Speeches & Transcripts

What type of growth for the next decade?

January 11, 2012

Markus Repnik Bulgarian Economic Forum 2010 Sofia, Bulgaria

As Prepared for Delivery

Good Afternoon, great to be with all of you, here today.

Distinguished guests, 
I have been listening with great interest to the remarks so far.  Please let me try to build on this remarks, in particular on the intervention of madam Minister of environment. Madam Minister, it appears - we like the same color, because If one discusses “factors for growth” for the next decade, the underlying question is – what type of growth?

And this brings me to my proposition – that Bulgaria should aggressively move towards a green economy, should improve its green competitiveness, that Bulgaria should grow green.

So if you follow my proposition that Bulgaria should grow green, the question is then - what are the green growth factors?

The answer is that the growth factors, namely – infrastructure, skills, business climate and innovation – are commonly known. But they need to be developed in a way that they stimulate and contribute to green growth.

First, infrastructure.
We all know that Bulgaria is lagging behind in terms of infrastructure: as assessed by the World Economic Forum Competitiveness Report, Bulgaria ranks 120 out of 139 countries in terms of quality of overall infrastructure.

So, Bulgaria needs to quickly catch up. Bulgaria needs to catch up, and while caching up it should put a particular focus on “greening” its infrastructure - in areas like public transport, energy efficiency and renewable energy, water supply and waste water treatment.
A good example is the Republic of Korea. The country has a "Green Growth National Vision", a five-year “Green Growth Plan”, and the country is massively investing in green infrastructure – in the economic stimulus package the country had earmarked close to 90 percent of its funds for green growth.

For Bulgaria, a key financing mechanism for catching up and greening infrastructure are EU funds – speeding up absorption of EU funds is therefore critically important.

Second, skills.
Today, Bulgaria has the lowest labor productivity in the EU. Therefore, upgrading existing labor force skills, in particular skills needed in high value and export oriented industries, is crucial.
And “green” industries tend to be in the category of these high value industries.
In 2008, Europe’s eco-industries provided 4 million jobs and experienced an annual growth rate of 8%. And green jobs are closely related to the Europe 2020 strategy.

Third, business climate.
Improved infrastructure and skills are necessary, but they are not sufficient.
In order to stimulate green growth, a coherent and conducive policy and regulatory environment is needed.

Let me provide an example from my home country, Austria. In the context of its EU accession in the 1990ies, the Austrian Government started to put a particular emphasis on creating a conducive environment for organic agriculture. Today, 19.5% of all Austrian farmland is cultivated in a certified organic manner, and Austria is a leading exporter of organic agricultural products in the EU. In other words, through providing the right environment, the Austrian Government has fostered the competitiveness of the agriculture sector with significant environmental benefits. While 19.5% of Austria’s farmland is certified organic, today 0.3% of Bulgaria’s farmland is certified organic.

Forth, innovation
Innovation plays a key role to foster green growth – companies need to adapt and develop new technologies, products and processes.

The role of the public sector is to create incentives so that eco-innovation happens faster – this also implies creating links between science and private sector.

So, ladies and gentlemen, I have been using frequently the word “green growth” – but what is “green growth “?

According to the OECD, green growth is growth that is low on CO2 emissions, low and mindful on resource use, and low on waste and pollution.

And if we believe that carbon emissions, efficient resource use and low pollution are becoming increasingly important competiveness factors, the question is how Bulgaria is positioned today and what could be done.

If we look at Bulgaria today, it is the country with the lowest per capita income in the EU. And at the same time, Bulgaria is the country with the highest energy intensity in the EU, meaning the country with the largest amount of energy consumed to produce one unit of GDP. This translates into very high CO2 emissions per unit of GDP. For example, Bulgaria’s carbon emissions per capita are about the same as those of Sweden, but Sweden with about the same carbon emissions per capita is producing an 8 times higher GDP per capita than Bulgaria.

In other words, energy efficiency of the economy is a crucial element of a green growth strategy in Bulgaria. According to the International Energy Agency, one dollar invested in energy efficiency saves 2 dollars investments in new generation capacity. Energy efficiency is therefore a huge untapped energy resource.
Energy and energy efficiency is just one sector. What is needed is to focus policies, investments and spending towards a broad range of sectors.
This focus will only happen if public policy and private sector investments are aligned – and if Bulgaria moves strategically, at large scale and opportunistically.
But this move and its respective priority decisions need to be underpinned by solid economic analysis. With support of the World Bank, countries like Brazil, China, India, Mexico and Poland have undertaken such analysis in order to move towards a low carbon economy, to move towards a green economy.

Ladies and gentlemen, costs of inaction are high – at global level and at country level.
And in addition to the economic arguments to foster green growth, we all have a very personal argument – our children. We all want that they will have opportunities, that they will have a better life. And preserving our natural resource base as well as limiting the impact of climate change is probably the single most important contribution of our generation for the future well-being of our children.

Thank you very much.