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Competitiveness in South East Europe

A Policy Outlook 2018

image of Competitiveness in South East Europe

Future economic development and the well-being of citizens in South East Europe (SEE) increasingly depend on greater economic competitiveness. Realising the region’s economic potential requires a holistic, growth-oriented policy approach. Against the backdrop of enhanced European Union (EU) accession prospects and a drive towards deeper regional co-operation, SEE governments have demonstrated a renewed commitment to enacting policy reforms.

 

The second edition of Competitiveness in South East Europe: A Policy Outlook seeks to help SEE policy makers assess progress made towards their growth goals and benchmark them against regional peers and OECD good practices. The 17 policy dimensions addressed in this report encompass a wide range of areas key to economic competitiveness including the business environment, skills and capacity, the region's economic structure and its governance. The report leveraged a highly participatory assessment process which brought together more than 1 500 individual stakeholders including OECD experts, SEE policy makers, private sector representatives and regional policy networks and organisations to create a balanced view of performance.

Since the latest edition of the report, there have been areas of noteworthy progress. The six assessed SEE economies have adopted strategies to improve the overall standard of education, acted to remove technical barriers to trade and taken steps to establish better financing mechanisms for small and medium-sized enterprises. Further efforts are underway to expand broadband services and close the digital divide, tackle inefficiencies in the energy and agriculture sectors, and address demographic challenges posed by long-term unemployment. Notwithstanding these important gains, there remain considerable challenges for these economies as they continue their journey towards structural reform.

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Tax policy in South East Europe

This chapter assesses tax policy in six South East European economies. It begins with a brief overview of the general features of the tax system including tax revenues and the balance of the tax mix. It also discusses tax policy assessment tools such as models to forecast future tax revenues, micro-simulation models and tax expenditure reporting. It then focuses on three key sub-dimensions. The first, tax policy, explores whether tax policy fosters an environment conducive to inclusive economic growth and how its design affects revenues raised, investment and competitiveness. The second sub-dimension, tax administration, assesses the efficiency of the tax administration. The third, international tax and tax co-operation, explores the extent to which the six SEE economies co-operate on tax matters with other economies and whether their international tax rules are aligned with international best practice. The chapter includes suggestions for enhancing the policies in each of these sub-dimensions, which in turn would foster the competitiveness of these economies.

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