Национальный инвестиционный совет

Вид материала

Restructuring and integration: challenges for EU-Russian relations
Growth and integration moving ahead
Restructuring and integration
What can be done?
Industrial policy still misunderstood
Foreign Direct Investment
Directions of future European integration
Selected references
Overview developments 2005-2006 and outlook 2007-2008
Unemployment, based on LFS
Regional composition of imports, 2000 and 2006 EU-25 2000 2006

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Restructuring and integration: challenges for EU-Russian relations

Introduction

European integration is at crossroads. After recent EU enlargements with the former socialist countries from Central and Eastern Europe (May 2004: the Czech Republic, Hungary, Estonia, Poland, Latvia, Lithuania, the Slovak Republic and Slovenia; January 2007: Bulgaria and Romania - NMS), as well as the stalemate following the rejection of a draft EU Constitutional Treaty by referenda in France and the Netherlands in 2005, the EU has been preoccupied by internal debates. Future EU enlargements (Turkey, Croatia, Macedonia are moving slowly forward, other Western Balkan states are all potential candidates) seem to be put on hold while the EU Neighbourhood Policy (ENP) is in disarray and remains largely toothless. The attitudes towards future enlargements (Turkey’s EU membership in particular) became negative in several EU member states (in particular in Austria, France and Germany), the outstanding Stabilization and Association Agreements in Western Balkans are hostage to the settlement of Kosovo status while the design, scope and conduct of EU Eastern Neighbourhood Policy became more controversial as several NMS (especially Poland and the Baltic States) are bringing new accents.^²⁶ The ENP’s implementation has been complicated also by disappointments in the actual developments of the ‘Orange’ revolution in Ukraine, the crisis in EU relations with Belarus and – last but not least – by a marked deterioration of EU-Russian relations. The evolution of EU-Russian Strategic Partnership is unclear after the expiry of the Partnership and Cooperation Agreement (PCA) in November 2007. For all these policy directions new initiatives and sustained efforts of both the EU and Russia are badly needed.

Growth and integration moving ahead

At the same time, the European economy (Germany in particular) has emerged from the period of weak growth surprisingly robust and the EU enlargement has been a clear economic success.^²⁷ The NMS have been currently growing on average by close to 6% per year, the economic growth and stability in Western Balkans future member states (FMS) have markedly improved as well. GDP growth in Belarus, Kazakhstan, Ukraine and Russia (NIS) – driven initially by the post 1998 financial meltdown, devaluations and high commodity prices, but with booming domestic demand and first signs of economic diversification recently emerging – continues to match, if not outperform, even the most successful NMS. All three groups of countries – the NMS, FMS and the CIS – are emerging as dynamic growth regions and are rapidly catching up (the latest wiiw economic forecasts confirm this positive outlook – see Tables 1 and Figure 1). Disregarding signs of overheating in the region (in particular in the Baltic States as well as in Bulgaria and Romania), investment flows have accelerated – and these flows are now moving not only from West to the East but, perhaps surprisingly and sometimes controversially, from East to West as well. Meanwhile, the trade integration of the European economy continues to increase: not only is the intra-EU trade of key importance especially for the NMS, but the EU (in particular after recent enlargements) has become the leading trading partner in particular for Russia (55% of exports), but for Ukraine (28%) and even for Belarus (45% of exports) as well.

In contrast to a rapidly diminishing role of the CIS in the foreign trade of Russia (in 2006 only 14% of Russian exports and 16.2% of imports were traded within the CIS), the share of the CIS (and of Russia in particular) remains still high in the foreign trade of both Ukraine and Belarus – especially as far as imports of energy are concerned.^²⁸ Belarus’ and Ukraine’s dependence on the Russian energy deliveries is a well known fact (reiterated by the recent price disputes). However, not less important is the CIS market (and here again Russian in particular) for the two former countries as a market for their exports – especially of manufactured products.^²⁹

In the European Union (EU-27 after the latest enlargement), the domestic market plays a key role and the trade integration is rather close (about two thirds of all EU imports represent transactions within the EU). The share of NMS in overall EU imports has been rapidly increasing (from 3.9% in the year 2000 to 5.8% in 2006 – see Figure 2). Only 3.7% of EU imports originate in Russia; EU imports from Belarus and even Ukraine are negligible. The intra-EU orientation of the NMS is even more pronounced (and rising). In 2006, less than 27% of NMS imports came from outside the EU (of which 8.8% were from Russia and less than 1% from Ukraine – see Figure 2).^³⁰ Yet the NMS have been successful not only in penetrating western EU markets: a very important by-product of the accession and integration processes has been a dynamic speed of (re)integration within the NMS themselves: the share of intra-NMS imports in their total imports increased from 9.5% in 2000 to more than 14.3% in 2006 (Figure 2).

