MAKING REGIONAL
VALUE CHAINS
HAPPEN IN THE
WESTERN BALKANS
Paris, 13 June 2013

This project is funded by the
European Uni...
The Next Generation Competitiveness
Initiative (NGCI)
Funding and
implementation

Geographical
coverage

• Project funded ...
Project timeline

Preparatory Phase
April – November 2013

• Sector identification based on
analysis and consultations wit...
Value chains in a global context

• Post-Washington Consensus world – Global economic
recession of 2008-09 and rise of con...
FDI in the Western Balkans: comparable to
central Europe but more resilient
FDI inflows as % of GDP (average)

25%

Wester...
Export performance has been below potential
Exports of Goods and Services
(% of GDP)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0...
Motives for relocations suggest that the region
could attract more FDI
80%

Main motives for production relocations
72%

7...
A combination of factors makes the region
attractive
ALB

BIH

HRV

XK

MKD

MNE

SRB

Benchmark
countries

Labour costs
U...
Objectives of the workshop

1
Identify sectors
where regional value
chains exist or could
be developed

2
Discuss ways to
...
Session 1

1
Identify sectors
where regional value
chains exist or could
be developed

2
Discuss ways to
identify barriers...
Key question of the session

How do we identify 3 sectors for further
value chain analysis?

11
Analytical framework for sector selection

Competitiveness of the Western Balkans sectors in the global
marketplace
Potent...
Analytical framework for sector selection

Competitiveness of the Western Balkans sectors in the global
marketplace
Potent...
Services account for the largest and
increasing share of GDP
Sectors' share of GDP in
the Western Balkans

Sectors' share ...
Food, metals and chemicals account for most of
manufacturing turnover
Top 10 manufacturing sectors in CEFTA by turnover (y...
FDI has been mainly market-seeking and
concentrated in services
FDI Stocks by Activity in 2010 (% of Total FDI Stocks)
Fin...
Coke/petroleum, food and metals have
attracted most FDI in the past years
Economy

Bosnia and
Herzegovina

Croatia

Serbia...
The top exporting industries are basic metals,
machinery and equipment and textiles
Total exports in 2011 (bn USD)
0

2

4...
Travel accounts for the largest share of
service exports
Service exports in 2011 (bn USD)
0
2
4
6
8

10

12

14

Travel
Ot...
Exports in chemicals, rubber and plastics and
machinery have grown faster than other sectors
WB exports (annual growth 200...
RCA indices show the export specialisation of
WB economies
RCA indices in 2009
Wood and Cork
Textiles, Leather and Footwea...
Which sectors have potential for future growth?
Growth in WB exports and EU27 import demand
WB exports (annual growth 2006...
Analytical framework for sector selection

Competitiveness of the Western Balkans sectors in the global
marketplace
Potent...
Depending on the industry, supply chains
tend to be more or less regional
Intermediate exports: Intra vs. Extra-CEFTA (200...
The RCA matrix helps identify economies’
positions in supply chains
RCA in final good
exports

No evidence of
supply chain...
An example: Serbia’s industries’ positions in
supply chains
4

No Evident International
Supply Chains
Food, Beverages, To
...
WB economies present supply chain
complementarities in selected sectors
Economies’ positions in supply chains (2009)
Indus...
Governments in the region support similar
sectors
Sectors prioritised by WB economies
ALB

BIH

HRV

XK

MKD

MNE

SRB

Me...
Multidimensional view of the analysis
The size of the bubble represents the size of the
sector as a % of manufacturing out...
Discussion questions
What could be the shortlist of sectors: Food, beverages, and tobacco;
Travel; Metals; Textiles?
How m...
Session 2

1
Identify sectors
where regional value
chains exist or could
be developed

2
Discuss ways to
identify barriers...
Key questions

What are the main obstacles which limit Western Balkan
economies’ integration and upgrading in regional and...
Session 3

1
Identify sectors
where regional value
chains exist or could
be developed

2
Discuss ways to
identify barriers...
Key questions

How can Western Balkans co-operate to create regional value
chains which can successfully compete in the gl...
ANNEX

35
Multidimensional view of the analysis (II)
Growth in EU demand (annual growth, 2006-2011)

14%

The size of the bubble rep...
FDI inflows, bn USD
12
10
8
6
4
2

0
2000
-2

2001

ALB

2002
BIH

2003
HRV

2004
MNE

2005
SRB

2006

2008
MKD

2009
SVK
...
Share of total EU imports by selected trade
partners (% total EU imports)
20%

15%

10%

5%

0%

TUR

Western Balkans

Nor...
WB exports are concentrated in low and
medium-low tech industries
Exports by industry (% of manufactured exports)
Low tech...
Exports from Kosovo*
Exports from Kosovo* (thousand EUR)
0

