SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE REGION

STATE OF THE REGION REPORT TM

[2007]

The Baltic Sea Region as a Place to Do Business Key messages

• Regional cooperation is a key opportunity and necessity for the Baltic Sea Region to improve its competitiveness position within the and globally. • The Baltic Sea Region registers solid levels of economic performance and competitiveness. The Region needs to prepare for further increasing global competition and worsening demographics that threaten to erode its current competitive advantages over time. • Companies are only starting to experience the Baltic Sea Region as an integrated geography. The separation in small national markets has so far limited the ability of companies to fully exploit the existing qualities of the Region. • The current discussions in the Baltic Sea Region provide an opportunity for a step-change towards an institutional architecture for effective regional collaboration in the 21st century.

By Dr. Christian Ketels*

Prepared for the Baltic Development Forum in collaboration with the Nordic Investment Bank (NIB) and the Nordic Council of Ministers (NCM)

* The author would like to thank Professor Örjan Sölvell, School of Economics, who played an import role in launching the concept of the State of the Region Report. Mikael Hilmersson and Susanne Sandberg, Baltic Business School Kalmar, provided able research assistance for Section C of the Report. The Institute for Strategy and Competitiveness, Harvard Business School, provided international data on business competitiveness. Foreword

8FBSFQSPVEUPQSFTFOUUIFGPVSUIBOOVBM4UBUFPGUIF3FHJPO3FQPSU QSPWJEJOHJOEFQUILOPXM FEHFBOEBOBMZTJTPGXIBUNBLFTUIF#BMUJD4FB3FHJPOBOEJUTDPVOUSJFTUJDL'SPNPVSQPJOUPG WJFX UIFSFBSFUISFFNFTTBHFTGSPNUIF3FQPSUUPCFIJHIMJHIUFE

5BMFOUTNBUUFS"QSJNBSZTUSFOHUIPGUIF#BMUJD4FB3FHJPOJTJUTDBQBDJUZUPJOOPWBUFɨFGVUVSF DPNQFUJUJWFTVDDFTTPGUIF3FHJPOXJMMUIFSFGPSFEFQFOEPOJUTBCJMJUZUPEFWFMPQ BUUSBDUBOESFUBJO UIFTLJMMTOFDFTTBSZUPVQHSBEFJUTIJHIUFDIBOELOPXMFEHFJOUFOTJWFJOEVTUSJFT*OBTJUVBUJPO XIFSFUIFNPCJMJUZPGTUVEFOUTBOEIJHITLJMMFEMBCPVSJTSJTJOH JUXJMMCFFTTFOUJBMUIBUUIF#BMUJD 4FB3FHJPOQSPWJEFTTUSPOHBOEDMFBSJODFOUJWFTUPNBUDIUIFHSPXJOHEFNBOEGPSFYDFMMFODFJO TLJMMT

#VTJOFTTFTNBUUFS1SPTQFSJUZBOEDPNQFUJUJWFOFTTBSFDMPTFMZMJOLFEUPUIFHSPXUIBOEQSPmUT HFOFSBUFECZTVDDFTTGVMCVTJOFTTFTBOEJOWFTUNFOUT'VOEBNFOUBMVOEFSTUBOEJOHPGXIBUESJWFT CVTJOFTTBOEJOWFTUNFOUTJTUIFSFGPSFFTTFOUJBMGPSQSPWJEJOHUIFSJHIUGSBNFXPSLDPOEJUJPOTGPS GVUVSFHSPXUI5PQPTJUJPOUIF#BMUJD4FB3FHJPOoPO5PQPG&VSPQFoGPSUIFGVUVSF JUXJMMCF FTTFOUJBMUIBUUIFWPJDFPGJUTCVTJOFTTMFBEFSTJTNPSFQSPNJOFOUMZQSFTFOUJOUIFDPNQFUJUJWFOFTT VQHSBEJOHEFCBUF

/FJHICPVSTNBUUFS*OUIFGVUVSF &VSPQFBODPPQFSBUJPOBOEJOUFHSBUJPOXJMMCFDSVDJBMCVUOFFET UPCFDPNQMFUFECZGVSUIFSFĊPSUTBNPOHOFJHICPVSTUPBDIJFWFBIJHIFSEFHSFFPGFDPOPNJDXFMM CFJOH*OQBSBMMFMUPUIFFĊPSUTVOEFSUBLFOJOSFMBUJPOUP-JTCPO"HFOEBPGUIF&6 TUSPOHFSJOUF HSBUJPODBOCFBDIJFWFEXJUIJOBTNBMMFSSFHJPOBMGSBNFXPSLUIBUJTNPSFOBSSPXMZHFPHSBQIJDBMMZ BOEDVMUVSBMMZEFmOFE*OUIJTDPOUFYU JUJTFTTFOUJBMUIBUUIFDPVOUSJFTJOUIF#BMUJD4FB3FHJPO CVJMEPOUIFJSBCJMJUZUPDPPQFSBUFUPPQUJNJTFUIFJSDPNNPODPNQFUJUJWFQPUFOUJBM

ɨFBOBMZTJTBOEDPODMVTJPOTJOUIF4UBUFPGUIF3FHJPO3FQPSUBSFUIPTFPGUIFBVUIPSBOEEPOPU OFDFTTBSJMZSFnFDUUIFWJFXTBOEDPNNJUNFOUTPGPVSPSHBOJTBUJPOT)PXFWFS XFBSFQPTJUJWFUIBU UIF3FQPSUXJMMCFPGVTFBTBTPVSDFPGLOPXMFEHFBOEJOGPSNBUJPOGPSDPNQFUJUJWFOFTT JOOPWB UJPOBOECVTJOFTTVQHSBEJOH UIBUDBOTQVSDPODSFUFBDUJPOGPSUIFEFWFMPQNFOUPGUIF#BMUJD4FB 3FHJPO

$PQFOIBHFO)FMTJOLJ /PWFNCFS

Hans Brask Johnny Åkerholm Halldór Ásgrímsson Director President & CEO Secretary General Baltic Development Forum Nordic Investment Bank Nordic Council of Ministers Table of contents

EXECUTIVE SUMMARY 5

INTRODUCTION 7

SECTION A: The context for cross-national cooperation in the Baltic Sea Region 8 1. Cross-national cooperation as a tool for competitiveness 10 Cross-national regions and competitiveness 10 Regional cooperation within the European Union 12 Key policy areas for regional cooperation 13 2. The macroeconomic climate for cross-national cooperation 15 The global context 15 The Baltic Sea Region 16 Countries in the Baltic Sea Region 18

SECTION B: Competitiveness of the Baltic Sea Region 22 1. The economic performance of the Baltic Sea Region 25 Prosperity 25 Prosperity accounting 28 Intermediate indicators and enablers of competitiveness 31 Overall assessment 36 2. The foundations of competitiveness in the Baltic Sea Region 37 Legacy and governance 38 Microeconomic competitiveness 41 Special focus: Skills and cluster 50 Overall assessment 56 3. The Lisbon Agenda 57 The Baltic Sea Region on the Lisbon Agenda 59 Countries in the Baltic Sea Region on the Lisbon Agenda 59 National Reform Programs 60

SECTION C: Doing business in the Baltic Sea Region – the company perspective 64 1. The Baltic Sea Region as a market 68 Market integration 69 Company organization 71 Market attractiveness 72 Trends 72 Overall assessment 73 2. Competitive advantages in the Baltic Sea Region 74 Qualities of the Baltic Sea Region 74 The impact of the Baltic countries on the Baltic Sea Region 76 The impact of the Baltic Sea Region on company strategy 77 Activities with global reach in the Baltic Sea Region 78 Overall assessment 79 3. Competitiveness upgrading 80 Focus of current public efforts to upgrade competitiveness 80 Company participation in competitiveness efforts 81 Interaction between the public and private sector 81 Overall assessment 82

FINAL OBSERVATIONS 83

4 STATE OF THE REGION REPORT 2007 Executive Summary

ɨF4UBUFPGUIF3FHJPO3FQPSUJTUIFGPVSUIFEJUJPOJOUIJTTFSJFTPGBOOVBMFWB MVBUJPOTPGDPNQFUJUJWFOFTTBOEDPPQFSBUJPOBDSPTTUIF#BMUJD4FB3FHJPOɨF3FQPSU JTPSHBOJ[FEJOUPUISFFQBSUT1BSU"PGUIF3FQPSUEFTDSJCFTUIFNPUJWBUJPOGPSSFHJPOBM DPPQFSBUJPOBOEUIFNBDSPFDPOPNJDDPOUFYUJOXIJDIJUDVSSFOUMZPDDVST1BSU#DP WFSTEJĊFSFOUBTQFDUTPGUIF3FHJPOTDPNQFUJUJWFOFTT GSPNBOBTTFTTNFOUPGJUTFDPOP NJDQFSGPSNBODFUPBOFWBMVBUJPOPGJUTNJDSPFDPOPNJDGVOEBNFOUBMTUPJUTQPTJUJPO SFHBSEJOHUIF&VSPQFBO6OJPOT-JTCPO"HFOEB1BSU$MPPLTBUUIF3FHJPOGSPNUIF QFSTQFDUJWFPGCVTJOFTTFTBOEEJTDVTTFTJUTBUUSBDUJWFOFTTBTBNBSLFU JUTQPUFOUJBMBTB TPVSDFPGDPNQFUJUJWFBEWBOUBHFT BOEJUTFĊFDUJWFOFTTBTBQPMJDZQMBUGPSNGPSDPNQF UJUJWFOFTTVQHSBEJOH

1BSU"TFUTUIFTUBHFGPSSFHJPOBMDPPQFSBUJPOJOUIF 1BSU# BDPOUJOVBUJPOPGUIFUSBDLJOHPGUIF#BMUJD #BMUJD4FB3FHJPO IPNFUPNJMMJPOQFPQMF 4FB3FHJPOTDPNQFUJUJWFOFTTTUBSUFEGPVSZFBSTBHP  BOEBOBOOVBM(%1PGBCPVUǎCJMMJPOɨF EJTDVTTFTFDPOPNJDPVUDPNFTJOUIF3FHJPO1SPTQFS BDBEFNJDMJUFSBUVSFIBTJODSFBTJOHMZQPJOUFEPVU JUZHSPXUIIBTBDDFMFSBUFEBOEJTPWFSBMMPOBTPMJE UIBUDPPQFSBUJPOBNPOHOFJHICPSJOHDPVOUSJFTIBT QBUI FWFOJGUIFIJHITQFFEPGUIFMBTUZFBSXJMMCF TJHOJmDBOUCFOFmUTGPSDPNQFUJUJWFOFTTBOEFDPOPNJD IBSEUPTVTUBJOɨF3FHJPODPOUJOVFTUPCFOFmU QFSGPSNBODF*UIBTBMTPTUBSUFEUPQSPWJEFBCFUUFS GSPNBTPMJEDPNCJOBUJPOPGIJHIMBCPSNPCJMJ[BUJPO TFOTFPGXIBUSPMFEJĊFSFOUMFWFMTPGHFPHSBQIZPVHIU BOETPMJEQSPEVDUJWJUZMFWFMT*OUFSNFEJBUFJOEJDBUPST UPQMBZ*OUIF#BMUJD4FB3FHJPO UIFPQQPSUVOJUJFT PGDPNQFUJUJWFOFTT PGUFOBCFMMXFUIFSGPSUIJOHTUP GPSUIFOFJHICPSIPPEUPHFOFSBUFCFOFmUTBSFIJHI DPNF TFOENPSFNJYFETJHOBMTCVUBSFHFOFSBMMZBMTP CVUSFRVJSFBOBDUJWFQPMJUJDBMTUSBUFHZUPPWFSDPNF BUTPMJEMFWFMTɨFVOEFSMZJOHUIFNFPGUIFDIBOHFT SFNBJOJOHCBSSJFST"OEUIF3FHJPODBOCFDPNFBO JOIBTCFFOUIBUUIF3FHJPOJTFOUFSJOHUIFMBUFS JNQPSUBOUDPNQMFNFOUUPUIF&VSPQFBO6OJPO  TUBHFTPGBDMBTTJDCVTJOFTTDZDMFVQTXJOH QVSTVJOHEFFQFSMFWFMTPGJOUFHSBUJPOBOEDSFBUJOHB QMBUGPSNUPJOnVFODFQPMJDZNBLJOHBUUIF&6MFWFM *OUFSNTPGVOEFSMZJOHDPNQFUJUJWFOFTT UIF#BMUJD 4FB3FHJPODPOUJOVFTUPCFBNPOHUIFNPTUDPNQFUJ 3FHJPOBMDPPQFSBUJPOJTBĊFDUFECZUIFNBDSPFDP UJWFFDPOPNJFTJOUIFXPSME8IFSFDIBOHFTPDDVSSFE OPNJDDMJNBUFJOXIJDIJUPDDVST"UUIFHMPCBMMFWFM  TJODFMBTUZFBS UIFZUFOEFEUPCFQPTJUJWF SFnFDU UIFFOWJSPONFOUIBTCFFOWFSZCFOFWPMFOUJOSFDFOU JOHUIFCFOJHOFDPOPNJDDMJNBUFUIBUUIF3FHJPOJT ZFBSTɨFNPTUMJLFMZPVUDPNFOPXJTBNPEFSBUF FYQFSJFODJOHɨF3FHJPOTTUSFOHUITDPOUJOVFUPCF TMPXEPXOPGUIFHMPCBMFDPOPNZ"NVDINPSFTFSJ JUTTPQIJTUJDBUFEDPNQBOJFT JUTBTTFUCBTF JUTJOOPWB PVTDPOUSBDUJPOESJWFOCZmOBODJBMNBSLFUQSPCMFNT UJWFDBQBDJUZ BOEJUTFRVBMSVMFTGPSBMMJODPNQFUJ JTVOMJLFMZ CVUQPTTJCMF"UUIF#BMUJD4FB3FHJPO UJPO8FBLOFTTFTFYJTUJOUIFCVSEFOUIBUSVMFTBOE MFWFM UIFNBDSPFDPOPNJDDMJNBUFJTTUSPOH3FBM SFHVMBUJPOTJNQPTFPOUIFWJUBMJUZPGDPNQFUJUJPOBOE (%1HSPXUISFNBJOTTJHOJmDBOUMZBCPWFUIFMFWFMJO JOTPNFBTQFDUTPGUIFFEVDBUJPOTZTUFNɨFTLJMM UIF&6BOEIBTTUBSUFEUPPVUQFSGPSNCPUIUIF CBTFSFNBJOTTUSPOHGPSOPXCVUUIFSFBSFDPODFSOT /"'5"SFHJPOBOEUIFXPSMEFDPOPNZPWFSBMMɨF XIFUIFSJUXJMMSFNBJODPNQFUJUJWFJOBDIBOHJOHGV FDPOPNJFTJOUIF3FHJPOBSFFOUFSJOHUIFMBUFSTUBHFT UVSFFOWJSPONFOUɨFDMVTUFSQPSUGPMJPPGUIF3FHJPO PGUIFDVSSFOUCVTJOFTTDZDMF8IJMFUIFSFJTTPNF JTTPMJE CVUB3FHJPOXJEFTUSBUFHZUPEFWFMPQJUJT SJTLPGPWFSIFBUJOH UIFNPTUMJLFMZPVUDPNFJTGPSBO SFRVJSFE JOUIFGBDFPGJODSFBTJOHDPNQFUJUJPOBNPOH PSEFSMZTMPXEPXOPGHSPXUISBUFTPWFSUIFDPNJOH DMVTUFSTXJUIJO&VSPQFBOEHMPCBMMZ NPOUITBOEZFBST

STATE OF THE REGION REPORT 2007 5 'SPNUIFQFSTQFDUJWFPGUIF&VSPQFBO6OJPOT-JTCPO DPNF MJLF(&)FBMUI$BSF BSFBCMFUPESBXFTQFDJBM BHFOEB UIF#BMUJD4FB3FHJPOSFNBJOTJOBMFBEJOH MZPOUIFTLJMMCBTFPGUIF3FHJPO$PNQBOJFTGSPN QPTJUJPO BACFBDPOGPSUIFSFTUPG&VSPQFBT&6 UIF3FHJPOIBWFTFFOUIFQBSUJDVMBSOBUVSFPGMPDBM $PNNJTTJPO1SFTJEFOU#BSSPTPDPNNFOUFEUXPZFBST NBSLFUTBOECVTJOFTTFOWJSPONFOUTTIBQFUIFJSTUSBU BHPɨFDPVOUSJFTGSPNUIF3FHJPOBMTPHFUHFOFSBMMZ FHJFTPOHMPCBMNBSLFUT$PNQFUJOHPOJOOPWBUJPO  HPPESFWJFXTGPSUIFEJSFDUJPOBOEJNQMFNFOUBUJPO EFTJHO BOEBXJMMJOHOFTTUPBEKVTUCVTJOFTTNPEFMT PGUIFJS/BUJPOBM3FGPSN1SPHSBNT BOFXQPMJDZUPPM nFYJCMZUPUIFQBSUJDVMBSOFFETPGGPSFJHONBSLFUT  JOUSPEVDFEXJUIUIFSFMBVODIPGUIF-JTCPO"HFOEB DPNQBOJFTGSPNUIF3FHJPOIBWFCFFOTVDDFTTGVMJOB JO3FHJPOBMDPPQFSBUJPODPVME IPXFWFS CF TJHOJmDBOUSBOHFPGCVTJOFTTFTBDSPTTUIFXPSMEɨF DPNFBNPSFWJTJCMFQBSUPGUIFTFQSPHSBNT NBSLFUPQQPSUVOJUJFTJOUIF#BMUJDDPVOUSJFT UPTPNF EFHSFFBMTPJO1PMBOEBOE/83VTTJB IBWFJOWJHPS 1BSU$ BTQFDJBMTFDUJPOGPSUIJTZFBS UBLFTUIFDPN BUFEUIF3FHJPOBOEHJWFODPNQBOJFTOFXPQQPSUV QBOZQFSTQFDUJWFBOEJTCBTFEQBSUMZPOBTFUPG$&0 OJUJFTUPEFWFMPQTUSBUFHJDBEWBOUBHFT JOUFSWJFXTDPOEVDUFEGPSUIJT3FQPSU"TBNBSLFU  UIF#BMUJD4FB3FHJPOJTOPUQFSDFJWFEBTJOUFHSBUFE  &ĊPSUTUPVQHSBEFDPNQFUJUJWFOFTTJOUIF#BMUJD4FB MBSHFMZCFDBVTFUIFOFFEGPSMPDBMMZTFSWJOHDVTUPNFS 3FHJPOXPSLHFOFSBMMZXFMMCFUUFSUIBOJONBOZ OFFETBOEUIFEJĊFSFODFTJOSFHVMBUPSZSFHJNFTBOE PUIFSQBSUTPGUIFXPSME#VUUIFDVSSFOUSFWJFXPG MFHBDZNBSLFUTUSVDUVSFTSFRVJSFDPNQBOJFTUPSVO QVCMJDTFDUPSJOTUJUVUJPOTGPS#BMUJD4FB3FHJPODPPQ CVTJOFTTFTOBUJPOBMMZɨF3FHJPOJT IPXFWFS CF FSBUJPOOFFETUPCFBNCJUJPVTJOJUTBQQSPBDIUPSFH DPNJOHJODSFBTJOHMZJNQPSUBOUBTBIJHIFSNBOBHF JTUFSXJUIUIFCVTJOFTTDPNNVOJUZ$PNQBOZMFBEFST NFOUMFWFMUPJODSFBTFUIFFċDJFODZPGCVTJOFTTNPE UIFNTFMWFTXJMMOFFEUPEJTDVTTXIFUIFSUIFZTIPVME FMTɨFMBDLPGNBSLFUJOUFHSBUJPOSBJTFTDPTUMFWFMT DSFBUFBOFX#BMUJD4FB3FHJPOWPJDFPGCVTJOFTTFTBT GPSDPNQBOJFT'VSUIFSJOUFHSBUJPOXJMMSFEVDFUIFTF BDPVOUFSQBSUUPUIFFYJTUJOHQVCMJDTFDUPSTUSVDUVSFT DPTUTBOEDBOBUUSBDUNPSFGPSFJHODPNQBOJFTBOE PQFOUIFEPPSGPSDPOTPMJEBUJPOBDSPTTUIF3FHJPO 8JUIPVUBEPVCU IBTCFFOBHPPEZFBSGPSUIF ɨJTQSPDFTTIBTPOMZCFHVOJOUIFQBTU SFHJPOBM FDPOPNJFTPGUIF3FHJPO BUSFOEUIBUJTMJLFMZUP JOUFHSBUJPOIBTTVQQPSUFEUIFHSPXUIPGFYJTUJOH DBSSZUISPVHIGPSɨFDIBMMFOHFTBSFGVSUIFS CVTJOFTTNPEFMTCVUIBTOPUMFEUPUIFJSSFDBMJCSBUJPO BXBZJOUIFGVUVSF SFMBUFEUPUIF3FHJPOTQPTJUJPO JOUIFXPSMEFDPOPNZBOEJUTEFNPHSBQIJDQSPmMF ɨF#BMUJD4FB3FHJPOQSPWJEFTBOVNCFSPGRVBMJ ɨFNPTUJNNFEJBUFTUFQUPBEESFTTUIFTFDIBMMFOHFT UJFTUIBUNBLFJUBOBUUSBDUJWFTPVSDFPGDPNQFUJUJWF JTUIFDSFBUJPOPGBOFĊFDUJWFJOTUJUVUJPOBMBSDIJUFD BEWBOUBHFT*UTTNBMMNBSLFUTJ[FIBT IPXFWFS MFBET UVSFUIBUDBOEFWJTFBOEFYFDVUFBOBDUJPOBHFOEBGPS GPSFJHODPNQBOJFTUPTUBZPVUTJEFJOTUFBEPGMFWFSBH MPOHUFSNDPNQFUJUJWFOFTTJOUIF#BMUJD4FB3FHJPO JOHUIFTFPQQPSUVOJUJFTɨPTFDPNQBOJFTUIBUIBWF