In short, the European growth is on track and the economic integration is progressing “from the bottom”, driven by both the accession process (in the NMS and less clearly also in Western Balkans) and by growing business interests in rapidly expanding lucrative markets farther East (especially in Russia). EU trade and investments in these dynamic markets grow despite a difficult and unclear contractual environment (PCA with Russia ending, the envisioned Deep Free Trade agreement with Ukraine may not meet the latter’s expectations, disrupted relations with Belarus, SAA with Serbia stalled over Kosovo issue, etc.). Institutional framework for doing business in wider Europe is in a clear mismatch with economic reality, challenging not only the future European integration but also its competitiveness in a global economy. Next integration steps are complicated not only by internal EU disputes, but also by a growing Russian assertiveness linked to its growing economic strength and attempts to restore influence on the post-Soviet space where it views EU inroads (including Neighbourhood Policy) as an unwelcome intrusion in its traditional sphere of influence. This, in turn, is viewed with suspicion by several NMS (especially by Poland and the Baltic States) where the distrust in Russian intentions is particularly strong. However, some Russian recent and at least in part apparently politically motivated actions vis-à-vis its “near abroad” (energy price disputes, trade sanctions, restrictions on migrant workers) are not instrumental to the promotion of economic cooperation within the region either.

All these relatively recent developments raise many – sometimes unexpected - questions and new challenges for Europe, its growth, stability and competitiveness in a global economy. EU-Russian relations are of particular relevance for the future of European economic integration with broader implications for growth performance and the international competitiveness of Europe in a globalized economy. Given the present stalemate in enlargement and neighbourhood policies evolution, the narrowing of a distance between EU membership and non-membership in absence of a strong accession anchor is very important.^³¹ The present paper draws on a wide body of ongoing research, using as points of departure the experience, results and policy implications from the recently completed INDEUNIS research project.^³² It outlines several key problem areas which affect the evolution of future EU-Russian relations in the context of a broader European economic integration.

Restructuring and integration

Restructuring and integration can be seen as two sides of the same “transition” coin. Russia has made considerable progress in both areas, yet it still lags behind the NMS (though not necessarily behind other CIS such as Ukraine and Belarus). It is generally agreed that while the CIS lag behind the NMS in reforms and restructuring, the transition paths followed are fairly similar. As INDEUNIS has project shown, both groups of countries underwent during the last one and half decades an overlapping sequence of structural change, roughly in four stages:

geographical reorientation of trade,
change of commodity composition in output and trade,
integration into European (and global) markets based on comparative advantage,
beginning of shifts up the ladder of comparative advantage.

The NMS-CIS lag is largely explained by the initial delays in market reforms and a subsequent slower pace and not by worse starting conditions or more “radical” reforms. Essential reforms started with a five- to ten-years delay for many reasons including extended policy debates, opposition of old and new vested interests, local conflicts, and the absence of EU accession perspective. That perspective was important for the NMS as it reinforced the political determination to proceed with reforms (which were also stipulated by the EU Association Treaties). In contrast to Western Balkans FMS (and even there with some important qualifications), the CIS are unlikely to obtain an EU accession perspective anytime soon (Russia does not even want that perspective since it considers itself “special” with own growth strategy and alternative integration aspirations – see below). Other available external institutional ‘anchors’ – in particular WTO membership – may have been too weak for a committed pursuit of reforms, partly also because a direct financial “carrot” may be negligible.^³³ One way to replace the lacking accession anchor is to offer better access to the European market and programmes to those who are not already members, i.e. to reduce the distance between membership and non-membership (Tsoukalis, 2007).

What can be done?

Domestically, a policy aimed at the reduction of reform and development gaps of CIS, particularly Russia, vs. the NMS may include a number of options:

advance/complete the liberalization and institutional development processes;
provide more government budget for renewing and expanding infrastructure in roads, telecommunications, scientific research;
establish an Industrial Policy (IP) to promote priority sectors, hi-tech exports, using budgetary and tax-relief mechanisms;
use tariff and other protection under an IP policy for temporary support to infant-industries or a revival of old industries.

