Monitoring policies and institutions for direct investment in South-East Europe.

323 Pages·2010·5.302 MB·English

by  OECD

Investment Reform Index 2010
Investment
MONITORING POLICIES AND INSTITUTIONS
FOR DIRECT INVESTMENT IN SOUTH-EAST EUROPE Reform
In
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t Index 2010
Improving the climate for investment is a strategic economic priority for South-East Europe. The m
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global economic crisis has highlighted the importance to the region’s long-term prosperity of n
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generating higher levels of direct investment. Many of the policy reforms needed to strengthen the R
investment climate are also necessary for membership of the European Union, to which countries ef MONITORING POLICIES AND
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in the region generally aspire. rm INSTITUTIONS FOR DIRECT INVESTMENT
In
Using an innovative methodology, the Investment Reform Index 2010 (IRI 2010) monitors d IN SOUTH-EAST EUROPE
e
investment-related policy reforms in the economies of South-East Europe and compares these x
to best practices in the OECD area. Based on inputs from governments, the private sector, 2
0
independent experts and multilateral organisations active in the region, the IRI 2010 assesses 10
policies and institutional settings in eight fields of policy critical to domestic and foreign investors. M
O
These are: investment policy and promotion; human capital development; trade policy and N
IT
facilitation; access to finance; regulatory reform and parliamentary processes; infrastructure O
R
for investment; tax policy analysis; and SME policy. For the economies examined, the IRI 2010 IN
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provides: P
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• An independent and rigorous assessment of investment-related policy settings and reform against IC
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international good practice. S A
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• Guidance for policy reform and development. IN
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• An evidence base with which to facilitate prioritisation of donor activities supporting investment TIT
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and growth. T
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Investment Reform
Index 2010
MONITORING POLICIES
AND INSTITUTIONS FOR DIRECT INVESTMENT
IN SOUTH-EAST EUROPE
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at
the forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
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opinions expressed and arguments employed herein do not necessarily reflect the official
views of the OECD or of the governments of its member countries or those of the European
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mentioned in this publication.
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DOI 10.1787/9789264079588-en
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FOREWORD
Foreword
I
ncreasing the volume and quality of private investment is critical to the economies of South-East
Europe. Despite a recent record of positive and in some cases rapid economic growth, levels of private
investment need to rise. As transition proceeds and privatisation processes conclude, the
opportunities for attracting significant new privatisation-driven foreign direct investment will
diminish. Higher volumes of foreign investment are now needed in greenfield projects, particularly in
export-oriented activities. Increasing domestic private and foreign investment will help to raise
output and productivity in South-East Europe, which are critical to employment creation, sustainable
trade balances, improved government finances and ultimately to addressing the region’s pressing
social problems. The global financial and economic crisis, which hit the region severely during the
preparation of this study, has further underlined the importance of achieving more and better private
sector investment.
In this context, the Investment Reform Index 2010 provides a detailed assessment and
benchmarking of critical policy settings and institutional conditions that shape the environment for
direct investment. Best practice policies in the OECD area are used as pointers to guide the
assessment. The assessment itself has been prepared through a process that has included senior
policy makers, independent experts and the private sector in each country, as well as OECD staff
working across a broad range of policy specialisms. The Investment Reform Index 2010 is a follow-up
to an equivalent study undertaken in 2006. In many parts of the report progress since 2006 has been
highlighted.
This study is one among a number of studies and advisory projects currently undertaken by the
OECD’s Investment Compact for South-East Europe. Working with policy makers from all countries
of the region, through the South-East Europe Investment Committee, the Investment Compact
represents a prime instance of how knowledge and expertise possessed by the OECD can be
harnessed and shared with non-member countries.
Mr. Anthony O’Sullivan
Head of the Private sector Development Division
Directorate for Financial and Enterprise Affairs
OECD
INVESTMENT REFORM INDEX 2010 © OECD 2010 3
ACKNOWLEDGEMENT
Acknowledgement
P
reparation of the Investment Reform Index 2010 has involved many experts, institutions
and government officials. Alistair Nolan has had overall editorial and management
responsibility. Individual chapters have been prepared by: Milan Konopek (Investment
Policy and Promotion); Alistair Nolan, Sara Barclay and Erin Hengel (Human Capital
Development); Andrea Beltramello (Trade Policy and Facilitation); Nicolas Philiponnet
(Access to Finance); Jakob Fexer and Adelina Vestemean (Regulatory Reform and
Parliamentary Processes); Steve Clark and Erin Hengel (Tax Policy Analysis); and Edgardo
Valencia Cruickshank, Monica Chavez Lemos and Lotte van Mechelen (Infrastructure for
Investment). Drafting of country-specific texts was greatly assisted by Mary O’Mahony.
Critical advice has been had throughout from Antonio Fanelli. Additional support and
research assistance was provided by Aleksander Leicht, Monica Chavez Lemos, Lotte van
Mechelen and Renata Seperic. Anthony O’Sullivan, Alexander Böhmer, Fadi Farra,
Barbara Fliess, Philipp Carlsson-Szlezak and staff from across the OECD’s Private Sector
Development Division contributed to valuable exchanges on the assessment