6 STATE OF THE REGION REPORT 2007 Introduction

Why a State of the Region Report? UIF3FQVCMJDPG,PNJ "SLIBOHFMTLBZBPCMBTU  ɨF4UBUFPGUIF3FHJPO3FQPSUJTUIFGPVSUI /FOFUTLZ"0 BOE7PMPHPETLBZBPCMBTU  FEJUJPOJOUIJTTFSJFTPGBOOVBMFWBMVBUJPOTPGDPN QFUJUJWFOFTTBOEDPPQFSBUJPOBDSPTTUIF#BMUJD4FB ɨJT3FHJPO BTNFBTVSFEJOUIJT3FQPSU JTIPNFUP 3FHJPOɨFTFSJFTXBTDSFBUFEUPJOGPSNEFDJTJPOT NJMMJPOQFPQMF BOVNCFSUIBUIBTCFFOEFDSFBT BCPVUSFHJPOBMFDPOPNJDDPPQFSBUJPOJOUIF3FHJPO  JOHCZBCPVU BOOVBMMZPWFSUIFMBTUGFXZFBST UPUSBDLUIFJNQBDUPGUIFTFEFDJTJPOTPODPNQFUJUJWF ɨF/PSEJDDPVOUSJFTBOEOPSUIFSO(FSNBOZ‰UP OFTT BOEUPDPNNVOJDBUFUIF3FHJPOBOEJUTXJMMJOH HFUIFSOPXSFQSFTFOUJOHBCPVUPGUIF3FHJPOT OFTTUPVQHSBEFCPUIXJUIJOBOEPVUTJEFɨF3FQPSU JOIBCJUBOUT‰IBWFHBJOFEJOQPQVMBUJPOCVUUIFEF NBEFUIF#BMUJD4FB3FHJPOWJTJCMFJOBWFSZEJSFDUXBZ DSFBTFJOQPQVMBUJPOJOUIF#BMUJDDPVOUSJFT OPSUIFSO 1PMBOE BOEOPSUIXFTUFSO3VTTJBXBTFWFOIJHIFS ɨJTZFBST3FQPSUGPMMPXTUIFCSPBETUSVDUVSFUIBU ɨF3FHJPOTMBCPSGPSDFPGNJMMJPOFNQMPZFFT XFIBWFEFWFMPQFETJODF4FDUJPO"QSPWJEFTB IBTCFFOHSPXJOHTJODF.PTUSFDFOUMZ UIJT EJTDVTTJPOPGUIFCSPBEFSDPOUFYUJOXIJDISFHJPOBM HSPXUIIBTDPNFNPSFGSPNUIF/PSEJDDPVOUSJFT DPPQFSBUJPOBOEDPNQFUJUJWFOFTTPDDVST8FEJTDVTT UIBOGSPNUIF#BMUJDT 1PMBOE BOE3VTTJBɨF3F UIFmOEJOHTPGUIFBDBEFNJDMJUFSBUVSFPOUIFJNQBDU HJPODSFBUFTBOBOOVBM(%1PGBCPVUǎCJMMJPO PGOFJHICPSJOHDPVOUSJFTPOQSPTQFSJUZBOEDPNQFUJ ɨ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mOBMMZ BDDPVOUTGPS PGUIF&VSPQFBO6OJPOT-JTCPO"HFOEB4FDUJPO$ PGSFHJPOBM(%1 UBLFTUIFQFSTQFDUJWFPGCVTJOFTTFTBOEBTLTIPXUIFZ QFSDFJWFUIF3FHJPO8FMPPLBUUIFBUUSBDUJWFOFTTPG ɨFSFJTOPTDJFOUJmDXBZUPFYBDUMZEFUFSNJOFUIF UIF#BMUJD4FB3FHJPOBTBQMBDFUPEPCVTJOFTT BTB CPVOEBSJFTPGUIF#BMUJD4FB3FHJPO8FQSPDFFE TPVSDFPGDPNQFUJUJWFBEWBOUBHFT BOEBTB3FHJPO QSBHNBUJDBMMZ JODMVEJOHUIPTFSFHJPOTUIBUBQQFBS UIBUBJNTUPVQHSBEFJUTDPNQFUJUJWFOFTT DMPTFMZJOUFHSBUFEXJUIPUIFSSFHJPOTBSPVOEUIF #BMUJD4FB*DFMBOEBOE/PSXBZBSFJODMVEFECFDBVTF What is the Baltic Sea Region? UIFZIBWFDMPTFSFMBUJPOTUPNBOZDPVOUSJFTBSPVOE 'PSPVSBOBMZTJT XFEFmOFUIF#BMUJD4FB3FHJPO UIF#BMUJD4FBBOEBSFFBHFSUPQBSUJDJQBUFJOSFHJPOBM oBTJOQSFWJPVTZFBSTo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

STATE OF THE REGION REPORT 2007 7 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

This section of the State of the Region Report describes the context for cross- national cooperation in the Baltic Sea Region. We discuss the conceptual questions that this raises and apply them to the reality of the Baltic Sea Region: why is regional cooperation useful and what particular role can it play? What is the general economic environment in which this cooperation currently takes place? And which are the policy areas that regional co- operation can most effectively address?

8 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

SECTION A: The context for cross-national cooperation in the Baltic Sea Region

$SPTTOBUJPOBMDPPQFSBUJPOJTPGUFODFMFCSBUFEJO BSFOBXIFOQPMJDZNBLJOHSFTQPOTJCJMJUJFTBSFEJWJEFE QVCMJDTQFFDIFTCVUUFOETUPCFQVTIFEEPXOUIF CFUXFFO#SVTTFMTBOEOBUJPOBMDBQJUBMT QPMJUJDBMQSJPSJUZMJTUTPODFEPNFTUJDDIBMMFOHFTBSJTF *OUIJTSFTQFDU UIF#BMUJD4FB3FHJPOIBTUPEFBMXJUI 4FDPOE XFMPPLBUUIFDVSSFOUNBDSPFDPOPNJD UIFTBNFDIBMMFOHFTBTNBOZPUIFSOFJHICPSIPPET DMJNBUFJOUIF3FHJPOɨJTDMJNBUFIBTBOJNQPS UIBUBJNUPJODSFBTFUIFJSMFWFMPGDPPQFSBUJPO UBOUJNQBDUPOUIFXJMMJOHOFTTUPFOHBHFJOSFHJPOBM DPPQFSBUJPOBOEPOUIFJTTVFTUIBUSFHJPOBMDPPQFSB 'JSTU XFSFWJFXUIFBDBEFNJDMJUFSBUVSFPOUIF UJPOIBTUPEFBMXJUI$PNQFUJUJWFOFTTEFBMTXJUIUIF FDPOPNJDJNQPSUBODFPGOFJHICPSIPPEBOEPOUIF VOEFSMZJOHDBQBDJUZPGUIFFDPOPNZ XIJMFUIFNBDSP SPMFPGEJĊFSFOUHFPHSBQIJDMFWFMT JODMVEJOHDSPTT FDPOPNJDDMJNBUFBĊFDUTUIFTIPSUUFSNnVDUVBUJPOT OBUJPOBMSFHJPOT JOFDPOPNJDQPMJDZNBLJOHɨFTF JOUIFXBZUIJTDBQBDJUZJTVTFEɨFNBDSPFDPOPNJD HFOFSBMDPODFQUTBSFUIFOBQQMJFEUPUIFSFBMJUZPG DMJNBUFIBTJNQPSUBOUSFQFSDVTTJPOTPODPNQFUJUJWF UIF#BMUJD4FB3FHJPO8IJMFUIJTEJTDVTTJPONJHIU OFTT CFDBVTFJUTIBQFTDPNQBOJFTBOEQPMJUJDJBOT TFFNUIFPSFUJDBM JUUVSOTPVUUPIBWFIJHIMZQSBDUJDBM WJFXPGQSJPSJUJFTBOEPQQPSUVOJUJFTGPSDPMMBCPSBUJOH JNQMJDBUJPOT8JUIPVUBTPVOEVOEFSTUBOEJOHPGUIF BDSPTTCPSEFST 3FHJPOTSPMF JUDBOFBTJMZCFDPNFBOJSSFMFWBOUTJEF

STATE OF THE REGION REPORT 2007 9 t The Baltic Sea Region 1. Cross-national cooperation neighborhood creates clear as a tool for competitiveness benefits for prosperity and $SPTTOBUJPOBMDPPQFSBUJPOJTOPUBHPBMJOJUTFMGo competitiveness; benefits that JUJTBUPPMUPBDIJFWFPUIFS NPSFVMUJNBUFHPBMTMJLF FDPOPNJDQSPTQFSJUZPSTFDVSJUZ8IFUIFSPSOPU grow if neighboring countries DSPTTOBUJPOBMDPPQFSBUJPOJTVTFGVMEFQFOETPOJUT actively integrate BCJMJUZUPNBLFBTJHOJmDBOUDPOUSJCVUJPOUPSFBDI JOHUIFTFVMUJNBUFHPBMT$SPTTOBUJPOBMDPPQFSBUJPO JTBQQSPQSJBUFBTMPOHBTUIFFOFSHZBOESFTPVSDFTJU t The Region can compliment SFRVJSFTBSFOPUNPSFFċDJFOUMZVTFEBUIPNFPSBU cooperation at the European PUIFSHFPHSBQIJDMFWFMT level through deeper integra- *OUUIF#BMUJD4FB3FHJPO GPSNPTUPGUIFTUIF HPBMTGPSDSPTTOBUJPOBMDPPQFSBUJPOIBWFCFFOQSJ tion efforts and as a platform to NBSJMZQPMJUJDBM XJUIBSFBTMJLFFDPOPNJDTQMBZJOHBO influence EU policies JNQPSUBOUCVUVMUJNBUFMZPOMZTVQQPSUJOHSPMF8IFO UIF#BMUJDDPVOUSJFTBOE1PMBOECFDBNFNFNCFSTPG UIF&VSPQFBO6OJPOJO UIFCBMBODFCFUXFFO t Baltic Sea Region cooperation UIFTFHPBMT BOEUIFSPMFPGUIF#BMUJD4FB3FHJPOBTB should focus on projects with UPPMJOBDIJFWJOHUIFN IBTTIJGUFE&DPOPNJDEFWFM PQNFOUBOEPUIFSQSBDUJDBMNBUUFSTMJLFFOWJSPONFO strong cross-border spillovers UBMQSPUFDUJPOIBWFCFDPNFEPNJOBOUHPBMT"OEUIF JOTUJUVUJPOTPGUIF&VSPQFBO6OJPOIBWFCFDPNFUIF and on effectively using exis- GPDBMQPJOUGPSNBOZDSPTTOBUJPOBMEJTDVTTJPOTBOE ting EU and national programs QPMJDJFT

8IBUBSFUIFDPOTFRVFODFTUIBUUIFTFGVOEBNFOUBM DIBOHFTIBWFIBEGPS#BMUJD4FBDPPQFSBUJPO 'JSTU  XFOFFEUPSFFWBMVBUFUIFSPMFUIBUDPPQFSBUJPOBU UIJTMFWFMDBOQMBZJOUIFDPOUFYUPGFDPOPNJDQPMJDZ 4FDPOE XFOFFEUPEFmOFUIFSFMBUJPOTIJQCFUXFFO DPPQFSBUJPOJOUIF#BMUJD4FB3FHJPOBOEDPPQFSB UJPOJO&VSPQF"OEUIJSE XFOFFEUPSFFWBMVBUFUIF QPMJDZBSFBTUIBUSFHJPOBMDPPQFSBUJPOJOUIF#BMUJD 4FB3FHJPOTIPVMEGPDVTPO

Cross-national regions and competitiveness /FJHICPSTBOEUIFOBUVSFPGFDPOPNJDSFMBUJPOTIJQT CFUXFFOUIFNNBUUFSGPSFDPOPNJDQSPTQFSJUZ8IJMF MPDBMDPOEJUJPOTBSFUIFNPTUJNQPSUBOUESJWFSTPGB DPVOUSZTQSPTQFSJUZBOEDPNQFUJUJWFOFTT UIFOFJHI CPSIPPEDBONBLFBTJHOJmDBOUDPOUSJCVUJPOUPXBSET IJHIFSFDPOPNJDXFMMCFJOH)PXTUSPOHUIFOFJHI CPSJTFDPOPNJDBMMZNBLFTBEJĊFSFODF)PXTUSPOH UIFUJFTXJUIUIFOFJHICPSBSFNBLFTBEJĊFSFODF "OEIPXCJHUIFPWFSMBQJOFDPOPNJDTQFDJBMJ[BUJPO JTNBLFTBEJĊFSFODF

0 0 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

t ɨFDPNQFUJUJWFOFTTBOEQSPTQFSJUZPGOFJHICPS What does this mean for the Baltic Sea Region? JOHDPVOUSJFTIBWFBDMFBSQPTJUJWFJNQBDUPOB t 'JSTU UIF3FHJPOTHFPHSBQIJDQPTJUJPOJODSFBTFT DPVOUSZTPXODPNQFUJUJWFOFTTBOEQSPTQFSJUZ" UIFOFFEGPSMFWFSBHJOHUIFCFOFmUTPGSFHJPOBM SJDIOFJHICPSQSPWJEFTBOBUUSBDUJWFNBSLFUBOE JOUFHSBUJPOɨFDPVOUSJFTBDSPTTUIF#BMUJD4FB3F TPVSDFPGJOWFTUNFOU"DPNQFUJUJWFOFJHICPS HJPOBSFTNBMMBOEUIFFOUJSF3FHJPOJTMPDBUFEBU DSFBUFTPQQPSUVOJUJFTUPQSPWJEFDPNQMFNFOUBSZ UIFQFSJQIFSZPGBMBSHFSFDPOPNJDBSFB XJUIMPX BDUJWJUJFTJOJOUFHSBUFEWBMVFDIBJOT"OEBDPN EZOBNJDHSPXUIJOUIFQBTU3FHJPOBMJOUFHSBUJPO QFUJUJWFOFJHICPSXJUITUSPOHJOTUJUVUJPOTDSFBUFT QSPWJEFTUIFPQQPSUVOJUZUPSFEVDFUIFMJNJUBUJPOT BOFYBNQMFBOEJTBOFĊFDUJWFCFODINBSLGPS PGTNBMMEPNFTUJDNBSLFUTJ[FBOEJODSFBTFTUIF TUSFOHUIFOJOHUIFDPVOUSZTPXODPNQFUJUJWFOFTT JOIFSFOUBUUSBDUJWFOFTTPGUIJTSFHJPOGPSFDPOPNJD BDUJWJUZ*DFMBOETGPDVTPOEFWFMPQJOHJUTSFMBUJPOT t ɨFOFJHICPSIPPEFĊFDUTBSFTUSFOHUIFOFEJGDPVO XJUIUIF#BMUJD4FB3FHJPOJTBOFYBNQMFPGIPX USJFTIBWFTUSPOHFDPOPNJDUJFTUISPVHIUSBEF JO TVDIBDUJWFQPMJDJFTDBOPWFSDPNFFWFOBDIBMMFOH WFTUNFOU BOEQFSTPOBMJOUFSDIBOHF$PVOUSJFTFN JOHHFPHSBQIJDBMMPDBUJPO QJSJDBMMZUSBEFNPSFXJUIUIFJSOFJHICPSTUIBOXJUI PUIFST BOE UIF DMPTFS UIFTF USBEJOH SFMBUJPOTIJQT t 4FDPOE UIF3FHJPOTIFUFSPHFOFJUZJOUFSNTPG BSF UIFIJHIFSUIFCFOFmUTGPSQSPTQFSJUZ$PVO FDPOPNJDEFWFMPQNFOUBOEMFHBDZDBODPNQMJ USJFTUIBUUSBEFMFTTXJUIUIFJSOFJHICPSTCFDBVTFPG DBUFUIFJOUFHSBUJPOCFUXFFOUIF#BMUJDDPVOUSJFT  MBSHF EJTUBODFT  JOFċDJFOU 3VTTJB BOE1PMBOEPOUIF JOGSBTUSVDUVSF DPOOFDUJPOT  #VUNPTUOFJHICPSIPPEFąFDUT POFIBOE BOEUIF/PSEJD CBE QPMJUJDBM SFMBUJPOT  PS IBWFUPCFFBSOFE UIFZEPOPU DPVOUSJFTBOE(FSNBOZPOUIF FYQPSUT XIJDI NBJOMZ DPO DPNFBVUPNBUJDBMMZ PUIFSIBOEɨFSFNBJOJOH TJTUPGDPNNPEJUJFTMJLFPJM MBCPSNBSLFUCBSSJFSTLFQU UIBUBSFTPMEPOHMPCBMNBSLFUT NJTTPVUPOUIFTF JOQMBDFCZ(FSNBOZGPSFNQMPZFFTGSPNUIF BEWBOUBHFT GPSNFS$PNNVOJTUDPVOUSJFTJTBOFYBNQMFPGUIF QPMJUJDBMQSPCMFNTUIJTDBODSFBUF"QSPBDUJWFBQ t ɨFOFJHICPSIPPEFĊFDUTBSFBMTPTUSPOHFS JG QSPBDIJTOFFEFEUPPWFSDPNFUIFTFEJĊFSFODFTJO DPVOUSJFTTQFDJBMJ[FJOTJNJMBSDMVTUFST$PNQFUJ UFSNTPGDPNQBOZNBUVSJUZ BENJOJTUSBUJWFQSPDF UJPOCFUXFFOOFJHICPSJOHDMVTUFSTJTNPSFJOUFOTF EVSFT BOEQVSFNBSLFUUSBOTQBSFODZ BOETQVSTIJHIFSQFSGPSNBODF$PPQFSBUJPO CFUXFFOOFJHICPSJOHDMVTUFSTDBOCFNPSFJOUFOTF t ɨJSE UIF3FHJPOTDMPTFOFTTJOUFSNTPGDVMUVSBM JGFĊ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ĊFDUTXPSLUISPVHITIFFSQSPY DBOFBTJMZCFDPNFUIFWJDUJNPGQPMJUJDBMSJWBMSJFT  JNJUZɨFNFSFQSFTFODFPGBTVDDFTTGVMOFJHICPSDBO FWFOXIFOUIFFDPOPNJDCFOFmUTBSFDMFBS5PP NBLFBEJĊFSFODF FWFOJGUIFSFJTMJUUMFEJSFDUDPOUBDU PGUFO UIFFDPOPNJDSFMBUJPOTCFUXFFO3VTTJBBOE #VUNPTUOFJHICPSIPPEFĊFDUTIBWFUPCFFBSOFE  UIFPUIFSQBSUTPGUIF#BMUJD4FB3FHJPO QBSUJDV UIFZEPOPUDPNFBVUPNBUJDBMMZ$PVOUSJFTOFFEUP MBSMZUIF#BMUJDDPVOUSJFTBOE1PMBOE TVĊFSGSPN TFUSVMFTBOESFHVMBUJPOTBOEJOWFTUJOJOGSBTUSVD UIJTQPMJUJDBMCBHHBHF UVSFTPUIBUMJOLBHFTDBOEFWFMPQ$MVTUFSTOFFEUP FTUBCMJTIDPNNVOJDBUJPO EFWFMPQMJOLBHFT BOEDSF 0WFSBMM UIFSFJTBTUSPOHHFOFSBMBSHVNFOUGPSSF BUFBDMFBSMZEJĊFSFOUJBUFEQSPmMFPGDPNQMFNFOUBSZ HJPOBMDPPQFSBUJPOBTQBSUPGBOPWFSBMMDPNQFUJUJWF TUSFOHUITGPSDPMMBCPSBUJPOUPCFDPNFBSFBMJUZ"OE OFTTTUSBUFHZ"OEUIJTBSHVNFOUBQQMJFTJOUIF#BMUJD VMUJNBUFMZ DPNQBOJFTOFFEUPNBLFMJOLBHFTBSFBMJUZ 4FB3FHJPOFWFONPSFUIBOJONBOZPUIFSQBSUTPG UISPVHIUIFJSTBMFT QSPDVSFNFOU BOEJOWFTUNFOUT &VSPQFBOEUIFXPSME

