Central and East European Leaders Meet to Discuss Region’s Investments
15/10/2003
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Twenty three heads of government and ministers of finance, economy, transport and communications from Central and Eastern Europe, the Balkans and the Commonwealth of Independent States (CIS), prominent businesspeople and top representatives of international financial institutions are gathered yesterday and today in Bucharest for the first ever Regional Investment Summit, convened by the United Nations Development Programme (UNDP), the International Herald Tribune and the Government of Romania.
This unprecedented event shows strong political will—never before have so many countries of the region come together at such high levels to take stock of the successes of transition, evaluate the state of affairs in foreign direct investment, and measure the progress and remaining challenges of the economic development of the region.
“The list of participating countries gives us an overview of the complex geographic, economic and cultural space arbitrarily named ‘Eastern Europe’” said Romanian President Ion Iliescu in his opening remarks.
The Summit comes at a crucial time in the region’s development. With less than 8 months remaining before the expansion of the EU and NATO, Central and Eastern Europe is poised to become one of the world’s most promising investment destinations. Also, the countries that will soon become immediate EU neighbors can take advantage of the new opportunities that this proximity brings.
“For the countries of the European Union’s ‘New Frontier’, proximity can sometimes offer more opportunities than inclusion, as the latter may mean a country losing its competitive cost structure,” said Mr. Mark Malloch Brown, the Administrator of the United Nations Development Programme and Chairman of the United Nations Development Group—the third highest-ranking UN official—in his keynote address.
This region already has an impressive record on foreign direct investment (FDI). While the global investment flows declined from $1.4 trillion in 2000 to $650 billion in 2002, and net foreign direct investment to developing countries also fell sharply in 2002 to an estimated $143 billion compared to $172 billion in the previous year, Central and Eastern Europe has been able to buck the global trend. According to the UNCTAD World Investment Report 2003, from 1997-2001 total FDI inflow to Central and South Eastern Europe and the Baltic States grew overall by 51%, from $19billion to $28.7billion. The Czech Republic, Poland and Slovakia were among the world’s top 30 FDI recipients last year.
According to the latest Foreign Direct Investment Confidence Index, based on annual surveys of executives from the world’s largest companies conducted by A.T. Kearney, in 2002, for the first time, Russia was ranked 8th among the 10 most attractive investment destinations worldwide, up from 17th place last year. Also, Poland reached an all-time-high, becoming the 4th most preferred investment destination worldwide.
Good FDI figures are not limited to EU accession countries, and now to Russia. The Balkans, which recorded strong increases in FDI during 2001-2002, continues to be attractive to foreign investors. Serbia alone has attracted some $1.1billion in FDI already this year, while between them, Romania and Bulgaria account for another $1billion in the first half of 2003 – a 36% increase over the same period last year.
However, while this is good news for the region, real disparities continue to exist between countries in terms of FDI allocation. Poland, the Czech Republic, Hungary and Slovakia receive 60 per cent of the region’s cumulative FDI inflows, while Romania and Bulgaria for example received less than 10 per cent of FDI during the transition period.
“Tackling this two-tier situation in FDI allocation to the region is a key reason why we are all here: business, government, academia, the international development community and others, want to see the successes of FDI demonstrated by some transition countries spread to all, not least South Eastern Europe and the CIS,” added Mr Malloch Brown in his opening remarks.
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