50,000

100,000

150,000

Manufactured goods classified chiefl...
FDI stocks by manufacturing industry (2007)
-20%

0%

20%

40%

60%

80%

100%

ALB
BIH
HRV
MKD
Food, beverages and tobacc...
FDI stocks by manufacturing industry (2010)
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ALB

BIH

HRV
Food, bev...
FDI Stocks by Manufacturing Sector (EUR mn)
Albania
-20

0

20

40

60

80

100

120

140

26 Other non-metallic mineral p...
FDI Stocks by Manufacturing Sector (EUR mn)
Bosnia and Herzegovina
0

100

200

300

400

500

23 Coke, refined petroleum ...
FDI Stocks by Manufacturing Sector
(EUR mn)
Croatia
0

1000

2000

3000

23 Coke, refined petroleum products and nuclear f...
RCAs with the EU by industry in 2007
Industries

ALB

BIH

MKD

MLD

MNE

SRB

Technological
intensity

0.08

0.04

0.01

...
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Making regional value chains happen in the Western Balkans

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The OECD Investment Compact for South East Europe presents "Making regional value chains happen in the Western Balkans" at an OECD event, June 2013.

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  • The WBs export significantly less than Central European countries , even when exports are adjusted to GDP. Export growth has also been below potential: increase by 21% between 2007 and 2011 (against 24% in Central Europe) and by 26% between 2009 and 2011 (against 33% in Central Europe). Croatia and Serbia stand out as the main exporters in the region. In 2011, 44% of the region’s exports came from Croatia and 27% from Serbia.
  • According to the OECD new book on VCs (but for global firms, not EU ones) :Cost savings and cheap labour are important drivers of the growth of production inemerging markets, but they are not the sole, or even the most important factors; marketsize and growth are the main reasons for international investment (OECD, 2011b).
  • ALB: Base metals (Iron and steel)BIH: Base metals (mainly Iron and steel)MNE: Base metals (Iron and steel, non-ferrous metals)SRB: Base metals (mainly Iron and steel)
  • Looking at global FDI trends by sector (UNCTAD world investment report), we can see that manufacturing accounts for 46% of FDI project values (M&A and greenfields only?). In manufacturing, food beverages and tobacco account for 6%, coke petrol for 4%, chemicals for 10%, electrical and electronic equipments for 5% and motor vehicles and other transport equipment for 6%. he largest increases were observed in the food and chemicals industries, while FDI projects in coke, petroleum and nuclear fuel saw the biggest percentage decrease.Wholesale, retail trade,etc.: overall, not specifically in motor vehicles
  • Exports to the rest of the world tend to be in relatively more technology intensive productsBasic metals: iron and steel (seenextslide)Other transport equipment reflect the exports of ships and yachts from Croatia. “Cruise ships and similar vessels for the transport of persons” corresponded to 8.8% of Croatian exports in 2010.Machinery and equipment : Electrical transformers amounted to 3.5% of Croatian exports in 2010 and the country also exports a range of other electrical apparatus (eg. diodes, semi-conductor devices). Insulated wire and optical fibre cables totalled 2.2% of Serbia’s exports in 2010. Source: The Observatory of Economic Complexity
  • Travel services include both business trade and personal travel
  • Specifythat CEFTA alsoincludes Moldova
  • RCA for travel computed as: share of travel in WB exports in services / share of travel in EU27 exports of services (for 2008)FDI for travel: FDI in hotels and restaurants/ FDI in manufacturingFDI data only shows Albania, Bosnia and Herzegovina, Croatia and the FYR MacedoniaLight blue, 0-2 economies prioritised the sector. Middle blue- 3-4 economies prioritised it. Dark blue- 5-7 countries prioritised itRCA data is for the CEFTA countries (- Kosovo* for which no data are available)NACE Code 26.1: Manufacture of glass and glass productsNACE Code 26.2: Manufacture of non-refractory ceramic goods other than for construction purposes; manufacture of refractory ceramic productsNACE Code 26.3: Manufacture of ceramic tiles and flagsNACE Code 26.4: Manufacture of bricks, tiles and construction products, in baked clayNACE Code 26.5: Manufacture of cement, lime and plasterNACE Code 26.6: Manufacture of articles of concrete, plaster and cementNACE Code 26.7: Cutting, shaping and finishing of ornamental and building stoneNACE Code 26.8: Manufacture of other non-metallic mineral productsnb- other non mettalic mineral products include glass, ceramics, bricks, cement
  • The pattern for Central Europe in 2001 is very similar to
  • They have a lot of coal in Bosnia and Herzegovina and coke can be derived from coal. The main energy resource of B&H is coal (brown coal and lignite), with estimated reserves of 6 billion tons (according to a document by the investment promotion agency)B&H oil industry encompasses imports and refining of imported crude oil and production of petroleum products.The biggest investors in the energy sector are Russian, Slovenian, Croatian and Hungarian companies, in the oil subsectors.
  • About oil in Croatia: INA - Industrijanafte, or INA for short, is the national oil company of Croatia. It was founded in 1964. The company is owned by the Hungarian oil company MOL Group (47.16%), the Republic of Croatia (represented by the Croatian Government) (44.84%) and private investors (7.9%).[1]The main INA company, INA d.d., is involved in exploration and production of oil and gas, deriving oil and the trade of oil and oil derivatives. The INA Group is the group of daughter-companies, including PROplin which deals with liquified petroleum gas, Crosco which deals in drilling & well services, STSI for technical services and Maziva-Zagreb which produces lubricants. INA also owns a stake in JANAF, the Adriatic oil pipeline.Pliva was purchased in December 2008 by the international pharmaceutical company Teva Pharmaceuticals, and operates as part of the Teva Active Pharmaceutical Ingredients (TAPI) division.
  • 2007 RCAs with EU have not evolved since 2004, and are mostly industries with low technological intensity (↑ shows new RCA; ↔ shows stable RCA)
  • Making regional value chains happen in the Western Balkans

