dusan kulka, fdi advisor regional competitiveness forum, november, 2006
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Dusan Kulka, FDI AdvisorRegional competitiveness Forum, November, 2006
(Foreign Direct) Investment
(Regional) Competitiveness
• (Overall) investment attractiveness is heavily influenced by national legislation & government performance.
• First significant investment activity has been / is mostly related to privatization of state owned enterprises.
• Followed by “spontaneous” (mostly resource and market seeking) investments investigating emerging markets’ potentials / conditions.
• If balance 1,2 and 3 provides satisfying feedback, first larger greenfield investments start searching for convenient location in the region / specific country.
• Manufacturers seeking efficiency represent vast majority of those FDI.
FDI in CEE Region
Basic info
Indicator (2005) Ukraine Czech Republic
Population 46 930 thousand 10 232 thousand
Territory 603 700 sq km 78 866 sq km
GDP €66,48 billion €99,99 billion
GDP per capita at PPP
€6 260 €17 260
Average monthly salary €126 €639
FDI stock €14,5 billion €50,4 billion
FDI stock per capita €310 €4 932
Source: The Vienna Institute for International Economic Studies; www.wiiw.ac.at
Export per capita in 2004
Export per capita
$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000
Slove
nia
Czech
Rep
ublic
Hunga
ry
Slova
kia
Eston
ia
Lith
uani
a
Latv
ia
Polan
d
Croat
ia
Bulga
ria
Russia
Roman
ia
Turke
y
Ukrai
ne
World Europe EU15
$65.771.534.270Total exports
$32.672.195.000Total exports
Source: UNCTAD data; BermanGroup analysis; www.bermangroup.cz
Share of export as % of GDP
Export share in GDP
0%5%
10%15%20%25%30%35%40%
Slove
nia
Czech
Rep
ublic
Hunga
ry
Slova
kia
Eston
ia
Lith
uani
a
Latv
ia
Bulga
ria
Croat
ia
Polan
d
Roman
ia
Russia
Turke
y
Ukrai
ne
World Europe EU15
Source: UNCTAD data; BermanGroup analysis; www.bermangroup.cz
More than 600 investment projects successfully implemented
• 45% of employees in industry
• 55% of industrial production
• 65% of industrial exports
Once FDI feel happy
High potential versus poor performance
First big efficiency-seeking investments plus growing annual inflow of FDI
Still serious obstacles:
• Problematic business climate / poor image: unstable environment, red tape, …
• Low understanding of FDI business practice
• Very limited number of market-ready investment opportunities
• Lack of professional assistance to investors
Ukraine & FDI
Average FDI
UAH117.121
UAH57.057
Annual salesper employee
Average FDI
44%
25%
Share of exports
BAS Ukraine 2005
BAS Ukraine 2005
Average FDI
UAH871
UAH789
Average monthly salary
Average FDI
UAH105.087
UAH39.510
16%12.7%
Investments per employee and new jobs
• Network of large cities• Skilled and inexpensive labor
• Growing domestic consumption / markets
• Improving export performance
• Positive development in light industry and machinery
• Increasing interest of investors – productivity gains
• Slow but continual improvement of country’s business environment
• WTO accession expected
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