STATE OF THE REGION REPORT 2007 11 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Regional cooperation within the European Union BĊFDUFEUIFBMMPDBUJPOPGQPMJDZSFTQPOTJCJMJUJFTBDSPTT ɨFSFHJPOPGOFJHICPSJOHDPVOUSJFTJTPOMZPOF BMMMFWFMTPG&VSPQFBOHFPHSBQIZ/BUJPOBMHPWFSO PGNBOZQPMJDZBSFOBTJOXIJDIEFDJTJPOTXJUIBO NFOUTIBWFTFFOBTJHOJmDBOUBNPVOUPGUIFJSSFTQPO JNQPSUBOUJNQBDUPODPNQFUJUJWFOFTTBOEQSPTQFS TJCJMJUJFTNPWFUP#SVTTFMTɨFZSFNBJOFOHBHFEJO JUZBSFNBEF*OUIFQBTU UIFDPNQFUJUJWFOFTTEFCBUF UIFEFDJTJPOQSPDFTTUISPVHIUIFJSSFQSFTFOUBUJPOJO GPDVTFENVDIPODPNQFUJUJPOCFUXFFODPVOUSJFTBOE UIF&VSPQFBO$PVODJM CVUIBWFUPDPNQSPNJTFXJUI OBUJPOBMMFWFMQPMJDJFT*GPUIFSHFPHSBQIJDMFWFMTXFSF PUIFSHPWFSONFOUTSBUIFSUIBO POMZ XJOOJOHQBS DPOTJEFSFEBTSFMFWBOUQPMJDZBSFOBT UIFEJTDVTTJPO MJBNFOUBSZTVQQPSUEPNFTUJDBMMZ4VCOBUJPOBMSFHJPOT VTVBMMZBTTVNFEB[FSPTVNDPNQFUJUJPOBCPVUSFMB IBWFCFFOSFNPWFEGVSUIFSGSPNUIFEFDJTJPOTUIBU UJWFJOnVFODF VTFEUPCFUBLFOJOOBUJPOBMHPWFSONFOUTCVUBMTP mOEBNPSFPQFOFOWJSPONFOUJOXIJDIUPDPPQFSBUF ɨJTWJFXIBTDIBOHFE'JSTU UIFSFJTBNVDIMBSHFS XJUITVCOBUJPOBMSFHJPOTJOPUIFSDPVOUSJFT$SPTT BQQSFDJBUJPOUIBUDPNQFUJUJPOPDDVSTCFUXFFOTVCOB OBUJPOBMSFHJPOTGBDFQSPCBCMZUIFNPTUTJHOJmDBOU UJPOBMSFHJPOTXJUIJOBOEBDSPTTOBUJPOBMCPSEFSTɨF DIBMMFOHFUPUIFJSUSBEJUJPOBMSPMFɨFZOFFEUP EJĊFSFODFTJOQSPTQFSJUZCFUXFFOTVCOBUJPOBMSFHJPOT EFmOFUIFJSSPMFSFMBUJWFUPXIBUOBUJPOTDBOEPBOE XJUIJODPVOUSJFTBSFBTJHOUIBUTPNFSFHJPOTTVDDFFE XIBU&VSPQFBOJOTUJUVUJPOTDBOEP NVDICFUUFSUIBOPUIFST FWFOJGUIFZBSFTVCKFDUUPUIF TBNFOBUJPOBMQPMJDJFT4FDPOE UIFSFJTBNVDIDMFBSFS ɨFHSPXUIPGUIF&VSPQFBO6OJPOUPNFNCFST  VOEFSTUBOEJOHUIBUDPOEJUJPOTXJUIJOBQBSUJDVMBSTVC BOEUIF&6TQBTUTVDDFTTJOFDPOPNJDJOUFHSBUJPO  OBUJPOBM SFHJPO BSF TIBQFE CZ EFDJTJPOT POEJĊFSFOU IBWFDIBOHFEUIFEFNBOETUIBUUIF&VSPQFBOQPMJDZ HFPHSBQIJDMFWFMT-PDBMDIPJDFTNBUUFS OBUJPOBMQPMJ TZTUFNJTGBDJOH'JSTU UIFSJTJOHOVNCFSPG&6 DJFTNBUUFS UIFDPPQFSBUJPOXJUIOFJHICPSJOHDPVO NFNCFSTIBTDPNQMJDBUFEUIFQVSFNFDIBOJDTPG USJFT NBUUFST  BOE UIF DPOUFYU NBLJOHEFDJTJPOTɨFJO TFU CZ TVQSBOBUJPOBM JOTUJUV ǰF#BMUJD4FB3FHJPODBO DSFBTJOHIFUFSPHFOFJUZBNPOH UJPOTMJLFUIF&VSPQFBO6OJPO CFBAOBUVSBMDPBMJUJPOXJUI &6NFNCFSDPVOUSJFTBEET NBUUFSBTXFMMɨJTEFFQFSVO TJHOJmDBOUJOnVFODF JGJUT GVSUIFSDPNQMFYJUZ4FDPOE  EFSTUBOEJOH PG UIF SPMF PG EJG UIFTVDDFTTPGUIF&VSPQFBO GFSFOUHFPHSBQIJDMFWFMTJODPN NFNCFSDPVOUSJFTBSFBCMFUP 6OJPOJOSFNPWJOHUIFNPTU QFUJUJWFOFTTQPTFTOFXUBTLTGPS JEFOUJGZDPNNPOQSJPSJUJFTBOE PCWJPVTCBSSJFSTUPFDPOPNJD QPMJDZNBLFST DPPSEJOBUFQPTJUJPOT JOUFHSBUJPOUIBUFYJTUFEBUOB UJPOBMCPSEFSTIBTDIBOHFEUIF t ɨFDPNQFUJUJWFOFTTPGBMPDBUJPOEFQFOETPOUIF QPMJDJFTVOEFSEJTDVTTJPO1PMJDJFTOPXPOUIFBHFOEB BQQSPQSJBUFBMMPDBUJPOPGFDPOPNJDQPMJDZSFTQPO BSFBT PSNPSF JNQPSUBOUEPNFTUJDBMMZBTUIFZBSF TJCJMJUJFTBDSPTTUIFEJĊFSFOUMFWFMTPGHFPHSBQIZ GPSDSPTTCPSEFSFDPOPNJDJOUFHSBUJPO3FBDIJOH 8IFUIFSBQPMJDZTIPVMECFNBOBHFEBUUIFMPDBM  BDPOTFOTVTPOJTTVFTUIBUIBWFBTUSPOHEPNFTUJD OBUJPOBM DSPTTOBUJPOBM PS&VSPQFBOMFWFMEF QPMJDZBTQFDUJTHFUUJOHJODSFBTJOHMZEJċDVMU&VSP QFOETPOBUSBEFPĊCFUXFFOUIFBEWBOUBHFTBOE QFBOJOUFHSBUJPOJTOFDFTTBSZCVUOPUTVċDJFOUGPS DPTUTPGMPDBUJPOTQFDJmDWFSTVTHFOFSBMQPMJDJFT JNQSPWJOHDPNQFUJUJWFOFTTBDSPTT&VSPQFBOSFHJPOT MJLFUIF#BMUJD4FB t ɨFDPNQFUJUJWFOFTTPGBMPDBUJPOEFQFOETPO JUTBCJMJUZUPJOnVFODFEFDJTJPONBLJOHBUIJHIFS What does this mean for the Baltic Sea Region? HFPHSBQIJDMFWFMTJOPSEFSUPMFBEUPQPMJDZDIPJDFT 8JUIJOUIF&VSPQFBO6OJPO JOEJWJEVBMDPVOUSJFT UIBUUBLFBDDPVOUPGUIFMPDBUJPOTTQFDJmDOFFET CFDPNFQBSUPGBDPNQMFYQPMJUJDBMTUSVDUVSFXIFSF BOEJOUFSFTUT8IJMFQBSUPGUIFUBTLJTCBSHBJOJOH EFDJTJPOTEFQFOEPOUIFTVQQPSUPGBTVċDJFOU XJUIUIFJOUFSFTUTPGPUIFSMPDBUJPOT NVDIPGJU OVNCFSPGPUIFS&6NFNCFSTɨFBCJMJUZUPPSHBO BMTPJOWPMWFTUIFQSPWJTJPOPGJOGPSNBUJPOBCPVU J[FDPBMJUJPOTUIBUQSPWJEFTVDITVQQPSUCFDPNFTB MPDBMFYQFSJFODFTBOEOFFETTPUIBUUIFZDBOCF DSVDJBMFMFNFOUPGTVDDFTTGVMFDPOPNJDQPMJDZɨF UBLFOJOUPBDDPVOUJOUIFEFDJTJPONBLJOHQSPDFTT #BMUJD4FB3FHJPODBOCFBAOBUVSBMDPBMJUJPOXJUITJH OJmDBOUJOnVFODF JGJUTNFNCFSDPVOUSJFTBSFBCMFUP *O&VSPQF UIFFNFSHFODFPGUIF&VSPQFBO6OJPO JEFOUJGZDPNNPOQSJPSJUJFTBOEDPPSEJOBUFQPTJUJPOT BTUIFGPDBMQPJOUGPSFDPOPNJDQPMJDZNBLJOHIBT ɨFDPVOUSJFTJOUIF#BMUJD4FB3FHJPOXJMMOPUBMXBZT

12 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

TIBSFPQJOJPOTBOEUIFDPBMJUJPOXJMMOPUBMXBZTJO DPVOUSJFTOFFETBOEUIFSPMFTQMBZFECZJOTUJUVUJPOT DMVEFUIFTBNFDPNCJOBUJPOPGDPVOUSJFT&TQFDJBMMZ BUPUIFSHFPHSBQIJDMFWFMT (FSNBOZBOE1PMBOENJHIUIBWFOBUJPOBMJOUFSFTUT UIBUEPOPUBMXBZTDPJODJEFXJUIUIFJOUFSFTUTPG t *OUFSNTPGQPMJDZBSFBT SFHJPOBMDPPQFSBUJPODBO UIFJSOPSUIFSOSFHJPOT#VUUIF#BMUJD4FB3FHJPODBO DPWFSFWFSZUIJOHGSPNJOJUJBUJWFTUPXBSETVQHSBE QSPWJEFBVTFGVMTUBSUJOHQPJOUGPSEJTDVTTJPOTBOE JOHUIFNJDSPFDPOPNJDDPNQFUJUJWFOFTT JF JODSFBTFUIFMJLFMJIPPEGPSPQJOJPOTGSPNUIJT3FHJPO JOWFTUNFOUBUUSBDUJPO JOGSBTUSVDUVSFQSPKFDUT KPJOU UPCFIFBSEɨJTJTQBSUJDVMBSMZFWJEFOUJOQPMJDZJOJ SFTFBSDIQSPKFDUT FUD UPNBDSPFDPOPNJDDPPSEJ UJBUJWFTBUUIF&VSPQFBOMFWFMUIBUEJSFDUMZUBSHFUUIJT OBUJPO JFNPOFUBSZQPMJDZ FYDIBOHFSBUFQPMJDZ  3FHJPO MJLFUIF#BMUJD4FB3FHJPOTUSBUFHZEFWFMPQFE FUD UPPUIFSQPMJDJFT JFMFHBMBOEBENJOJTUSBUJWF CZUIF&VSPQFBO1BSMJBNFOUBOEUIFBDUJWJUJFTPGUIF SFGPSNT TPDJBMQPMJDJFT FOWJSPONFOUBMQSPUFD &6 *DFMBOE /PSXBZ BOE3VTTJBVOEFSUIFVNCSFMMB UJPO  PGUIF/PSUIFSO%JNFOTJPO t *OUFSNTPGUIFJOUFOTJUZPGDPPQFSBUJPO UIFBDUJWJ .BOZEFDJTJPOTUIBUOFFEUPCFUBLFOPODPNQFUJUJWF UJFTDBOSFBDIEJĊFSFOUMFWFMTPGJOUFHSBUJPOGSPN OFTTSFMBUFE JTTVFT BU UIF DSPTTOBUJPOBM MFWFM JOWPMWF QVSFDPOTVMUBUJPO JFGPDVTJOHPOQPMJDZMFBSO B NZSJBE PG UFDIOJDBM SVMFT JOH UPUBSHFUFEDPMMBCPSBUJPO BOE SFHVMBUJPOT "DIJFWJOH ǰF&VSPQFBO6OJPOBOEUIF POTQFDJmDJTTVFTXJUIDSPTT BHSFFNFOU PO UIFTF JTTVFT CPSEFSTQJMMPWFST JFKPJOU JO B &VSPQFBO 6OJPO PG  #BMUJD4FB3FHJPOBSFEJąFSFOU  USBOTQPSUBUJPOJOGSBTUSVDUVSF NFNCFST XJUI B IJHI EFHSFF OPUDPNQFUJOHQPMJDZBSFOBT PSCPSEFSQSPDFEVSFT UPGVMMZ PG IFUFSPHFOFJUZ JT DPNQMJ JOUFHSBUFEQPMJDJFT JFDPN DBUFE BOE TPNFUJNFT JNQPTTJCMF "DIJFWJOH BHSFF NPO'%*BUUSBDUJPOPSJOUFHSBUFE3%GVOEJOH NFOU XJUIJO UIF #BMUJD 4FB 3FHJPO  IPXFWFS  NJHIU QSPHSBNT TUJMMCFQPTTJCMFɨFHBJOTGSPNDPNNPOSFHVMBUJPOT BSFIJHIFSBNPOHOFJHICPSTXJUIDMPTFFDPOPNJDUJFT ɨF&VSPQFBO6OJPOIBTQPMJDJFTXIJDIDPWFSUIFGVMM "OEUIFQPUFOUJBMUPOFHPUJBUFBDPNQSPNJTFJTMBSHFS SBOHFPGNJDSPFDPOPNJD NBDSPFDPOPNJD BOEJOTUJ XJUIGFXFSDPVOUSJFTXJUIBIJHIFSEFHSFFPGDVMUVSBM UVUJPOBMOPOFDPOPNJDQPMJDZBSFBT*UXJEFMZTVQ QSPYJNJUZɨF#BMUJD4FB3FHJPODPVMECFDPNFBSPMF QPSUTQPMJDZMFBSOJOHBDSPTT&VSPQFBODPVOUSJFTBOE NPEFMGPSIPXDSPTTOBUJPOBMDPPQFSBUJPOXJUIJOQBSUT SFHJPOT TJODFUIFSFMBVODIPGUIF-JTCPO"HFOEB PG&VSPQFDBOCFOFmU&VSPQFBOJOUFHSBUJPO*UDPVME VOEFSUIFIFBEJOHPGUIFi0QFONPEFMPGDPPSEJOB QVTIUIF-JTCPO"HFOEBBHHSFTTJWFMZGPSXBSE OPUKVTU UJPOw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ɨF&VSPQFBO 6OJPOBOEUIF#BMUJD4FB3FHJPOBSFEJĊFSFOU OPU ɨFQPMJDJFTPGUIF&VSPQFBO6OJPOBOEUIFSFHJPOBM DPNQFUJOHQPMJDZBSFOBT&6BDDFTTJPOIBTOPUNBEF DPPQFSBUJPOXJUIJOUIF#BMUJD4FB3FHJPOIBWFFOB #BMUJD4FB3FHJPODPPQFSBUJPOTVQFSnVPVT*OGBDU  CMFETJHOJmDBOUQSPHSFTTJOBENJOJTUSBUJWFBOEMFHBM XJUINPSFQPXFSNJHSBUJOHUP#SVTTFMT BTUSPOH#BMUJD SFGPSNTBTXFMMBTSFHJPOBMTFDVSJUZ&OWJSPONFOUBM 4FB3FHJPOXJMMCFJODSFBTJOHMZJNQPSUBOUUPSFUBJOSFBM DPPQFSBUJPOIBTEFMJWFSFENBOZCFOFmUTBTXFMM CVU JOnVFODFJOUIJTSFHJPOPGMBSHFMZTNBMMDPVOUSJFT IVHFDIBMMFOHFTSFNBJO