The main conclusion stemming from the experience of structural change in the NMS is that their consequent and predominantly liberal policies of reforms have been economically very successful, and provide an object lesson for both the CIS and Russia. The major component of NMS success has been a fairly steady progress in market reforms, including liberalization and openness to FDI, and institutional developments which were fostered by an integration perspective (WTO, OECD and, finally, the EU). For Russia and other CIS, following the same path despite the problems early delay has caused, would seem to be the best recommendation.

Corporate governance and other crucial aspects of institution building, in which differences between NMS and other transition countries are rather obvious, are the key to explaining NMS-NIS differences (not the speed of trade liberalization, macro policies, etc.). Corporate governance problems represent a significant deterrent to foreign investors – in the privatization process, in becoming outside owners of private (privatized) enterprises, as well as in establishing new (both domestically and foreign-owned) firms – although the situation has been improving recently.

Strong state involvement in the form of Industrial Policy is a tempting and increasingly popular option (particularly in Russia, however not only there), but it provides no guarantee for success and creates a risk of abuse, corruption and large budgetary costs.^³⁴ The creation of general economic circumstances that are favourable for both foreign and domestic investors is therefore crucial for growth and competitiveness. In the creation of such conditions, progress in Russia has been rather limited, and without such progress, satisfactory and sustainable economic, industrial and trade development cannot be achieved. Establishing a modern market economy’s institutional system has to be continued in the NMS, and has to be accelerated, starting from a still rather low level, in the CIS (including Russia). All of the above requires a strong and independent judiciary – a problem which is not fully solved even in the NMS – and has important implications for business strategies of European companies, EU-Russian relations and even for Russia’s own integration aspirations in the “near abroad”.

The main policy implications of the previous research, in particular within the above mentioned INDEUNIS project, focus on three broad areas: industrial policy, the role of Foreign Direct Investments (FDI) and of European (not only EU) integration. The key findings, important also for future EU-Russia relations, are summarized below.

Industrial policy still misunderstood

The Russian government recently endorsed long-term development strategies for several industries and set national priorities for mid-term development. These are, however, not sufficiently supported by any effective policies for encouraging investments in the priority areas, and have so far failed to markedly redirect the overall economic policy. The present industrial policy à la Russe is understood as a set of government measures influencing business entities, exercised in order to encourage their active involvement in structural and technological modernization or a rapid development of individual industrial sectors. Specific investment programmes in various priority areas are to pool financial and technological resources for economic modernization, financed via special development institutions including wide involvement of private capital within the frameworks of public-private partnership (significantly FDI policy is not mentioned). The argument of possible inefficiencies of industrial policies and the danger of corruption is not accepted, it is argued that the “strong state” will prevent abuse and the “quality of bureaucrats will improve together with tasks they handle^³⁵.

Important counter-arguments provides i.a. Soos in one of INDEUNIS papers (see Soos (2007), quoting Mille (2006):

‘Rather than wishing for ‘‘more honest’’ officials, or prioritizing stricter controls and penalties (as do the public) or higher salaries (as do officials) as solutions to the problem of corruption—the analytic findings point to the importance of reducing the situations in which corruptibility is most likely to be translated into corruption. Reforming situations means providing clients with alternative access points and better appeal procedures. It means more clearly and publicly set out rights for clients on the one hand and more clearly and publicly set out user charges, tariffs or ‘‘price lists’’ on the other.’, see Mille (2006).

Maincent and Navarro (2006) found that the economic arguments in favour of targeted industrial policies are controversial, though in some circumstances they may succeed in fostering growth of national companies. Indeed, it is fair to say that after some disappointment with horizontal industrial policy there has been a revival of interventionist instincts also in the EU. However, the authors find that the risk of failure in picking the winners is particularly great in high technology sectors where the risk of making wrong choices is particularly high. Supporting research and innovations, the access to technology by small and medium sized enterprises is certainly beneficial.

