconomic settings and excessively optimistic views on prudential risks—also have played a critical role.
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Study of the UniCredit Group (May 2010): Automotive industry in CEE during the crisis: tough environment, but still gaining positions The automotive sector was among the most affected by the financial crisis in 2009. CEE countries suffered a drop in production of half a million vehicles. But CEE is emerging as a relative winner of the crisis. The region increased its share in European production to 24% in 2009 (22.4 % in 2008). The crisis accentuated the speed of the restructuring of the sector, and the West-East substitution of production continued.
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CEE – Wrongly labelled The economic downturn highlights the huge differences between the countries of Central, Eastern and South-Eastern Europe – it makes it harder to put them all under the label „CEE“. Two articles deal with this question of labelling the region:
Transitions Online (April 22, 2010): The region no one could name: http://www.tol.org/client/article/21382-the-region-no-one-could-name.html
The Economist (January 7, 2010): „Eastern Europe“: Wrongly
labelled: http://www.economist.com/world/europe/displaystory.cfm?story_id=15213108
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Financial Times Special Report „Russia“ (April 2010): Caught between modernity and chaos
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Vale Columbia Center – Columbia FDI Profiles (April 2010): Ukraine’s inward FDI and its policy context
With a population of more than 46 million people, Ukraine is a sizeable potential market for foreign direct investment. Together with a favorable geographic location and low costs of labour and other inputs, Ukraine offers attractive opportunities for foreign investors. Overcoming the crisis, improving the investment framework, accelerating economic reforms and association with the EU would help exploiting its considerable FDI potential.
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EBRD Study (February 2010): South-eastern Europe: lessons from the global economic crisis This paper shows how the crisis has evolved in south-eastern Europe and why this region was affected by developments that originated elsewhere. It argues that the impact has been better than many feared and that this resilience can be attributed in large part to the mature and sensible reaction of the region itself.
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UniCredit Group Research (2010): SEE exposure to Greece: Much ado about nothing or a serious threat? The Greek crisis affects the economies in SEE selectively. Bulgaria is the most exposed as Greece is one of the top-3 export destinations (almost 10% of exports) and Greek FDI in the country is significant. Greek FDI in Serbia is notable as well. But the spill-over effects should not be considered a major source of concern. In contrast, Greek banks provide a more relevant transmission channel for SEE, where Greek banks have a significant role: there are 4 Greek controlled banks among the top-10 in Bulgaria, 3 in Serbia, 2 in Romania and one in Turkey.
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The spring 2010 issue of Transform – the magazine of PwC in CEE – is out now: How are leaders in Central and Eastern Europe tackling the short-term survival challenges posed by the global downturn while simultaneously planning for long-term growth?
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Poland moved up from position 22 to 6 in the 2010 FDI Confidence ranking of A.T. Kearney (February 2010)
FDI flows will remain disappointing through 2011, according to the 2010 A.T. Kearney Foreign Direct Investment Confidence Index, a regular assessment of senior executive sentiment at the world’s largest companies. The Index also found executives are wary of making investments in the current economic climate and revealed that they expect the economic turnaround to happen no earlier than 2011. Half of the companies surveyed also report that they are postponing investments as a result of market uncertainty and difficulties in obtaining credit.
China remains the top-ranked destination by foreign
investors followed by the U.S.A., India, Brazil and Germany. But Poland (+16 ranks)
and Czech Republic (+8) showed the strongest gains since 2007 while Russia lost
8 ranks.
Read more: http://www.atkearney.com/index.php/Publications/foreign-direct-investment-confidence-index.html
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AT Kearney 2009 Global Retail Development Index: Windows of Hope for Global Retailers Emerging
markets continue to represent attractive investment opportunities for
global retailers and the economic downturn has made entry to many of
these markets more critical and relevant. For the fourth time in five
years, India is the most attractive country for retail investment
followed by Russia.
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EBRD Study (November 2009): Understanding the crisis in emerging Europe Emerging Europe suffered larger output declines
during 2008-09 than any other region in the world, although, the
negative impact varied widely across the economies of the region.
However, major balance-of-payments crises and collapses of the banking
systems were avoided. The authors attribute this outcome to European
economic and political integration.
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EBRD ups 2010 forecast for some transition countries, recovery remains fragile. This upward revision reflects with +3.3% a slightly faster
economic recovery for the region than anticipated (+2.5%), but with stark variation
across the region. Drivers of the development are the large economies Poland,
Turkey, Russia, and Kazakhstan. Poland, Slovakia and Slovenia are likely to
benefit from a rebound in eurozone growth.