Key policy areas for regional cooperation What does this mean for the Baltic Sea Region? 3FHJPOBMDPPQFSBUJPODBODPWFSNBOZEJĊFSFOU $PPQFSBUJPOTIPVMEGPDVTPOBSFBTXJUIDMFBSDSPTT QPMJDZBSFBTBOEUBLFNBOZEJĊFSFOUGPSNTɨF CPSEFSTQJMMPWFSTUIBUPDDVSMBSHFMZXJUIJOUIF TQFDJmDDIPJDFTUIBUBSFCFJOHNBEFBMPOHUIFTFUXP 3FHJPOJOTUFBEPGCSPBEFSHFPHSBQIJFT#PUINJDSP EJNFOTJPOTDBODIBOHFPWFSUJNF EFQFOEJOHPOUIF FDPOPNJDVQHSBEJOH JFFĊPSUTUPJODSFBTFNBSLFU

STATE OF THE REGION REPORT 2007 13 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

JOUFHSBUJPOBTXFMMBTHFOFSBMMZTUSFOHUIFOJOHUIF MFWFMQSPHSBNTBOEQPMJDZUPPMTDBOCFBQQMJFENPTU CVTJOFTTFOWJSPONFOU BOENBOZBTQFDUTPGFOWJSPO FĊFDUJWFMZ*OTPNFBSFBTBEEJUJPOBMQSPHSBNTBOE NFOUBMQSPUFDUJPOGBMMJOUPUIJTDBUFHPSZ4VDIFĊPSUT UPPMTNJHIUCFOFFEFECVUJONPTUDBTFTFYJTUJOHOB XJMMQSPWJEFEJSFDUNVUVBMCFOFmUTGPSUIFQBSUJDJ UJPOBMSFTPVSDFTDBOCFQPPMFEɨF#BMUJD4FB3FHJPO QBOUT8JUIJOCVTJOFTTFOWJSPONFOUVQHSBEJOH  EPFTOPUOFFEBIJHIFSRVBMJUZPGJOJUJBUJWFTBOEJOTUJ FYBNQMFTXIJDIIBWFCFFOEJTDVTTFEJOQSFWJPVT4BUF UVUJPOTJUOFFETUPHFUCFUUFSPSHBOJ[FEJODSFBUJOHBO PGUIF3FHJPO3FQPSUTBSFJOUFHSBUFEUSBOTQPSUBUJPO JOUFHSBUFEBOENVUVBMMZSFJOGPSDJOHBDUJPOBHFOEB BOEFMFDUSJDJUZOFUXPSLT KPJOUJOWFTUNFOUBUUSBDUJPO ɨJTBHFOEBXPVMEQSPWJEFDMFBSHVJEBODFPOUIFSPMF BOECSBOEJOH BDPNNPO#BMUJD4FB3FHJPOTQBDF UIBUJOEJWJEVBMJOTUJUVUJPOTBOEFĊPSUTQMBZ PWFSBMM GPSJOOPWBUJPOBOETLJMMT BOEUIFDPMMBCPSBUJPOPG ɨFSFPSHBOJ[BUJPOBOEDPOTPMJEBUJPOPGFYJTUJOH SFHJPOBMDMVTUFSTJOBTQFDJmDmFME MJLFJO4DBO#BMU JOTUJUVUJPOBMTUSVDUVSFTJOUIF#BMUJD4FB3FHJPODBO GPSMJGFTDJFODFT NBLFBOJNQPSUBOUDPOUSJCVUJPOUPSFHJPOBMDPNQFUJ UJWFOFTT JGUIFZDSFBUFUIFCBTJTGPSNPSFDPPSEJOBUFE $PPQFSBUJPOTIPVMEGPDVTPOTUSBUFHJDQMBOOJOH JF BDUJPO POJEFOUJGZJOHIPXUIFBWBJMBCMFOBUJPOBMBOE&6

14 STATE OF THE REGION REPORT 2007 2. The macroeconomic climate tThe unusually benevolent for cross-national cooperation global economic climate of the last few years is gradually ɨ F4UBUFPGUIF3FHJPO3FQPSUBOBMZ[FTUIFNFEJVN UFSNESJWFSTPGNJDSPFDPOPNJDDPNQFUJUJWFOFTTBOE cooling off, with additional risks QSPTQFSJUZ*UJTOPUBOBTTFTTNFOUPGUIFTIPSUUFSN NBDSPFDPOPNJDDMJNBUFJOUIFFDPOPNJFTPGUIF due to the recent financial 3FHJPOTVDIBTTFTTNFOUTBSFQSPWJEFESFHVMBSMZCZ market volatility NBOZCBOLT HPWFSONFOUBHFODJFT BOENVMUJMBUFSBM mOBODJBMJOTUJUVUJPOTɨ FNBDSPFDPOPNJDFOWJSPO NFOUDBO IPXFWFS IBWFBOJOnVFODFPOUIFBCJMJUZ tThe Baltic Sea Region is PGB3FHJPOUPNPVOUDSPTTOBUJPOBMFĊPSUT0OUIF entering the later stages of POFIBOE TUSPOHFDPOPNJDHSPXUIDBONBLFJUFBTJFS UPGPDVTPOBOEJOWFTUJODPPQFSBUJPOBOEDPNQFUJ a classic business cycle. It UJWFOFTTVQHSBEJOH0OUIFPUIFSIBOE TUSPOHFDP OPNJDHSPXUIDBOSFEVDFUIFQPMJUJDBMQSFTTVSFUIBU is well positioned to weather NPUJWBUFTQSPHSFTTPODPNQFUJUJWFOFTTVQHSBEJOH*O weakening global conditions FJUIFSDBTF UIFNBDSPFDPOPNJDDMJNBUFJTBOJNQPS UBOUDPOUFYUVBMGBDUPSUPSFDPHOJ[FXIFOEJTDVTTJOH but not immune to external SFHJPOBMDPPQFSBUJPO shocks The global context ɨ FHMPCBMFDPOPNZDVSSFOUMZQSPWJEFTBHFOFS tIndividual countries in the BMMZCFOFWPMFOUFOWJSPONFOUGPSFDPOPNJDHSPXUI ɨ FSFBSFTJHOTPGBOFDPOPNJDTMPXEPXOCVUBTGBS Region face their own macro- BTUIJTTMPXEPXODPOUJOVFTUPQSPDFFEBUBNPEFSBUF economic challenges. The QBDFJUJTBXFMDPNFJOEJDBUJPOPGBOPSNBMCVTJOFTT DZDMF BOEOPUBSFBMQSPCMFN.PSFXPSSZJOHBSFUIF Baltic countries, for example, SJTLGBDUPSTUIBUIBWFFNFSHFESFDFOUMZBOEXIJDI need to fight off overheating OPXUISFBUFOUPQVTIUIFHMPCBMFDPOPNZPĊDPVSTF without threatening their fast ɨ FDPODFSOTBCPVUHMPCBMJNCBMBODFT FTQFDJBMMZ catch-up path UIFFYUFSOBMEFmDJUTPGUIF6OJUFE4UBUFT IBWFCFFO EBNQFOFEPWFSUIFMBTUGFXNPOUIT4PNFBEKVTU NFOUTBSFVOEFSXBZUISPVHIUIFEFWBMVBUJPOPGUIF 64EPMMBSɨ FTFBEKVTUNFOUTIBWFTPGBSIBEMJNJUFE PWFSMZOFHBUJWFFĊFDUTPOPUIFST&YQPSUTPVUTJEFPG UIF6OJUFE4UBUFTIBWFTPGBSCFFOBCMFUPNBOBHFUIF BEWFSTFQSFTTVSFPOQSJDFTɨ F&VSPQFBONBSLFUIBT UBLFOTPNFPGUIFTMBDL IBWJOHFOUFSFEBNPSFQPTJ UJWFQIBTFJOJUTCVTJOFTTDZDMFɨ F"TJBOFDPOPNJFT  UPP DPOUJOVFUPHSPXTUSPOHMZ0WFSBMM UIFSFBM FDPOPNZJTEPJOHXFMMBOEHMPCBMJNCBMBODFTTFFN NBOBHFBCMF

ɨ FDPODFSOTBCPVUSJTLTJOUIFHMPCBMmOBODJBM TZTUFN IPXFWFS IBWFSFDFOUMZJODSFBTFE8IJMFUIF TVCQSJNFMPBOTJOUIFXFBLFOJOH64IPVTJOHNBS LFUXFSFUIFUSJHHFS UIFFĊFDUTBSFOPXUISFBUFOJOH UPTQSFBEUPPUIFSNBSLFUTBTXFMMɨ FSFBMDPODFSO

STATE OF THE REGION REPORT 2007 15 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

JTUIFJNQBDUPGOFXmOBODJBMJOTUSVNFOUTPOSJTLT PVUQFSGPSNCPUIUIF/"'5"SFHJPOBOEUIFXPSME ɨFTFJOTUSVNFOUTIBWFDSFBUFEFOPSNPVTOFXQPTTJ FDPOPNZPWFSBMMɨFFDPOPNJFTJOUIF3FHJPOBSF CJMJUJFTGPSXFBMUIDSFBUJPOUISPVHICFUUFSBWBJMBCJMJUZ FOUFSJOHUIFMBUFSTUBHFTPGUIFDVSSFOUCVTJOFTTDZDMF PGDBQJUBMBOENPSFFĊFDUJWFBMMPDBUJPOPGSJTLT#VU 8IJMFUIFSFJTTPNFSJTLPGPWFSIFBUJOH UIFNPTU UIFMBDLPGFYQFSJFODFXJUIUIFVTFBOESFHVMBUJPO MJLFMZPVUDPNFJTGPSBOPSEFSMZTMPXEPXOPGHSPXUI PGUIFTFOFXJOTUSVNFOUTIBTBMTPDSFBUFETJHOJmDBOU SBUFTPWFSUIFDPNJOHNPOUITBOEZFBST SJTLT8IPVMUJNBUFMZCFBSTXIBUSJTLT JTMFTTPCWJPVT UIBOCFGPSFGPSNBOZNBSLFUQBSUJDJQBOUT"OEJUJT (%1HSPXUIJOUIF#BMUJD4FB3FHJPOJTCFJOHESJWFO FRVBMMZVODFSUBJOXIPXJMMCFBĊFDUFEJGBQBSUJDVMBS CZJODSFBTJOHEPNFTUJDDPOTVNQUJPOBOEJOWFTU JOTUJUVUJPOPSNBSLFUHFUTJOUPUSPVCMF*OBEEJUJPO  NFOU XIJMFUIFDPOUSJCVUJPOPGUSBEFIBTSFDFEFE UIFFNFSHFODFPGUIFTFOFXJOTUSVNFOUTDPODVSSFOUMZ *NQPSUHSPXUIJTPVUQBDJOHFYQPSUHSPXUIUIFTUJMM XJUIUIFTPMJEHSPXUIJOUIFXPSMEFDPOPNZIBT TJHOJmDBOUDVSSFOUBDDPVOUTVSQMVTJTGBMMJOHɨF GVFMFEBTFOTFPGFYVCFSBODFUIBUNJHIUIBWFSFTVMUFE TUSFOHUIFOJOHPGDVSSFODJFTJOUIF#BMUJD4FB3FHJPO JOBHFOFSBMNJTQSJDJOHPGSJTLT BHBJOTUUIF64EPMMBSXJMMTMPXEPXOFYQPSUTUPUIF 64BOEJODSFBTFDPNQFUJUJPOXJUI64SJWBMTPOPUIFS ɨFNPTUMJLFMZPVUDPNFSFNBJOTBGVSUIFSNPEFSBUF NBSLFUT8BHFQSFTTVSFJTCVJMEJOHVQBOEJOnBUJPO TMPXEPXOPGUIFHMPCBMFDPOPNZ*OFWJUBCMZUIFSF JTTMPXMZBDDFMFSBUJOH6OJUMBCPSDPTUHSPXUIJTTFUUP XJMMCFTPNFFĊFDUTPGUIFWPMBUJMJUZPOUIFmOBODJBM JODSFBTFTJHOJmDBOUMZ SPVHIMZJOQBSBMMFMUPDIBOHFT NBSLFU TVDIBTQSFTTVSFPODPVOUSJFTBOEDPNQBOJFT JOUIF&6ɨFJODSFBTFJOUIF3FHJPOTUFSNTPG XJUIIJHIFYUFSOBMEFmDJUTIJHIMFWFSBHF CVUUIFTF USBEFTJODF FOUJSFMZESJWFOCZIJHIFSQSJDFT OFFEOPUBĊFDUPUIFSTUPPNVDI#VUBNVDINPSF GPS/PSXFHJBO 3VTTJBO BOE%BOJTIPJMFYQPSUT IBT TFSJPVTDPOUSBDUJPO XJUIBTJHOJmDBOUOVNCFSPG NFBOXIJMFDPNFUPBIBMU*UIBTBMXBZTCFFOOFHB mOBODJBMNBSLFUTTIVUUJOHEPXO JTQPTTJCMFBTXFMM UJWFGPSUIFPUIFSDPVOUSJFTJOUIF3FHJPO *UNBZCFVOMJLFMZ CVUUPPMJUUMFJTLOPXOUPSVMFPVU TVDIBTDFOBSJPBMUPHFUIFS .POFUBSZ QPMJDZ JT UJHIUFOJOH BOE XJMM NPTU MJLFMZ DPOUJOVF UP EP TP VOMFTT UIF mOBODJBM NBSLFU SJTLT The Baltic Sea Region TIPVMEFTDBMBUF/PNJOBMFYDIBOHFSBUFTIBWFHFOFSBMMZ ɨFNBDSPFDPOPNJDDMJNBUFJOUIF#BMUJD4FB3FHJPO TUSFOHUIFOFE'JTDBMQPMJDZIBTCFFOSFMBUJWFMZSFTUSJD JTTUSPOH3FBM(%1HSPXUISFNBJOTTJHOJmDBOUMZ UJWF FWFOUIPVHIQPMJUJDBMQSFTTVSFIBTCFFOCVJMEJOH BCPWFUIFMFWFMJOUIF&6BOEIBTTUBSUFEUP VQ UP JODSFBTF TQFOEJOH ɨF EFCU MFWFM PG HPWFSO

Figure 1: GDP growth in main world regions

'$##(" #  

$&"    



        

$(&  ''$'  !$#%$&'

16 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 2: Main macroeconomic trends in the Baltic Sea Region

(% $$)#!$  !'%  

$ #("%$

# ) (#$  )''$(%)$(





        

%)'  ((% (! "%$&%'( 

NFOUTJOUIF3FHJPOIBTCFFOESPQQJOHGBTUJOSFDFOU UIFSFJTOPTJHOPGBDPMMBQTFPGUIFSFBMFTUBUFNBSLFU  ZFBSTCFUXFFOBOE UIFEFCUMFWFMESPQQFE FWFOUIPVHIQSJDFJODSFBTFTBSFTMPXJOHEPXO/PSEJD CZ  PG (%1*U JT OPX BQ CBOLTIBWFIBEMFTTEJSFDUFYQPTVSF QSPBDIJOHUIFMFWFMPGUIF/"'5" ǰFUVSCVMFODFTPOHMPCBM UPUIF64NBSLFUUIBOUIFJS(FS SFHJPO SPVHIMZQPJOUTBIFBE NBOBOE6,QFFST"OEUIFTUSPOH PGUIF&6 mOBODJBMNBSLFUTTIPVMEPO FYUFSOBMQPTJUJPOBOEUIFTPMJEQP BWFSBHFBąFDUUIF#BMUJD4FB TJUJPOPGHPWFSONFOUmOBODFTQSP ɨFUVSCVMFODFTPOHMPCBMmOBO 3FHJPOMFTTUIBOPUIFSQBSUT WJEFBDVTIJPOFWFOJGSJTLQSFNJ DJBM NBSLFUT TIPVME PO BWFSBHF PG&VSPQF VNTTIPVMEESBNBUJDBMMZSJTFɨF BĊFDU UIF #BMUJD 4FB 3FHJPO MFTT NBJO DIBMMFOHF GPS UIF #BMUJD 4FB UIBOPUIFSQBSUTPG&VSPQF3FBM 3FHJPO JT UP NBOBHF UIF PSEFSMZ FTUBUFQSJDFTIBWFSJTFOTJHOJmDBOUMZJONBOZQBSUTPG TMPXEPXOPGHSPXUISBUFTXJUIPVUBTFRVFODFPGPWFS UIF3FHJPOBOEUIFNPSUHBHFNBSLFUTJOTPNFDPVO IFBUJOHBOETVCTFRVFOUDSJTJT USJFTBSFMBSHFSFMBUJWFUPUIFTJ[FPGUIFFDPOPNZ#VU

STATE OF THE REGION REPORT 2007 17 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Countries in the Baltic Sea Region FUBSZQPMJDZSFHJNFT SFBċSNFECZUIFOFXHPWFSO 8JUIJOUIF#BMUJD4FB3FHJPO JOEJWJEVBMDPVOUSJFT NFOUBGUFSJUUPPLPċDFJO IBWFFOBCMFEUIF GBDFEJĊFSFOUDIBMMFOHFT PGUFOSFMBUFEUPIPXGBSUIFZ QSVEFOUNBOBHFNFOUPGCVPZBOUFYQPSUSFWFOVFT IBWFBMSFBEZDPNFJOUIFCVTJOFTTDZDMFBOEIPXXFMM GSPNUIFDPVOUSZTPJMBOEHBTTFDUPS6OFNQMPZNFOU UIFZBSFQSFQBSFEGPSBTMPXEPXO JTMPX/PSXBZSFDPSETUIFTFDPOEMPXFTUVOFNQMPZ

Figure 3: GDP growth across the Baltic Sea Region

.!*"))/' $)#!  



   /--% -.*)%  .0%  %)')  !') *') %.$/)%

 !)(,& *,12

 !,()2 1! !) 



        

*/, !  ..!*".$!!#%*)!+*,.

