• No results found

Strengths and Weaknesses in the Baltic Sea Region

N/A
N/A
Protected

Academic year: 2021

Share "Strengths and Weaknesses in the Baltic Sea Region"

Copied!
18
0
0

Loading.... (view fulltext now)

Full text

(1)

Strengths and Weaknesses in the Baltic Sea Region

Christian H.M. Ketels, PhD Institute for Strategy and Competitiveness

Harvard Business School and Center for Strategy and Competitiveness Stockholm School of Economics

This presentation draws on joint work with Professor Örjan Sölvell and has benefited strongly from ideas developed by Professor Michael E.

Porter. The State of the Region-Report has been financed by the Nordic Investment Bank (NIB) and the Nordic Council of Ministers (NCM) in collaboration with the Baltic Development Forum (BDF). The full Report is available at www.bdforum.org

Additional information on competitiveness research can be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu

(2)

2 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Two Questions

• Where does the Baltic Sea Region stand?

• Is the Region on a sustainable trajectory?

(3)

3 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Dimensions of Strengths and Weaknesses

• Institutions

• Trust

• Common ‘language’

• Leadership

• Macroeconomic, political, legal, and social context

• Business environment quality

• Company sophistication

• Prosperity

• World market position

• Innovation

• Integration

Capabilities

Assets

Outcomes

(4)

4 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

• World market position solid but not improving

• Innovation position strong but not improving

• Level of integration is significant but unbalanced across parts of the region

• High prosperity in the north-west, high growth in the south-east

• World market position solid

• Innovation position strong

• Level of integration is significant

Economic Outcomes

(5)

5 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Prosperity

Cross-National Regions and BSR Countries

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

Baltic Sea Region

Iberia NAFTA

Central Europe EU-15

EU-10

GDP per Capita, US-Dollar, PPP, 2005

Growth of Prosperity, CAGR, 2000 - 2005

Source: Groningen Growth and Development Centre and The Conference Board (2006), IMF (2006), authors’ calculations

ASEAN BRIC

Oceania British Isles

Denmark

Estonia Iceland

Latvia Norway

Lithuania Sweden

N Poland

N Russia Finland

N Germany

(6)

6 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Investment and Exports

FDI Inflows over Time

-10%

0%

10%

20%

30%

40%

50%

60%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

European Union Baltic Sea Region

Source: UNCTAD (2006), author’s analysis.

FDI Inflows as % of Gross Domestic Investment

World Central European Region

Inward FDI Stock as % of GDP, 2004

European Union: 32%

Baltic Sea Region: 32%

Central European Region: 23%

World: 22%

(7)

7 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Patenting Intensity over Time

Baltic Sea Region Countries

0 20 40 60 80 100 120 140 160 180 200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Finland Sweden Germany Iceland Denmark Norway Estonia

Russian Federation Lithuania

Latvia Poland

Source: USPTO (2006), author’s analysis. State of the Region-Report 2006

Patents per 1000 Capita

(8)

8 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Integration

Foreign Direct Investment Flows

0%

10%

20%

30%

40%

50%

60%

70%

80%

Li thu ani a

Fin la nd

E st oni a

No rw ay

De nma rk

Sw ede

n

N P ola nd

N W R us si a

Ic el an d

N G er m any

Sweden Finland Denmark Estonia N Germany Norway Latvia Iceland Lithuania NW Russia N Poland

Share of inward FDI from other BSR countries, 1999 - 2004

Source country

Source: UNCTAD, national statistical offices, author’s calculations

BSR average

(9)

9 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Economic Assets

• Sound macroeconomic policies, sound institutions and legal systems, and few social issues

• Well established financial markets, solid skill and science base, and a regulatory environment

supporting fair and open competition

• A core group of multinational companies from the region and wide-spread adoption of modern

management practices

• But economically small region at the European periphery with few metropolitan regions

• But low attraction of skilled foreign labor, weak incentives for investment and risk taking, and remaining gaps in infrastructure

• But few new companies of significant

size emerging

(10)

10 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Microeconomic Foundations

Business Competitiveness Index Ranking over Time

2001 2002 2003 2004 2005 2006

Baltic Sea Region

Source: Global Competitiveness Report (2006), author’s analysis.

