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REXECODE
R EXECODE
European Enlargement and ICT
Industrial Issues, Offshoring/location trends
Michel Martinez
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Where we stand
Since 2 years, FDI flows slumped
CEE (excepted Russia)
Balance of foreig n direct investment (in % of GDP)
8
6
4
2
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
© REXECODE
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Where we stand
But the amount of international debt securities increased by 60 %
since 2000
Amount of international debt securities (bil ions $)
140
120
100
80
60
40
20
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
© REXECODE
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Where we stand
But the foreign claims were multiplied by two since 2000
CEE : amount of foreign claims of reporting banks (bil ions $)
500
400
300
200
150
100
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
© REXECODE
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Where we stand
High level of foreign claims in new new members countries
(40% to 60 % of GDP)
Amount of Foreig n claims of reporting banks (in % of GDP)
70
60
50
Poland
Hungary
Czech republic
40
30
20
10
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
© REXECODE
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
ICT production
Eastern European countries have high level of ICT production
Share of ICT value added (in % of GDP)
12
10
8
6
4
2
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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0
REXECODE
ICT production
Eastern European countries have high level of Telecommunication production
Share of Communications Value Added (in % of GDP)
9
8
7
6
5
4
3
2
1
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Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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0
REXECODE
ICT production
The Eastern European countries
are less better ranked in IT production
Share of IT Value added (in % of GDP)
6.0
5.0
4.0
3.0
2.0
1.0
8
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Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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0.0
REXECODE
ICT production
But they are very well placed in the production
of components and scientific instrument
Share of other IC technologies value added (in % od GDP)
components and scientific instruments
3.5
3.0
2.5
2.0
1.5
1.0
0.5
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Two aspects for Offshoring/location trends
1. Access to (new) markets
2. Competitiveness Improvement
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
1. Access to markets
1. Access to (new) markets: reasons for locating activities
ICT marketing
ICT services need to get closer the customers
some ICT services are produced when and where they are consumed.
ICT products costly to transport (??)
which is the size of ICT markets of CEE
countries and which will be their growth?
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
ICT production
The 10 new members represent already
a larger share of ICT market than of GDP
S ha re of 1 0 ne w me mbe rs in the EU
in the ICT ma rke t, billions € a nd %
S ha re of 1 0 ne w me mbe rs in the EU
in the G DP , billions € a nd %
9 309
95.7%
420
4.3%
562.3
94.4%
33.5
5.6%
EU15
EU15
EU 10 new members
EU 10 new members
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
ICT production
This is particularly the case on the Telecommunication market,
not on the IT market
S ha re of 1 0 ne w me mbe rs in the EU
in the IT ma rke t, billions € a nd %
270.0
96.3%
10.5
3.7%
S ha re of 1 0 ne w me mbe rs in the EU
in the Te le c ommunic a tion ma rke t, billions € a nd %
23.0
7.3%
292.3
92.7%
EU15
EU15
EU 10 new members
EU 10 new members
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
1. Access to markets
Trends of economic growth:
better prospects 2004-2010 for new members as during the last 10 years
Average annual econom ic grow th rate (%)
4.5
4
1990- 2003
3.5
2004- 2010
3
2.5
2
1.5
1
0.5
0
European
Union (15)
Germany
France
Uk
It aly
Spain
CEE
Hungary
Poland
Czech
Slovak
Republic
Republic
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
1. Access to markets
Trends of ICT markets
IT:
Low penetration rate and high needs of investments
Telecommunication
Which impact of deregulation?
?
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
2. Competitiveness Improvement
2. Competitiveness Improvement : reasons for locating activities
wages costs
taxes on benefits
infrastructures
innovation and R&D
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
2. Competitiveness Improvement
Eastern european countries have, with Ireland,
the lower profit taxes
Profit taxe in 2004 (%)
40
35
30
25
20
15
10
5
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Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
2. Competitiveness Improvement
Eastern european countries have the lower hourly wage costs
Hourly wage costs in 2004,
in €/hour
35
30
25
20
15
10
5
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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REXECODE
Conclusion
Conclusion
Low hourly wage cost
Low profit tax
EU subsidies
highly skilled workforce
High growth rate of domestic It market
attractive locations for FDI
Michel Martinez, Journées de l’IDATE, European Enlargement and ICT, 24 novembre 2004
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