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

2 4 6 8 10 12

Real GDP growth rates (2000 constant prices), 2008.-2011.

4 6 8

Average real GDP growth rates (2000 constant prices),2001.- 2011.

• 10
• 8
• 6
• 4
• 2

2 2008 2009 2010 2011 Albania Bosnia&Herzegovina Bulgaria Croatia Greece Kosovo Macedonia, FYR Montenegro Romania Serbia

• 8
• 6
• 4
• 2

2 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 EU_COUNTRIES NON_EU EU27

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

Entrepreneurial deficit

TEA NECESSITY TEA OPPORTUNITY

15 20 25 30 35 40 45 50 30 40 50 60 70 80 5 10 15 Makedonija B i H Srbija Poljska Hrvatska Češka Rumunjska Njemačka Mađarska Grčka Rusija Francuska Latvija Portugal Španjolska Slovenija Italija UK Irska Švicarska Finska Švedska Austrija Nizozemska Belgija Island Norveška Danska Prosjek za razdoblje 2001-2009 GEM europske zemlje Prosjek 10 20 30 Norveška Švedska Slovenija Island Danska Nizozemska Finska Švicarska Češka Italija Irska Austrija Francuska Portugal UK Latvija Grčka Španjolska Belgija Mađarska Hrvatska Srbija Rumunjska Rusija BiH Makedonija Prosjek za razdoblje 2005-2009 GEM europske zemlje Prosjek

Source: Šošić et al (2012)

Entrepreneurial deficit

Early stage entrepreneurial activity Composite index of entrepreneurial activity (average 2002-2010)

Source: Šošić et al (2012)

Inward looking optics

Romania Serbia Albania Greece Kosovo

Average exports (% GDP, 2000.-2011.)*

10 20 30 40 50 60 Bulgaria Macedonia, FYR Croatia Montenegro EU27 Bosnia&Herzegovina Romania

* Kosovo 2006-2011 Source: World Bank Database

Convergence horizons

Romania Croatia Bulgaria Greece

Convergence horizon, average GDPpc growth rates* * Estimated catching-up time based on average GDP per capita growth rates (2005 constant prices, PPP) 2000.-2011.

2011 2031 2051 2071 2091 2111 Macedonia Bosnia&Herzegovina Montenegro Serbia Albania 75% EU 100% EU

Source: Authors’ calculations from WB Database

Required investment and growth

100 110 120 130 140 150 160

Actual/required domestic investment, 2011.*

70 80 90 100 Actual/required investment

Source: Authors’ calculations from WB Database * 100=4% real GDP growth rates, based on national ICOR and 6% capital amortization

Mannas from heaven

15 20 25 30

Average FDI (% GDP)

25 30 35 40

Usage of IPA funds, 2007.-2011.

5 10 15 2004-2007 2008-2011

Source: World Bank Database

5 10 15 20 25 Croatia Kosovo Macedonia, FYR

Source: European Comission

The FDI manna track record

5 6 7

Average domestic investment growth vs average real GDP growth, 2001.-2011.*

5 6 7

• th

Average FDI growth vs average real GDP growth, 2001.-2011.*

1 2 3 4 5 5 10 15 20 Average real GDP growth Average domestic investment growth 1 2 3 4 10 20 30 40 50 60 Average real GDP groth Average FDI growth

Source: Authors’ calculations from WB Database

Soundness of banks

1.0 2.0 3.0

Banks return on assets

• 3.0
• 2.0
• 1.0

0.0 Albania1 Bosnia and Herzegovina1 Bulgaria1 Croatia Macedonia, FYR1,13 Montenegro Romania1 Serbia1 2010 2007

Source: Kraft, E.: Banking in Southeast Europe

Soundness of banks

15 20 25 30

Gross domestic savings (% GDP), 2011.

• 20
• 15
• 10
• 5

5 10 Kosovo Montenegro Bosnia and Herzegovina Albania Macedonia, FYR Serbia Bulgaria Croatia Romania

Source: World Bank Database