Markus Repnik Speech, Southeast Europe i* Forum, 23 November 2011*
This Forum is emphasizing four important “I”s to deepen economic relations in South East Europe: Infrastructure, Innovations, ICT, and Investments.
I’d like to propose three additional letters.
"U” for UNCERTAINTY
“A” for ACTION, and
“L” for LEADERSHIP.
I need to start with the “U”, the uncertainty
This forum takes place in a context of significant economic uncertainty. Still recovering from the recent global economic crisis, we are confronted with a sovereign debt crisis in several European countries with negative implications for the financial sector. Growth is slowing down, in Europe and globally. And while we know that we are confronted with a crisis, we don’t know how this crisis is going to unfold, we don’t know the impact on growth and jobs.
Looking at this evolving crisis from the perspective of South East Europe - namely the Western Balkans, Turkey, Romania and Bulgaria - it may appear as a crisis abroad. Because several countries in the region tend to score better on key macroeconomic indicators than “old” Europe.*
Expected growth in South East Europe is higher than in other European countries, with 2011 projected growth rates averaging around 3% compared to 1.5 % for the EU. However, in order to catch up on income levels, the growth rate in the region needs to be higher than in the more advanced EU countries.
Public debt in South East Europe is lower than in most EU countries, ranging from below 17% here in Bulgaria to around 59% in Croatia.
And expected 2011 budget deficits in some countries in the region are relatively low, including here in Bulgaria with an expected deficit of 2.5% of GDP.
While all this is relatively good news, South East Europe is not immune to the crisis, on the contrary. With the exception of Turkey, all countries in the region are small and open economies, dependent on exports to the EU, linked with European banks, and – to a varying degree – dependent on remittances from workers abroad.
For example, exports to the EU range from 46% in Turkey to 75% in Albania. And concerning remittances, in some Western Balkans countries, their share of GDP is as high as 10%.
In other words, South East Europe is exposed to the crisis. And the question is, how to best deal with this, how to best deal with significant uncertainty?
There are many answers, but all of them require two key ingredients: the “A” for action and the “L” for leadership.
So, what actions should Governments undertake in an environment of economic uncertainty? It is about being conservative AND being innovative. Being conservative on macroeconomic policies, and being innovative on strengthening competitiveness and social safety nets - at a time when budgets will remain tight, at a time when Governments need to focus their attention on how to best spend limited resources.
This forum is built on the belief that the present turbulent times require deeper regional cooperation among the countries in South East Europe, with a focus on infrastructure, innovations, iCT, and FDI.
These four “I”s are strongly related to competitiveness, competitiveness of individual countries, competitiveness of the region as a whole. While countries on the one hand compete with each other, for example on attracting FDI, they also benefit from cooperation, for example on regional infrastructure. And this forum provides the space to discuss innovative actions to strengthen regional cooperation.
But taking and implementing actions to strengthen competitiveness will not always be easy. And this brings me to the letter “L”, to leadership. Leadership is needed, not only from Government, from all actors.
Ladies and gentlemen, we are living in a fast changing world with increasing uncertainty and increasing economic, social and environmental global challenges. Addressing these challenges requires leadership. We will not advance with recipes from the past, we need to go beyond routine, we need to go beyond what we know. Hence, leadership is about challenging our current thinking and beliefs, it is about challenging AND changing reality.
I would like to end with a statement of Ron Heifetz who founded the Center for Public Leadership at Harvard Kennedy School of Government. According to him, leadership is not about a leader knowing all the answers; leadership is about asking the right questions and stimulating people’s creativity to jointly develop innovative solutions.
And this is what this Forum is about, bringing together people to find innovative answers - answers to the questions on how to deepen regional cooperation, on how to strengthen the competitiveness of South East Europe in the context of uncertainty.
These are crucially important questions. I wish all of US that YOU will succeed in identifying innovative answers.
Thank you very much!
* World Bank EU 10 Economic Report November 2011;
World Bank South East Europe Economic Report November 2011