Foreign Direct Investment in the Western Balcans


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Foreign Direct Investment in the Western Balcans

  1. 1. Foreign Direct Investment in the Western Balkans Marco Ranieri CIRPET - Research Centre on Transition and Developing Countries Department of Economics University of Turin (Italy)
  2. 2. Foreword <ul><li>Western Balkans: Croatia, Bosnia Herzegovina, Serbia (Kosovo), Montenegro, Macedonia, Albania </li></ul><ul><li>+Slovenia => CIRPET Research “Economic relations between Italy and former Yugoslavia” (2007) </li></ul><ul><li>Research financed by Unicredit Group and Intesa San Paolo and supported by Regional Agency for Investments, Export and Tourism-Piedmont </li></ul><ul><li>Aim: to provide practical information for Italian companies interested in the target area </li></ul><ul><li>Main sources: EBRD Transition Report and “on the field” research </li></ul>1/33
  3. 3. <ul><li>As the Eastern EU enlargement for the moment is stopped (Turkey and European Neighborhood Policy-ENP countries left), the focus is on the Western Balkans </li></ul><ul><li>Europe’s next high-value location for manufacturers </li></ul><ul><li>=> the Western Balkans can be a valid production platform </li></ul>Why the Western Balkans? 2/33
  4. 4. Relations with EU and NATO 3/33
  5. 5. Macroeconomic data (2006) 4/33
  6. 6. Despite some differences… <ul><li>Per capita GDP </li></ul><ul><li>19.000US$ Slovenia – 3.000 BiH </li></ul><ul><li>Unemployment </li></ul><ul><li>5,6 % Slovenia – 41% BiH </li></ul><ul><li>Inflation rate </li></ul><ul><li>2,5% Slovenia, Albania – 12,5% Serbia </li></ul>5/33
  7. 7. 5 Common Location Key Advantages <ul><li>Highly competitive overall cost structure (labor, land and utilities cheaper than new EU member countries) </li></ul><ul><li>Labor availability, cost and quality (well educated and experienced workforce, technical expertise) </li></ul><ul><li>Strategic location and proximity (Adriatic access and adjacent to both Western and Central Europe) </li></ul>6/33
  8. 8. <ul><li>Local availability of raw materials and supply network (wood, metals, agricultural products) </li></ul><ul><li>Improving fiscal and incentive regimes (regulatory, fiscal and tax reforms and investor incentives) </li></ul>7/33
  9. 9. Commercial Indicators 8/33
  10. 10. Main features <ul><li>All countries register trade and current account deficit </li></ul><ul><li>Slovenia and Croatia are the most open economies </li></ul><ul><li>Almost all the trade is with EU and neighboring countries => foreign investors should act with a “regional approach” (opportunity to serve a “regional” market) </li></ul>9/33
  11. 11. FDI flows (2001-2007) 10/33
  12. 12. Main features <ul><li>In all countries there were some years with decreasing flows, due to internal factors (e.g. Albanian rise in Macedonia) or external (general decrease of FDI in 2001-2002) </li></ul><ul><li>BUT </li></ul><ul><li>=> The general trend is positive </li></ul>11/33
  13. 13. FDI flows and stocks (1989-2006) 12/33
  14. 14. Main features <ul><li>Croatia has an exceptional capacity to attract FDI: more than 13 billions US$ (higher per capita stock) </li></ul><ul><li>Slovenia is the richest country and the most open to world trade BUT has a low stock of FDI, due to national aversion to privatize some sectors (e.g. Nova Ljubljanska Banka). Outward investment </li></ul><ul><li>Montenegro has an high per capita stock </li></ul><ul><li>Albania has the lowest per capita stock </li></ul><ul><li>Positive expectations for Serbia (Fiat-Zastava) </li></ul>13/33
