The effects of corruption risks in the business sector on the progress of EU2020 strategy

The effects of corruption risks in the business sector on the progress of EU2020 strategy

Putting forward: a) Smart growth ; b) Sustainable growth and c) Inclusive growth by thus addressing high-employment economy, delivering social and territorial cohesion. Regional R&D strategy as stepping stone of the smart growth pillar of SEE 2020 was lunched on 25 October, 2013 in Zagreb Innovation is the cornerstone of the South East Europe (SEE) 2020 strategy: The R&D strategy aim to improve the research base and conditions for research excellence in the Western Balkans, thus slowing the brain drain and supporting the brain gain; promote the research-industry collaboration and technology transfer; enable business investments in research and innovation; and strengthen the governance of national policies with appropriate regional technical assistance facility (Z.Jvanovic, Minister of Education);

Economic growth of the region: Reduce the region s trade deficit Increase the rate of creation of new businesses Create more jobs SEE2020 Targets 2020 2010 No of highly qualified persons Overall employment rate Government s effectiveness, 2.05 1.33 2.9 2.3 39.7 44.4 (Source: Regional Cooperation Council)

Kosovo 68.8 65.3 80.0 70.8 65 30 Albania 79.3 50.7 81.4 87.7 70 70 Bosnia and Herzegovina 47.4 59.3 84.0 86.6 65 60 Croatia 58.2 43.3 80.3 87.4 75 60 Montenegro 72.0 67.4 82.5 84.7 75 50 Serbia 62.9 65.9 80.8 77.8 70 50 Macedonia 81.5 66.7 80.8 86.1 60 60 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Business Freedom Labor Freedom Monetary Freedom Trade Freedom Investment Freedom Financial Freedom

Unemployment % 17.3 30.3 16.1 n/a 26.9 18.2 19 Albania Bosnia and Herzegovina Croatia Kosovo Macedonia Montenegro Serbia Sum of GDP per Capita (PPP) 11300.8 10491.8 21581.4 9255 14009.1 16123.1 13671.4 Sum of 5 Year GDP Growth Rate (%) 1.9 1.3-0.4 3 2.4 2 0.4 Sum of GDP Growth Rate (%) 2.6 2.8 1.6 3.3 3.7 4.1 0.7 Sum of GDP (Billions, PPP) 32.7 40.5 91.1 17.4 29 10 97.5 Sum of Population (Millions) 2.8 3.9 4.2 1.9 2.1 0.6 7.2

KEY CHALLENGES 72.6 88.9 68.9 91.9 52.0 61.4 67.0 46.9 44.3 44.7 33.1 40.3 31.3 83.1 66.8 83.3 43.4 43.4 38.2 50.4 56.8 40.2 50.3 58.0 65.5 89.3 51.5 72.5 33.7 83.5 86.9 32.7 39.7 40.0 28.5 41.2 54.0 77.8 93.5 45.9 58.0 70.3 Fiscal Health Gov't Spending Tax Burden Government Integrity Judical Effectiveness Property Rights

Accelerating business reforms; Trade is a main engine for growth; Progress in entrepreneurial sectors & advancement of legal & regulatory frameworks; All SEE Countries are facing following challenges: Corruption remains a problem in many sectors, including the security, education, housing, and labor sectors, as well as in privatization processes and the judiciary. Politicization of the judiciary is a long-standing problem. Corruption is pervasive in health care, education, and all levels of government including law enforcement. Impunity, political favoritism, nepotism, and selective prosecutions are common. The judiciary remains susceptible to influence by nationalist political parties and pressure from the executive branch. Inefficiency and corruption are widespread at all levels of government Corruption remains a notable problem. Government allies lead state agencies that have anticorruption roles, and several companies with close ties to the government are supported primarily by public funds. (Source: Economic Freedom Index Report, 2017)

Transparency International - Corruption Index 100 90 80 70 60 50 40 30 20 10 0 TI Index 2016 ranking (out of 176) Score out of 100 (very clean) 2015 Score 2014 Score 2013 Score 2012 Score Macedonia 90 37 42 45 44 43 Albania 83 39 36 33 31 33 Bosnia & Herzegovina 83 39 38 39 42 42 Serbia 72 42 40 41 42 39 Montenegro 64 45 44 42 44 41 Kosovo 95 36 33 33 33 34

Montenegro Serbia Bosnia & Herzegovina Albania Macedonia Macedonia Albania Bosnia & Herzegovina Serbia Montenegro Score (1-7) 4.28 3.93 3.71 3.89 4.2 CGI 2015 2016 ranking (out of 140) 60 93 111 94 70 Score (1-7) 4.23 4.06 3.8 3.97 4.05 CGI 2016 2017 ranking (out of 138) 68 80 107 90 82

Political Instability Corruption Access to financing Inadequate educational workforce Poor work ethic in national labor force Inefficient government bureaucracy Inadequate supply of infrastructure Smart growth: Week cooperation between universities & business community Better investments in R&D Investing in skills & capacities of human capital The vast majority of employed persons in the SEE region (81%)) say they are ready to pursue ADDITIONAL TRAINING in order to advance at work (Source: RSS, 2017)

All SELDI countries have anti-money laundering/ financial intelligence agencies whose role, however, in anticorruption is limited.

Source: MCIC Business Survey, 2014 The wide spread of corruption cannot be reduced 3.75 Corruption will always exist in (country), yet it can be limited to a degree 35.25 Corruption in (country) can be substantially reduced 49.50 Corruption in (country) can be eradicated 9.75 Don't know/no answer 1.75 0 10 20 30 40 50 60

Yes, I filed a court complaint 0.25 Yes, I turned to a superior employee 0.50 No, I did not udertake any acitons 6 I did not encounter any corruption cases, connected with the activities of my 92 Don't know/no answer 1.25 0 20 40 60 80 100 %

Did not know who to turn to/ who to contact 4 It will take a lot of time which I cannot afford to waste 4 My actions will not accomplish anything 41.67 I am afraid of negative consequences 37.50 Other reason 8 Don't know/no answer 4 10 20 30 40 50 %

33.33 33.33 Yes, there was a result Partial result No, there was no result of my actions 33.33

Improving the management of human capital & financial recourses; Advancing Innovative tools for organizational management performance, quality control & implication of standards; Introducing innovative mechanisms that promote growth and employment and ensure the sustainability of public finances; Effective enforcement of anti-corruption mechanisms in business sector & legal enforcement of anti-corruption strategies (i.e. OECD Convention on Combating Bribery of foreign public officials) Increasing regulatory mechanisms of law implementation and application of unselective justice; Increasing investments in R&D; Better law enforcement of legal protection & law on whistle blowing; Improving the cooperation between universities, business community, regional entrepreneurship hubs & business accelerators;

Thank you Emilija Tudzarovska-Gjorgjievska, MA, MSc etudzarovska@yahoo.com