ɨF/PSEJDDPVOUSJFTHFOFSBMMZFOKPZUIFNPTU NFOUSBUFJOUIF#BMUJD4FB3FHJPO3FBMXBHFTBSF GBWPSBCMFNBDSPFDPOPNJDQPTJUJPOPGUIFDPVOUSJFT SJTJOHGBTUEFTQJUFUIFJODSFBTJOHJOnPXTPGXPSLFST JOUIF3FHJPO"TUIF3FHJPOPWFSBMM UIFJSNBJO GSPNUIF&6 FTQFDJBMMZUIFOFX&6NFNCFSDPVO DIBMMFOHFSJHIUOPXJTUPBDIJFWFBHSBEVBMNPEFSB USJFT1VCMJDTQFOEJOHSFNBJOTSFMBUJWFMZSFTUSJDUJWF UJPOPGHSPXUIXIJMFBWPJEJOHBOPWFSIFBUJOHPGUIF BOEJOnBUJPOIBTCFFONPEFSBUFEFTQJUFUIFHSPXUI FDPOPNZ ɨFSFBSFDPODFSOT IPXFWFS XIFUIFSUIFHPWFSO NFOUXJMMLFFQJUTSFTUSJDUJWFmTDBMQPMJDZ 4XFEFO UIFMBSHFTUFDPOPNZPGUIF3FHJPO IBT SFDFOUMZFYQFSJFODFEBTUSPOHHSPXUITVSHF CSPBEMZ %FONBSLTFDPOPNZIBTCFFOTUFBEJMZBDDFMFSBUJOH CBTFEPODPOTVNQUJPO JOWFTUNFOUT BOEFYQPSUT TJODFCVUHSPXUIJTOPXNPEFSBUJOH4USPOH 6OFNQMPZNFOUJTGBMMJOHBOEUIFHPWFSONFOUIBT HSPXUIBOEmTDBMDPOTPMJEBUJPOIBWFMFEUPBNBSLFE JOJUJBUFEMBCPSNBSLFUBOEUBYSFGPSNTUIBUBSF JNQSPWFNFOUPGQVCMJDTFDUPSmOBODFT*OnBUJPO JOUFOEFEUPJODSFBTFMBCPSTVQQMZ8BHFHSPXUIIBT SFNBJOTBUBOBDDFQUBCMFMFWFMCVUJTFEHJOHVQXBSET JODSFBTFECVUSFNBJOTCFMPXQSPEVDUJWJUZHSPXUI 8BHFHSPXUIIBTDPNFEPXOCVUSFNBJOTBIFBEPG *OUFSFTUSBUFTBSFFEHJOHVQBOEJOnBUJPOBSZQSFT QSPEVDUJWJUZHSPXUI6OFNQMPZNFOUDPOUJOVFTUPGBMM TVSFJTTMPXMZJODSFBTJOH'JTDBMQPMJDZJTHFUUJOHNPSF BOEJTTJHOJmDBOUMZCFMPXJUTMPOHUFSNBWFSBHFMFWFM SFTUSJDUJWFBOEUIFHPWFSONFOUTEFCUSBUJPJTTUBSUJOH $IBOHFTJOUIFUBYTUSVDUVSFBJNUPSFEVDFUIFUBY UPESPQNPSFRVJDLMZɨFHSPXUISBUFJTFYQFDUFEUP CVSEFOPOMPXJODPNFFBSOFSTɨFDVSSFOUBDDPVOU TMPXEPXOHSBEVBMMZ QPJOUJOHUPXBSETBTPGUMBOEJOH CBMBODFSFNBJOTTUSPOHMZQPTJUJWFCVUJNQPSUTBSF PGUIFFDPOPNZ HSPXJOHGBTUFSUIBOFYQPSUT*GQPMJDJFTTUBZPODPVSTF  UIFFDPOPNZXJMMGBDFOPNBKPSNBDSPFDPOPNJDSJTL /PSXBZTHSPXUISBUFIBTCFFOTMJHIUMZMPXFSCVU GBDUPSTɨFTMPXEPXOPGHSPXUITIPVMETJHOBMBTPGU NPSFTUBCMFPWFSSFDFOUZFBSTɨFmTDBMBOENPO MBOEJOHPGUIFFDPOPNZXJUIPVUPWFSIFBUJOH

18 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Table 1: Monetary indicators across the Baltic Sea Region

2000 2001 2002 2003 2004 2005 2006 2007E

Consumer Price Index (annual change in %) 3.1% 2.3% 2.4% 2.1% 1.1% 1.8% 1.9% 1.7% 4.0% 5.8% 3.6% 1.3% 3.0% 4.1% 4.4% 5.5% 3.4% 2.6% 1.6% 0.9% 0.2% 0.8% 1.6% 1.4% 5.1% 6.4% 5.2% 2.1% 3.2% 4.0% 6.7% 4.6% 2.7% 2.5% 1.8% 2.9% 6.2% 6.7% 6.5% 8.3% 1.0% 1.3% 0.3% -1.2% 1.2% 2.7% 3.8% 4.6% N 1.5% 2.0% 1.3% 1.1% 1.7% 2.0% 1.7% 2.0% N 10.1% 5.5% 1.9% 0.8% 3.5% 2.1% 1.0% 2.3% 3.1% 3.0% 1.3% 2.5% 0.4% 1.6% 2.3% 0.8% NW 20.8% 21.5% 15.8% 13.7% 10.9% 12.7% 9.7% 8.2% 0.9% 2.4% 2.2% 1.9% 0.4% 0.5% 1.4% 2.0% Baltic Sea Region 2.8% 3.1% 2.2% 2.0% 1.2% 1.9% 2.2% 2.1% ASEAN 2.4% 6.1% 6.3% 4.5% 4.7% 7.2% 8.1% 4.6% EU-15 2.0% 2.3% 2.1% 1.9% 1.9% 2.1% 2.1% 1.9% NAFTA 3.8% 3.1% 1.9% 2.5% 2.8% 3.3% 3.2% 2.6% World 4.1% 4.0% 3.5% 3.7% 3.6% 3.7% 3.8% 3.7%

Unit Labor Cost Index (in US dollar. 1996 = 100) Denmark 71.1 71.4 78.0 95.0 101.6 101.2 103.6 114.3 Estonia 116.1 126.4 151.4 199.2 233.8 259.7 305.2 387.3 Finland 62.9 61.5 63.2 73.2 78.1 77.2 74.1 80.2 Iceland 106.3 91.2 105.3 129.6 141.4 169.7 172.2 208.9 Latvia 100.0 95.8 101.3 113.6 122.8 125.2 139.7 157.1 Lithuania 116.1 106.1 113.6 134.3 147.8 155.8 170.9 208.3 N Germany 72.2 70.5 74.9 89.8 98.6 97.4 96.9 104.4 N Poland n a n a n a n a n a n a n a n a Norway 87.1 87.7 100.7 110.0 111.1 115.3 116.1 127.5 NW Russia 44.0 59.9 71.5 86.6 106.6 129.5 161.8 196.8 Sweden 77.7 72.8 78.3 95.3 104.3 103.2 103.6 115.1 Baltic Sea Region 75.8 74.3 81.4 95.7 103.0 105.3 108.4 121.8 ASEAN n a n a n a n a n a n a n a n a EU-15 80.2 79.4 85.4 102.7 114.7 116.2 118.1 129.6 NAFTA n a n a n a n a n a n a n a n a World n a n a n a n a n a n a n a n a

Source: EIU State of the Region Report 2007

'JOMBOEJTFYQFSJFODJOHBTJNJMBSNPEFSBUJPOPGIJHI IBWFCFFOPOMZQBSUMZTVDDFTTGVMBOEUIFQPTTJCJMJUZ HSPXUI8JUIIJHIFSVOFNQMPZNFOU XBHFQSFT PGUIFHMPCBMmOBODJBMNBSLFUWPMBUJMJUZBĊFDUJOHUIF TVSFIBTCFFOTPNFXIBUMPXFSUIBOJOPUIFS/PSEJD FDPOPNZTFFNTSFBM DPVOUSJFT*OnBUJPOSFNBJOTMPXEFTQJUFTPNFSFDFOU BDDFMFSBUJPOɨFDPNCJOBUJPOPGmTDBMDPOTPMJEB /PSUIFSO(FSNBOZJTFYQFSJFODJOHBTPMJEDZDMJDBM UJPOBOETUSPOHHSPXUIJTESJWJOHBGBTUFSESPQPGUIF VQTXJOH XJUIIJHIFSHSPXUISBUFT JNQSPWJOHQVCMJD HPWFSONFOUTEFCUSBUJP.BDSPFDPOPNJDSJTLTGPSUIF CVEHFUT BOEGBMMJOHVOFNQMPZNFOU"DPNCJOBUJPO NFEJVNUFSNBQQFBSMPX PGmTDBMQPMJDZUJHIUFOJOH MBCPSNBSLFUSFGPSNT BOE DPNQBOZSFTUSVDUVSJOHIBTTVQQPSUFEUIFSFDPWFSZ *O*DFMBOEUIFSJTLTBSFNPSFQSPOPVODFEUIBOJOUIF &YQPSUTSFNBJOTUSPOHBOEUIFDVSSFOUBDDPVOU PUIFS/PSEJDDPVOUSJFT(%1HSPXUIXJMMESPQBTUIF TVSQMVTJTTPMJE8IFUIFSFOPVHIIBTIBQQFOFEUP TJHOJmDBOUJOWFTUNFOUJOBOFXBMVNJOVNTNFMUFS QVTIUIF(FSNBOFDPOPNZPOBIJHIFSNFEJVN DPNFTUPBDMPTF*OnBUJPOJTTFUUPTMPXEPXOCVU UFSNHSPXUIQBUISFNBJOTUPCFTFFO8IJMFUIF SFNBJOTTJHOJmDBOUMZIJHIFSUIBOJOUIFPUIFS/PS JNQSPWFNFOUTBSFSFBM UIFQFSGPSNBODFPOVO EJDDPVOUSJFT6OJUMBCPSDPTUTBSFHSPXJOHRVJDLMZ FNQMPZNFOUBOEQVCMJDmOBODFTTJHOJmDBOUMZMBHT (PWFSONFOUEFCUMFWFMTBSFNPEFSBUFBOETIPVMEGBMM CFIJOEUIF#BMUJD4FB3FHJPOBWFSBHF8BHFQSFTTVSF POUIFCBDLPGBTUSPOHHPWFSONFOUCVEHFUTVSQMVT JTQJDLJOHVQBOEJOnBUJPOJTFEHJOHVQXBSETGSPN ɨFBUUFNQUTUPSFJOJOPWFSIFBUJOHDPOTVNQUJPO MPXMFWFMTɨFJOWPMWFNFOUPGUXP(FSNBOmOBODJBM

STATE OF THE REGION REPORT 2007 19 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Table 2: Fiscal indicators across the Baltic Sea Region

2000 2001 2002 2003 2004 2005 2006 2007E

Public Debt (in % of GDP) Denmark 51.7% 47.4% 46.8% 45.8% 44.0% 36.3% 30.1% 26.0% Estonia 5.2% 4.8% 5.6% 5.7% 5.2% 4.4% 4.1% 3.6% Finland 43.4% 42.0% 41.2% 42.9% 43.5% 41.9% 38.9% 34.6% Iceland 41.1% 46.0% 42.3% 40.9% 34.5% 25.5% 31.5% 30.4% Latvia 12.2% 13.7% 13.1% 13.2% 13.1% 11.6% 9.9% 9.0% Lithuania 27.9% 26.6% 25.3% 21.1% 19.4% 18.6% 18.2% 16.3% N Germany 59.2% 58.7% 60.2% 63.8% 66.0% 68.0% 67.8% 64.4% N Poland 36.4% 37.4% 41.8% 46.5% 44.7% 45.4% 45.5% 45.7% Norway 34.0% 32.9% 40.2% 49.0% 52.7% 49.0% 47.4% 46.7% NW Russia 54.5% 43.2% 36.2% 28.2% 21.8% 14.1% 7.7% 5.5% Sweden 54.8% 52.7% 52.0% 52.2% 52.0% 51.5% 47.8% 43.0% Baltic Sea Region 48.1% 45.9% 46.9% 49.1% 49.3% 46.4% 43.1% 39.6% ASEAN 68.1% 66.5% 64.3% 64.1% 61.9% 57.3% 51.7% 49.4% EU-15 63.0% 61.6% 61.0% 62.0% 62.8% 63.7% 63.0% 61.0% NAFTA 37.6% 35.6% 36.5% 38.5% 39.2% 39.3% 38.9% 38.4% World 59.6% 58.4% 59.2% 60.6% 60.8% 59.5% 56.9% 55.0%

Government Balance (in % of GDP) Denmark 2.3% 1.2% 0.2% -0.1% 1.9% 4.6% 4.2% 3.8% Estonia -0.2% -0.2% 0.4% 2.0% 2.3% 2.3% 3.8% 1.7% Finland 6.9% 5.0% 4.1% 2.4% 2.1% 2.5% 3.8% 4.2% Iceland 1.7% -0.7% -2.6% -2.8% 0.2% 5.2% 5.3% 3.7% Latvia -2.5% -1.9% -2.3% -1.6% -1.1% -1.0% -0.3% 0.0% Lithuania -4.0% -3.6% -1.8% -1.3% -1.5% -0.5% -0.2% -0.5% N Germany 1.3% -2.8% -3.7% -4.0% -3.8% -3.3% -1.7% 0.5% N Poland -2.1% -4.2% -4.9% -4.4% -4.5% -2.9% -2.4% -2.3% Norway 15.4% 13.3% 9.2% 7.3% 11.1% 15.2% 18.2% 16.8% NW Russia 2.4% 3.1% 1.7% 2.4% 4.8% 7.5% 7.4% 3.2% Sweden 3.8% 1.7% -1.5% -1.1% 0.6% 1.8% 2.1% 2.4% Baltic Sea Region 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% ASEAN -2.5% -2.2% -2.4% -2.1% -1.7% -1.0% -0.8% -1.7% EU-15 0.9% -1.2% -2.3% -3.0% -2.8% -2.3% -1.7% -0.9% NAFTA 2.3% 1.1% -1.4% -3.1% -3.1% -2.2% -1.6% -1.0%

Source: EIU State of the Region Report 2007

JOTUJUVUJPOTJOUIF64TVCQSJNFMPBONBSLFUNFMU TMPXFTU"TJO*DFMBOE UIFSFJTTPNFWVMOFSBCJMJUZ EPXOIBTDSFBUFEBOFXSJTLGBDUPS UPUJHIUFOJOHJOUFSOBUJPOBMmOBODJBMNBSLFUT%F TQJUFUIFGBTUHSPXUI -BUWJBSFHJTUFSTSFMBUJWFMZIJHI ɨF#BMUJDDPVOUSJFTGBDFTJHOJmDBOUPWFSIFBUJOHQSPC VOFNQMPZNFOU QPTTJCMZESJWFOCZBTFHNFOUFEMBCPS MFNT-PDBMXBHFTBOEQSJDFTBSFHSPXJOHTUSPOHMZ  NBSLFUGPSFUIOJD3VTTJBOTUIBUEPOPUTQFBL-BUWJBO BCPWFUIFMFWFMPGQSPEVDUJWJUZHSPXUI$VSSFOUBD ɨF-BUWJBOHPWFSONFOU UIF-BUWJBODFOUSBMCBOL  DPVOUEFmDJUTBSFIJHI8IJMFBTJHOJmDBOUBNPVOUPG BOEUIFPXOFSTPGUIFNBJO-BUWJBOCBOLTBSFXPSL UIFJOnPXmOBODFTJOWFTUNFOUT UIFSFJTBMTPBIVHF JOHUPBEESFTTUIFPWFSIFBUJOHJUSFNBJOTUPCFTFFO JODSFBTFJODSFEJUmOBODFEDPOTVNQUJPO8JUIPVU XIFUIFSUIFTUFQTUBLFOBSFTVċDJFOU BOJOEFQFOEFOUNPOFUBSZQPMJDZoBMMDPVOUSJFTIBWF UJFEUIFJSDVSSFODJFTUPBOFYUFSOBMBODIPSoUIF &TUPOJBBOE-JUIVBOJBIBWFTJNJMBSDIBMMFOHFTCVUBU DPVOUSJFTIBWFPOMZmTDBMQPMJDZBOEmOBODJBMNBSLFU BMPXFSMFWFMPGJOUFOTJUZ&TUPOJBJTDMPTFMZUSBDLJOH SFHVMBUJPOTBTTIPSUUFSNUPPMTUPBEESFTTUIFFNFSH -BUWJBOHSPXUISBUFTCVUDBOSFMZPOTUSPOHHPWFSO JOHJNCBMBODFT NFOUmOBODFTXJUIMPXEFCUTBOEBCVEHFUTVSQMVT TJODF6OFNQMPZNFOUJTESPQQJOHGBTUBOE ɨFJNCBMBODFTTFFNNPTUQSPCMFNBUJDJO-BUWJB  DPVMETPPOCFMPXFSUIBOJO4XFEFO-JUIVBOJBO XIFSFUIFDVSSFOUBDDPVOUEFmDJUJTUIFIJHIFTUBOE HSPXUISBUFTIBWFCFFOTMJHIUMZMPXFSBOEUIFTJ[FPG UIFTIJGUUPBNPSFDPNQFUJUJWFFYQPSUFDPOPNZUIF UIFFYUFSOBMJNCBMBODFTJTOPUBTXPSSZJOH6OFN

20 STATE OF THE REGION REPORT 2007 SECTION A THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Table 3: External macroeconomic indicators across the Baltic Sea Region

2000 2001 2002 2003 2004 2005 2006 2007E

Current Account (in % of GDP) Denmark 1.4% 3.0% 2.0% 3.3% 2.4% 3.8% 2.4% 1.4% Estonia -5.3% -5.2% -10.7% -11.6% -12.6% -10.1% -15.7% -16.5% Finland 8.6% 9.6% 10.2% 6.5% 7.8% 5.0% 5.9% 6.2% Iceland -9.8% -4.3% 1.6% -4.9% -10.0% -16.2% -27.4% -17.1% Latvia -4.7% -7.5% -6.7% -8.2% -12.9% -12.5% -21.1% -22.2% Lithuania -5.9% -4.7% -5.1% -6.9% -7.7% -7.1% -10.8% -13.0% N Germany -1.7% 0.0% 2.0% 1.9% 4.3% 4.6% 5.1% 4.7% N Poland -5.8% -2.8% -2.5% -2.1% -4.2% -1.7% -2.3% -3.0% Norway 14.9% 16.1% 12.6% 12.3% 12.8% 15.4% 16.7% 14.9% NW Russia 18.0% 11.1% 8.4% 8.2% 10.0% 10.9% 9.6% 5.9% Sweden 2.7% 3.0% 5.2% 7.5% 7.9% 6.6% 7.2% 7.4% Baltic Sea Region 4.5% 5.6% 5.7% 5.8% 6.3% 6.5% 6.5% 5.7% ASEAN 7.8% 6.4% 5.6% 6.6% 5.9% 5.7% 8.3% 6.6% EU-15 -0.8% -0.1% 0.3% 0.4% 0.8% 0.0% -0.3% -0.3% NAFTA -3.7% -3.4% -3.9% -4.2% -4.7% -5.1% -5.2% -4.9% World -0.5% -0.4% -0.4% -0.1% 0.0% 0.0% 0.2% 0.3%

Terms of Trade (1990 = 100) Denmark 100.0 100.7 100.8 102.1 102.8 103.7 104.3 105.8 Estonia Finland 92.0 89.2 84.6 84.6 84.4 82.0 90.2 91.1 Iceland 75.0 74.9 80.5 79.0 78.8 72.6 75.9 77.7 Latvia 125.6 127.4 122.9 121.5 124.0 119.8 124.6 127.0 Lithuania 132.8 132.3 132.9 132.2 133.4 128.0 129.1 129.5 N Germany 100.2 100.6 102.7 104.8 104.2 101.1 98.5 94.7 N Poland 108.2 110.8 113.8 109.9 115.6 115.7 115.2 115.6 Norway 149.4 141.4 141.3 140.3 139.4 179.3 230.1 245.4 NW Russia 129.9 119.8 115.6 122.8 142.6 162.0 174.6 179.1 Sweden 92.7 90.0 88.1 87.9 85.5 83.1 81.7 77.1 Baltic Sea Region 107.3 105.3 104.8 104.8 105.0 113.5 126.0 127.3 ASEAN 96.1 92.5 92.3 93.3 92.6 92.5 94.7 95.1 EU-15 96.0 96.7 98.0 99.0 98.9 97.7 97.5 97.6 NAFTA 98.5 100.3 101.2 101.5 101.7 99.6 99.3 99.6

Source: EIU State of the Region Report 2007

QMPZNFOUJTMPXFSUIBOJOUIFUXPPUIFS#BMUJDDPVO /PSUIXFTUFSO3VTTJBDPOUJOVFTUPHSPXTUSPOHMZ ESJW USJFT DMPTFUP/PSXFHJBOMFWFMTɨFmOBODJBMTJUVB FOCZHSPXJOHEPNFTUJDEFNBOEGVFMMFECZTUSPOH UJPOPGUIFQVCMJDTFDUPS IPXFWFS JTMFTTGBWPSBCMF SFWFOVFTGSPNPJMBOEHBTFYQPSUT8JUIPJMQSJDFT TUBCJMJ[JOHPOBIJHIMFWFM UIFHSPXUISBUFPGUIF3VT /PSUIFSO1PMBOEIBTCFOFmUFEGSPNUIFTUSPOH TJBOFDPOPNZJTFYQFDUFEUPGBMMɨFDVSSFOUBDDPVOU HSPXUIUIBUUIFFOUJSFDPVOUSZFYQFSJFODFEGPMMPX TVSQMVTJTRVJDLMZFSPEJOHBOEUIFSFBMFYDIBOHFSBUF JOH&6BDDFTTJPO"GUFSZFBSTPGTVCEVFEHSPXUI  JTBQQSFDJBUJOH*OnBUJPOJTSFDFEJOHCVUSFNBJOTDMPTF UIFSFSFNBJOTTVċDJFOUTMBDLJOUIFFDPOPNZUPLFFQ UP6OJUMBCPSDPTUHSPXUIJTIJHI'JTDBMQPMJDZ JOnBUJPOBSZUFOEFODJFTBUCBZɨFHPWFSONFOUEFmDJU IBTCFFOSFMBYFETPNFXIBUCVUSFNBJOTTPMJEPWFSBMM JTGBMMJOHUPMPXOFHBUJWFOVNCFST CFOFmUJOHGSPN 3VTTJBTHPWFSONFOUEFCUTIBWFCFFOESPQQJOHGBTU TUSPOHFSUBYSFDFJQUTBOEMPXFSFYQFOEJUVSFTGPSVO TJODF FNQMPZNFOUCFOFmUTɨFDVSSFOUBDDPVOUSFNBJOTJO EFmDJUCVUGPSBHSPXJOHFDPOPNZUIFMFWFMPGEFmDJU TFFNTGVMMZTVTUBJOBCMF

STATE OF THE REGION REPORT 2007 21 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

This section of the State of the Region Report tracks the status quo of current competitiveness across the Baltic Sea Region, following up on the assessments done in previous Reports. It collects a set of indicators on performance and capacity that together give an indi- cation of the conditions that com- panies located in this region face. Previous Reports provide additional information on individual aspects of the business environment, aspects which have not changed significantly over recent years.

