centrope business and labour report 2007
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DESCRIPTIONCENTROPE is a multilateral project which develops a binding and lasting cooperation framework for the collaboration of regions and municipalities, business enterprises and societal institutions in the Central European Region. Thus it covers the regions Vienna, Lower Austria and Burgenland, South Moravia Region, Bratislava and Trnava Regions, Györ-Moson-Sopron as well as Vas County.The CENTROPE Business and Labour Report is joint project of WIFO Vienna, wiiw Vienna, Institute for Economic Research of Slovak Academy of Sciences, IREAS – Institute for STructural Policy Prague, West Hungarian Research Institute Györ.
- 1. CENTROPEBUSINESS & LABOUR REPORTStudy carried out by In co-operation with Institute for Structural Policy (IREAS), Czech Republic, The West Hungarian Research Institute, HungaryThe Slovak Academy of Sciences; Slovakia
2. CENTROPE Business and Labour Report, No. 0, 2007 2 Executive Summary The CENTROPE region is one of the most important transnational economic areas at the former Eastern borders of the European Union. Located at the intersection of four countries, comprising two capital cities as well as several further major cities (Brno and Gyr) and covering some of the most dynamic regions in the Central and East European countries as well as some of the most prosperous regions within the EU (Vienna), CENTROPE is a region of enormous economic potential. Situated at the crossroads of important European transport corridors and disposing of efficient international airports, CENTROPE offers excellent accessibility and short distances to all European key markets. Given its large and expanding market together with its favourable location and high accessibility, CENTROPE is one of the European key areas for both large and small to medium scale investment. The high number of institutions of research and development and higher education in CENTROPE add to this, and are a key factor to attract highly innovative industries and services, which in turn are the basis for a sustained period of economic growth and prosperity.The economic ties and cross-border activities within CENTROPE have increased significantly over the last decade and a half. It can be expected that these ties will strengthen further in the near future, as the planned measures to close existing gaps and eliminate bottlenecks in the cross-border transport network as well as to step up the modernisation of the existing infrastructure will improve internal and external accessibility. However on the institutional front the still existing institutional and physical barriers, e.g. in the fields of labour mobility and transport infrastructure (especially with respect to the Austrian regions of CENTROPE), hamper the full exploitation of the economic potential of CENTROPE.Thus, one consequence of the increasing economic integration of the regions forming CENTROPE, is a necessary parallel evolution of cross-border policy making. In consequence, to facilitate economic cooperation, cooperation in the fields of economic policy is a must. In the end, a successful development of CENTROPE depends crucially on the integration of policy makers, with respect to sharing similar goals and as a consequence also the same decisions.The broad aim of the CENTROPE Business and Labour Report is to base these decisions on accurate, comparable and timely analysis of the economic development of CENTROPE and its regions. As such this report intends to assist all the relevant actors (e.g. economic agencies, networks of entrepreneurs, trade unions, politicians and administration) in monitoring the economic development of the transnational economic space. Additionally this report intends also to serve as a basis for discussion of labour market and employment issues and policies, as well as of investment and location policies, to make CENTROPE an attractive region for local and foreign investors.Importantly, it must not be forgotten that this first issue of the CENTROPE Business and Labour Report is a pilot project. This implies that beyond writing this report, much effort from all participating institutions was spent in making this report feasible at all. Thus, before actually drafting the report a lot of background work had to be done.In detail this means that the current report is the results of an intensive work programme that included four work packages.The first work package was concerned with setting up a multilateral working group. Therefore, to gain as detailed as possible knowledge of the individual regions within CENTROPE the aim was to find one competent partner from each CENTROPE country. Each partner, given his experience and knowledge of local regional development had at least three tasks to fulfil, namely to act as a contact person for any questions concerning his region/country, to gain access to the relevant statistical data and to write 3. CENTROPE Business and Labour Report, No. 0, 2007 3the report for his country. Thus, a multilateral working group was established. The partners in the group consist of the Austrian Institute of Economic Research (WIFO) and the Vienna Institute for International Economic Studies (wiiw) from Austria, Institute for Structural Policy (IREAS) of the Czech