Rank 5

15

25

BCI – Overall Index

NBE – Business Environment Quality

COS – Company Sophistication

(11)

11 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Knowledge Creation

Top Universities in the Baltic Sea Region

Copyright © 2005 Institute of Higher Education, Shanghai Jiao Tong University

(12)

12 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

• Wide set of cross-regional institutions and long historical legacy of linkages across the region but very different recent historic experiences

• Generally high level of trust in the north-west but unclear whether this carriers over to cross-regional relations and the south-east

• Broad consensus on the importance of competition and the impact of globalization but different views on the role of

government

• General tendency to believe in the power of institutions with less tradition in individual leadership

• Wide set of cross-regional institutions and long historical legacy of linkages across the region

• Generally high level of trust in the north-west

• Broad consensus on the importance of competition and the impact of globalization

• General tendency to believe in the power of institutions

Capabilities

(13)

13 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

The Formula of Baltic Sea Region Growth

The Nordic Model

Sound domestic policies

• Macro

• Institutions

• Skills

• Infrastructure

• Openness

Sound domestic policies

• Macro

• Institutions

• Skills

• Infrastructure

• Openness

Globalization

• Huge opportunities from opening

markets

• Companies with

long legacy of global presence

Globalization

• Huge opportunities from opening

markets

• Companies with

long legacy of global presence

x x x x

Technological change

• Increasing role of know-how in value creation and growth of science-related industries play to strengths of the region

Technological change

• Increasing role of know-how in value creation and growth of science-related industries play to strengths of the region

= Strong economic growth

(14)

14 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

The Formula of Baltic Sea Region Growth

The Baltic Model

Legacy

• Sound skill base Legacy

• Sound skill base

Openness and Incentives

• Openness for trade and investment

• Aggressive FDI attraction efforts

• Low taxes

Openness and Incentives

• Openness for trade and investment

• Aggressive FDI attraction efforts

• Low taxes

x x x x

Location

• Revitalization of historic relations to Northern and

Western neighbors Location

• Revitalization of historic relations to Northern and

Western neighbors

= Strong economic growth

(15)

15 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Institutions

• Leveraging EU and NATO institutional structures to provide stability

Institutions

• Leveraging EU and NATO institutional structures to provide stability

Legacy

• Tradition of close ties across the Region

Legacy

• Tradition of close ties across the Region

The Formula of Baltic Sea Region Growth

The Integration Model

x x x x

Historic Opportunity

• Willingness in

Western Europe to push for integration

• Consensus in Eastern Europe

Historic Opportunity

• Willingness in

Western Europe to push for integration

• Consensus in Eastern Europe

= Strong growth of integration

(16)

16 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

The Formula Hitting its Limits

Traditional challenges remain in place

o Economically small region at the European periphery

Domestic policy models are losing traction

• Nordic countries need to provide better environment for human skill-intensive entrepreneurial companies

• Baltic countries need to invest in creating new capabilities

Baltic Sea integration policies are losing traction

• Past model of west-to-east transfers has reached its limit

• EU membership of Baltic countries and Poland create a competing arena

• The EU context changed the dynamics of relations to Russia

Competitors are catching up

o Many countries are significantly upgrading their domestic policies

(17)

17 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

High Low

The Challenge of Economic Heterogeneity

Degree of Heterogeneity Degree of Heterogeneity

• Easy to develop a common identity

• Easy applicability of others’

experience

• Balanced distribution of benefits

• Regional cooperation is easier but provides fewer benefits

• Huge potential gains from regional benchmarking

• Huge potential gains from division of labor

• Regional cooperation is harder

but provides higher benefits

(18)

18 Copyright 2006 © Christian H. M. Ketels Baltic Sea Region Report 2005 - 08-28-05 CK

Putting the Baltic Sea Region at the Top of Europe

Key Issues

• Aggressively pursue full regional integration, especially when it hits politically sensitive areas

• Intensify the integration of private sector leaders and companies into regional cooperation efforts

• Identify the unique economic value that the Baltic Sea Region aims to provide as part of the global economy

• Address individual weaknesses in the business environment, focusing

on the areas most critical to the Region’s strategic position

References

Related documents

46 Konkreta exempel skulle kunna vara främjandeinsatser för affärsänglar/affärsängelnätverk, skapa arenor där aktörer från utbuds- och efterfrågesidan kan mötas eller

Däremot är denna studie endast begränsat till direkta effekter av reformen, det vill säga vi tittar exempelvis inte närmare på andra indirekta effekter för de individer som

The increasing availability of data and attention to services has increased the understanding of the contribution of services to innovation and productivity in

a) Inom den regionala utvecklingen betonas allt oftare betydelsen av de kvalitativa faktorerna och kunnandet. En kvalitativ faktor är samarbetet mellan de olika

The purpose of this study is to provide an introduction into the current situation in the shipping industry within the EU (European Union) and how the future member states - in

Swedish Renewable energy sector: Companies concerned with the creation of energy and energy technology.. Focus: Technological change and opportunity

Industrial Emissions Directive, supplemented by horizontal legislation (e.g., Framework Directives on Waste and Water, Emissions Trading System, etc) and guidance on operating

The EU exports of waste abroad have negative environmental and public health consequences in the countries of destination, while resources for the circular economy.. domestically