Increasing 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.

Preparation 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.

South-East Europe (SEE) has progressively reduced restrictions to national treatment since completion of the previous Investment Reform Index (IRI 2006). Restrictions only remain in a limited number of sectors, e.g., arms production and manufacturing. The protection of physical property has been enhanced with the digitization of land registries and cadastral books. However, enforcement of intellectual property rights (IPR) remains a challenge. Consideration should be given to using designated IPR courts to expedite cases of IPR infringement. SEE economies should review procedures and criteria for acquiring business-related licenses and permits at the sub-national level (such as building/construction permits) and ensure their overall transparency. One option is to have investment promotion agencies function as one-stop shops for inward investors. The scope for additional privatisation-related investment is narrowing, while public private partnerships (PPP) are in their infancy. Policy makers in SEE are encouraged to exchange best practices on the design of PPP units, PPP-related legislation, cost-benefit analysis and monitoring, drawing for instance on the OECD Principles for Private Sector Participation in Infrastructure.

Raising the quantity and quality of direct investment is critical to the economies of South-East Europe (SEE). The importance of meeting this challenge has been underscored by the global economic crisis.

The investment policy and promotion dimension assesses the policy frameworks governing FDI. In addition, the dimension examines the types of services and activities used to facilitate the entry and expansion of foreign investment and the transparency of investment-related laws, regulations and procedures. Compared to IRI 2006, a new subdimension is included, reviewing policies supporting privatisation and public-private partnerships (PPPs).