State of the Region Report 2012
State of the Region Report 2012 
The Top of Europe Bracing Itself for Difficult Times: Baltic Sea Region Collaboration to Sustain Growth
Key Messages
- The Baltic Sea Region’s solid economic performance in 2011 has been a reward for its strong response to the 2008/2009 global crisis. Both exports and domestic demand contributed to growth.
- A few months into2012, the data suggest significantly more difficult times ahead; risks are squarely focused on the downside. The Baltic Sea Region’s deep linkages with the rest of Europe tie its performance to the path the European economy will take.
- The crisis has led to a step-change in the structural evolution of the global economy. The Baltic Sea Region has lost export market shares but solid foreign direct investment suggests that this is a reflection of firms choosing to internationalise differently, not the result of lost competitiveness.
- Country-specific differences within the Region are significant, and have grown during the recovery. While there are signs of solid catch-up between the Region’s less and more advanced economies, policy challenges within these groups differ widely.
- Competitiveness fundamentals are broadly in line with prosperity levels, and parts of the Region continue to be global leaders in competitiveness. Priorities in upgrading competitiveness differ from country to country and are related to both individual policy areas and the integration of activities across them. Regional collaboration is an important tool for specific competitiveness challenges.
- The EU Baltic Sea Region Strategy has significantly enhanced co-ordination across existing organizations, networks, projects, and financing tools. This has been achieved be ‘repurposing’ the existing structure of institutions and policies that were mostly developed in a different context. If the ambition is to accomplish more, more fundamental changes in this institutional architecture are needed.
- Transportation infrastructure and green growth are two topics of specific importance for the Baltic Sea Region and its future competitiveness. In both areas, regional collaboration, given the nature of the Region, is critical for making full use of existing opportunities.
Read State of the Region Report 2011
State of the Region Report 2011
The Top of Europe’s Quest for Resilience: A Competitive Region Facing a Fragile Global Economy
Key Messages
- A sound policy response has helped the Baltic Sea Region to weather the global economic crisis better than most of its peers
- The Region’s post-crisis recovery has been surprisingly rapid, but turbulences in the Euro zone and elsewhere have severely undermined the economic outlook
- Longer-term, the Region also needs a strategy to retain value creation locally as FDI is increasingly surpassing trade as a key mechanism for internationalization
- The competitiveness of the Region remains solid and broadly in line with prosperity; sustained new growth requires further continuous competitiveness upgrading
- Regional collaboration is a critical tool for competitiveness upgrading, especially in areas like market and innovation system integration. Joint policy learning but also traditional support to lagging countries continues to hold benefi ts for the Region
- Regional collaboration around the Baltic Sea has benefited from increasing levels of coordination across organizations, networks, projects, and financing
- The EU Baltic Sea Region strategy has played a very positive role in enhancing the effectiveness of collaboration. It has so far been less impactful in introducing new participants, topics, or solutions to address regional issues
- Strong political leadership from within the Region is needed to provide the EU strategy with the financial and organizational architecture needed for another step-change in impact
- Entrepreneurship through indigenous innovation and firm entry is critical for the less developed parts of the Baltic Sea Region to accelerate catch-up and for its already wealthy economies to sustain their strong global position
Read State of the Region Report 2010
State of the Region Report 2010
Boosting the Top of Europe
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Key messages:
- The Baltic Sea Region has been hit disproportionally hard by the global crisis, with both labor productivity and labor mobilization dropping; the current speed of recovery is high but fragile
- The dramatic fall in exports has been accompanied by a worrying loss of market share; the crisis might have accelerated structural trends in the global economy working against the Region
- The competitiveness fundamentals remain strong; the on average solid fi scal position of governments even creates opportunities to pull ahead of some international peers
- The level of regional collaboration remains strong, with the EU Baltic Sea Region strategy an important reference, but the governance structure is only emerging
- The last decade has been a period of impressive overall performance for the Baltic countries; they have been remarkably resilient in the diffi cult adjustment progress; the deep current crisis signals, however, that the economic policy approach needs to be fundamentally reviewed
- Macroeconomic policy in the Baltics has been too narrowly focused on meeting the legal requirements for Euro-zone accession, neglecting the medium-term sustainability of fi nancial markets and, in some countries, public fi nances
- Microeconomic upgrading in the Baltics has been effective in market opening and (mostly) in the adoption of EU rules and regulation; it has largely failed in building distinct competitive strengths and especially in leading to the fundamental upgrading of local companies
- Poland’s better performance during the crisis is not a refl ection of higher or more robust competitiveness, but the result of country-specifi c factors; its good current position is a unique opportunity to address the country’s competitiveness weaknesses
- To take full advantage of its unique level of existing regional linkages despite a complex political situation following the crisis, the Region should renew the argument for regional collaboration, rethink the appropriate approach towards competitiveness upgrading, and rebuild the institutional framework for collaboration.