    1. 1. MAKING REGIONAL VALUE CHAINS HAPPEN IN THE WESTERN BALKANS Paris, 13 June 2013 This project is funded by the European Union
    2. 2. The Next Generation Competitiveness Initiative (NGCI) Funding and implementation Geographical coverage • Project funded by the European Commission • Implemented by the OECD Investment Compact Albania, Bosnia and Herzegovina, Croatia, Kosovo*, FYR Macedonia, Montenegro and Serbia Objective Strengthening the competitiveness of the WBs through better integration in value chains: • Deeper integration in value chains (“quantity” challenge) • Upgrading in value chains (“quality” challenge) Rationale for a sector focus • Allows to generate greater interest and involvement from the private sector • Useful approach to understand obstacles to doing business • With limited resources, a sector-specific approach can have impact 2
    3. 3. Project timeline Preparatory Phase April – November 2013 • Sector identification based on analysis and consultations with stakeholders • Establishment of sectoral working groups Implementation Phase January 2014 to April 2016 • Identification of barriers to value chain development • Pilot projects to support regional value chains 3
    4. 4. Value chains in a global context • Post-Washington Consensus world – Global economic recession of 2008-09 and rise of contending centres of economic and political power • Large emerging economies like China, India and Brazil are both export platforms and turning inward • Small economies are seeking specialized niches in the global economy and regional economic blocs • Lead firms in global value chains are streamlining and consolidating their sourcing and production networks Source: Presentation by Gary Gereffi, Duke University, October 31, 2012 Tapping into International Value Chains, Opportunities & Challenges for Latin America, San Jose, Costa Rica 4
    5. 5. FDI in the Western Balkans: comparable to central Europe but more resilient FDI inflows as % of GDP (average) 25% Western Balkans 20% Central Europe 15% 10% 5% 0% MNE ALB SRB HRV MKD 2009-2011 Source: UNCTAD (2013) BIH CZE 2000-2008 HUN SVK SVN 5
    6. 6. Export performance has been below potential Exports of Goods and Services (% of GDP) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average Central Europe 2011 Average WB Source: WDI (2013) - NB: Czech Republic, Hungary, Slovakia and Slovenia are included in Central Europe. Poland is not included because it is a significantly larger market. 6
    7. 7. Motives for relocations suggest that the region could attract more FDI 80% Main motives for production relocations 72% 70% 60% 50% 40% 30% 27% 26% 20% 10% 13% 12% 11% 8% 4% 0% Source: European Manufacturing Survey, 2009 7
    8. 8. A combination of factors makes the region attractive ALB BIH HRV XK MKD MNE SRB Benchmark countries Labour costs Unit labour costs (2009, Index SVK=100) ? 106 117 ? 114 159 122 SVK: 100 Time to market (h) Road transport. time to Frankfurt 18h 13h 8h 18h 16h 16h 12h SVK: 7h TUR: 23h Cost of energy Industrial electricity tariff EUR per MWh (2009) 60 50 90 60 60 70 40 SVK: 140 TUR: 80 Coast, Metals, Metals, Wood, Coal Metals, Land Coast, Metals, Wood Metals, Wood, Land 30% 36% 40% 45% 50% Natural resources Main natural resources available in the economy Skills Enrollment in tertiary education in 2009 (%) Coast, Metals, Wood, Wood Land, CoalPetroleum Lignite 49% ? SVK: 54% TUR:46%
    9. 9. Objectives of the workshop 1 Identify sectors where regional value chains exist or could be developed 2 Discuss ways to identify barriers limiting value chain development in these sectors 3 Examine concrete policy actions to address these barriers 9
    10. 10. Session 1 1 Identify sectors where regional value chains exist or could be developed 2 Discuss ways to identify barriers limiting value chain development in these sectors 3 Examine concrete policy actions to address these barriers 10