22 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

SECTION B: Competitiveness of the Baltic Sea Region

$PNQFUJUJWFOFTTSFNBJOTBDPODFQUUIBUJTNVDI POUIFNFEJVNUFSN BSPVOEmWFZFBST BOEBJNTUP EFCBUFECVUOPUXFMMVOEFSTUPPEɨFDPODFQUPG TVQQPSUQPMJDZNBLFSTJOJEFOUJGZJOHXIJDIBSFBTUIFZ DPNQFUJUJWFOFTTXFBQQMZIFSF CVJMEJOHPOUIFXPSL PVHIUUPGPDVTPOJOUIJTQFSJPE*UQSPWJEFTSFDPN CZ1SPGFTTPS.JDIBFM&1PSUFSTJODF EFmOFT NFOEBUJPOTUIBUBSFTJUVBUJPOTQFDJmDQSJPSJUJFT DPNQFUJUJWFOFTTBTUIFMFWFMPGQSPEVDUJWJUZUIBUDPN DIBOHFBTDPVOUSJFTEFWFMPQBOEUIFSFBSFOPNBHJD QBOJFTDBOBDIJFWFJOBHJWFOMPDBUJPO1SPEVDUJWJUZJT QPMJDZGPSNVMBTUIBUBSFFĊFDUJWFPSGVOEBNFOUBMGPS DFOUSBMCFDBVTFJUEFmOFTUIFMFWFMPGQSPTQFSJUZUIBU BMMMPDBUJPOTBUBMMUJNFT$PNQFUJUJWFOFTTJTQBSUJDV SFHJPOTPSDPVOUSJFTDBOVMUJNBUFMZTVTUBJO MBSMZDPODFSOFEXJUIUIFNJDSPFDPOPNJDMFWFM JF EJNFOTJPOTPGUIFCVTJOFTTFOWJSPONFOUUIBUIBWFB ɨFDPNQFUJUJWFOFTTDPODFQUQSPWJEFTBGSBNFXPSLUP EJSFDUJNQBDUPODPNQBOZQSPEVDUJWJUZBOEJOOPWB BTTFTTUIFJNQBDUPGUIFEJĊFSFOUEFUFSNJOBOUTPGQSP UJPODBQBDJUZ EVDUJWJUZGPSBTQFDJmDDPVOUSZPSSFHJPO*UJTGPDVTFE

STATE OF THE REGION REPORT 2007 23 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Competitiveness and traditional growth economics $PNQFUJUJWFOFTTBOEUSBEJUJPOBMBDBEFNJDHSPXUIFDPOPNJDTBSFSFMBUFECVUEJG GFSFOUDPODFQUT#PUIBSFJOUFSFTUFEJOUIFTBNFQIFOPNFOB JFFYQMBJOJOHUIF EJĊFSFODFTPGQSPTQFSJUZBDSPTTMPDBUJPOT#VUUIFZUBLFEJĊFSFOUQFSTQFDUJWFTJO PSEFSUPVOEFSTUBOEJU ɨFBDBEFNJDHSPXUIMJUFSBUVSFUSJFTUPmOEUIFNJOJNVNBNPVOUPGGBDUPST UIBUDBOFYQMBJOQSPTQFSJUZEJĊFSFODFTBDSPTTBXJEFHSPVQPGDPVOUSJFTPWFSUIF MPOHSVOɨJTIBTMFEUPBGPDVTPOEFFQTFBUFEJOTUJUVUJPOTBOEHFPHSBQIJDMPDB UJPO*UIBTBMTPMFEUPNPEFMTJOXIJDIBMMGBDUPSTUIBUJNQSPWFQSPTQFSJUZXPSL BEEJUJWFMZ JFUIFJSJNQBDUEPFTOPUEFQFOEPOIPXHPPEPSCBEPUIFSUIJOHTBSF JOBDPVOUSZ ɨFDPNQFUJUJWFOFTTMJUFSBUVSFUSJFTUPJEFOUJGZUIFTQFDJmDBSFBTJOXIJDIB MPDBUJPOIBTUPJNQSPWFJOPSEFSUPJODSFBTFQSPEVDUJWJUZ8IJMFJOTUJUVUJPOTBOE HFPHSBQIJDMPDBUJPOTNBUUFS UIFZEPOPUQSFEFUFSNJOFPVUDPNFTɨFZXPSL UIFJSXBZ TMPXMZBOEXJUINBOZTUPQTBOEUVSOT UISPVHINBOZQPMJDZDIPJDFT UIBUUIFOBĊFDUQSPEVDUJWJUZɨFDPNQFUJUJWFOFTTMJUFSBUVSFJTJOUFSFTUFEJOUIFTF DIPJDFT BOEBJNTUPHJWFQPMJDZNBLFSTUIFUPPMTUPNBLFCFUUFSDIPJDFTSBUIFS UIBOKVTUGPMMPXUIFUSFOETSPPUFEJOJOTUJUVUJPOTBOEMPDBUJPO8IJMFVMUJNBUFMZ BMMGBDUPSTUIBUBSFJNQPSUBOUGPSQSPEVDUJWJUZIBWFUPCFVQHSBEFE POMZBGFXBSF ACJOEJOHDPOTUSBJOUTJOBOZHJWFOTJUVBUJPO*NQSPWFNFOUTJOPUIFSBSFBTIBWF OPFĊFDU CFDBVTFUIFCJOEJOHDPOTUSBJOUTMJNJUUIFBCJMJUZPGDPNQBOJFTUPUBLF BEWBOUBHFPGUIFNɨFDPNQFUJUJWFOFTTMJUFSBUVSFUSJFTUPJEFOUJGZUIFTFCJOEJOH DPOTUSBJOUTBOEBJNTUPHJWFQPMJDZNBLFSTUIFUPPMTUPBEESFTTUIFNSBUIFSUIBO BQQMZHFOFSJDQPMJDZGPSNVMBTCBTFEPOJEFPMPHJDBMQPTJUJPOT ɨFUXPMJUFSBUVSFTBSFDPNQMFNFOUBSZBOEUIFJSUIFPSFUJDBMVOEFSQJOOJOHT BSF UPBTVSQSJTJOHEFHSFF DPOTJTUFOU

8FBTTFTTDPNQFUJUJWFOFTTBUUISFFMFWFMT'JSTU XF MFWFMPGQSPEVDUJWJUZDPNQBOJFTDBOSFBDI8FGPDVT MPPLBUQFSGPSNBODFJOUFSNTPGQSPTQFSJUZBOELFZ PONJDSPFDPOPNJDGPVOEBUJPOTPGUIFFDPOPNZ CVU QSPTQFSJUZESJWFST QBSUJDVMBSMZQSPEVDUJWJUZ8FBMTP BMTPEJTDVTTUIFPWFSBMMNBDSPFDPOPNJD MFHBM QPMJUJ MPPLBUJOUFSNFEJBUFJOEJDBUPSTMJLFXPSMEFYQPSU DBM BOETPDJBMDPOUFYUɨJSE XFEJTDVTTQFSGPSN NBSLFUTIBSFT '%*BUUSBDUJPO PSQBUFOUJOHUIBUBSF BODFPOUIFXJEFSSBOHFPGJOEJDBUPSTJODMVEFEJOUIF CPUIPVUDPNFTBOEESJWFSTPGBMPDBUJPOTDPNQFUJ -JTCPO"HFOEB UJWFOFTT4FDPOE XFSFWJFXUIFGBDUPSTUIBUESJWFUIF

24 STATE OF THE REGION REPORT 2007 1. The economic performance tThe last year has seen excep- of the Baltic Sea Region tionally strong performance by the economies in the Baltic ɨ FVMUJNBUFUFTUGPSUIFRVBMJUZPGCVTJOFTTFOWJ SPONFOUDPOEJUJPOTBOEFDPOPNJDQPMJDJFTJTUIF Sea Region, with labor produc- PVUDPNFTBDIJFWFEJOUFSNTPGFDPOPNJDQFSGPSN BODF8FDPOUJOVFUPUSBDLUIFQFSGPSNBODFPGUIF tivity and mobilization rising #BMUJD4FB3FHJPOSFMBUJWFMZUPLFZQFFST BTXFMMBTPG JOEJWJEVBMDPVOUSJFTBOETVCOBUJPOBMSFHJPOTBDSPTT Investment activity is up UIF#BMUJD4FBɨ FLFZJOEJDBUPSPGQFSGPSNBODFJT t UIFMFWFMPGQSPTQFSJUZBDIJFWFE IFSFPQFSBUJPOBM and the Region’s record on J[FEBT(%1QFSDBQJUB1SPTQFSJUZJTUIFOGVSUIFS FDI attraction significantly EFDPNQPTFEJOUPJUTLFZESJWFST JFMBCPSQSPEVDUJW JUZ MBCPSNPCJMJ[BUJPO BOEEPNFTUJDQSJDFMFWFMT improved, while exports and "EEJUJPOBMJOEJDBUPSTDBQUVSFGBDUPSTUIBUBSFCPUI PVUDPNFTBOEESJWFSTPGDPNQFUJUJWFOFTT patenting are stable at high levels Prosperity ɨ FDFOUSBMNFBTVSFPGQSPTQFSJUZXFVTFJTHSPTTEP NFTUJDQSPEVDU (%1 QFSDBQJUBJO64EPMMBST  tThe Region’s business cycle BEKVTUFECZQVSDIBTJOHQPXFSQBSJUZɨ JTNFBTVSFJT position has driven many of the DPNQBSBCMFBDSPTTDPVOUSJFTBOEUJNF BOEFMJNJOBUFT UIFTUSPOHJOnVFODFPGFYDIBOHFSBUFnVDUVBUJPOT*U recent improve ments; a rever- BMTPDBQUVSFTUIFJNQBDUPGMPDBMQSJDFMFWFMTSBUIFS UIBOKVTUQSPEVDUJPOWBMVFT BLFZEFUFSNJOBOUPGUIF sal to more moderate levels is BDUVBMTUBOEBSEPGMJWJOHDJUJ[FOTFOKPZJOBDPVOUSZ to be expected

ɨ F#BMUJD4FB3FHJPODPOUJOVFTUPJODSFBTFJO QSPTQFSJUZBUBTPMJESBUF"GUFSTMPXJOHEPXOTMJHIUMZ JO UIF3FHJPOSFQPSUFEJOJUTTUSPOHFTU (%1QFSDBQJUBHSPXUISBUFTJODF SFBDIJOHBO BOOVBMSBUFPGɨ F3FHJPOIBTOPXSFBDIFE BQSPTQFSJUZMFWFMPGPGUIF&6BWFSBHF B NBSLFEJNQSPWFNFOUGSPNUFOZFBSTBHP*GUIF #BMUJD4FB3FHJPOLFFQTUIFHSPXUIEJĊFSFOUJBMPG UIFMBTUUFOZFBSTWFSTVTUIF&6 JUXJMMSFBDIUIF &VSPQFBOBWFSBHFJO*GJULFFQTUIFHSPXUIEJG GFSFOUJBMPG UIFDBUDIVQXPVMECFDPNQMFUFE BMSFBEZJOFBSMZ

ɨ FBDDFMFSBUJPOPGHSPXUIJOXBTOPUMJNJUFE UPUIF#BMUJD4FB3FHJPO0UIFSQBSUTPG&VSPQF NBSLFEMZJNQSPWFEUIFJSQFSGPSNBODFBTXFMM XIJMF SFHJPOTFMTFXIFSFJOUIFHMPCBMFDPOPNZDPOUJOVFE UPTUBZPOUIFJSQSFWJPVTHSPXUIUSBKFDUPSJFTɨF $FOUSBM&VSPQFBO3FHJPOJNQSPWFEJUTHSPXUIQFS GPSNBODFGSPNBMPXFSMFWFMCZFWFONPSFUIBOUIF #BMUJD4FB3FHJPO SFHJTUFSJOHHSPXUIJO  NPSFUIBOJOUIFQSFWJPVTZFBSɨ F&6 PMENFNCFSDPVOUSJFTNPWFEUPHSPXUI VQ

STATE OF THE REGION REPORT 2007 25 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 4: Prosperity growth over time

$! %  

 %

  '# !& &#   





            

!%#  $$!$! "!#$

GSPNJO(FSNBOZ *UBMZ BOEUIF#FOFMVY ɨ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ɨFNB TBXUIFTUSPOHFTUHSPXUIBDDFMFSBUJPOSFMBUJWFUP KPSJUZPGSFHJPOTJTJOUIFNJEEMFSBOHFPGǎ UP *DFMBOEXBTUIFPOMZDPVOUSZJOXIJDIHSPXUI ǎ (%1QFSDBQJUBɨF&6IBWFBTJNJMBS BDUVBMMZTMPXFEEPXOSFMBUJWFUPUIFQSFWJPVTZFBS TIBSFPGIJHIMZQSPTQFSPVTSFHJPOTCVUOPSFHJPOXJUI B(%1QFSDBQJUBCFMPXǎ ɨF&6SFDFOU "NPOHTVCOBUJPOBMSFHJPOTJOUIF#BMUJD4FB3FHJPO  FOUSBOUTUPUIF&6IBWFOPSFHJPOTJOUIFUPQHSPVQ UIFNFUSPQPMJUBOBSFBTPG)BNCVSH 0TMP 4UPDL CVUBMBSHFDPODFOUSBUJPOPGSFHJPOTCFMPXǎ  IPMN BOE)FMTJOLJMFBEUIFSFHJPOBMSBOLJOHJO BOECFUXFFOǎ BOEǎ (%1QFSDBQJUB UFSNTPGQSPTQFSJUZ$PQFOIBHFOJTQSFTVNBCMZBMTP ɨF&6BOEUIF&6UIVTIBWFBTPDBMMFEAPOF POUIJTMJTU CVU%FONBSLSFQPSUTPOMZOBUJPOBMMFWFM TJEFEEJTUSJCVUJPO XIFSFJOUIF&6NPTUSFHJPOT EBUBUP&VSPTUBUɨFMFBEJOHNFUSPQPMJUBOSFHJPOT IBWFIJHIFS(%1QFSDBQJUB BOEJOUIF&6NPTU BDDPVOUGPSBCPVUPGBMM(%1JOUIF#BMUJD4FB SFHJPOTIBWFMPXFS(%1QFSDBQJUB UIBOUIFBWFSBHF 3FHJPO SFHJPO

26 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 5: Prosperity level and growth, selected countries

0&1$"0*3"! %/,,"1  

 /16"7

   $&,".% 1*3*2)2,&2 &.-"1+ 6&%&.  *.,".% ! $&".*"

 &1-".7 #&1*" ",3*$ &"&(*/.

