Launching a Regional Strategy for Business Development
A comprehensive strategy is needed to realise the region’s growth potential. The Baltic Development Forum Summit on 17–19 September 2000 ended up recommending the first building blocks of a regional strategy to further economic growth and political stability. The strategy covers two main parallel tracks. Firstly, accession of the candidate countries to the EU as soon as possible. Secondly, continued development and implementation of the “The Baltic Rim Regional Agenda – Developing a new innovative and co-operative mindset”, launched at the summit by Prof. Michael E. Porter of Harvard Business School and Prof. Örjan Sölvell, Stockholm School of Economics.
Speedy accession to the EU as a precondition for growth and stability
Speedy accession of the three Baltic republics and Poland to the European Union is a necessary and decisive precondition to release the Baltic Sea region’s growth potential. If Poland and the Baltic republics become members of the EU in 2003 and continue their catching-up, their annual GDP growth rate is expected to be 2–4 % higher than EU average. Consequently, Poland might almost double its GDP in the following ten years while the GDP of Estonia, Latvia and Lithuania might increase by 60 %. This is a very promising scenario, coming on top of the development potential of the Russian economy, which is showing clear signs of recovery. The huge growth potential in the Baltic Sea region is substantiated in a study conducted by the Danish Ministry for Trade and Industry prepared for the BDF Summit.
The importance of a speedy accession can not be overstated. At the summit, the Prime ministers from the Baltic republics warned against a delay in the enlargement process. A slowdown may have harmful effects on the internal stability in the candidate countries according to the Estonian Minister for Foreign Affairs. If the enlargement process looses momentum and thereby credibility, this may jeopardise the governments’ credit of trust among the electorate, fuelling anti-EU feelings.
A new regional agenda to promote dynamic business environment
At the same time there is a need for a strategy shift towards improving the region’s business environment. Much more attention should be paid to the underlying microeconomic environment in order to strengthen the region’s competitiveness. The BDF Summit therefore recommended further development and implementation of the Baltic Rim Regional Agenda as a decisive step to promote business development in the region. Objectives following from the Baltic Rim Agenda are:
- formation of a regional cluster economy taking full advantage of nation-specific uniqueness
- becoming a leader in the IT field, making the necessary investments within the communication infrastructure
- allocation of more funding to the educational sector thereby giving priority to developing the human capital resource base
- promoting a higher level of regional societal integration to ensure a higher degree of mobility of the labour force and students
In addition, the summit recommended the following measures to improve the business climate:
- further investigation of the need for setting up a new regional financial institution – ‘a Venture Catalyst’ – to counter the financial underdevelopment in transition countries
- rethinking the role of international financial institutions in the second decade of transition
- further implementation of institutional reforms and reducing bureaucratic barriers while securing a predictable and transparent business climate.
- legal and regulatory basis for the development of internationally oriented stock markets in the Baltic Sea region. Small and medium-sized countries should
- implement the rules that are gaining international acceptance since the time for locally invented rules and regulations has passed
- bilateral assistance policy that is more focused on the development of common competencies and beholds of the whole region.
Lack of political leadership
The enlargement process must not slow down due to a lack of political will and courage among the European heads of state. Since the beginning of the 1990s the situation has changed. At that time the enlargement of the EU was seen as a moral duty. Today, the pro-European momentum is being eroded. The consequence of this lack of political leadership is reflected in a late Eurobarometer survey showing diminishing support for enlargement among EU countries. Indirectly, this may be a threat to the unification process in Europe.
The EU and in particular the countries in the region have a clear responsibility to ensure a speedy accession. Despite the “no” in the Danish referendum on the Euro on 28 September, Denmark will still be among the best advocates of speedy accession of the Baltic republics and Poland to the EU.
Equally important, Russia should also benefit from the enlargement. Co-operation between the EU and Russia should therefore be encouraged. Baltic Development Forum is firmly committed to this objective, and we welcome all integrating forces, in particular the Northern Dimension Action Plan. Given the importance of developing a partnership between Russia and the EU, Russia and the Northern Dimension has been chosen as the overall theme of the third annual BDF summit to be held in St.Petersburg in September 2001. The enlargement process and the integration of Russia into the European Union represent huge challenges. In order to meet them, Europe needs a visionary political leadership acknowledging the importance of speedy accession to the EU as enhancing the overall stability of Europe, as well as a committed business community.