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Future Trends in the Baltic Sea Region- Potential for SMEs

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Elina Priedulena, Hanse Parlament, “Future Trends in the Baltic Sea Region- Potential for SMEs“

Elina Priedulena, Hanse Parlament, “Future Trends in the Baltic Sea Region- Potential for SMEs“

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  • 1. Future trends in the Baltic Sea Region Elina Priedulena, Hanse Parlament Part-financed by the European Union (European Regional Development Fund and European Neighbourhood and Partnership Instrument)
  • 2. Contents1. Economic development in Baltic Sea Region (BSR) - general development trends - SMEs2. Trading across borders3. Innovation4. Demographic changes5. Economic Outlook for Lithuania 2
  • 3. Is it worth to operate abroad?• Large companies have been global for a long time – globalization/internationalization• SMEs are usually acting on markets close to home → Next step: expand further to other markets, understanding the vast opportunities but also the risks, in large consumer markets like Poland, Russia and Ukraine, because: → more opportunities, even though more competitiveness; more profit for own enterprises 3
  • 4. Economic development of BSR 4
  • 5. BSR Source: HWWI 5
  • 6. States of BSR – a vast potential of EU• 147 million inhabitants = 29% of the population of the EU• 67 millionen employees (2009) = 31 % of all employees in EU• 30 % of the GDP of the EU Member States• export 725 mrd./euro = 33% of exports within EU (2009)• import 993 mrd./euro = 30% of EU imports (2009)• more than 100 universities and research institutesFurthermore• favourable geographical location  regional cooperation in manifold manner• EU recognised the potential of BSR and developed the EU Strategy 2020 for the BSR – first specific regional strategy in EU to support and coordinate collaboration of diverse players on various levels. Source: HWWI 6
  • 7. Real GDP growth rate,percentage change on previous year Source: Eurostat 7
  • 8. Real GDP development and forecast 2009 2010 2011 2012f 2013fDenmark -5.8 1.3 1.2 1.4 1.7Germany -5.1 3.7 3.0 0.8 1.5Estonia -14.3 2.3 8.0 3.2 4.0Latvia -17.7 -0.3 4.5 2.5 4.0Lithuania -14.8 1.4 5.9 2.3 3.8Poland 1.6 3.9 4.0 2.5 2.8Finland -8.2 3.6 2.8 0.4 1.8Sweden -5.2 5.6 4.0 1.4 2.1Norway -1.7 0.7 2.4 2.7 2.9 • percentage change on previous year • f=forecast Source: Eurostat 8
  • 9. GDP per Capita in PPS (EU=100) 250 EU 27 Denmark 200 Germany Estonia 150 Index value Latvia Lithuania 100 Poland Finland 50 Sweden Norway 0 2004 2005 2006 2007 2008 2009 2010 Source: Eurostat 9
  • 10. Small and medium-sized enterprises (SMEs) 10
  • 11. SMEs – backbone of the European economy• enterprises (EU, 2010) – SME: 99.8% of all enterprises (20.8 Mio.) • Typical SMEs (92% of all SMEs): micro enterprises < 10 headcount • Ø 4 employees/enterprise – large enterprises: 0.2% of all enterprises (43,000)• share of employment (EU, 2010)  SMEs EU 27: 66.9% of all employees  85% of net new jobs in the EU between 2002 and 2010 were created by SMEs 11
  • 12. Trading across borders 12
  • 13. Trading within BSR  The exchange of goods is essential for the cross-border integration of EU states; Baltic Sea states important trading partners  international trade through spatial proximity between regions more intense → neighbours within BSR have intense import and export trading relationships with each other  the traditional economic interconnections between former Hanseatic cities Source: HWWI 13
  • 14. Major export and import countries of Lithuania 2011 Imports Exports 78159.9 LTL/milj. 69642.5 LTL/mlj.EU 55.9% 61.4%Russia 32.8% 16.6%Germany 9.7% 10.2%Poland 9.1% 9.3%Latvia 6.6% 6.9%Netherlands 4.9% 6.6%Sweden 3.3% 6.1%Italy 3.2% 5.2%Beldium 3.21% 4.1%Estonia 2.8% 4.1%Belarus 2.5% 3.6% Source: Statistics Lithuania 14
  • 15. Corner stones of export and import mineral products 25% chemical industry products 48% machinery; mechanical appliances; electrical equipmentExport 9% vehicles; aircraft; vessels&associated transport equipment 10% other 8% mineral products 34% 35% chemical industry products machinery; mechanical appliances; electricalImport equipment vehicles; aircraft; vessels&associated transport equipment other 8% 11% 12% 15
  • 16. Innovation 16
  • 17. Indicators of Innovation Innovation GDP share Share of R&D Patents per Labour force European of R&D₂ employees at 100.000 share of Scoreboard₁ expenditures labour forces inhabitants HRST₃ 2009 2008 2007 2007 2009 Rating %EU 27 - 1.9 1.5 11.7 42.1Sweden 2 3.8 2.4 29.8 51.2Finland 3 3.7 3.0 25.1 52.5Germany 4 2.6 1.7 29.1 47.5Denmark 6 2.7 2.4 19.4 53.0Estonia 13 1.3 1.4 1.7 49.2Poland 26 0.6 0.7 0.4 36.4Lithuania 27 0.8 1.2 0.2 45.3Latvia 30 0.6 0.9 0.8 43.3Russia - 1.0 1.1 (2005) 0.2 -1) 33 countries by comparison2) R&D – Research and Development3) HRST – Human Resources in Science and TechnologySources: Eurostat (2010); HWWI 17
  • 18. Innovation and SMEs • fundamental, especially in crisis times, for stimulating the expansion of SMEs, either into existing or new markets • compared with large enterprises rather difficult: finance, technology, shortage of qualified personnel, limited resources • Policy responses to those challenges:  Reaching equal big share of GDP into R&D is one of strategic goal of the EU Strategy 2020. 18
  • 19. Demographic changes 19
  • 20. Demography• employment resources is the key factor of economic development in BSR• Demografic changes due to:  continued increase of life expectancy  natural population development – averaged EU wide low rates of fertility  Migration – increased migration from low earn countries to EU 15 20
  • 21. Effects: aging of society, lack of employment, growing average age ofpopulation, structural issues/changes regarding employment, problems insocial spheres – safeguarding of social pension system, etc. 21
  • 22. Economic Outlook for Lithuania 22
  • 23. Source: Lietuvos Bankas23
  • 24. Economic outlook• The country’s economy is slowing amid the eurozone debt crisis• Nevertheless, → the global outlook brightens 2013 → the economy in Lithuania will recovery 24
  • 25. Yes, it is worth to operate abroad! • BSR builds a good action place: “In spite of numerous economic, ecological and cultural differences, the Baltic Sea States form a cohesive, “domestic region”. This makes regional cooperation especially important here, acting as a role model for other regions of Europe. But there is still more potential to be exploited.” Günther Oettinger - Commissioner for Energy • and SMEs: “…form the backbone of the European economy. They are key to entrepreneurial spirit and innovation in the EU and thus crucial to ensure EU competitiveness. “ Erkki Liikanen - Enterprise Commissioner 25
  • 26. Thank you for your attention! 26

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