Piroska Nagy and Bojan Markovic EBRD...2015/02/03 · Kyrgyz Republic Latvia Lithuania Moldova...
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Piroska Nagy and Bojan Markovic EBRD EBRD Transition Report presentation Sofia, 3 February 2015
Transcript of Piroska Nagy and Bojan Markovic EBRD...2015/02/03 · Kyrgyz Republic Latvia Lithuania Moldova...
Piroska Nagy and Bojan Markovic
EBRD
EBRD Transition Report presentation
Sofia, 3 February 2015
Stuck in Transition?
A wake-up call Reform fatigue is slowing the
process of convergence
TRANSITION REPORT 2013
3
Transition slow-down… E
con
om
ic t
ran
siti
on
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.519
89
1990
1991
199
2
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
CEB Central Asia EEC SEE Russia Bulgaria
…means convergence slow-down
Sources: IMF WEO, EBRD REP, weighted averages.
Innovation in Transition
FranklinGothic DemiCondITC 38pt
A wake up call Reform fatigue is slowing down
the convergence process
Innovation by
companies as a
driver of growth…
…re-energises
transition
TRANSITION REPORT 2014
Adopt, Adapt, Advance: Picking the low-hanging fruit
Innovation about improving productivity within firms
Innovation goes well beyond R&D in high-tech sectors
Products and production processes new to the firm
Firms Adopt, Adapt and Advance towards technological frontier
7
BEEPS V:
Around 16,000 firms in
30 countries and similar
surveys in Jordan and Israel
Taking the pulse on firm innovation
8
Innovation: New products
AMG Technology: a company experienced in semiconductor manufacturing technologies since 2007
Connects micromechanical system with electronics and bridges the gap between nano-sized objects and macro-level tools
New product: triple scanning microscope, merging a dual beam microscope with high-speed atomic force microscope, used for novel analytical methods like tomography
Became the first Bulgarian SME to receive funding from Eurostars transnational programme
Innovation: New production processes
Bulgaria’s KCM, the largest lead and zinc smelter in the Balkans
EBRD and UniCredit provided EUR 95 mil. for upgrading lead production and zinc processing
New processes helped reduce lead dust emissions by 10% and improve energy efficiency by 35%
10
Firm innovation gets countries unstuck…
Morocco
Jordan
Macedonia
Ukraine
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Morocco
Jordan
Macedonia
Ukraine
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Morocco
Azerbaijan
Belarus
Jordan
Macedonia Russia
Slovenia
Ukraine
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Morocco
Azerbaijan
Belarus
Jordan
Macedonia Russia
Slovenia
Ukraine
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Morocco
Azerbaijan
Belarus
Czech Republic
Egypt
Estonia
Hungary
Jordan
Latvia
Macedonia Romania
Russia
Slovenia
Slovak Republic Tunisia Ukraine
Turkey
Bulgaria
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Morocco
Azerbaijan
Belarus
Czech Republic
Egypt
Estonia
Hungary
Jordan
Latvia
Macedonia Romania
Russia
Slovenia
Slovak Republic Tunisia Ukraine
Turkey
Bulgaria
0
20
40
60
80
100
120
140
160
180
200
0 10 20 30 40 50 60 70 80
Inn
ova
tio
n in
ten
sit
y o
f e
xp
ort
s
GDP per capita, in per cent of EU-15 average
1993/1994 → 2010/2011
Source: USPTO, UN Comtrade, Feenstra et al. (2005)
-20
0
20
40
60
80
100
120
140
160
180
Latin
America
Emerging
Asia
SEMED Russia Transition
Countries
CEB SEE Bulgaria
Gro
wth
19
93
-20
10
, per
cen
t
TFP Human capital Labour Physical capital Growth
11
…by boosting aggregate productivity
Source: EBRD Transition Report 2013, Penn World Tables 8.0.
