Tradeflow Study - UNDP Black Sea Trade and Investment Promotion ...

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. stock and foreign affiliates activities. The table below highlights the relatively low level of FDI in BSEC countries. Investment inflows and outflows in BSEC Countries (2005) Inflow Per capita Inward stock Outflow ($Mio) in US$ ($ Mio) ($Mio) Per capita Outward stock in US$ ($ Mio) Albania 260 83 1,680 82 Armenia 155 51 1,024 7 2 32 Azerbaijan 1,392 170 13,876 1,221 146 3,686 Bulgaria 2,224 287 9,173 316 41 127 Georgia 450 101 2,320 - 90 -20 Greece 662 60 22,455 46 4 12,339 Moldova 225 54 1,129 0 0 28.1 Romania 6,437 297 25,918 - 13 -1 242 Russia 13,072 91 20,351 13,126 92 120,417 Turkey 8,546 118 63,285 1,086 15 8,315 Ukraine 1,497 32 8,364 275 6 466 Serbia and Montenegro 1,481 181 5,428 5 1 Source: ITC Investment Map, 2007 The study then proceeds to select sectors already identified previously as having a high intraregional trade potential for the manufacturing sector. For investment opportunities in the services sector, the study takes into account commitments made by countries in the WTO GATS Agreement in market access and national treatment with regard to establishing a foreign commercial presence in their country. The dynamism of the sector in the region, as well as the size of current service trade flows is also taken into account. The manufacturing sectors of textiles and clothing, food and beverages, metal products and wood products are identified as having a high investment potential. The service sectors of travel, distribution, communication, environment, education, health, recreational, cultural and personal, and other commercial services have a high indicative investment potential. Nonetheless, Turkey, Greece and Romania have certain limitations in establishing a foreign presence in their territory in subsectors of these services. The study has identified a number of key strategic sectors for intra regional trade and investment promotion based on quantitative tools. The results need to be further refined with enterprise surveys and on the ground evaluation of the conditions for trade and investment. The use of buyers and sellers meetings, trade forums and improved communication of trade and investment conditions will be important channels through which to exploit more fully the untapped trade and investment potential of the Black Sea Economic Cooperation. 12/135
I. BSEC Economic Performance and Trade Cooperation I.1. Trade and Investment Context The BSEC represents a huge market of some 350 million people with a foreign trade capacity of over US$ 300 billion annually, an area of nearly 20 million square kilometres and rich in natural resources, and one of the European Union’s major energy supplier. Owing to its geographical location, the markets in the region could quite easily be integrated to the important markets of Europe, Central Asia and/or the Middle East. The BSEC region is a sizeable market by any criteria, and as such, is an attractive destination for both trade and investment in several obvious areas such as transportation, communications, energy and tourism. The most populous country in BSEC is the Russian Federation with 143 million inhabitants, followed by Turkey (73 million) and Ukraine (47 million). The populations of the BSEC countries add up to 350 million, which is around three quarters of the size of the population of the European Union (460 million) but significantly larger than the USA (297 million). In terms of land area, the Russian Federation accounts for the largest surface area (17.1 million square kilometres), followed by Turkey (0.8 million square kilometres) and Ukraine (0.6 million square kilometres). However most of the surface area in Russia is not arable, in comparison to Turkey and Ukraine which have higher relative shares of arable land. The size of the BSEC market is significant, at around US$ 1.6 trillion in 2005. However, there are major disparities in the size of economies across the region. Three countries, Greece, the Russian Federation and Turkey, alone constitute 83 % of BSEC’s GDP. On the other hand, five countries contribute less than 1% of BSEC’s GDP (Albania, Armenia, Azerbaijan, Georgia and Moldova). The estimated growth rate in 2006 for the region is high, with the highest annual growth rate of GDP originating in Azerbaijan (25 %). Armenia is estimated to have recorded 8.5% growth in 2006, followed by Georgia with 7.5%. The lowest economic growth has been recorded for Moldova (3.5%) 3 . Figure 1 highlights some of the basic macroeconomic indicators of the region and illustrates the great diversity of economies in the region, both in terms of GDP and in current account performance. 3 EBRD Statistics 13/135
Page 1: Black Sea Economic Cooperation: Stu
Page 4 and 5: . Table of Contents Abbreviations .
Page 6 and 7: . Table 15d. Greece’s Commitments
Page 8 and 9: . Abbreviations BSEC EBRD EU EUROST
Page 10 and 11: . econometric model, referred to as
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. In terms of existence of a legal
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. III.3. Sectoral opportunities BSE
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. service sector (retail, business
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. Table 23b. FDI in Bulgaria (2005)
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. Table 23d. FDI in Romania (2005)
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. Table 23f. FDI in Turkey (2005) I
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. 74/135
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. of trade in services performance,
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. Egger, P. (2002), An Econometric
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. World Bank (2005), Trade, Transp
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. Annex 1. Trade Indicators 82/135
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. Table A2. Major Import Partners f
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. Table A4. Major Import by Product
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Albania Armenia Azerbaijan Bulgaria
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. HS Description ALB ARM AZE BGR GE
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. Table A7 Trade intensity in BSEC
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. HS Description ALB ARM AZE BGR GE
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. country I and country j’s capit
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. Annex 2.3. Results of Gravity Equ
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. Georgia Sector / Exports to ALB A
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. Russia Sector / Exports to ALB AR
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. Annex 2.4. Results of Trade Flow
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Annex 2.5. Results of Trade Flow An
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. Note: Excludes energy and tobacco
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