Foreign Direct Investment

The weakness of FDI inflows into the CIS is a serious deficiency (Table 2). Though FDI cannot be the predominant source of investment financing (and Russia has nowadays enough own resources), FDI plays multiple important roles, and this could benefit the CIS, too.^³⁶ The NMS nowadays attracts both new FDI projects and upgrading investments ranging from simple efficiency-seeking to more complex network-type integrated production. Foreign penetration has supported the upgrading of industrial structures and improved competitiveness. Empirical analysis shows that industrial integration through FDI has led to considerable increases in productivity, technology and quality, as well as in sales and exports of the NMS where new dynamic sectors emerged (Hunya, 2006). A comparison of NMS-NIS export structures is telling: whereas the NMS have become major exporters of manufactured products (90% of their exports to the EU), especially of motor vehicles, radio, TV and communication equipment as well as machinery, Russian exports to the EU consist mainly of oil and gas (55% of the total), refined petroleum (16.8%) and basic metals (11%). These three product groups made up more than 80% of Russian exports to the EU - see Table 3. The concentration on low value added basic manufactured goods is high also in Belarus’ exports to the EU (refined products: 55%), exports of Ukraine (basic metals: 34%) and Kazakhstan (oil and gas: 80%, basic metals: 14%). Nevertheless, the direct link between FDI and economic growth in transition countries is not certain (Jensen, 2006).

In Russia and other CIS, much of the investment inflows recorded so far stem probably from Russian-owned assets held offshore and reinvested in Russia or CIS, rather than from foreign investors proper bringing fresh capital, technology and management know-how.^³⁷ Several INDEUNIS papers show that Russian FDI policy is still to a high degree protectionist and the infant-industry arguments prevail over concerns about the benefits of economic freedom. FDI policy is not considered as an integral part of industrial policy (also in Ukraine, FDI policy seems to be far from being considered an integral part of economic policy – despite frequent political statements “welcoming” FDI).

Russia’s greatest untapped potential lies in efficiency-seeking FDI. With its technological capabilities and human skills, Russia could become a major international engineering hub (Ukraine, Kazakhstan and even Belarus may also have such potential). But the success may prove inadequate under a scenario of intense global competition for FDI projects, in which case the country would also need to upgrade its investment promotion efforts, including the liberalization of FDI and the provision of targeted incentives. If that happens, Russia could multiply its inward FDI stock within a relatively short period of time. One of important caveats is that before this happens, Russia could become a too expensive location for export-oriented FDI projects. Besides, both the size of Russian economy, national security concerns and its abundance of natural resources will doubtlessly shape FDI flows differently from patterns observed in the NMS. Furthermore, the role, patterns and effects of outward Russian FDI is becoming an increasingly hot topics which requires additional research.^³⁸ The above aspects have again important implications for both potential relocation of production to Russia, the adequate business strategies of European firms and for EU-Russia economic relations.

Directions of future European integration

Closer economic integration between the enlarged EU, the CIS and Russia in particular requires further mutual trade liberalization and encouragement of cooperation in various fields such as in industry, transport infrastructure and research. The EU – the stronger side – should be expected to lead the process.^³⁹ A contrasting view, increasingly popular in Russia, is that Russia is different from both the NMS and other CIS: it is big and does not wish, or need, to integrate with the EU. According to this view, Russia should develop its own integration space encompassing the bulk of the post-Soviet area (The Common Economic Space). Integration within that space should create an economy that would be multi-country, multi-sector but basically inward-oriented. However, before that were to happen Russia would have to change its sturdy behaviour towards its potential integration partners, offering incentives for such an integration project instead of threats when the potential partners are hesitant.

Yet there is a broad agreement that the relationship between the enlarged EU and the CIS requires a more intensive search for constructive approaches to the interaction within the triangle of Russia – EU – CIS countries. Turning the space of the common ‘near abroad’ of both Russia and the EU into a conflict area would be deplorable. Both Russia and the EU should develop coordinated “neighbourhood” policies which should recognize the futility of ‘competing integrations’ in relation to the CIS with Russia trying hard to involve its major partners in the Customs Union of the ‘Four’ (Belarus, Russia, Kazakhstan and Ukraine) and the EU hindering this process while offering those countries no clear prospects of deeper EU economic integration. The Single Economic Space integration should be an ‘interface’ project between the EU and the CIS, as part of the gradually evolving Common European Economic Space.^⁴⁰

Conclusions

Trade and investment integration of the European economy has been rapidly progressing yet there is a clear mismatch between (mostly successful) activities of individual companies and the existing institutional framework. It can be realistically assumed that all major CIS (including Russia and perhaps even Belarus) will become WTO members in the next 2-3 years. However, neither WTO membership (see example of Moldova) nor PCA can be seen as sufficiently strong and credible institutional anchors for stability and consequent institutional reforms.^⁴¹ An equally sober assessment regarding the anchoring impact of an envisaged Deep Free Trade Agreement with Ukraine, not to speak about the uncertain post-PCA deal with Russia, has to be made.^⁴² The existing regional trade arrangements such as CEFTA in Western Balkans or the CES in the CIS (in both plays the EU a key role as a major trading partner of the countries concerned) are also not sufficient alternatives to a broader Common European Economic Space (CEES) encompassing both the enlarged EU, Western Balkan countries and the CIS.