Gro
wth
19
93
-20
10
G
row
th 1
99
3-2
01
0
Exports have become more innovation intensive, in particular in
CEB
12 Source: USPTO, UN Comtrade, Feenstra et al. (2005)
0
10
20
30
40
50
60
70
80
90
100CEB
SEMEDSEETUR
EEC
CARUS
BUL
Inn
ova
tio
n in
ten
sity
of
exp
ort
s
Sh
are
of
firm
s
Productivity
Transition region
Sh
are
of
firm
s
Productivity
Transition region
Israel
Sh
are
of
firm
s
Productivity
Transition region
Israel ?
13
In each country firms can take ‘innovative
actions’ to improve their productivity
14
Firm innovation can improve productivity everywhere
• Some firms are as productive as leaders in advanced markets…
• …but laggards must adopt and adapt – or die – to raise aggregate
productivity and get countries unstuck
Sh
are
of
firm
s
Productivity
Central Asia
Sh
are
of
firm
s
Productivity
Central Europe and the Baltic states
Sh
are
of
firm
s
Productivity
Central Asia
Israel
Sh
are
of
firm
s
Productivity
Central Europe and the Baltic states
Israel
Sh
are
of
firm
s
Productivity
Central Asia
Israel
?
Sh
are
of
firm
s
Productivity
Central Europe and the Baltic states
Israel
?
0
50
100
150
200
250
Higher-tech sectors Medium-low-tech sectors Low-tech sectors
Pe
rce
nta
ge
in
cre
ase
in
la
bo
ur
pro
du
cti
vity
Pe
rce
nta
ge
of firm
s th
at in
no
vate
Percentage of firms engaged in product innovation Impact of product innovation on productivity
0
50
100
150
200
250
Higher-tech sectors Medium-low-tech sectors Low-tech sectors
0
5
10
15
20
25
30
Pe
rce
nta
ge
in
cre
ase
in
la
bo
ur
pro
du
cti
vity
P
erc
en
tag
e o
f firms th
at in
no
vate
Percentage of firms engaged in product innovation Impact of product innovation on productivity
Pay-off from innovation highest in low-tech industries…
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
Azerbaijan
Uzbekistan 0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
Low innovation
Azerbaijan Kazakhstan
Uzbekistan
Turkey
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
Buy Low innovation
Azerbaijan
Bulgaria
Estonia
Kazakhstan
Uzbekistan
Turkey
Israel
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
Buy
Make and Buy
Low innovation
Albania
Armenia
Azerbaijan
Belarus
Bosnia and Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
FYR Macedonia
Georgia Hungary Jordan
Kazakhstan
Kosovo
Kyrgyz Republic
Latvia
Lithuania Moldova
Mongolia
Montenegro
Poland
Romania
Serbia
Ukraine
Uzbekistan
Slovak Republic
Tajikistan
Turkey Russia
Slovenia
Israel
0
2
4
6
8
10
12
14
16
18
20
22
24
26
0 2 4 6 8 10 12 14 16 18
Pe
rce
nta
ge
of
firm
s t
ha
t m
ak
e o
r m
ak
e a
nd
bu
y
Percentage of firms that only buy
Buy
Make and Buy
Low
innovation
16
Source: BEEPS V
…and is often best achieved by simply acquiring foreign
know-how
Innovative firms more sensitive to the business environment
17
In particular: corruption, skills and access to finance
Gre
ate
r co
nst
rain
t fo
r in
no
vato
rs
Corruption
Skills Finance
Tax administration
Informal sector
Electricity
Transport
Telecommunications Customs/trade
regulations Access to land
Crime
Licences/permits
Labour regulations Courts
Corruption
Skills Finance
Tax administration
Informal sector
Electricity
Transport
Telecommunications Customs/trade
regulations Access to land
Crime
Licences/permits
Labour regulations Courts
Corruption
Skills
Finance
Tax administration
Informal sector
Electricity
Transport
Telecommunications
Customs/trade
regulations Crime
Licences/permits
Labour regulations
Courts
Central Europe and
the Baltic States
Corruption
Skills
Finance
Tax administration Informal sector
Electricity
Transport Telecommunications
Customs/trade
regulations
Access to land
Crime
Licences/permits
Labour regulations
Courts South-eastern Europe
Corruption
Skills
Finance
Tax administration