    11. 11. Key question of the session How do we identify 3 sectors for further value chain analysis? 11
    12. 12. Analytical framework for sector selection Competitiveness of the Western Balkans sectors in the global marketplace Potential for regional cooperation Value-added potential 12
    13. 13. Analytical framework for sector selection Competitiveness of the Western Balkans sectors in the global marketplace Potential for regional cooperation Value-added potential 13
    14. 14. Services account for the largest and increasing share of GDP Sectors' share of GDP in the Western Balkans Sectors' share of GDP in 2010 in the WB and CE 100 100 90 80 80 70 60 60 50 40 40 30 20 20 10 0 0 2000 2010 Agriculture Western Balkans Industry Services Central Europe 14
    15. 15. Food, metals and chemicals account for most of manufacturing turnover Top 10 manufacturing sectors in CEFTA by turnover (yearly average 2008-10) Turnover (EUR bn) Share Employment Share Food products and beverages 12.0 28% 222521 21% Basic metals 3.7 9% 46582 4% Fabricated metal products 3.5 8% 98772 9% Chemicals and chemical products 3.4 8% 46816 4% Non-metallic mineral products (glass, ceramics, cement, stone products, etc.) 2.8 7% 60206 6% Coke, refined petroleum and nuclear fuel 2.8 7% 10593 1% Textiles, apparel and leather 2.0 5% 207988 19% Rubber and plastic products 1.7 4% 43452 4% Electrical machinery and apparatus, nec 1.4 3% 37509 3% Furniture and other manufacturing 1.2 3% 52953 5% Industry Source: OECD (2012) Nb- CEFTA includes Moldova as well as the Western Balkan economies. 15
    16. 16. FDI has been mainly market-seeking and concentrated in services FDI Stocks by Activity in 2010 (% of Total FDI Stocks) Financial intermediation Wholesale, retail trade, repair of motor vehicles etc 23.7% 33.1% Transport, storage and communication Construction Real estate, renting and business activities 3.9% Mining and quarrying 2.3% Hotels and restaurants 2.3% 7.0% Other 15.5% 2.2% Manufacturing 9.9% NB: Data include Albania, Bosnia and Herzegovina, Croatia and the FYR Macedonia 16
    17. 17. Coke/petroleum, food and metals have attracted most FDI in the past years Economy Bosnia and Herzegovina Croatia Serbia The FYR Macedonia Sector Sum of inflows from 2007 to 2010 (EUR mn) Coke, and petroleum products Metals Food products Coke, and petroleum products Other non-metallic mineral products Metals Food products Metals Transport equipment 311 127 92 1045 269 101 489 413 161 Transport equipment Food products Metals 124 69 27 Data for FDI inflows in the FYR Macedonia in 2008 are not available so only the inflows in 2007, 2009 and 2010 are summed up. Source: Vienna Institute for International Economic Studies. NACE REV. 1 17
    18. 18. The top exporting industries are basic metals, machinery and equipment and textiles Total exports in 2011 (bn USD) 0 2 4 Basic Metals Machinery and Equipment Textiles, Leather and Footwear Food, Beverages and Tobacco Chemicals Transport Equipment Coke and Petroleum Products Fabricated Metal Products Rubber and Plastics Iron and steel, nonferrous metals Electric appliances Industrial machinery and equipment Clothing accessories, Footwear, L eather goods Major trade deficit in petroleum: WBs net importer Wood and Cork Paper Products, Printing and Publishing Pharmaceuticals Other Non-Metallic Mineral Products Source: based on OECD STAN BTD - NB- No data available for Kosovo* 18
    19. 19. Travel accounts for the largest share of service exports Service exports in 2011 (bn USD) 0 2 4 6 8 10 12 14 Travel Other business services Legal, accounting, co nsulting, architectur al, etc. services Transportation Communications services Construction services Computer and information services Personal, cultural, and recreational… Includes business and personal travel Road, railway, sea and air passenger and freight transport Financial services Royalties and license fees Insurance services ALB BIH HRV MNE SRB MKD 19 Source: UN Service Trade Database