Although the CEES is economically preferable (another major conclusion from INDEUNIS project), it is currently for various reasons not a realistic option – at least in the short and medium run owing to diverging political interests and the existing bilateralism in EU’s external relations. Still, this does not mean that partial integration steps in selected areas of common interests could not be pursued. Among these are such urgent issues like energy supplies (including problems of energy security and transit), further liberalization of trade and investment flows and the labour market challenges affecting European growth and competitiveness (emerging shortages of skilled workers, including labour migration, in both East and West), institutional developments (in particular corporate governance issues) and further financial markets integration. Furthermore, the very important proposition that “Russia is different” and can pursue its own development and integration strategies has to be more thoroughly investigated.^⁴³

Given the strong evidence regarding beneficial effects of EU integration, in particular for (but not only) the NMS, as well as important – though often lopsided – EU-Russia-NIS trade links there is an urgent need for further steps towards a broader and smooth European economic integration. From the outside it seems that Russia now represents the main (though not the only) stumbling block: it seems to be no coincidence that Russian external relations with most of its neighbours have recently deteriorated: not only with the EU (where some NMS could be blamed), but also with Ukraine, Georgia and even Belarus. Joint actions are therefore needed, not only by the EU (which should, as a stronger partner lead the initiative), but by Russia as well, in order to create conditions for an improved partnership and cooperation in a wider common European economic space. Indeed, this could be one of the key parts of the new EU-Russia agreement following the expiry of current PCA. In any case, a turnaround from confrontation to cooperation is urgently needed.

Selected references:

(apart from INDEUNIS papers which are all available at:

ссылка скрыта)

Barrell, R. – Holland, D., [2000], Foreign Direct Investment and Enterprise restructuring in Central Europe, Economics of Transition, Vol. 8, No. 2, pp. 477-504.

Barisch, K. (2007), “Russia, realism and EU unity”. Policy Brief, Centre for European Reform, July, London.

Bevan, A. A. – Estrin, S. [2004], The determinants of foreign direct investment into European transition economies, Journal of Comparative Economics Vol. 32, No. 4, pp. 775–787.

Carstensen, K. – Toubal, F. [2004], Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis, Journal of Comparative Economics Vol. 32 No. 1 pp. 3–22.

Crespo, N. [2007] Determinant Factors of FDI Spillovers – What Do We Really Know?, World Development Vol. 35, No. 3, pp. 410–425.

Damijan, J. P. –Knell, M. –Majcen, B. –Rojec, M. [2003], The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries, Economic Systems Vol. 27, No. 1, pp. 189-204.

Dollar, D. – Hallward-Driemeier, M. – Mengistae, T. [2006], Investment Climate and International Integration, World Development Vol. 34, No. 9, pp. 1498–1516.

Emerson, M. (2007), “The wider neighbourhood is in not such good shape”. European Neighbourhood Watch, No. 29, July, CEPS, Brussels.

Frenkel, M. –Funke, K. – Stadtman, G. [2004], A panel analysis of bilateral FDI flows to emerging economies, Economic Systems Vol. 28, No. 3, pp. 281–300.

Gligorov, V., Richter, S. et al., (2007), „ High Growth Continues, with Risks of Overheating on the Horizon“. wiiw Research Reports, No. 341, July, Vienna.

Hamilton, C. B. [2005] Russia’s European economic integration. Escapism and realities, Economic Systems Vol. 29, pp. 294–306.

Havlik, P. (2003), “Russia and the European Union”. In Contemporary Europe. Social and Political Research Journal. (in Russian). Institute of Europe, Moscow, No. 1, pp. 32-38.

Havlik, P. (2003), “EU-Erweiterung: Implikationen für Wachstum und Wettbewerbsfähigkeit”. In Europäische Rundschau, Wien, No. 3, pp. 31-40.