 &.31",41/0& &(*/. 23/.*"  !   /,".% *3)4".*" "35*"  422*"    

    1/63)/'01/20&1*37 8   /41$&1/.*.(&.1/63)".%&5&,/0-&.3&.31&".% )&/.'&1&.$&/"1%  3"3&/'3)&&(*/.&0/13 

Prosperity and Human Development Index (%1QFSDBQJUBJTPOFJOEJDBUPSPGQSPTQFSJUZCVUUIFSFJTBSFDPHOJUJPOUIBUPUIFS GBDUPST MJLFTPDJBMBOEFOWJSPONFOUBMDPOEJUJPOT NBUUFSBTXFMMɨF)VNBO%F WFMPQNFOU*OEFYJTUIFNPTUFTUBCMJTIFEBUUFNQUUPQSPWJEFBCSPBEFSQFSTQFDUJWF POUIFRVBMJUZPGMJGFBDSPTTDPVOUSJFT*UJODMVEFTIFBMUIBOEFEVDBUJPONFBTVSFT BMPOHTJEF(%1QFSDBQJUB ɨF#BMUJD4FB3FHJPOPWFSBMMSBOLTUIPOUIFMBUFTU)VNBO%FWFMPQNFOU *OEFY )%* 0WFSUJNF UIF3FHJPOIBTDPOTJTUFOUMZJODSFBTFEJUTBCTPMVUF)%* WBMVF*UIBT IPXFWFS ESPQQFETMJHIUMZJOSBOL)POH,POH *TSBFM BOE(SFFDF IBWFNPWFEBIFBEPGUIFBWFSBHFPGUIF#BMUJD4FB3FHJPOJOUIFMBTUZFBSTɨF SBOLPGUIF#BMUJD4FB3FHJPOPOUIFCSPBEFS)%*NFBTVSFPGQSPTQFSJUZJT TMJHIUMZMPXFSUIBOPO(%1QFSDBQJUBBMPOF WFSTVT 4QBJO /FX;FBMBOE  *TSBFM BOE(SFFDFBMMSBOLIJHIFSUIBOUIF#BMUJD4FB3FHJPOPOUIF)%*CVU MPXFSPO(%1QFSDBQJUB ɨFNBJOSFBTPOGPSUIFTVSQSJTJOHMZXFBLFSQPTJUJPOPGUIF#BMUJD4FB3FHJPO PO)%*JTUIFTJUVBUJPOJO3VTTJB3VTTJBT)%*QPTJUJPOESPQQFEVOUJM BOE JTPOMZOPXJNQSPWJOHBHBJOCBTFEPOHSPXJOH(%1QFSDBQJUBmHVSFTɨFDPVO USZSBOLTIJHIPOFEVDBUJPOCVUWFSZQPPSPOIFBMUIEVFUPMPXMJGFFYQFDUBODZ ɨF#BMUJDDPVOUSJFTESPQQFEVOUJMBTUIFJSFDPOPNJFTDPOUSBDUFE CVUIBWF JNQSPWFETJODFUIFO"MMPUIFSDPVOUSJFTBDSPTTUIF#BMUJD4FB3FHJPO JODMVEJOH 1PMBOEBTUIFSFNBJOJOHGPSNFS$PNNVOJTUDPVOUSZ IBWFJNQSPWFETJODFEBUBJT BWBJMBCMF

STATE OF THE REGION REPORT 2007 27 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Prosperity accounting JOHɨF3FHJPOIBTOPXSFBDIFEBQSPEVDUJWJUZ *OBOBDDPVOUJOHTFOTF QSPTQFSJUZJTUIFSFTVMUPG MFWFMPGPGUIF&6BWFSBHF DPNQBSFEUP UISFFGBDUPSTMBCPSQSPEVDUJWJUZ JFIPXNVDI(%1 UFOZFBSTBHP JTHFOFSBUFEJOBOIPVSPGXPSL MBCPSNPCJMJ[BUJPO  JFIPXNBOZIPVSTPGXPSLBSFQFSGPSNFEQFSDBQJ ɨF$FOUSBM&VSPQFBO3FHJPOSFNBJOTBCPVUCF UBPGUIFQPQVMBUJPOEVSJOHUIFZFBS BOEQSJDFMFWFMT  IJOEUIF#BMUJD4FB3FHJPOBOEDPOUJOVFTUPJODSFBTF JFIPXNVDIDPOTVNQUJPOHPPETDBOCFCPVHIUGPS MBCPSQSPEVDUJWJUZBUBMPXFSSBUF EFTQJUFTJHOJmDBOU POFVOJUPGJODPNF HSPXUIBDDFMFSBUJPOMBTUZFBS4JODFMBTUZFBS UIF #BMUJD4FB3FHJPOIBTTVSQBTTFEUIF*CFSJBO1FOJOTVMB ɨF#BMUJD4FB3FHJPODPOUJOVFTUPQFSGPSNTUSPOHMZ JOUFSNTPGMBCPSQSPEVDUJWJUZɨF&6DPVO POMBCPSQSPEVDUJWJUZBTXFMMBTPOMBCPSNPCJMJ[B USJFTIBWFTJHOJm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mDBOUMZCFMPXMBTUZFBSCVUTUJMMIJHIFS SFMBUJWFUPMBTUZFBS XJUIUIFHSPXUISBUFSFBDI UIBOJOUIF&6

Figure 6: Prosperity decomposition, selected cross-national regions

) *)$, -*#+$'"(/ * &)%(0& ', *( -,$.$,0  ,(* ,(* ,(*

                           %,$  "$('    %,$  "$('    %,$  "$('           %,$  "$('            

(-* *('$'" '*(/,#'  . %()& ', ',* ' # ('! * ' (*   -,#(*+%-%,$('+ ,, (!,#  "$(' )(*, 

Figure 7: Prosperity decomposition, selected countries

 %& % ( )&' #$+& "%!$,"#( &$)( * (,  ($& ($& ($&

$&+,  ()#  !# $&+, !# (*  '($#  &"#, #"& $!# )''  +#  #!# )''  (*   #!# +# '($#   !(  $# #"& &"#,  !(  $# #"& !# !(  $# &"#,  #!# !(  $# '($#  +# +# $!# (*   #!#  ()#   ()#   ()#  #"& $!# '($#  $!# $&+, $&+, (*  )''  !# &"#, )'' 

$)& &$# ##&$+(# *!$%"#( #(& # $#&# $& )($&'!)!( $#' (($( $#%$&(

28 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 8: Prosperity growth over time, GDP per hour worked

$! %  

  %

  '# !& &#



 



            

!%#  $$!$! "!#$ 8JUIJOUIF#BMUJD4FB3FHJPO /PSXBZDPOUJOVFTUP ɨFDPVOUSZIBTNBEFMJUUMFQSPHSFTTPOQSPEVDUJW SFHJTUFSUIFIJHIFTUMFWFMPG(%1QFSIPVSXPSLFE  JUZHSPXUIPWFSUIFMBTUGFXZFBSTPOMZ1PMBOEBOE QBSUMZESJWFOCZUIFSPMFPGUIFPJMBOEHBTTFDUPS %FONBSLSFHJTUFSFEMPXFSBCTPMVUFJNQSPWFNFOUT JOJUTFDPOPNZ(FSNBOZ 4XFEFO 'JOMBOE BOE TJODF %FONBSLGPMMPX XJUIPOMZTNBMMEJĊFSFODFTBNPOH UIFN*O 'JOMBOETVSQBTTFE%FONBSL ESJWFO "NPOHTVCOBUJPOBMSFHJPOTXJUIJOUIF#BMUJD4FB3F CZUIFTUSPOHFTUBOOVBMJNQSPWFNFOUPGUIF3FHJPO HJPO EBUBJTPOMZBWBJMBCMFGPSUIFMFWFMPG(%1QFS *DFMBOETBXBESPQJOMBCPSQSPEVDUJWJUZJOCVU FNQMPZFFVOUJM0OUIJTNFBTVSF UISFF/PSXF IBTQSPHSFTTFENPTUTJODF3VTTJBSFNBJOTBUUIF HJBOSFHJPOTJOXIJDIUIFPJMSFWFOVFTBSFSFHJTUFSFE  CPUUPNPGUIF3FHJPOTMBCPSQSPEVDUJWJUZSBOLJOH QSJNBSJMZ0TMP DPNFPVUPOUPQɨFZBSFGPMMPXFE

Figure 9: Labor utilization over time, annual hours worked per capita

 & !&#$'!#"#"%





  

 



      

!&#  %%!%! "!#%

STATE OF THE REGION REPORT 2007 29 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

CZ)BNCVSH 4UPDLIPMN ¯MBOE BOE)FMTJOLJɨF BOECFUXFFOBOEGPSFNFSHJOHFDPOPNJFT #BMUJDDPVOUSJFTBOEUIF1PMJTISFHJPOPG8BSNJO JO"TJBBOEBDSPTTUIF#3*$ #SB[JM 3VTTJB *OEJB  TLP.B[VSTLJFSFHJTUFSFEUIFTUSPOHFTUQSPEVDUJWJUZ BOE$IJOB DPVOUSJFT JODSFBTFTJODFɨFUXP4XFEJTISFHJPOTPG 4ZETWFSJHFBOE4NÌMBOESFHJTUFSFEUIFMPXFTUQSPEVD 8JUIJOUIF#BMUJD4FB3FHJPO *DFMBOESFNBJOTPO UJWJUZHSPXUI UPQPGUIFMBCPSNPCJMJ[BUJPOSBOLJOH GPMMPXFECZ &TUPOJB 3VTTJB BOE-BUWJB*O *DFMBOEIBEUIF *OMBCPSNPCJMJ[BUJPO NFBTVSFECZBOOVBMIPVST HSFBUFTUMBCPSNPCJMJ[BUJPOJODSFBTFEFTQJUFUIJT UIF XPSLFEQFSDBQJUB UIF#BMUJD4FB3FHJPOTBXBTJHOJG DPVOUSZSFHJTUFSTUIFIJHIFTUESPQJOXPSLJOHIPVST JDBOUJNQSPWFNFOUJO ESJWFOCZFNQMPZNFOU QFSDBQJUBJOUIF3FHJPOTJODF&TUPOJB -BUWJB  HBJOTBDSPTTBMMDPVOUSJFTJOUIF3FHJPOɨF3FHJPO BOE1PMBOEJODSFBTFEMBCPSNPCJMJ[BUJPOCZTJHOJm OPXSFHJTUFSTIPVSTXPSLFEQFSDBQJUB DPNQBSFE DBOUBNPVOUTBTXFMMMBTUZFBS*OGBDU BMMDPVOUSJFTJO UPJOUIF&6BWFSBHF UIF3FHJPOSFHJTUFSFEJODSFBTJOHXPSLJOHIPVSTQFS DBQJUBJOBTBSFTVMUPGTPMJEFDPOPNJDHSPXUI ɨF$FOUSBM&VSPQFBO3FHJPOIBTESPQQFEUP ɨFJODSFBTFXBTUIFTNBMMFTUJO(FSNBOZ PGUIF#BMUJD4FB3FHJPOMFWFM DPNQBSFEUPUFO ZFBSTBHPɨFHBQIBTPQFOFEVQNBJOMZJOUIFZFBST "NPOHTVCOBUJPOBMSFHJPOTXJUIJOUIF#BMUJD4FB VOUJMNPSFSFDFOUMZUIFHSPXUIPGUIFHBQIBT 3FHJPO EBUBJTPOMZBWBJMBCMFGPSUIFOVNCFSPG TMPXFEEPXOTJHOJmDBOUMZɨF*CFSJBO1FOJOTVMBIBT FNQMPZFFTSFMBUJWFUPUIFUPUBMQPQVMBUJPO/PSE JODSFBTFEJUTMBCPSNPCJMJ[BUJPOESBNBUJDBMMZPWFS /PSXBZ 4UPDLIPMN ¯MBOE BOE%FONBSLBSFBIFBE UIFMBTUEFDBEFBOESFHJTUFSTOPXNPSFIPVSTQFS POUIJTNFBTVSFJO8JUIUIFFYDFQUJPOPGUIF DBQJUBUIBOUIF#BMUJD4FB3FHJPO4JODFMBTUZFBS UIF UISFF1PMJTISFHJPOTBMM#BMUJD4FB3FHJPOTBSFBCPWF &6DPVOUSJFTIBWFSFEVDFEUIFHBQUPUIF#BMUJD UIFBWFSBHFPGUIF&VSPQFBO6OJPO'PVSPGUIF 4FB3FHJPOJOUFSNTPGMBCPSNPCJMJ[BUJPOTPNF mWFSFHJPOTXJUIUIFIJHIFTUJODSFBTFJOUIFTIBSF XIBU XIJMFJUIBTJODSFBTFESFMBUJWFUPUIFPME&6 PGFNQMPZFFTJOUIFQPQVMBUJPOBSFGSPN4XFEFO NFNCFSDPVOUSJFT0VUTJEFPG&VSPQF MBCPSVUJMJ[B 0OMZ-BUWJBFOUFSTUIFUPQSBOLTɨFMBSHFTUEFDSFBTF UJPODPOUJOVFTUPCFTJHOJmDBOUMZIJHIFSUIBOJOUIF JTSFHJTUFSFECZUXP1PMJTIBOEUISFF/PSXFHJBO #BMUJD4FB3FHJPOɨFHBQJTCFUXFFOBOE SFHJPOT0OFGBDUPSESJWJOHUIFEJĊFSFODFTJTVOFN GPSBEWBODFESFHJPOTJO/PSUI"NFSJDBBOE0DFBOJB  QMPZNFOUɨFPUIFSJTUIFEFNPHSBQIJDQSPmMF B

Figure 10: Relative price changes, European countries

-& "("1"(    +-2 3  "( *   "*) -' !   &*( *!  2"!"*

 "-) *3  (/& " "$&+* 



 0..&  ./+*& +( *!   /1& &/%0 *&         % *$"+#,-& "("1"(4   +0- "0-+./ /  / /"+#/%""$&+*",+-/

30 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

GBDUPSUIBUDVSSFOUMZGBWPSTUIF#BMUJDDPVOUSJFTXJUI Intermediate indicators and UIFJSMPXCJSUISBUFT#VUUIFFĊFDUXJMMCFTUSPOHMZ enablers of competitiveness OFHBUJWFXIFOUIFTNBMMDPIPSUTFOUFSUIFXPSLGPSDF &YQPSUT JOWFTUNFOUT BOEQBUFOUJOHBSFJOEJDBUPSTPG VOEFSMZJOHDPNQFUJUJWFOFTTBOETJHOBMUIFQPUFOUJBM *OEPNFTUJDQSJDFMFWFMT NFBTVSFECZQSJDFMFWFMTSFMB GPSGVUVSFQSPTQFSJUZ5BSHFUJOHUIFNEJSFDUMZDBOCF UJWFUPUIF&VSPQFBOBWFSBHF UIF#BMUJD4FB3FHJPO QSPCMFNBUJD GPSFYBNQMFXIFOJOXBSE'%*JTUIF DPOUJOVFTUPQFSGPSNXPSTFUIBOUIF&6BWFSBHF SFTVMUPGHFOFSPVTmOBODJBMJODFOUJWFT CVUUIFZBSF 4JODF QSJDFMFWFMTIBWFHSPXOGBTUFSJOUIF#BM JNQPSUBOUJOEJDBUPSTPGTUSFOHUITBOEXFBLOFTTFTJO UJD4FB3FHJPOUIBOBDSPTTUIFBWFSBHFPGUIF&6ɨF BDPVOUSZTCVTJOFTTFOWJSPONFOU&YQPSUT JOWFTU &6PMENFNCFSDPVOUSJFTDPOUJOVFUPCFTMJHIUMZ NFOUT BOEQBUFOUJOHBSFBMTPFOBCMFSTPGDPNQFUJ NPSFFYQFOTJWFUIBOUIF#BMUJD4FB3FHJPOCVUUIF UJWFOFTTɨFZBSFDIBOOFMTUISPVHIXIJDIUIFCVTJ HBQJTHSBEVBMMZTISJOLJOH OFTTFOWJSPONFOUDBOCFJNQSPWFE GPSFYBNQMFCZ FYQPTVSFUPHMPCBMDPNQFUJUJPOPOFYQPSUNBSLFUT 8JUIJOUIF#BMUJD4FB3FHJPO *DFMBOE /PSXBZ BOE %FONBSLBSFUIFNPTUFYQFOTJWFDPVOUSJFT4XFEFO ɨF#BMUJD4FB3FHJPOEPFTQFSGPSNTMJHIUMZXFBLFS DPOUJOVFTUPCFNPSFFYQFOTJWFUIBOUIF&6BWFSBHF  POJOUFSNFEJBUFDPNQFUJUJWFOFTTJOEJDBUPSTUIBOPO CVUIBTBDIJFWFETPNFDPOWFSHFODFUPUIF&6QSJDF QSPTQFSJUZɨFDIBOHFTPWFSUIFMBTUZFBSIBWFCFFO MFWFMɨFFOUSZPGNPSFMPXDPTUSFUBJMDIBJOTNJHIU NJYFE XJUIGPSFJHOEJSFDUJOWFTUNFOUBOEEPNFTUJD IBWFIBEBOFĊFDU%FONBSLBOE&TUPOJBIBWFTFFO JOWFTUNFOUJNQSPWJOHXIJMFFYQPSUNBSLFUTTIBSFT UIFJSSFMBUJWFQSJDFMFWFMTJODSFBTFUIFNPTU BOEQBUFOUJOHIBWFGBMMFOCFIJOE

%BUBPOQSJDFMFWFMTJOTVCOBUJPOBMSFHJPOTJTOPU 8PSMEFYQPSUNBSLFUTIBSFTBSFBOJNQPSUBOUJOEJDB SFBEJMZBWBJMBCMFɨFSFJTBUFOEFODZJONBOZDPVO UPSPGUIFBCJMJUZPGDPNQBOJFTMPDBUFEJOBTQFDJmD USJFT IPXFWFS UIBUNPSFQSPTQFSPVTSFHJPOTFYQFSJ DPVOUSZUPTVDDFTTGVMMZDPNQFUFPOXPSMENBSLFUT FODFIJHIFSQSJDFTGPSMPDBMSFBMFTUBUFBOEPUIFSMPDBM ɨFZBSFBMTPBOJOEJDBUJPOPGDPNQBOJFTFYQPTVSF HPPETɨJTJTMJLFMZUPCFUIFDBTFBTXFMMJOUIF#BMUJD UPGPSFJHODPNQFUJUJPOPOHMPCBMNBSLFUT4VDI 4FB3FHJPO SFEVDJOHUIFNFBTVSFEEJĊFSFODFJO FYQPTVSFDBOCFBOJNQPSUBOUESJWFSPGIJHIFS (%1QFSDBQJUBBDSPTTSFHJPOT FċDJFODZBOEDBOFOBCMFMFBSOJOHGSPNPQFSBUJPOBM QSBDUJDFTBCSPBE

Figure 11: World export market shares, Baltic Sea Region



 #

"&#

 $

     

 %"  $$ $ ! "$

STATE OF THE REGION REPORT 2007 31 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

