Challenges and Prospects
Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 13: FDI and trade as pivotal elements for catching up and competitiveness
13. FDI and trade as pivotal elements for catching up and competitiveness Ewald Nowotny 1. SOUTH-EAST EUROPEAN COUNTRIES AND A STRATEGY OF EXPORT-LED GROWTH The countries of South-East Europe (SEE) are a very inhomogeneous group, both with regard to their economic and political structures and with regard to their relationship with the EU. But for all of these countries a strategy of export-led growth appears to be the most promising way for economically sustainable development. This is immediately obvious for the many small countries of this region, but is relevant also for Romania, the biggest country. A policy of export-led growth is directly relevant for tackling the problems of high current account deﬁcits. This problem is relevant for most of the countries of the region and has to been seen as one of the major policy restrictions for more expansionist government policies – policy restrictions in many cases institutionalized by IMF agreements (see Table 13.1). One also has to be aware that for the countries of the Western Balkans the external balances shown in this table are the current account deﬁcits after grants. Current account deﬁcits before grants are substantially higher in some countries; in Bosnia and Herzegovina for instance they account for 21.3 per cent of GDP – which is clearly an unsustainable situation. From a longer-term perspective a policy of export-led growth has the even more important eﬀect of enforcing international standards of quality and reliability and thus advancing long-term structural change with regard to institutions,...
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