Havlik, P. (2004), „Russia, European Union and EU Eastward Enlargement“. In G. Hinteregger and H.G. Heinrich (Eds), Russia – Continuity and Change. SpringerWienNewYork, pp. 363-378.

Havlik, P. (2004), “Structural change, productivity and employment in the new EU member states” (together with M. Landesmann). In: Economic Restructuring and Labour Markets in the Accession Countries. Employment and Social Affairs. EC DG Employment, Social Affairs and Equal Opportunities, Brussels, December, pp. 1-22. (.int/comm/employment_social/employment_analysis/restruct_sem_en.php)

Havlik, P. (2005), “The Enlarged European Union and Its Eastern Neighbourhood” (with Vasily Astrov). In: K. Liuhto and Z. Vincze (Eds), Wider Europe. Esa Print Oy 2005, pp. 169-195. (published also in Journal of East-West Business, Vol. 11, No. 1/2, pp. 13-44).

Havlik, P. (2005), „Central and East European Industry in an Enlarged European Union: Restructuring, Specialisation and Catching-Up“. In: Économie Internationale, No. 102, pp. 107-132.

Havlik, P. (2007), “Ukraine, Belarus and Moldova: Economic Developments and Integration Prospects” (with Vasily Astrov). In: D. Hamilton and G. Mangott (Eds), The New Eastern Europe: Ukraine, Belarus & Moldova. Center for Transatlantic Relations, John Hopkins University, Washington D.C., pp. 127-147.

Hunya, G., (2006), “Can internationalization through inward FDI be advantageous for Russia?”. INDEUNIS Paper (ac.at/indeunis.

Hunya, G., (2007), “wiiw Database on Foreign Direct Investments in Central, East and Southeast Europe: Shift to the East”. wiiw, Vienna.

Jensen, C., (2006), “Foreign Direct Investment and Economic Transition: Panacea or Pain Killer?”, Europe-Asia Studies, Vol. 58, No. 6, September, pp. 881-902.

Kaufmann, D. –Kraay, A. – Mastruzzi, M. [2006], Governance Matters V: Aggregate and Individual Governance Indicators for 1996–2005, WPS 4012, The World Bank, Washington, D. C.

Mille, W. L. [2006], “Corruption and Corruptibility”, World Development Vol. 34, No. 2, pp. 371–380.

Maincent, E., Navarro, L.., (2006), “A Policy for Industrial Champions: from picking winners to fostering excellence and the growth of firms”. Industrial Policy and Economic Reforms Papers, No. 2, EU DG Enterprise and Industry, Brussels, April.

Pindyuk, O., (2007), “Foreign trade restructuring in Belarus and Ukraine: a comparison”. wiiw Monthly Report, No. 6, Vienna, pp. 4-13.

Shleifer, A. – Treisman, D. [2000], Without a Map. Political Tactics and Economic Reform in Russia, MIT Press, Cambridge, Mass.

Tsoukalis, L., (2007), “Global, Social & Political Europe”. ELIAMEP, July, Athens.

Zhuravskaya, E., (2007), “Whither Russia? A Review of Andrei Shleifer’s A Normal Country”. Journal of Economic Literature, Vol. XLV, March, pp. 127-146.

