Competitiveness and Private Sector Development: Eastern Europe and South Caucasus 2011

Competitiveness Outlook

image of Competitiveness and Private Sector Development: Eastern Europe and South Caucasus 2011

With a total population of over 75 million people and a strategic location between wealthy trading partners, with Russia to the east and a vast market of EU citizens to the west, the Eastern Europe and South Caucasus (EESC) region is attractive as a destination for investment and trade. It is endowed with significant human and resources ranging from the black soil in Ukraine that produces some of the best wheat in the world, to energy reserves in Azerbaijan and unexplored water resources in several countries. However, in spite of recent growth – an average of almost 8% of GDP during 1998-2008 – the region’s productivity levels remain 77% below the world average. The OECD Eastern Europe and South Caucasus Competitiveness Outlook examines the key policies that would increase competitiveness in the countries of the region through developing human capital, improving access to finance for SMEs and creating more and better investment opportunities.



Executive Summary

The Eastern Europe and Southern Caucasus (EESC) is one of the fastest-growing regions in the world. The six countries in the region are Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. Following the post-Soviet transition and particularly between 2002 and 2008 it reached double-digit growth – a rapid expansion that was driven by high capital inflows, rising domestic consumption and expansionary fiscal and monetary policies. However, this expansion came to an abrupt end in late 2008 with the onset of the global financial crisis. The EESC economies have now embarked on a recovery, although expansion in 2011-15 is likely to be weaker than in the preceding period. The World Bank 2010-13 forecast expects real GDP growth to be lower than in other developing countries: between 2.9% and 5.7%.


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