Read State of the Region Report 2009
State of the Region Report 2009
Boosting the Top of Europe
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Key messages:
- The Baltic Sea Region has been hit disproportionately hard by the global crisis but is now expected to rebound quicker than others;
- The impact of the crisis is going to widen the signifcant existing economic differences across the Region, ending a catch-up process that had become unsustainably rapid;
- The level of regional collaboration remains strong, with innovation and environment frequent themes and the EU Baltic Sea Region Strategy emerging as a coordinating mechanism;
- The crisis has shifted the focus to policies controlled at the national level and led to a divergence of needs and perceptions across the Region;
- Regional collaboration is becoming more difficult;
- The Region remains one of the most prosperous regions internationally with balanced positions on labor productivity and mobilization, despite the current drop in prosperity and productivity;
- The significant heterogeneity of competitiveness levels and profiles across the Region is further increased by the crisis and the policy responses now under way;
- The Baltic Sea Region remains Top of Europe on the Lisbon Agenda goals and has a significant contribution to make to the Agenda’s post-2010 renewal;
- The Region needs to continue deepening its integration, marching ahead on its way to an innovation-driven economy, and becoming better prepared to deal with economic shocks;
- The EU Baltic Sea Region Strategy is an important step forward for regional collaboration;
- The EU Baltic Sea Region Strategy needs further actions within the Region to meet the high expectations created;
- The EU Baltic Sea Region Strategy has the potential to become an important role model for a new approach towards European integration.
Read State of the Region Report 2008
State of the Region Report 2008
Sustaining growth at the Top of Europe
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Key messages:
- The Baltic Sea Region is facing a significantly more complex economic and political context for collaboration than 12 months ago, especially after the global economic crisis reached a new quality in mid-September;
- The Baltic Sea Region is well positioned to weather the global economic storm better than most of its peers, although for individual countries in the Region, especially Iceland, Estonia, Latvia, and to some degree Russia, there are tough challenges ahead;
- The Baltic Sea Region’s medium-term economic performance remains strong and has up to the summer been characterized by many economies operating close to capacity at the top of the business cycle, since September the economic climate has, however, cooled significantly;
- The Baltic Sea Region remains one of the most competitive regions in the world, not much changed relative to last year. Different parts of the Region continue to rely on significantly different sets of competitive advantages;
- The Baltic Sea Region has the potential to become a role model for a new integration approach in Europe, especially if the EU Baltic Sea Region Strategy leads to a new level of alignment between local, national, and cross-national policies;
- The Baltic Sea Region devotes significant political attention to the environment and energy efficiency. These efforts have resulted in clear achievements in both areas, but especially where collaboration on the level of the Region is required more is needed to get to effective action.
Read State of the Region Report 2007
State of the Region Report 2007
The Baltic Sea Region as a Place to Do Business
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Key messages:
- Regional cooperation is a key opportunity and necessity for the Baltic Sea Region to improve its competitiveness position within the European Union and globally.
- The Baltic Sea Region registers solid levels of economic performance and competitiveness. The Region needs to prepare for further increasing global competition and worsening demographics that threaten to erode its current competitive advantages over time.
- Companies are only starting to experience the Baltic Sea Region as an integrated geography. The separation in small national markets has so far limited the ability of companies to fully exploit the existing qualities of the Region.