    20. 20. Exports in chemicals, rubber and plastics and machinery have grown faster than other sectors WB exports (annual growth 2006-2011) Exports in 2011 and annual growth (2006-2011) 16% Chemicals 14% Rubber and Plastics Paper, Printing and Publishing 12% 10% Pharmaceuticals Machinery and Coke and petroleum Equipment products Food products, Beverages and Tobacco 8% Wood and Cork 4% Textiles and leather Fabricated metals Manufacturing 6% n.e.c.; Recycling Basic Metals Transport Non-Metallic Mineral Products 2% 0% 0 1000 2000 3000 4000 5000 6000 Western Balkans exports in 2011 (mn USD) Source: based on OECD STAN BTD NB- No data available for Kosovo* 20
    21. 21. RCA indices show the export specialisation of WB economies RCA indices in 2009 Wood and Cork Textiles, Leather and Footwear Other Non-Metallic Mineral Products Food, Beverages and Tobacco Fabricated Metal Products Basic Metals Electrical Machinery and Apparatus n.e.c Rubber and Plastics Products Pulp, Paper, Printing and Publishing Coke, Petroleum Products Other Transport Equipment Machinery and Equipment, n.e.c Chemicals and Chemical Products Motor Vehicles, Trailers and Semi-Trailers Pharmaceuticals Medical, Precision and Optical Instruments Radio, TV and Communication Equipment ICT Office, Accounting and Computing Machinery CEFTA 3.91 2.29 2.25 1.92 1.68 1.61 1.23 1.16 1.09 1.06 0.92 0.67 0.50 0.29 0.23 0.21 0.20 0.19 0.15 ALB 1.32 8.75 2.33 0.80 2.09 0.93 0.63 0.37 1.00 0.27 0.02 0.11 0.06 0.04 0.05 0.04 0.07 0.07 0.10 BIH HRV MKD MNE SRB 7.50 5.07 0.51 5.54 2.38 2.09 1.45 5.00 0.12 1.66 1.47 3.31 2.24 0.25 1.33 0.97 1.51 2.02 2.08 2.61 2.69 1.71 0.99 0.75 1.48 1.89 0.48 3.77 8.71 2.22 0.56 1.71 0.48 0.07 1.19 0.73 0.63 0.84 0.08 2.33 1.17 1.07 0.32 0.64 1.45 0.92 2.02 0.20 0.42 0.43 0.20 1.96 0.08 0.23 0.45 0.61 0.86 0.30 0.82 0.67 0.40 0.63 0.46 0.09 0.52 0.51 0.27 0.10 0.12 0.32 0.04 0.21 1.34 0.03 0.06 0.10 0.28 0.16 0.03 0.20 0.02 0.34 0.03 0.04 0.20 0.04 0.28 0.06 0.04 0.22 0.02 0.16 0.05 0.04 0.27 21 Source: Based on OECD STAN BTD. CEFTA also includes Moldova. No data available for Kosovo*
    22. 22. Which sectors have potential for future growth? Growth in WB exports and EU27 import demand WB exports (annual growth 2006-2011) 16% Chemicals 14% Machinery and Equipment 12% Paper, Printing and Publishing 10% 8% Pharmaceuticals Fabricated metals Manufacturing Basic Metals n.e.c.; Recycling Transport Coke and petroleum products Rubber and Plastics Food products, Beverages and Tobacco 6% Wood and Cork 4% Textiles and leather Non-Metallic Mineral Products 2% 0% 0% 2% 4% 6% 8% Growth in EU27 imports (annual growth 2006-2011) Source: based on OECD STAN BTD 10% 12% 22
    23. 23. Analytical framework for sector selection Competitiveness of the Western Balkans sectors in the global marketplace Potential for regional cooperation Value-added potential 23
    24. 24. Depending on the industry, supply chains tend to be more or less regional Intermediate exports: Intra vs. Extra-CEFTA (2009) 0 20 40 60 80 100 Other Non-Metallic Mineral Prod. Office, Computers Paper, Printing and Publishing Fabricated Metal Products Basic Metals Electrical Machinery n.e.c Machinery and Equipment, n.e.c Textiles, Clothing Other Transport Equipment Manufacturing n.e.c; Recycling intra-CEFTA extra-CEFTA Source: OECD (2012). CEFTA also includes Moldova. No data available for Kosovo* 24
    25. 25. The RCA matrix helps identify economies’ positions in supply chains RCA in final good exports No evidence of supply chains Final stage supply chains No RCA in intermediate goods imports RCA in intermediate goods imports Intermediate stage supply chains First stage supply chains RCA in intermediate good exports Source: OECD (2012) 25
