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

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Current account balance (% of GDP) . Price stability has generally been maintained in the region, although three countries still face double digit inflation rates: Moldova, Serbia and the Russian Federation (13%, 13% and 10% respectively in 2006). Azerbaijan and the Ukraine have experienced an 8% increase in their consumer price index, and most other countries in BSEC have low and stable inflation. Figure 1. Basic economic indicators of the BSEC (2005 or latest available year) 15 Scale of bubble indicates the size of the economy (GDP) 10 Russian Federation US$ 100 billion 5 Ukraine Serbia and Montenegro US$ 500 billion 0 Azerbaijan Turkey - 5 Armenia Albania Romania Greece - 10 Moldova Georgia Bulgaria - 15 0 5 000 10 000 15 000 20 000 GDP Per capita (US$) Note: Dashed lines indicate estimated BSEC averages Source: Estimations from author and World Bank World Development Indicators database, 2007 The share of trade in the national economy dropped sharply after the fall of communism but has since gradually regained prominence and in some cases, surpassed pre-market economy levels. Trade flows among countries are in theory a function of the comparative advantages belonging to these countries and the differences in their resources. Bilateral trade between BSEC countries is highly dependant on historical factors which shaped the complementarily of their structures of production. A slow diversification process has taken place throughout the region. The share of trade which is directed to transition economies has declined and has reached between 50 percent in the case of Ukraine to less than 20 percent in the case of Albania. The relative increase in the share destined to non-transition economies is indicative of a significant increase in the competitiveness of these economies. 14/135
Table 1 presents some interesting indicators related to private sector, trade and infrastructure development. The share of the private sector in the national economy varies from 55 percent in the case of Serbia to 75 percent in the cases of Albania and Armenia. The private sector accounts for the largest share of employment, though in general this corresponds approximately to the ratio of the private sector in GDP. Table 1. Basic structural indicators of transition BSEC economies, 2005 Albania Armenia Azerbaijan Bulgaria Georgia Moldova Romania Russia Serbia Ukraine Macroeconomic Private sector share in GDP (%) 75.0 75.0 60.0 75.0 65.0 60.0 70.0 65.0 55.0 65.0 Private sector share in employment (%) 80.0 na 68.1 71.0 77.7 60.0 na na na na Investment/GDP (%) 26.6 23.2 56.1 28.0 26.3 29.8 22.7 20.9 na 22.2 International Trade Share of trade with non-transition countries (%) 87.4 69.2 65.7 75.0 57.2 37.7 77.3 73.2 na 48.6 Finance Non-performing loans (in per cent of total loans) 2.3 2.1 14.9 3.8 3.8 5.3 6.1 2.8 23.8 19.0 Domestic credit to private sector (% of GDP) 10.3 8.0 6.2 26.0 14.8 25.4 10.2 25.7 na 35.2 Telecommunications Fixed-line (mobile) penetration rate (per 100 inhabitants) 8.6 (39.5) 19.3 (10.6) 13.0 (26.7) 32.1 (80.8) 15.1 (32.6) 22.1 (25.9) 20.2 (61.5) 27.9 (83.6) 32.9 (64.0) 25.8 (37.0) Internet penetration rate (per 10,000 inhabitants) 1.7 6.3 0.4 84.7 14.0 31.2 22.6 59.4 33.8 27.7 Source : EBRD Transition Report 2006 The financial sector reforms in a number of BSEC countries have created a more enabling environment for business, in particular for bridging inter-temporal consumption-investment constraints. However, the share of non-performing loans remains significant for a number of economies in the region and is of concern to the stability of the financial sector. Figure 2 presents the inflows and outflows of FDI in BSEC countries. Outflows signify more often than not, disinvestment in the country as opposed to new investment abroad. Azerbaijan is by far the largest recipient of FDI as a proportion of GDP in the region, which is entirely absorbed by the energy sector. Other countries enjoy far smaller levels of FDI though these tend to be more evenly distributed across sectors of the economy. The larger economies tend to be far smaller recipients of FDI, in part because the national contribution to gross fixed capital formation is large and in part because BSEC’s ability to attract FDI outside of the energy sector is relatively limited. Gross Fixed Capital Formation (GFCF) ranges from 17 percent in Serbia and Montenegro to 30 percent in Armenia. GFCF is exceptionally high in Azerbaijan owing to Azerbaijan’s singularity with exceptionally high FDI in the energy sector. In absolute terms, Russia’s domestic investment dwarfs other members of BSEC, since it accounts for half of all BSEC’s GFCF. 15/135
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
Page 12 and 13: . In this regard, travel services h
Page 14 and 15: . stock and foreign affiliates acti
Page 18 and 19: % of GDP . The dynamism of the priv
Page 20 and 21: . I.2. Background to Trade and Inve
Page 22 and 23: . II. Trade Potential and Opportuni
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Page 26 and 27: Imports Perspective . There are cer
Page 28 and 29: . II.1.3 Intra-industry trade betwe
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Page 36 and 37: . Wood and wood products, in parti
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Page 42 and 43: . II.4. Services With the exception
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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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