frameworks used.
The work of independent experts from South-East Europe has been central to this
study. The experts include Selim Belortaja, Haris Abaspahic, Emina Kadric, Anelia
Damianova, Zrinski Pelajic, Danijela Tepšic, Maja Vehovec, Lidija Švaljek, Pleurat Hundozi,
Michael Gold, Peers Brewer, Driton Fetahi, Visar Kelmendi, Arben Abdullahu, Dragan
Martinovski, Simona Sosolceva, Richard Currie, Silvana Mojsovska, Verica Janeska, Anatol
Gremalschi, Sorin Revenko, Ivana Vojinovic, Dragos Pislaru, Kosovka
OgnjenovicandAleksandra Brankovic.
Colleagues from across the OECD Secretariat have advised on assessment criteria and
commented on texts. These include Bob Bonwitt and his colleagues at the SIGMA
Programme as well as Stephen Lumpkin and Mihaylo Milovanovitch, Evdokia Möisé and
Stephen Thomsen.
As sources of valuable information and comments thanks are also due to Evgeny
Evgeniev, Borko Handjiski, Gordana Popovik-Friedman, Vito Intini and Susanne Szymanski.
This study has entailed considerable effort from government counterparts. In this
connection, thanks are due to all the Country Economic Team leaders, and their staff,
working with the OECD Investment Compact for South-East Europe.
Thanks are also due to delegations and offices of the European Commission from
throughout the region, and to the Business Advisory Council, as well as all participants in
the Private Sector Focus Group Meetings held in all countries of the region. Valuable
information was also provided by the CEFTA Secretariat.
The support of Eurochambres, and especially Micol Martinelli, in facilitating the
Private Sector Focus Group Meetings is gratefully acknowledged.
4 INVESTMENT REFORM INDEX 2010 © OECD 2010
ACKNOWLEDGEMENT
The Regional Co-operation Council kindly hosted the initial meeting of regional
government officials convened to design the study.
Critical administrative support has been provided by Laureline Decourtye, Elisa
Larrakoetxea, Geraldine Daly, Laurent Rota and Lynn Whitney. The publication process has
been led by Vanessa Vallée.
INVESTMENT REFORM INDEX 2010 © OECD 2010 5
Acknowledgment to the donors community
Special thanks are due to all the Donors of the Investment Compact for South-
East Europe for their constant support of the OECD’s work in the South-East
European region. Particular thanks are due to the United States of America, the
Government of Flanders and the European Union for their specific financial
contributions to the Investment Reform Index.
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TABLE OF CONTENTS
Table of contents
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Investment Reform Index 2010: Key Findings and Recommendations . . . . . . . . . . . . . 15
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
IRI 2010: Summary of Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PartI
Policy Findings by Dimension
Chapter 1. Investment Policy and Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
1.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
1.2. Investment policy and promotion assessment framework . . . . . . . . . . . . . . 38
1.3. Results by subdimension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
1.4. Conclusions and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Chapter 2. Human Capital Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
2.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2.2. Human capital and direct investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
2.3. The human capital development assessment framework . . . . . . . . . . . . . . . 72
2.4. Results by subdimension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
2.5. Human capital outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
2.6. Conclusions and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Chapter 3. Trade Policy and Facilitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
3.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.2. Trade policy and foreign direct investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
3.3. Trade policy and facilitation assessment framework . . . . . . . . . . . . . . . . . . . 104
3.4. Results by subdimension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
3.5. Conclusions and recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Chapter 4. Access to Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
4.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
4.2. Access to finance assessment framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
INVESTMENT REFORM INDEX 2010 © OECD 2010 7
TABLE OF CONTENTS
4.3. Overview of access to finance in South-East Europe. . . . . . . . . . . . . . . . . . . . 145
4.4. Results by subdimension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.5. Conclusions and recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Chapter 5. Regulatory Reform and Parliamentary Processes . . . . . . . . . . . . . . . . . . . . 169
5.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
5.2. Regulatory reform and parliamentary processes assessment framework. . . . . 171
5.3. Results by subdimensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
5.4. Conclusions and recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Annex 5.1. Romania’s Law on Decisional Transparency
in Public Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Chapter 6. Tax Policy Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
6.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
6.2. Tax policy analysis assessment framework . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
6.3. Results by subdimension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
6.4. Conclusions and recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Chapter 7. Infrastructure for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
7.1. Key findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
7.2. Infrastructure for assessment framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
7.3. Results by subdimension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
Chapter 8. SME Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
8.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
8.2. Key findings on progress in policy elaboration and implementation
in the Western Balkan region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
8.3. Key findings of the SME Policy Index 2010 by economy . . . . . . . . . . . . . . . . . . 240
8.4. Key findings by area of the European Charter for Small Enterprises . . . . . . 242
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
8 INVESTMENT REFORM INDEX 2010 © OECD 2010