    26. 26. An example: Serbia’s industries’ positions in supply chains 4 No Evident International Supply Chains Food, Beverages, To bacco RCA in final goods exports Final Stage Supply Chains 3 Fabricated Metal Prod. Textiles, Clothing 2 1 No RCA in intermediate goods imports Paper, Printing, Pub lishing RCA in intermediate goods imports 0 Fabricated Metal Other Non-Metallic Prod. 1 Mineral Prod.Manufacturing n.e.c. Electrical Machinery Paper, Printing, Pub 2 lishing Food, Beverages, To Basic Metals bacco 3 First Stage Supply Chains RCA in intermediate 4 goods exports Year: 2009 Rubber, Plastics Wood, Cork Intermediate Stage 26 Supply Chains
    27. 27. WB economies present supply chain complementarities in selected sectors Economies’ positions in supply chains (2009) Industry First stage Food, beverages and tobacco Intermediate stages SRB Final stages BIH HRV MKD MNE Textiles, Clothing ALB BIH HRV MKD SRB Wood and Cork BIH HRV MNE SRB ALB BIH HRV SRB Paper, Printing and Publishing Coke, Petroleum Products ALB BIH BIH SRB HRV Rubber and Plastics MKD SRB Basic Metals BIH MNE MKD SRB Fabricated metal products BIH ALB HRV MKD SRB Electrical machinery, nec HRV SRB Motor vehicles, Trailers BIH Source: OECD (2012). No data available for Kosovo* SRB 27
    28. 28. Governments in the region support similar sectors Sectors prioritised by WB economies ALB BIH HRV XK MKD MNE SRB Metal industry Textile, Apparel Wood processing Agro-food Mining Construction Automotive Pharmaceuticals ICT Tourism Banking Energy 28 Source: based on National Strategies and Investment Promotion Agencies
    29. 29. Multidimensional view of the analysis The size of the bubble represents the size of the sector as a % of manufacturing output. The colour of the bubble represents the extent to which governments in the WB prioritise the sector. 0-2 economies prioritise the sector 3-4 economies prioritise the sector 5-7 countries prioritise the sector 30% FDI stocks (% of manufacturing FDI, 2010) Coke, Petroleum Products 25% 20% Food, Beverages and Tobacco Other Non-Metallic Mineral Products 15% Electrical Machinery n.e.c and optical instruments 10% Travel Metals Textile products Chemicals 5% Motor Vehicles Pulp and paper products Wood and Cork Rubber and Plastics 0% Machinery and 0 0.5 Other Transport 1 Equipment, n.e.c Equipment 1.5 2 2.5 RCAs in exports (2009) 3 3.5 4 4.5 29
    30. 30. Discussion questions What could be the shortlist of sectors: Food, beverages, and tobacco; Travel; Metals; Textiles? How much weight should we attach to RCA, FDI stocks, size of sector as % of manufacuting input, growth in demand and existing government priorities? What other factors should be considered (e.g., employment, R&D capacity, etc.)? Is there potential for moving to higher value added? 30
    31. 31. Session 2 1 Identify sectors where regional value chains exist or could be developed 2 Discuss ways to identify barriers limiting value chain development in these sectors 3 Examine concrete policy actions to address these barriers 31
    32. 32. Key questions What are the main obstacles which limit Western Balkan economies’ integration and upgrading in regional and global value chains? What approaches should be used to identify barriers to value chain development? What is the feasibility of different types of upgrading in different sectors (process, product, functional, upgrading)? 32
    33. 33. Session 3 1 Identify sectors where regional value chains exist or could be developed 2 Discuss ways to identify barriers limiting value chain development in these sectors 3 Examine concrete policy actions to address these barriers 33
    34. 34. Key questions How can Western Balkans co-operate to create regional value chains which can successfully compete in the global market? Where could the OECD Investment Compact achieve the greatest impact through an 18 month pilot project? Have projects in the past aimed at helping firms join or upgrade in regional/global value chains? 34
    35. 35. ANNEX 35