Informal sector
Electricity
Transport
Telecommunications
Customs/trade
regulations
Access to land Crime
Licences/permits
Labour regulations
Eastern Europe and
Caucasus,
Central Asia and Russia
Greater constraint for non-innovators
Innovative firms more sensitive to the business environment
18
Electricity
Telecommunications
Transport
Customs and trade
Access to land
Courts Crime, theft and disorder
Tax administration
Business licensing and permits
Political instability
Corruption
Access to finance Labour regulations
Workforce skills
Gre
ate
r co
nst
rain
t fo
r in
no
vato
rs
Greater constraint for non-innovators
Bulgaria
In particular: corruption and skills
Local banking markets affects firms’ access to credit…
Source: BEPS II
…and their ability to innovate
0%
5%
10%
15%
20%
Product innovation Process innovation
Pe
rce
nta
ge
of
firm
s t
ha
t in
no
vate
No credit demand Unfulfilled credit demand Fulfilled credit demand
0%
5%
10%
15%
20%
Product innovation Process innovation
Pe
rce
nta
ge
of
firm
s t
ha
t in
no
vate
No credit demand Unfulfilled credit demand Fulfilled credit demand
21
Foreign firms more likely to innovate
Source: : BEEPS V, MENA ES
Gro
wth
19
93
-20
10
%
of
firm
s th
at in
no
vate
22
Exporters innovate more
Source: : BEEPS V, MENA ES
Gro
wth
19
93
-20
10
%
of
firm
s th
at in
no
vate
23
… and so do firms participating in global value chains
Source: : BEEPS V, MENA ES
Gro
wth
19
93
-20
10
H
igh
er li
kelih
oo
d o
f in
no
vati
on
(G
VC
vs.
no
n-G
VC
fir
ms)
What can policy-makers do?
Countries’ innovation policies are too similar
• Too focused on high-tech, R&D, university-industry technology transfer
• Not just adopt policies from advanced economies - also adapt them
Tailor policies to distance to technology frontier and local institutions
Help firms export and enter global value chains through:
Quality certifications Streamlined export
procedures VAT refunds
Embrace economic openness
25
Embrace economic openness
26
Embrace economic openness
Estonia:
focus on international cooperation,
foreign R&D investment grew by 15 per
cent a year
Embrace economic openness
Slovak Republic:
Special incentives for foreign firms,
including SMEs, to come to less-
developed regions
Embrace economic openness
Armenia:
Cisco, Microsoft partnerships, special
events. ICT companies now receive 44%
of revenues from exports
Right mix of horizontal vs. vertical policies
Focus on horizontal
policies where governance is
weak
Use vertical policies to
crowd in the private sector
Right mix of horizontal vs. vertical policies
Right mix of horizontal vs. vertical policies
Finland – centres of excellence programme:
Gradually phases out government funding to
prevent dependence
Right mix of horizontal vs. vertical policies
Bulgaria – Sofia Tech Park:
The first science and tech park to boost R&D,
encourage partnership between public and
private sectors and accelerate the
competitiveness of science and entrepreneurship
Right mix of horizontal vs. vertical policies
Israel - Yozma VC programme:
Government intervention most effective when
taking minority stakes
Getting ‘unstuck’: a double act
36
Need firms willing to innovate and governments facilitating innovation
Innovation must be nurtured and supported with a tailored approach:
Adopting/adapting phase:
•Tackle general barriers like corruption, labour skills and access to finance
•Help firms access international technology and value chains
•Promote smart specialisation
More advanced economies:
•Nurture creativity
•Encourage highly specialised human capital
•Improve competition policies
•Facilitate access to VCs and private equity for young start-up firms
TEXT TEXT
TRANSITION REPORT 2014
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