BANK FINANCING BOOTSTRAP ENTREPRENEURSHIP Saved by the banks? - PowerPoint PPT Presentation

BANK FINANCING BOOTSTRAP ENTREPRENEURSHIP Saved by the banks? Growth challenges and investment initiatives in the Balkans Ivo Bićanić and Dora Tuđa Faculty of Business and Economics University of Zagreb November, 2012

Real GDP growth rates (2000 Average real GDP growth rates constant prices), 2008.-2011. (2000 constant prices),2001.- 2011. 12 10 8 8 6 6 4 4 4 2 2 0 2 -2 -4 0 -6 -8 -2 -10 2008 2009 2010 2011 -4 Albania Bosnia&Herzegovina -6 Bulgaria Croatia Greece Kosovo -8 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Macedonia, FYR Montenegro EU_COUNTRIES NON_EU EU27 Romania Serbia Source: World Bank Database

Four features 1. The Linda Evangelista syndorm and ureasonable expectations 2. The entreprenurial deficit and preferance for state jobs state jobs 3. Inward looking optics and closed liberalization 4. Gerschenkron dissapointed and increased latecommer hurdles

10 15 15 20 25 30 35 40 45 50 0 5 Source: Šošić et al (2012) Makedonija TEA NECESSITY B i H Srbija Prosjek za razdoblje 2001-2009 GEM europske zemlje Poljska Hrvatska Češka Rumunjska Njemačka Ma đ arska Grčka Rusija Francuska Entrepreneurial deficit Latvija Portugal Španjolska Slovenija Italija UK Irska Švicarska Finska Švedska Austrija Nizozemska Prosjek Belgija Island Norveška Danska TEA OPPORTUNITY 10 20 30 30 40 50 60 70 80 0 Norveška Švedska Prosjek za razdoblje 2005-2009 GEM europske zemlje Slovenija Island Danska Nizozemska Finska Švicarska Češka Italija Irska Austrija Francuska Portugal UK Latvija Grčka Španjolska Belgija Ma đ arska Hrvatska Srbija Prosjek Rumunjska Rusija BiH Makedonija

Entrepreneurial deficit Composite index of Early stage entrepreneurial entrepreneurial activity activity (average 2002-2010) Source: Šošić et al (2012)

Inward looking optics Average exports (% GDP, 2000.-2011.)* Kosovo Greece Albania Serbia Romania Romania Bosnia&Herzegovina EU27 Montenegro Croatia Macedonia, FYR Bulgaria 0 10 20 30 40 50 60 * Kosovo 2006-2011 Source: World Bank Database

Convergence horizons Convergence horizon, average GDPpc growth rates* Greece Bulgaria Croatia Romania Albania Serbia Montenegro Bosnia&Herzegovina Macedonia 2011 2031 2051 2071 2091 2111 75% EU 100% EU * Estimated catching-up time based on average GDP per capita growth rates (2005 constant prices, PPP) 2000.-2011. Source: Authors’ calculations from WB Database

Required investment and growth Actual/required domestic investment, 2011.* 160 150 140 130 120 110 100 100 90 80 70 Actual/required investment * 100=4% real GDP growth rates, based on national ICOR and 6% capital amortization Source: Authors’ calculations from WB Database

Mannas from heaven Average FDI (% GDP) Usage of IPA funds, 2007.-2011. 30 40 25 35 20 30 15 15 25 25 10 20 5 15 0 10 5 0 2004-2007 2008-2011 Croatia Kosovo Macedonia, FYR Source: World Bank Database Source: European Comission

The FDI manna track record Average domestic investment Average FDI growth vs average growth vs average real GDP real GDP growth, 2001.-2011.* growth, 2001.-2011.* 7 7 6 6 5 oth Average real GDP groth 5 5 Average real GDP growth 4 4 3 3 2 2 1 1 0 0 0 5 10 15 20 0 10 20 30 40 50 60 Average domestic investment growth Average FDI growth Source: Authors’ calculations from WB Database

Soundness of banks Banks return on assets 3.0 2.0 1.0 2010 0.0 2007 Albania1 Bosnia and Bulgaria1 Croatia Macedonia, Montenegro Romania1 Serbia1 Herzegovina1 FYR1,13 -1.0 -2.0 -3.0 Source: Kraft, E.: Banking in Southeast Europe

Soundness of banks Gross domestic savings (% GDP), 2011. 30 25 20 15 10 5 0 -5 -10 -15 -20 Kosovo Montenegro Bosnia and Albania Macedonia, FYR Serbia Bulgaria Croatia Romania Herzegovina Source: World Bank Database