    36. 36. Multidimensional view of the analysis (II) Growth in EU demand (annual growth, 2006-2011) 14% The size of the bubble represents the size of the sector as a % of manufacturing output. The colour of the bubble represents the extent to which governments in the WB prioritised the sector. Coke, Petroleum Products 12% 10% 0-2 economies prioritised the sector 3-4 economies prioritised the sector 5-7 countries prioritised the sector Food, Beverages and Tobacco 8% Chemicals Rubber and Plastics 6% Metals 4% Textile products Pulp and paper products 2% Other Non-Metallic Mineral Products Transport Wood and Cork 0% 0 0.5 1 1.5 2 2.5 RCAs in exports 3 3.5 4 4.5 36
    37. 37. FDI inflows, bn USD 12 10 8 6 4 2 0 2000 -2 2001 ALB 2002 BIH 2003 HRV 2004 MNE 2005 SRB 2006 2008 MKD 2009 SVK 2010 2011 CZE 37 Source: UNCTAD (2013)
    38. 38. Share of total EU imports by selected trade partners (% total EU imports) 20% 15% 10% 5% 0% TUR Western Balkans North African countries Russia United States China (except Hong Kong) 38 Source: Eurostat
    39. 39. WB exports are concentrated in low and medium-low tech industries Exports by industry (% of manufactured exports) Low tech industries Medium-low tech Medium-high tech High-tech Central Europe 2001 Western Balkans 2011 Central Europe 2011 0% 10% 20% 30% Food products, Beverages and Tobacco Wood and Products of Wood and Cork Manufacturing not elsewhere classified; Recycling Rubber and Plastics Products Basic Metals Machinery and Equipment, not elsewhere classified Motor Vehicles, Trailers and Semi-Trailers Chemicals excluding Pharmaceuticals Office, Accounting and Computing Machinery Medical, Precision and Optical Instruments 40% 50% 60% 70% 80% 90% 100% Textiles, Textile Products, Leather and Footwear Pulp, Paper, Paper Products, Printing and Publishing Coke, Refined Petroleum Products and Nuclear Fuel Other Non-Metallic Mineral Products Fabricated Metal Products Electrical Machinery and Apparatus, not elsewhere classified Other Transport Equipment Pharmaceuticals Radio, Television and Communication Equipment Source: based on OECD STAN BTD - NB- No data available for Kosovo. Poland is not included in the Central European economies because it is a significantly larger market. 39
    40. 40. Exports from Kosovo* Exports from Kosovo* (thousand EUR) 0 50,000 100,000 150,000 Manufactured goods classified chiefly by material Crude materials, inedible, except fuels Food and live animals Mineral fuels, lubricants and related materials Machinery and transport equipment Beverages and tobacco Miscellaneous manufactured articles Chemicals and related products, n.e.s. Commodities and transactions not classified… Animal and vegetable oils, fats and waxes 2011 Source: Kosovo Agency of Statistics 2007 40
    41. 41. FDI stocks by manufacturing industry (2007) -20% 0% 20% 40% 60% 80% 100% ALB BIH HRV MKD Food, beverages and tobacco Wood products Coke, petroleum products Other non-metallic mineral products Machinery and equipment n.e.c. Transport equipment Other Textiles and leather products Pulp, paper products, publish. & printing Rubber and plastics Basic metals and fabricated metal products Electrical and optical equipment Chemical products Source: Vienna Institute for International Economic Studies. NACE REV. 1 41
    42. 42. FDI stocks by manufacturing industry (2010) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ALB BIH HRV Food, beverages and tobacco Wood products Coke, petroleum products Other non-metallic mineral products Machinery and equipment n.e.c. Transport equipment Other Textiles and leather products Pulp, paper products, publish. & printing Rubber and plastics Basic metals and fabricated metal products Electrical and optical equipment Chemical products 42 Source: Vienna Institute for International Economic Studies. NACE REV. 1