  15. 15. Countries’ most interesting sectors for FDI 14/33
  16. 16. Slovenia <ul><li>Tourism </li></ul><ul><li>Construction </li></ul><ul><li>Infrastructure and logistic </li></ul><ul><li>Privatizations (insurance, public utilities, TLC) </li></ul><ul><li>Wood processing industry </li></ul><ul><li>Plastic industry </li></ul><ul><li>Information and communication technology. </li></ul>15/33
  17. 17. Croatia <ul><li>Tourism </li></ul><ul><li>Information and communication technology (Siemens, Ericsson are already present) </li></ul><ul><li>Pharmaceutics (Pliva-Barr Pharmaceuticals USA, Belupo, GlaxoSmithKline) </li></ul><ul><li>Biotechnology (project for a tech-park in Varaždin) </li></ul><ul><li>Business services (processing data, call centers, data entry, telemarketing, back office). </li></ul>16/33
  18. 18. Bosnia Herzegovina <ul><li>Textile and footwear industry </li></ul><ul><li>Metals (Birac Zvornik, Aluminium Mostar, Bh Steel Company-Mittal Zenica) </li></ul><ul><li>Automotive (Skoda, Volkswagen) and mechanics </li></ul><ul><li>Wood processing industry and agriculture </li></ul><ul><li>Tourism (mountains-Sarajevo Olympic Games) </li></ul><ul><li>Information and communication technology </li></ul><ul><li>Privatization (TLC, public utilities) </li></ul><ul><li>Infrastructure. </li></ul>17/33
  19. 19. Serbia <ul><li>Mechanics </li></ul><ul><li>Specialized manufacture (e.g. jewelry) </li></ul><ul><li>Furniture production </li></ul><ul><li>Privatization </li></ul><ul><li>Other manufactory sectors </li></ul><ul><li>Automotive and supply chain (Zastava in Kragujevac) </li></ul>18/33
  20. 20. Fiat - Zastava <ul><li>On 28 July 2008, Fiat signed a letter of intent, undertaking to take control of the automobile division, investing 700 mln. euro in return for a 70% stake in the company (currently owned by the state) and an additional 100 mln. euro of investment from the Serbian government </li></ul>19/33
  21. 21. Montenegro <ul><li>Tourism and infrastructure (e.g. PortoMontenegro) </li></ul><ul><li>Wine industry </li></ul><ul><li>Privatization (public utilities e.g. Telecom Montenegro-Matav and ProMonte-Telenor) </li></ul><ul><li>Automotive (Daido Metal Kotor). </li></ul>20/33
  22. 22. Macedonia <ul><li>Textile and footwear industry </li></ul><ul><li>Informatics and telecommunications (software production, etc. USAid wireless Project) </li></ul><ul><li>Business services ( data entry, data processing) </li></ul><ul><li>Chemical industry </li></ul><ul><li>Agriculture, food and beverage processing industry </li></ul><ul><li>Tourism. </li></ul>21/33
  23. 23. Albania <ul><li>Textiles and garments </li></ul><ul><li>Shoe manufacture and leather processing </li></ul><ul><li>Agribusiness </li></ul><ul><li>Business services (processing data, call centers, data entry, telemarketing, back office, etc.) </li></ul><ul><li>Infrastructure and tourism. </li></ul>22/33
  24. 24. Automotive Sector 23/33
  25. 25. Food and Beverage Sector 24/33
  26. 26. ALBANIA <ul><li>Agency for Foreign Investment </li></ul><ul><li>Albanian Centre for International Trade </li></ul><ul><li>Chamber of Commerce of Tirana </li></ul><ul><li>Ministry of Economy </li></ul><ul><li>Ministry of Finance </li></ul><ul><li>Ministry of Foreign Affairs </li></ul><ul><li>National Bank </li></ul>25/33
