Published on October 12, 2007
Slide1: Comments on the Presentation “Growth and Institutions in the ‘Transition’ ” by Lúcio Vinhas de Souza EUROPEAN COMMISSION DIRECTORATE GENERAL ECONOMIC AND FINANCIAL AFFAIRS (DG-ECFIN) HEAD, RUSSIA/BELARUS DESK Presentation for the 7th. Annual Global Development Conference Institutions and Development : At the Nexus of Global Change St. Petersburg, Russia, January 19-21,2006 Growth Drivers in Belarus, Russia and Ukraine: Growth Drivers in Belarus, Russia and Ukraine Growth performance related to: Macro stabilization; The upward cycle in commodities prices from 1999 onwards; Limited but significant reforms (corporate restructuring, a more sustainable macro framework, some institution building). Growth Performance: BY, RU & UA: Growth Performance: BY, RU & UA Growth Performance: BY, RU & UA: Growth Performance: BY, RU & UA Russia: Russia Growth performance related to: Competitiveness gains after the 1998 devaluation; The upward cycle in energy prices from 1999 onwards; Limited but significant reforms (some corporate restructuring, a more sustainable macro framework). Russia: Russia Contribution of oil and gas sectors to industrial production growth (in %) Ukraine: Ukraine Growth performance related to: Competitiveness gains after the 1998 devaluation, growth resumption in major CIS markets; The upward cycle in commodities’ prices from 1999 onwards; Limited but significant reforms (a more sustainable macro framework). Ukraine: Ukraine Belarus: Belarus Growth performance related to: Preferential relations with Russia, including -privileged access to the large Russian market and… - …direct and indirect resource transfers from Russia (not necessarily decreasing and still very substantial); 2. (Relative) competitiveness gains towards its main single market (Russia). 3. Preventing “disorganization” short-run losses via limited market reforms(?). Belarus: Belarus *Estimate Dangers to growth sustainability in the short/ middle run:: Dangers to growth sustainability in the short/ middle run: Russia: Slowing of growth effects from commodities boom “Dutch Disease” Stalling of reforms Dangers to macro stabilization Belarus: Very sensitive to external shocks (especially from Russia) Reduction in transfers, loss of competitiveness Low investment, low FDI, very limited market reforms Ukraine: Slowing of growth effects from commodities boom External shocks “Disorganization”, policy inconsistency, stalling or roll back of reforms Slide12: Need for policies that assure that growth is sustainable: Diversifying external markets and products Greater FDI inflows Continuing stalled structural reform (greater introduction of market mechanisms) and assuring that those reforms achieved are not compromised The measures listed above are complementary (the policy set has to be consistent and reinforcing). Reform drivers: Domestic policies (RU), external anchors (UA), interaction of those. Conclusions: Conclusions Russia: Initial competitiveness boost, energy commodities’ prices plus limited but significant reforms largely explain growth performance. Ukraine: Rather traditional explanations for growth upswing (commodities’ prices upsurge, some reforms) and downswing (“disorganization”, negative external shocks). Belarus: Also, perfectly traditional explanations for growth performance: privileged relations with Russia, relative competitiveness gains. Neither a puzzle, nor a model. Basic questions: what are the ways to acquire and support institutions that are conducive to long run, sustainable growth? Not a single, unique formula. Slide14: Lúcio VINHAS DE SOUZA, Ph.D. European Commission, Unit ECFIN.D.3 Avenue. de Beaulieu, 1, Office -1/182 B-1160, Brussels Belgium Tel. 00 (32) (2) 298-0267 Fax. 00 (32) (2) 295-2791 email: [email protected] Private Website: http://www.tinbergen.nl/~phare/Partners/Souza.html Thanks for your attention… …and buy the book!