    43. 43. FDI Stocks by Manufacturing Sector (EUR mn) Albania -20 0 20 40 60 80 100 120 140 26 Other non-metallic mineral products Other not elsewhere classified industries (15-37) 19 Tanning and dressing of leather, mfr. of rel. articles 18 Wearing apparel, dressing and dyeing of fur 28 Fabricated metal products, ex machin. and equip. 22 Publishing, printing, reproduction of recorded media 27 Basic metals 24 Chemicals and chemical products 25 Rubber and plastic products 36 Furniture, manufacturing n.e.c. 20 Wood, products of wood and cork, ex furniture etc 21 Pulp, paper and paper products 17 Textiles 29 Machinery and equipment n.e.c. 37 Recycling 2010 2007 43 Source: Vienna Institute for International Economic Studies. NACE REV. 1. NACE 2 digit manufacturing
    44. 44. FDI Stocks by Manufacturing Sector (EUR mn) Bosnia and Herzegovina 0 100 200 300 400 500 23 Coke, refined petroleum products and nuclear fuel 15 Food products and beverages 26 Other non-metallic mineral products 27 Basic metals 21 Pulp, paper and paper products 24 Chemicals and chemical products 34 Motor vehicles, trailers and semi-trailers 28 Fabricated metal products, ex machin. and equip. 20 Wood, products of wood and cork, ex furniture etc 29 Machinery and equipment n.e.c. 19 Tanning and dressing of leather, mfr. of rel. articles 37 Recycling 25 Rubber and plastic products 31 Electrical machinery and apparatus n.e.c. 36 Furniture, manufacturing n.e.c. 30 Office machinery and computers 17 Textiles 18 Wearing apparel, dressing and dyeing of fur 22 Publishing, printing, reproduction of recorded media 33 Medical, precision, optical instr., watches & clocks Other not elsewhere classified industries (15-37) 2010 2007 44 Source: Vienna Institute for International Economic Studies. NACE REV. 1
    45. 45. FDI Stocks by Manufacturing Sector (EUR mn) Croatia 0 1000 2000 3000 23 Coke, refined petroleum products and nuclear fuel 26 Other non-metallic mineral products 15 Food products and beverages 31 Electrical machinery and apparatus n.e.c. 24 Chemicals and chemical products 18 Wearing apparel, dressing and dyeing of fur 32 Radio, TV and communic. equipment and apparatus 21 Pulp, paper and paper products 36 Furniture, manufacturing n.e.c. 28 Fabricated metal products, ex machin. and equip. 17 Textiles 19 Tanning and dressing of leather, mfr. of rel. articles 29 Machinery and equipment n.e.c. 22 Publishing, printing, reproduction of recorded media 25 Rubber and plastic products 34 Motor vehicles, trailers and semi-trailers 35 Other transport equipment 33 Medical, precision, optical instr., watches & clocks 27 Basic metals 20 Wood, products of wood and cork, ex furniture etc 37 Recycling 30 Office machinery and computers 2010 2007 Source: Vienna Institute for International Economic Studies. NACE REV. 1 45
    46. 46. RCAs with the EU by industry in 2007 Industries ALB BIH MKD MLD MNE SRB Technological intensity 0.08 0.04 0.01 0.11 High 0.11 0.21 0.1 0.48 Medium - high 0.12 0.05 0.38 1.24 ↑ Medium - high 0.57 ↔ 1.03 ↑ 4.11 ↔ 1.38 ↔ 0.19 0.72 0.01 1.37 Medium – high 0.03 1.02 ↔ 0.28 0.04 0.03 0 0.1 Medium -high 0.43 2.04 ↔ 1.89 ↔ 0.33 0.58 0.37 1.6 ↔ Medium - low 0.03 1.3 ↑ Medium - low Radio, television, communication 0.02 0.03 Machinery and equipment, n.e.c. 0.25 0.66 Other transport equipment 0.09 0.06 Electrical machinery and apparatus 0.06 Motor vehicles Fabricated metal products Other non-metallic mineral products HRV ↑ 2.19 0.14 1.27 2.07 ↔ 1.21↔ 4.82 ↔ Rubber and plastics products 0.19 0.55 0.42 0.17 0.43 0.01 1.89 ↔ Medium - low Basic metals 0.28 1.86 ↔ 0.45 5.21 ↔ 0.66 11.54 3.71 ↔ Medium – low 0.4 2.04 0.04 0.23 NA 0.06 Medium – low Food products and beverages 0.44 0.47 0.64 2.92 ↔ 0.35 1.67 ↔ Low Furniture 0.97 0.21 1.11 ↑ 0.07 0.8 Low 0.15 0.93 0 0.61 Low 0.19 1.01 ↑ Low 0.21 NA 0.01 Low 11.11 ↔ 0.29 2.05 ↔ Low 0.21 1.4 1.87 ↔ Low Coke, refined petroleum products, nuclear fuel Paper and paper products 1.84 Textiles 1.35 Tobacco products Wearing apparel Wood and products of wood ↔ ↔ NA 18.99 ↔ 1.3 ↔ 1.17 ↔ 0.92 4.84 ↔ 2.36 ↔ 0.48 0.62 0.01 0.87 1.30 ↔ 1.51 ↔ 2.18 ↔ 0.5 3.77 ↔ 2.40 ↔ 5.64 ↔ 3.48 ↔ 0.04 18.08 ↔ 0.35 46

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