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„Emerging Market Global Player Project“ of the Vale Columbia
Center (December 2009): New rankings of the largest outward investors
from Russia, Slovenia, China, Turkey and other emerging economies are
available.
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The Pew Global Attitudes Project (2009): Two decades after the Wall’s fall: end of communism cheered but now with more reservations. Majorities of people in most former Soviet republics and CEE countries endorse the emergence of multiparty system and a free market economy. However, the initial widespread enthusiasm about these changes has dimmed, support for democracy and capitalism has diminished markedly. In many nations, majorities say that most people were better off under communism and that the business class and politicians have benefited from the changes more than ordinary people. Nevertheless, self reported life satisfaction has risen significantly in these societies compared with nearly two decades ago.
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wiiw Presentation (November 2009): Response to the economic crisis in Ukraine and the medium-term outlook. Ruslan Piontkivsky, senior economist at the World Bank, discusses the impact of the economic crisis on Ukraine, the response by the authorities and the role of the international financial institutions and gives a medium-term outlook for the economy.
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wiiw Research Report (December 2009): Models of BRIC’s Economic Development and Challenges for EU Competitiveness. The BRICs show many similarities in their interactions with the EU, but significant differences as well. The major reason behind the latter is that they are following different models of economic development. In brief, Brazil is a domestically oriented service economy; Russian economic development is heavily dependent on energy and raw material resources; the Indian economy is essentially service-led, supported by exports; and China’s economic development is driven by manufacturing exports and investment. The authors analyse the economic characteristics of economic development for each individual BRIC country.
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BBC World Service: 1989 – Europe’s Revolution: A collection of special reports (radio programmes) on the events that changed societies and economies in CEE
Please click here
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Roland Berger CEE City Ranking Survey 2009: A functioning infrastructure, a high level of education, innovativeness, international flair, a good quality of life and a broad cultural offering are characteristics that make a city attractive for expatriates and companies. In the CEE City Ranking 2009 Vienna ranks first followed by Prague, Budapest, Ljubljana and Moscow.
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Oesterreichische Nationalbank – Special Issue: 1989 – 2009, Twenty Years of East-West Integration: Hopes and Achievements. This Special Issue 2009 comprises contributions by OeNB experts for the region and by renowned national and international authors who have monitored, analyzed and very often also shaped this process of transition in Central, Eastern and Southeastern Europe over the past two decades.
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GfK Consumer Confidence Barometer in CEE (BUL, CZR, POL, ROM) 2009: Majority of households in Central Europe has same financial situation as last year, pessimistic mood prevails in South-Eastern Europe.
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Globescan – Global Poll for BBC (November 2009): Wide dissatisfaction with capitalism – 20 years after the fall of the Iron Curtain. The BBC World Service global poll finds that dissatisfaction with free market capitalism is widespread, with an average of only 11% across 27 countries saying that it works well.
Please click here
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UniCredit Group Banking Study (November 2009): Banking in CEE: adquate risk appetite crucial to win upside The mood is positive, but full recovery from the crisis needs time. Central European countries such as Poland and the Czech Republic or Slovakia show better recovery prospects. South Eastern European countries and the Baltics will remain in recession in 2010, in need of some further rebalancing. Ukraine and Kazakhstan, as well as Russia, will record positive growth, but need time to fully readjust and exploit their potential.
Please click here for presentation
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Financial Times Videos: George Soros „Lecture on the Way
Forward“ at the Central European University in Budapest.
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wiiw Seminar (November 2009): What do Russians think about transition?
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EBRD Transition Report 2009 - Transition in
Crisis?:
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Roland Berger CEE Manager Survey (October 2009): Unclear and pessimistic outlook still dominates but group of optimists grows. Two thirds of managers reckon that crisis will last for at least 12 months more. Real recovery expected not earlier than in 2011. Restructuring will be top of the agenda in 2010.
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COFACE CEE Study:
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UNCTAD World Investment Report 2009: New record
high for inward FDI in SEE and the CIS in 2008.