  27. 27. BOSNIA HERZEGOVINA <ul><li>Bosnia Herzegovina (BiH) </li></ul><ul><li>Agency for statistics </li></ul><ul><li>Central Bank </li></ul><ul><li>Directorate for European Integration </li></ul><ul><li>EPPU Office </li></ul><ul><li>European Regional Economic Development Project </li></ul><ul><li>Foreign Investment Promotion Agency </li></ul><ul><li>Investment Guarantee Agency </li></ul><ul><li>Ministry of Foreign Affairs </li></ul><ul><li>Federation of Bosnia Herzegovina (FBiH) </li></ul><ul><li>Agency for Privatization of FBiH </li></ul><ul><li>Chamber of Economy of FBiH </li></ul><ul><li>Investment Bank of FBiH </li></ul><ul><li>Srpska Republic (SR) </li></ul><ul><li>Agency for SMEs of SR </li></ul><ul><li>Chamber of Commerce of SR </li></ul><ul><li>Directorate for Privatization of SR </li></ul><ul><li>Institute of Statistics of SR </li></ul>26/33
  28. 28. CROATIA <ul><li>Central Bureau Of Statistics </li></ul><ul><li>Chamber of Commerce (Zagreb) </li></ul><ul><li>Chamber of Economy </li></ul><ul><li>Croatian Bank for </li></ul><ul><li>Reconstruction and Development </li></ul><ul><li>Croatian National Bank </li></ul><ul><li>Croatian Privatization Fund </li></ul><ul><li>Hitro Service </li></ul><ul><li>Istrian Development Agency </li></ul><ul><li>Ministry of Economy </li></ul><ul><li>Ministry of Foreign Affairs </li></ul><ul><li>Ministry of Tourism </li></ul><ul><li>Trade and Investment Promotion Agency </li></ul>27/33
  29. 29. MACEDONIA <ul><li>Agency for Foreign Investments </li></ul><ul><li>Agency for Promotion of Entrepreneurship </li></ul><ul><li>Chamber of Commerce </li></ul><ul><li>Free economic Zones </li></ul><ul><li>Government </li></ul><ul><li>Macedonia competitiveness activity </li></ul><ul><li>Ministry of Economy </li></ul><ul><li>Ministry of Finance </li></ul><ul><li>Ministry of Foreign Affairs </li></ul><ul><li>National Bank </li></ul><ul><li>Privatization Agency </li></ul><ul><li>Secretariat for European Affairs </li></ul><ul><li>State Statistical Office </li></ul>28/33
  30. 30. MONTENEGRO <ul><li>Centre for Entrepreneurship and </li></ul><ul><li>Economic Development </li></ul><ul><li>Central Bank </li></ul><ul><li>Government </li></ul><ul><li>Institute for Strategic Studies </li></ul><ul><li>and Prognoses </li></ul><ul><li>Investment Promotion Agency </li></ul><ul><li>Montenegro Business Alliance </li></ul><ul><li>Statistical Office </li></ul>29/33
  31. 31. SERBIA <ul><li>Agency for Investment </li></ul><ul><li>Promotion in Central Serbia </li></ul><ul><li>Agency for Privatization www.priv.yu </li></ul><ul><li>Agency for SMEs </li></ul><ul><li>Chamber of Commerce </li></ul><ul><li>Foreign investors council </li></ul><ul><li>Government of Serbia </li></ul><ul><li>Ministry of Foreign Affairs </li></ul><ul><li>Ministry of International </li></ul><ul><li>Economic Relations </li></ul><ul><li>National Bank of Serbia www.nbs.yu </li></ul><ul><li>Serbia Investment and </li></ul><ul><li>Export Promotion Agency </li></ul><ul><li>Statistical Office </li></ul>30/33
  32. 32. SLOVENIA <ul><li>Agency for Entrepreneurship </li></ul><ul><li>and Foreign Investments </li></ul><ul><li>Agency for Foreign Investments </li></ul><ul><li>Biz Opportunities Exchange System </li></ul><ul><li>Central Bank </li></ul><ul><li>Chamber of Commerce </li></ul><ul><li>Ministry of Economy </li></ul><ul><li>Ministry of Finance </li></ul><ul><li>NLB-Nova Ljubljanska Banka </li></ul><ul><li>Public Institutions </li></ul><ul><li>Statistical Office </li></ul>31/33
  33. 33. Other websites <ul><li>Balkan Academic News (Central European University-Budapest) </li></ul><ul><li>Many other links on the Balkans at disposal on demand </li></ul>32/33
  34. 34. Marco Ranieri CIRPET Research Centre on Transition and Developing Countries Department of Economics University of Turin (Italy) [email_address] 33/33 Thank you for your attention!