- The current discussions in the Baltic Sea Region provide an opportunity for a step-change towards an institutional architecture for effective regional collaboration in the 21st century.
Read State of the Region Report 2006
State of the Region Report 2006
The Baltic Sea Region – Top of Europe in Global Competition
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Key messages:
- The Baltic Sea Region has been particularly well placed to benefit from globalization but this effect is slowly receding, raising the need to confront the challenges of a sparsely populated region at the European periphery.
- The Baltic Sea Region continues to achieve stronger economic growth than peer regions, but its performance on world markets and investment attraction is much less impressive.
- The Baltic Sea Region is among the most competitive locations in the world, clearly ahead of other parts of Europe, but some non-European countries have been more effective in upgrading competitiveness over the last few years.
- A wide range of efforts to improve competitiveness are already under way in the Baltic Sea Region; better integration into a consistent strategy to position the Region in a changing global economy could strengthen their effectiveness.
Read State of the Region Report 2005
State of the Region Report 2005
Competitiveness and Cooperation in the Baltic Sea Region
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Excerpt:
The authors of the State of the Region Report 2005 conclude that the Baltic Sea Region performs well on the Lisbon Agenda indicators. The region is among the best, particularly based on strengths in employment, environment and last but not least, innovation.
However – as the authors document it – the region’s competitive advantage in terms of innovation input is comparably higher than its innovation output. This indicates existing and unused potentials, which being employed would have a positive influence on the already high prosperity growth of our region.
The Report documents nicely the strong cluster base of the region with a rich portfolio of regional clusters and overlaps in cluster export specialization across countries. Certainly, the authors’ proposals of further cooperation between related clusters, benchmarks of cluster policies, and the creation of consistent data on clusters and cluster policies across the region are highly valued from an innovation system point of view.
A variety of networks and activities have emerged or have further grown over the last year. It demonstrates a strong decentralized ownership and supportable commitment to innovative regional processes from enterprises, academia and public actors.
Of course, the research and conclusions of the report are done by the authors and reflects not necessarily in all details the views and commitments of our organizations. However, we are very happy to provide the report to be used as an important knowledge tool in analyses and innovative actions driving further regional developments.
Read State of the Region Report 2004
State of the Region Report 2004
An Assessment of Competitiveness in the Baltic Sea Region
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Excerpt:
- The Baltic Sea Region has registered the strongest prosperity, labor productivity, and innovation growth of the selected four European peer regions in recent years
- The current level of performance, however, is only on par or even below the level reached by these peer regions
- The key driver of current prosperity in the Baltic Sea Region is high labor utilization, not labor productivity as widely assumed
- The Baltic Sea Region scores high on measures of innovation; it leads on scientific innovation but registers only average economic benefits from innovation
- The heterogeneity in performance and performance drivers across the Baltic Sea Regions is significant and higher than in the selected peer regions
Read State of the Region Report 2004 Part II
State of the Region Report 2004, Part II.
Innovation in the Nordic-Baltic Sea Region
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Excerpt from the highlights:
Increasingly, economic growth and competitiveness are driven by the ability to innovate. Innovative ability, in turn, is dependent on the successful interaction between firms, universities and the public sector.
Linkages between these three main actor groups (firms, academia and government) exist on many levels: local/regional, national and international. The term innovation system refers to the importance of these multiple forms of interactions for catalyzing innovation and improving economic performance.
The latest progress reports on European competitiveness and the Lisbon agreement highlight the importance of connecting the different economic actors, both in tangible (e.g. infrastructure and communication networks) and intangible (e.g. forming a common vision among the various stakeholders) ways. The fastest-growing regions are those that have most successfully managed to integrate – within the region and into the international competitive system.
The Nordic countries are world leaders in innovation and competitiveness indicators;
The Baltic countries, Poland and Russia exhibit remarkable dynamism and momentum for change – with high GDP growth and the strongest improvements in many innovation indicators. The region shares strong historical ties, growing trade and FDI flows, and increasing interest in forming a common platform for discussion, policy exchange and action in the field of innovation.