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Eastern Europe strong in Doing Business 2010 Ranking
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Russia lost in Competitiveness
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UniCredit Group - CEE Quarterly Q1/2009: Fast economic slowdown due to collapse in global demand
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Roland Berger CEE-Manager Survey (March 2009): Ensuring short-term liquidity and restructuring operations are top priorities
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Roland Berger Strategy Consultants: Russia and
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Roland Berger Strategy Consultants: The financial crisis - Consequences for Austria and CEE (November 2008)
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AT Kearney 2009 Global Retail Development Index: Windows of Hope for Global Retailers Emerging
markets continue to represent attractive investment opportunities for
global retailers and the economic downturn has made entry to many of
these markets more critical and relevant. For the fourth time in five
years, India is the most attractive country for retail investment
followed by Russia.
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The Pew Global Attitudes Project (2009): Two decades after the Wall’s fall: end of communism cheered but now with more reservations. Majorities of people in most former Soviet republics and CEE countries endorse the emergence of multiparty system and a free market economy. However, the initial widespread enthusiasm about these changes has dimmed, support for democracy and capitalism has diminished markedly. In many nations, majorities say that most people were better off under communism and that the business class and politicians have benefited from the changes more than ordinary people. Nevertheless, self reported life satisfaction has risen significantly in these societies compared with nearly two decades ago.
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wiiw Presentation (November 2009): Response to the economic crisis in Ukraine and the medium-term outlook. Ruslan Piontkivsky, senior economist at the World Bank, discusses the impact of the economic crisis on Ukraine, the response by the authorities and the role of the international financial institutions and gives a medium-term outlook for the economy.
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wiiw Research Report (December 2009): Models of BRIC’s Economic Development and Challenges for EU Competitiveness. The BRICs show many similarities in their interactions with the EU, but significant differences as well. The major reason behind the latter is that they are following different models of economic development. In brief, Brazil is a domestically oriented service economy; Russian economic development is heavily dependent on energy and raw material resources; the Indian economy is essentially service-led, supported by exports; and China’s economic development is driven by manufacturing exports and investment. The authors analyse the economic characteristics of economic
development for each individual BRIC country.
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Roland Berger Strategy Consultants: Restructuring in CEE (November
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UNCTAD report February 2009: Assessing the impact of the current financial and economic crisis on global FDI flows:
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For the 5th year in a row Eastern Europe and Central Asia led the world in Doing
Business reforms. The report "Doing Business 2009" of the World Bank is now
available for download:
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Roland Berger Strategy Consultants: SEE TOP 100 - The Top 100 Non-Financial Companies in South Eastern Europe
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EBRD Conference (December 2008): Transition economies and the impact
of the financial crisis on the banking sector (presentations)
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EBRD Transition Report 2008: Growth in Transition:
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Moscow School of Management Skolkovo: The Top 25 Russian MNCs: please click here.
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OeNB/Austrian Central Bank: Recent economic developments in selected CEE and SEE countries: please click here.
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ABA-Austrian Business Agency: Austria: East-West Business Interface: please click here.
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World Investment Report 2008: Foreign direct investment to and from South-East Europe and CIS reached unprecendentedly levels in 2007 (Downloads > Full Report > p.66-71): please click here.
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Doing Business 2009: Eastern Europe and Central Asia lead the world in reforms
of business regulations, please click here.
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FIW-WIIW Austrian FDI Study: Austrian investors focus increasingly on Eastern and South-Eastern Europe. Market-seeking motives prevail over efficiency-seeking motives.
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„CEE Sector Risk Analysis“ of COFACE Austria + CEE shows that wholesale/retail trade, construction and transportation have highest risk of insolvency in CEE in 2007:
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Deutsche Bank Research: Russia is leading foreign direct investor among BRIC states.
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Bank Austria presents the first CEE Sentiment
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CEE Banking - Still the right bet: "CEE Banking Study 2008" of Bank Austria/UniCredit
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Russia slips to rank 3 in the Global Retail Development Index 2008 while most other CEE countries fall dramatically.
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Ranking of the Top-25 Slovenian Multinational Enterprises developed
by the Columbia Program on International Investment in cooperation with
the Center of International Relations, Ljubljana. To download this
press release, click here.
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Ranking of the Top-25 Russian Multinational Enterprises developed
by the Columbia Program on International Investment in cooperation with
Skolkovo Moscow School of Management . To download this press release,
click here
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World Bank's Russian Economic Report, June 2008:
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The futures of the EBRD region to 2025 - A scenario analysis commissioned by the EBRD and conducted by the consultancy Outsights in 2006-07 please click here to access full text. |
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