Table 1 Overview developments 2005-2006 and outlook 2007-2008

	GDP				Consumer prices				Unemployment, based on LFS				¹⁾	Current account
	real change in % against previous year				change in % against previous year				Rate in %, annual average					in % of GDP
	2005	2006	2007	2008	2005	2006	2007	2008	2005	2006	2007	2008		2005	2006	2007	2008
			forecast				Forecast				forecast					forecast
Czech Republic	6.5	6.4	5	5.2	1.9	2.5	3	2.8	7.9	7.1	6.3	6		-1.6	-3.1	-4.3	-4.4
Hungary	4.1	3.9	2.7	3.1	3.6	3.9	7.0	3.5	7.2	7.5	7.7	7.7		-6.9	-5.8	-4.6	-3.8
Poland	3.6	6.1	6	5.5	2.1	1.0	2.3	2.5	17.8	13.9	11	10		-1.7	-2.3	-3.0	-3.5
Slovak Republic	6.0	8.3	8.5	8	2.7	4.5	3	2	16.2	13.3	11	10		-8.6	-8.3	-4.7	-4.1
Slovenia	4.0	5.2	5	5	2.5	2.5	2.6	2.3	6.6	6.0	5.8	5.5		-2.0	-2.5	-2.2	-1.5
NMS-5 ²⁾³⁾	4.5	5.9	5.4	5.2	2.4	2.1	3.3	2.7	14.1	11.5	9.7	9		-3.1	-3.5	-3.6	-3.7
Bulgaria	6.2	6.1	6	6	5.0	7.3	5	5	10.1	9.0	7.5	7		-12.0	-15.8	-16.5	-15.0
Romania	4.1	7.7	6.0	5.5	9.0	6.6	4.0	4.5	7.1	7.2	7	7		-8.7	-10.3	-13.0	-11.6
Estonia	10.5	11.4	9.5	8.4	4.1	4.4	5.5	5	7.9	5.9	5	4.5		-10.5	-14.8	-13.8	-11.5
Latvia	10.6	11.9	8.9	8	6.7	6.8	7.5	7	8.7	6.8	6	5.5		-12.6	-21.1	-19.5	-19.0
Lithuania	7.6	7.5	7	6.5	2.7	3.8	5	5	8.3	5.6	4.5	4		-7.2	-10.8	-11.1	-10.4
NMS-10 ²⁾³⁾	4.8	6.5	5.7	5.5	3.6	3.2	3.7	3.3	9.7	10.0	8.7	8.1		-4.6	-5.7	-6.2	-6.0
EU-15 ³⁾	1.6	2.8	2.7	2.5	2.1	2.2	.	.	7.9	7.4	6.9	6.5		0.01	-0.15	.	.
EU-25 ²⁾³⁾	1.9	3.1	3.0	2.8	2.1	2.2	2.0	1.9	8.8	8.0	.	.		-0.18	-0.40	.	.
EU-27 ²⁾³⁾	1.9	3.2	3.0	2.8	2.3	2.3	2.0	2.0	8.7	7.9	7.2	6.7		-0.27	-0.51	.	.
Croatia	4.3	4.8	5	5	3.3	3.2	2.8	2.3	12.7	11.1	10.8	10.3		-6.3	-7.6	-7.7	-7.1
Macedonia	3.8	3.1	4	4	0.5	3.2	3	3	37.3	36.0	35	35		-1.4	-0.4	-1.9	-1.8
Turkey	7.4	6.1	5.5	6.5	8.2	9.6	7.5	5	10.3	9.9	9.5	9		-6.4	-7.9	-6.9	-6.3
Albania⁴⁾	5.6	4.9	5	5.5	2.4	2.4	2.5	3	14.2	13.9	14	13.5		-7.4	-7.6	-8.5	-6.6
Bosnia and Herzegovina ⁴⁾⁵⁾	5.5	6.2	6	6	3.0	7.2	3.7	2	44.2	31.1	30	30		-21.3	-11.4	-10.9	-9.2
Montenegro	4.0	6.5	5	5	2.3	3.0	3	3	30.3	30.0	30	30		-8.9	-29.4	-15.2	-15.2
Serbia	6.2	5.7	5	5	16.2	11.6	8	6	20.8	20.9	22	23		-8.5	-11.4	-12.5	-11.5
Russia	6.4	6.7	6.9	5.2	12.5	9.8	8	7	7.2	7.2	7	6.5		11.0	9.6	6.6	5.3
Ukraine	2.6	7.1	6.5	6	13.5	9.1	10	9	7.2	6.8	6.5	6.4		3.1	-1.5	-3.8	-4.9
China	10.4	10.7	10.5	10	1.8	1.5	2.8	2	.	.	.	.		7.2	9.5	8.5	6.6

Note: NMS: The New EU Member States.

1) LFS - Labour Force Survey. - 2) wiiw estimate. - 3) Current account data include flows within the region. - 4) Unemployment rate by registration, end of period. - 5) From 2006 data based on first LFS April 2006.

Source: wiiw (June 2007); Eurostat; forecasts for EU-15 and the Baltic States: European Commission (Spring 2007); wiiw.

Figure 1

Real per capita GDP in transition countries, at PPP
European Union (25) average = 100

Remark: Projection assuming a 3 percentage points growth differential with respect to the EU-15 after 2007

Source: National statistics, Eurostat, wiiw estimates.

Figure 2

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Национальный инвестиционный совет

Regional composition of imports, 2000 and 2006

EU-25

2000 2006

NMS-10

2000 2006