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Foreign direct investments and trade

Improving economic growth in CEE

Globalisation has accelerated CEE’s economic growth and established its competitive advantages. But COVID-19 has disrupted trade and supply chains worldwide. 

How can governments and public sector institutions in CEE find new opportunities to maintain our global recognition and enter new markets?

It is now more important than ever for governments to provide the tailor-made support that businesses need to realise the region’s trade potential. Structured activities around economic marketing can help increase the competitiveness of local entrepreneurs and create the region’s brand. Governments can offer more targeted support to businesses when their programmes and information reflect the latest market realities. And as recent studies show, supporting trade through policies and special programmes may have a positive impact on exports as well as GDP.

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FDIs and trade in CEE

The COVID-19 pandemic also creates an opportunity to consider the investment side. Foreign Direct Investments (FDIs) help expand business, lower operating costs and help internationalise local companies. FDIs help fund individual companies, countries and regions. To advance this tool for economic growth, government support should target businesses' market promotion, to attract the interest of investors and increase recognition of the country. 

 

Economic Marketing: Structured activities performed by the public administration (on a regional or country level) that help to increase the competitiveness of entrepreneurs and create the region or country's brand. Those processes could be understood as support of entrepreneurs when going out to foreign markets, as well as attraction of investors.

How governments can support businesses to foster trade & attract FDIs

When local businesses expand into new markets outside their home country, it doesn’t just improve their own profitability but also builds the country’s economic prosperity. Entering new markets can often come with access to new technologies. These digital tools can lower the costs of production or increase the stakeholders’ and companies’ income, which in turn enters the local economy.

It is in the government's interest to support businesses in going abroad -- to establish the export of goods, generate employment, and grow the GDP. Public sector institutions can provide insightful data, foster networking and help build partnerships. Using market intelligence, governments have access to data that can help identify business opportunities and emerging demands. 

Governments around the world have different approaches to analysing the needs of domestic companies, looking for trends in the market or meeting the demand for new support instruments. Public institutions could provide support for market preparation, market entry or closing deals. This will help businesses have greater success in export, and ultimately produce more economic advantages for the country. 

In addition to expanding the country’s representation in the global market, generating investment at home is equally important. 

Governments can support local institutions to find investors through economic marketing. They should help businesses understand the market needs, market resilience, and provide incentives for attracting investors. They can act as a key mechanism to help connect institutions looking for money and investors willing to invest, and support the process through closing the deal. 

More investments will generate more jobs, improve capital flow and knowledge, and grow economic capacities. 

Beyond supporting the processes of import and export, governments should also ensure the people behind the businesses are well-equipped to develop the trade culture. 

Capacity building will help drive the economic development of the ecosystem. Providing training sessions, familiarising government officials with the latest best practices, introducing new trends and fostering networking amongst businesses will generate efficiency and long-term results. Public officials responsible for economy and trade should support SMEs and better understand what that support should entail.

Governments can support SMEs and businesses to network abroad, to learn from others and expand their knowledge. Potential growth areas include: understanding the different directions they can take their products and services in the market, hearing the journey of other businesses, and learning about the tools and support from public institutions that’s available to them to go abroad. 

Prioritising the skills and knowledge of business employees ultimately improves trade prospects and contributes to more economic growth. 

The European Commission estimates that by 2025 the volume of data will increase by 430% – from 33 zettabytes (1021 bytes) in 2018 to 175 zettabytes. With such an overwhelming amount of data, the question is no longer ‘what’ data is available, but ‘how’ we can utilise it to grow ourselves and our economies.

Market intelligence is key. Business intelligence systems help automate tasks such as downloading the data from the source, integrating it with other data sets and presenting it in custom, pre-specified reports.

Governments should use market intelligence to better understand their environment and design tools that support specific needs. A good analytical framework can help quickly identify opportunities and risks to enable better decision making, macroeconomic forecasting, and effective trade and policy design. 

Data on SMEs and businesses shouldn’t be siloed in the public sector. This information can be distributed to businesses so they are better able to make informed decisions.

New trends in trade

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Across CEE, public sector institutions are widely shifting towards modern and bureaucracy-free institutions. A large part of this transformation is focused on updating back-office processes, including analysis on trade and economic development. 

Here are a few trends we’re seeing: 
  • Digitalisation of market intelligence processes and automation of data management (including forecasting): Using digital tools for more efficient data gathering, analysis and predicting the levels of trade

  • Rise in cross-border e-commerce: As more activities go online, a process that was sped up by COVID-19, so has the selling of goods and services

  • Improved information platforms for exporters and importers: Public sector institutions are increasingly trying to develop new solutions (such as web portals) to present export support instruments or support the whole process of internationalisation.

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Contact us

Agnieszka Gajewska

Agnieszka Gajewska

CEE Public Sector & Infrastructure Leader, PwC Poland

Tel: +48 517 140 537

Malina Jankowska

Malina Jankowska

Director, Public Sector, PwC Poland

Tel: +48 519 508 126

Jeffery McMillan

Jeffery McMillan

CEE Director of Brand and Communications, PwC Central and Eastern Europe

Tel: +48 519 506 633

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