Republic, the West Hungarian Research Institute from Hungary and the Slovak Academy of Sciences.The second work package centred around finding an appropriate set of contents for the pilot CENTROPE Business and Labour Report. At this stage all partners worked together, to establish a common set of topics that realistically could be covered, given the differences of data availability across countries.The third work package dealt with data and methodological issues. A main aspect in this package was to create one basic set of indicators that are common and comparable across the CENTROPE countries, in order to ensure that in its essential results the Business and Labour Report is homogenous. Besides this common data set, it was decided that each partner should if possible use any available additional data, which might not be comparable to data from other countries, to deepen the analysis and interpretation in the report.Finally the fourth work package consisted of drafting and writing this proto-type version of the CENTROPE Business and Labour Report.In a sense this first version of the CENTROPE Business and Labour Report is symbolic for the character of CENTROPE. On the one hand, five institutions of CENTROPE were gathered together, and every participating institution was highly ambitious to jointly work on this report, in order to make it valuable source of information. Thus several different parties worked to together on a worthwhile project, which is also what CENTROPE in toto is about.At the same time the joint work has not been without difficulties. Different methodologies and experiences of the partner institutions, and even more the heterogeneity of available data sources, made it difficult to present this report and the chapters therein in a homogeneous way. This is reflected in the different styles the individual chapters in this report are written. It is also reflected in the fact that the country chapters focus on a small, though important, set of indicators, namely income, output and employment, while a number of important other indicators had do be discarded as they were not available in the course of this project. Thus important variables like wages (on a sectoral level), prices, foreign trade etc. were disregarded. Though the feeling among the participating institutions was that these indicators should and -in principle- could be used, the acquisition of such data was beyond the scope of this project.The end result of this endeavour is the current CENTROPE Business and Labour Report which represents a first time concise description of the economic development of CENTROPE, and thus provides a significant value added. But also the problems that arose in the course of the project provide important information, as they show the tasks for future work in order to make this report an even more valuable project. This is another aspect in which CENTROPE Business and Labour Report reflects CENTROPE idea and project: To work open-minded and jointly on the existing problems, in order to make this report and the whole CENTROPE better ever time.Macroeconomic developments of the CENTROPE countries During the last few years the CENTROPE countries were marked with strong economic growth, in terms of income, industrial output and exports, and recently also in employment. Though GDP growth rates will be somewhat lower in 2008, especially for Hungary, the CENTROPE countries will grow at a respectable pace compared to the EU-27. Exports from the CENTROPE countries are expected to grow further, given the favourable international environment, the growing import demand of the 4. CENTROPE Business and Labour Report, No. 0, 2007 4regions main trading partner countries, as well as the continuing competitiveness of the three new member states within CENTROPE. Limitations for economic growth in the CENTROPE countries potentially come from the increasingly tight labour markets, where the lack of highly skilled labour might dampen the future development of high value added activities.Still, the outlook for the CENTROPE regions is optimistic. It becomes even more optimistic, if the substantial funding from the European Cohesion Policy is taken into account. From 2007 onwards the countries in Central and Eastern Europe will receive on a net basis around +2.5 to +4% of their GDP. The importance of these funds is illustrated by the fact that from 1948 to 1952 Western Europe received in the course of the European Recovery Programs (Marshall Plan) financial assistance from the USA, which was on average 2.1% per year of the ERP countries GDP.The optimistic outlook for the CENTROPE countries is good news for the individual CENTROPE regions within these countries. Given the high correlation between country growth and the economic development of its regions it can be expected that the regions will be able to enjoy economic prosperity just as much as the countries as a whole. This is especially true for the CENTROPE regions. With few exceptions the CENTROPE regions belong to the most prosperous and most dynamic regions within their countries. Hence, given the past development of these regions, as well as their economic structure it can be expected that the CENTROPE regions will not only benefit from the good macroeconomic development in their country, but to also be a major c