*OXPSMENBSLFUFYQPSUTIBSFT UIFNPEFTUEPXOXBSE 8JUIJOUIF#BMUJD4FB3FHJPO /PSXBZ UIF#BMUJD USFOEGPSUIF#BMUJD4FB3FHJPOUIBUTUBSUFEJO DPVOUSJFT 3VTTJB BOE1PMBOEIBWFCFFOBCMFUP DPOUJOVFEJO"UPGXPSMEFYQPSUT UIF JODSFBTFUIFJSFYQPSUNBSLFUTIBSFTUIFNPTUPWFSUIF 3FHJPOTTIBSFJT IPXFWFS TUJMMTPNFXBZBCPWFUIF MBTUEFDBEF/PSXBZBOE3VTTJBIBWFHBJOFEQPTJUJPO QSFWJPVTMPXQPJOUPGJO/FWFSUIFMFTT  BTXFMM MBSHFMZEVFUPSJTJOHQSJDFTGPSUIFJSPJMBOE UIFGBMMJOFYQPSUNBSLFUTIBSFJTOPUFXPSUIZHJWFO HBTFYQPSUT*OQBSUUIJTJTBMTPBGBDUPSGPS-JUIVB UIFTUSPOHFYQPSUGPDVTPGNPTUDPVOUSJFTJOUIF OJBXJUITJHOJmDBOUPJMBOEHBTSFFYQPSUT4XFEFO  3FHJPO %FONBSL BOE*DFMBOEIBWFMPTUCFUXFFOBOE PGUIFJSXPSMEFYQPSUNBSLFUTIBSFTTJODF  ɨFSFMBUJWFTUBCJMJUZPGXPSMEFYQPSUNBSLFUTIBSFT 'PS%FONBSLBOE4XFEFO NBSLFUTIBSFMPTTFTPG PWFSBMMNBTLTWFSZEJĊFSFOUQPTJUJPOTJOHPPET CFUXFFOBOEJOHPPETFYQPSUTDPVMEOPU FYQPSUT BTUBCMFPGXPSMEUSBEF BOETFSWJDFT CFGVMMZDPNQFOTBUFECZHBJOTJOTFSWJDFFYQPSUT  4JODF UIF#BMUJD4FB3FHJPOIBTMPTU NBSLFUTIBSFJOHPPETXIJMFJUIBTJODSFBTFEJUTNBS *OXBSEGPSFJHOEJSFDUJOWFTUNFOU '%* JTBOJNQPS LFUTIBSFJOTFSWJDFTCZBUIJSE UPJO"M UBOUJOEJDBUPSPGUIFBUUSBDUJWFOFTTPGBMPDBUJPOGPS NPTUIBMGPGUIJTNBSLFUTIBSFHBJOIBTCFFOBDIJFWFE GPSFJHODPNQBOJFTɨJTBUUSBDUJPODBOCFESJWFOCZ CZ%FONBSLXJUIBGVSUIFSUIJSEBDDPVOUFEGPSCZ OBUVSBMSFTPVSDFT UIFTJ[FBOEHSPXUIPGUIFEPNFTUJD 4XFEFO"MMPUIFSDPVOUSJFTIBEOPPSNVDITNBMMFS NBSLFU PSUIFPQQPSUVOJUJFTPGVTJOHUIFMPDBUJPOBT HBJOTJOTFSWJDFFYQPSUNBSLFUTIBSFT BCBTJTGPSFYQPSUTɨFQSFTFODFPGGPSFJHODPNQBOJFT TUSFOHUIFOTSJWBMSZPOUIFEPNFTUJDNBSLFU MFBETUP ɨFNBKPSTIJGUJOXPSMEHPPEFYQPSUNBSLFUTIBSFT BOJOnPXPGLOPXMFEHFBOEDBQJUBM BOEDSFBUFTCFUUFS DPOUJOVFTUPCFCFUXFFO"TJBODPVOUSJFT JOQBSUJDVMBS MJOLBHFTUPGPSFJHOMPDBUJPOT $IJOB BOEUIF0&$% JFUIF&VSPQFBO6OJPOBOE UIF6OJUFE4UBUFT4JODF CPUIUIF&6BOE *O UIF#BMUJD4FB3FHJPOTUPQQFEUIFEPXO UIF6OJUFE4UBUFTIBWFMPTUBCPVUFBDIXPSME XBSEUSFOEJOJOXBSEGPSFJHOEJSFDUJOWFTUNFOUUIBU NBSLFUTIBSFXIJMF$IJOBBMPOFHBJOFE$PN IBETUBSUFEJO'%*JOnPXTIBWFJODSFBTFE QBSFEUPUIF&6 UIFMPTTFTPGUIF#BMUJD4FB3FHJPO BHBJO mSTUHMPCBMMZBOEUIFOBMTPJOUIF&VSPQFBO XIFSFTNBMMBUNVDITNBMMFSUIBOUIF3FHJPOT 6OJPOPGBMMHMPCBM'%*nPXTIBWFHPOFUP TIBSFPGJO&6USBEFXPVMETVHHFTU UIF#BMUJD4FB3FHJPO"TJOUIFQBTU UIF#BMUJD4FB

Figure 12: Investment activity, Baltic Sea Region



'+$),3 ++1 )

'+$),3  4# .*,2'+% 2#. %#

 103 ." /0,!(

+3 ."/0,!(

,*#/0'! '+2#/0*#+0

   

,1.!#     10&,./ + )4/'/ 0 0#,$0&##%',+#-,.0 

32 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

3FHJPOIBTSFBDUFEFWFONPSFTUSPOHMZUIBOPUIFS TUPDLUIFNPTUTJODF'JOMBOEIBTCFFOUIFNPTU XPSMESFHJPOTBT'%*nPXTJODSFBTFEɨFSFJTOP TVDDFTTGVMBNPOHUIFXFTUFSODPVOUSJFTJOUIF3F HMPCBMEBUBBWBJMBCMFZFUGPS CVUUIFOBUJPOBM HJPO CVUMPTUQPTJUJPOTJODF%FONBSLXBTUIF EBUBGSPNUIF#BMUJD4FB3FHJPOJTDMFBSMZQPTJUJWF  POMZDPVOUSZUIBUMPTUXPSMENBSLFUTIBSFJOJOXBSE JOEJDBUJOHUIBUUIFSFTVMUTXJMMCFFWFOTUSPOHFSUIBO '%*TUPDL ESPQQJOHCZTJODF JOUIFZFBSCFGPSF%FTQJUFUIFQPTJUJWFUSFOEJO JOnPXT XBTUIFmSTUZFBSJOXIJDIUIFTIBSFPG %PNFTUJDHSPTTmYFEDBQJUBMJOWFTUNFOUJTBOJNQPSUBOU UIF#BMUJD4FB3FHJPOJOUIFHMPCBMJOXBSE'%*TUPDL  JOEJDBUPSPGUIFBUUSBDUJWFOFTTPGBMPDBUJPOGPSBMMDPN JFUIFBDDVNVMBUFEJOnPXTBOESFUBJOFEQSPm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ɨF*CFSJBO 1FOJOTVMB  BOE$FOUSBM&VSPQF  IBWF *OUIFMBTUUXPZFBST UIF#BMUJD4FB3FHJPOIBT TPGBSBUUSBDUFEMFTT'%*UIBOUIF#BMUJD4FB3FHJPO CFDPNFTJHOJmDBOUMZTUSPOHFSJOEPNFTUJDHSPTTmYFE ɨF#3*$DPVOUSJFTBOE"4&"/BSFTUJMMMFTTQSPNJ DBQJUBMJOWFTUNFOUɨFJOWFTUNFOUSBUFIBTOPXJO OFOUIPTUTGPS'%* XJUIBOEPGHMPCBM DSFBTFETJODFBOEJTFYQFDUFEUPSFBDIPG '%*TUPDLTSFTQFDUJWFMZ0WFSUIFMBTUm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

Figure 13: Domestic investment, Baltic Sea Region

$"%% !(%& !& !"

















          

"'$  &&"& "!#"$&

STATE OF THE REGION REPORT 2007 33 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

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ɨF&6BOE/"'5" SFHJPOTXJUIB GSPNUIF#BMUJD4FB3FHJPODPOUJOVFUPQMBZBO IJHIFSDBQJUBMTUPDL BSFBUTJHOJmDBOUMZMPXFSSBUFT JNQPSUBOUSPMF FWFOUIPVHIDPNQBOJFTGSPNPUIFS QBSUTPGUIFXPSME JODMVEJOHFNFSHJOHFDPOPNJFT  8JUIJOUIF#BMUJD4FB3FHJPO -BUWJBBOE&TUPOJBSFH IBWFCFDPNFNPSFBDUJWFSFDFOUMZɨFTIBSFPG JTUFSUIFIJHIFTUJOWFTUNFOUSBUFT1PMBOEBOE3VTTJB HMPCBM'%*PXOFECZJOTUJUVUJPOTGSPNUIF#BMUJD4FB BSFFYQFDUJOHUIFTUSPOHFTUJODSFBTFJOJOWFTUNFOUTJO 3FHJPOSFBDIFEJO EPXOGSPNBIJHIPG CPUIIBWFSFMBUJWFMZMPXJOWFTUNFOUSBUFTHJWFO JOɨFWBMVFPGUIFPVUXBSE'%*IFMEJT UIFJSTUBHFPGEFWFMPQNFOU3VTTJB JOQBSUJDVMBS IBT FRVBMUPPGUIF#BMUJD4FB3FHJPOT(%1 BCPVU GPSZFBSTOPUJOWFTUFEFOPVHIUPLFFQVQJUTDBQJUBM QPJOUTMPXFSUIBOJO TUPDLBOEDPNQBOJFTOFFEUPJOWFTUJOPSEFSUPNFFU HSPXJOHEFNBOE4XFEFOIBTTFFOBTPMJEJODSFBTFPG "NPOHXPSMESFHJPOT UIF&VSPQFBO6OJPOSFNBJOT JOWFTUNFOUSBUFTJOUIFMBTUGFXZFBSTCVUSFNBJOTBU UIFNPTUJNQPSUBOUTPVSDFPG'%* DPOUSPMMJOHBCPVU UIFCPUUPNPG#BMUJD4FB3FHJPODPVOUSJFTJOUFSNT PGUIFHMPCBM'%*TUPDL"TJHOJmDBOUQBSUPG PGJOWFTUNFOUSBUFT*DFMBOEFYQFDUTUIFMBSHFTUESPQ UIFTFJOWFTUNFOUTBSFDSPTTCPSEFSJOWFTUNFOUTXJUIJO JOUIFJOWFTUNFOUSBUFBTBMBSHFGPSFJHOJOWFTUNFOU UIF&VSPQFBO6OJPOɨF/"'5"DPVOUSJFTGPMMPX JOUIFBMVNJOVNTFDUPSJTDPNJOHUPBOFOEEFTQJUF XJUIBCPVUPGUIFHMPCBM'%*TUPDL EFTQJUF UIJTESPQUIFDPVOUSZSFHJTUFSTBSFMBUJWFMZIJHIJOWFTU HSBEVBMMZMPTJOHQPTJUJPOPWFSUIFMBTUGFXZFBST NFOUSBUFHJWFOJUTTUBHFPGEFWFMPQNFOU 8JUIJO&VSPQF UIF#SJUJTI*TMFTBSFBIFBEPGUIF #BMUJD4FB3FHJPOBOESFNBJOUIFNPTUJNQPSUBOU 0VUXBSEGPSFJHOEJSFDUJOWFTUNFOU '%* JTBOJNQPS TVCSFHJPOJOUFSNTPGPVUXBSE'%*XJUIPGUIF UBOUJOEJDBUPSGPSUIFBCJMJUZPGMPDBMDPNQBOJFTUP HMPCBMTUPDLɨF*CFSJBO1FOJOTVMB DPOUSPMMJOH

Figure 14: FDI position, Baltic Sea Region

-/*#+!/)$10'!/$ 

213!/#  01-")



,3!/#01-")

   

-2/"$    !21'-/0!,!*40(0 1!1$-%1'$$&(-,$.-/1 

34 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

PGUIFHMPCBM'%*TUPDL BOE$FOUSBM&VSPQF   BMTPDPOUSJCVUFTUPBMPDBUJPOTLOPXMFEHFTUPDLBOE BSFTUJMMMFTTBDUJWFJOWFTUPSTBCSPBE EFTQJUFHBJOJOHJO UIVTJODSFBTFTUIFPQQPSUVOJUJFTGPSMPDBMDPNQBOJFT JNQPSUBODFPWFSUIFMBTUmWFZFBSTɨFTBNFJTUSVF UPGVSUIFSJNQSPWFUIFJSQSPEVDUJWJUZ GPSUIF#3*$DPVOUSJFT  BOE"4&"/   UIBUCPUISFHJTUFSFETJHOJmDBOUHSPXUIGSPNMPX *OQBUFOUJOHUIF#BMUJD4FB3FHJPOSFNBJOTUPCFPOF JOJUJBMMFWFMT PGUIFNPTUJNQPSUBOUJOOPWBUJPOIVCTJOUIFHMPCBM FDPOPNZ*O UIF#BMUJD4FB3FHJPOBDDPVOUFE 8JUIJOUIF#BMUJD4FB3FHJPO /PSXFHJBOJOTUJUV GPSPGQBUFOUTmMFEJOUIF64GSPNOPO64 UJPOT EPNJOBUFECZUIF1FUSPMFVN'VOE PXO JOTUJUVUJPOTɨJTQVUTJUUIJOUIFDPVOUSZSBOLJOH  GPSFJHODPNQBOJFTXJUIBWBMVFFRVJWBMFOUUP CFIJOE+BQBO (FSNBOZ 5BJXBO BOE4PVUI,PSFB PG/PSXFHJBO(%1*DFMBOEBOE4XFEFOGPMMPXBU 0WFSUIFMBTUGFXZFBST UIF#BMUJD4FB3FHJPOIBT  BOEPGUIFJSSFTQFDUJWF(%1"NPOHUIF IPXFWFS ESPQQFEGSPNBMFWFMPG1BUFOU GPSNFS$PNNVOJTUDPVOUSJFT 3VTTJBBOE&TUPOJB JOHJOUFOTJUZ JFQBUFOUTQFSDBQJUB IBEESPQQFE IBWFUIFNPTUJNQPSUBOUGPSFJHO'%*TUPDLBUBSPVOE TMJHIUMZGSPNUPCVUIBTOPXSFHBJOFEJUT PGOBUJPOBM(%1ɨFTFUXPDPVOUSJFTBOE MFWFM *DFMBOEIBWFFYQFSJFODFEBTUSPOH‰JOUIF*DFMBOEJD DBTFESBNBUJD‰JODSFBTFPGPVUXBSE'%*PWFSUIFMBTU "NPOHXPSMESFHJPOT /"'5"SFHJTUFSTUIFIJHIFTU EFDBEF/PSXBZBOE'JOMBOEXFSFUIFPOMZDPVOUSJFT TIBSFBOEJOUFOTJUZPG64QBUFOUJOH BMUIPVHIUIF64 UIBUTBXUIFWBMVFPGPVUXBSE'%*TISJOLSFMBUJWFUP IPNFCJBTDMFBSMZDPOUSJCVUFTUPUIJTQPTJUJPO1BUFOU UIFJS(%1 JOHJOUFOTJUZPGUIF/"'5"SFHJPOIBTCFFOnBUPWFS UIFMBTUGFXZFBSTɨFUPQUFODPVOUSJFTBDDPVOUGPS 1BUFOUJOHJTBOJNQPSUBOUJOEJDBUPSPGBDPVOUSZTJO PGBMMQBUFOUTmMFEJOUIF64CZOPO64JOTUJUV OPWBUJWFDBQBDJUZ CPUIGSPNDPNQBOJFTBOESFTFBSDI UJPOTɨF"TJBODPVOUSJFT 4PVUI,PSFB 5BJXBO CVU JOTUJUVUJPOT8FVTFQBUFOUTJOUIF6OJUFE4UBUFT CF BMTP+BQBOGSPNBOBMSFBEZIJHIMFWFM IBWFJODSFBTFE DBVTFWJSUVBMMZBMMFDPOPNJDBMMZTJHOJmDBOUJOWFOUJPOT UIFJSTIBSFBOEQBUFOUJOHJOUFOTJUZ4JOHBQPSF "VT BSFQBUFOUFEUIFSFGPSVTFJOUIF64NBSLFU8IJMF USBMJB )POH,POH BOE/FX;FBMBOEBSFPUIFSOPO JOOPWBUJPOPDDVSTJONBOZGPSNTUIBUEPOPUJOWPMWF &VSPQFBODPVOUSJFTUIBUIBWFJNQSPWFEUIFJSQPTJUJPO QBUFOUT NPTUSFTFBSDIFSTDPOTJEFSQBUFOUTBVTFGVM CVUBSFTUJMMBUBNPSFNPEFTUBCTPMVUFMFWFM0VUTJEF JOEJDBUPSGPSJOOPWBUJPONPSFHFOFSBMMZ1BUFOUJOH PGUIF#BMUJD4FB3FHJPO NPTU&VSPQFBODPVOUSJFT

Figure 15: Knowledge creation, leading countries

$"4&7*2764*51.00.32.2-&'.7&276 



$2.7*)"7&7*6   &4&2

 #&.9&2

 

 65&*0 "9.7;*50&2) .20&2) "9*)*2   "387-35*& *51&2: &2&)&  *21&5/  8675.& ".2,&435* &07.("*&!*,.32 (*0&2) 5&2(* 8675&0.&   359&: $ 5*0&2) -.2&   7&0: *9%*&0&2) 32,32, !866.& "4&.2 2).&       5397-3+4&7*2764*5(&4.7&!   "385(*$" #  &87-356&2&0:6.6 "7&7*3+7-*!*,.32!*4357 

STATE OF THE REGION REPORT 2007 35 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

XJUIBGFXFYDFQUJPOTMJLF"VTUSJBBOE*SFMBOEIBWFMPTU OBMTCVUBSFHFOFSBMMZBMTPBUTPMJEMFWFMT&YQPSUQPTJ QPTJUJPOɨJTJTBMTPUSVFGPS4XJU[FSMBOE TUJMMUIFUI UJPOTBSFPWFSBMMTUBCMFXJUIBRVJDLMZHSPXJOHSPMFPG NPTUQBUFOUJOHJOUFOTJWFDPVOUSZPVUTJEFPGUIF64 TFSWJDFFYQPSUT*OWFTUNFOUBDUJWJUZJTVQJOUIFTIPSU UFSNCVUTUJMMPOBOMPOHUFSNEPXOXBSEUSFOEɨF 8JUIJOUIF#BMUJD4FB3FHJPO 4XFEFOBDDPVOUTGPS 3FHJPOJTBOJNQPSUBOUTPVSDFPG'%* CVUIBTPWFS PGBMMQBUFOUTSFHJTUFSFEJOUIF64MBTUZFBS GPM UJNFMPTUQPTJUJPOBTBO'%*EFTUJOBUJPO'%*JOnPXT MPXFECZ/PSUIFSO(FSNBOZ  'JOMBOE   BSFTUBSUJOHUPBQQSPBDIUIFSFMBUJWFMZMPXMFWFMPG BOE%FONBSL  'JOMBOESFHJTUFSTUIFIJHIFTU EPNFTUJDJOWFTUNFOUBDUJWJUZ,OPXMFEHFDSFBUJPO QBUFOUJOHJOUFOTJUZ GPMMPXFECZ4XFEFOBOE SFNBJOTTPMJE#VUXIJMFJUMPPLTCFUUFSUIBOJONBOZ (FSNBOZ%FNBSL *DFMBOE BOE/PSXBZBSFDMPTF PUIFSQBSUTPG&VSPQF JUJTTJHOJmDBOUMZMFTTEZOBNJD UPUIF#BMUJD4FB3FHJPOBWFSBHF XIJMFUIFPUIFS UIBOJOPUIFSQBSUTPGUIFXPSME FTQFDJBMMZ"TJB DPVOUSJFTIBWFWFSZMPXMFWFMTPGQBUFOUJOHJOUFOTJUZ *O BMMDPVOUSJFTJOUIF3FHJPOFYDFQU&TUPOJB ɨFVOEFSMZJOHUIFNFPGUIFDIBOHFTJOIBT JODSFBTFEUIFJS64QBUFOUDPVOUBOEJOUFOTJUZ'JO CFFOUIBUUIF3FHJPOJTFOUFSJOHUIFMBUFSTUBHFTPGB MBOE GPMMPXFECZ%FONBSL 4XFEFO BOE(FSNBOZ  DMBTTJDCVTJOFTTDZDMFVQTXJOH-BCPSNPCJMJ[BUJPO SFHJTUFSFEUIFTUSPOHFTUJNQSPWFNFOUT JTVQNPSFUIBOMBCPSQSPEVDUJWJUZ$ZDMJDBMJOEJDB UPSTPGDPNQFUJUJWFOFTTMJLFJOWFTUNFOUBOE'%*BSF Overall assessment VQ XIJMFUIFQFSGPSNBODFJOBSFBTMFTTBĊFDUFECZ 8JUIPVUBEPVCU IBTCFFOBHPPEZFBSGPSUIF EPNFTUJDEFNBOEDPOEJUJPOT MJLFQBUFOUJOHBOE FDPOPNJFTPGUIF#BMUJD4FB3FHJPO BUSFOEUIBUJT FYQPSUT JTMFTTTUSPOH"TUIFCVTJOFTTDZDMFXJMMJOFWJ MJLFMZUPDBSSZUISPVHIGPS1SPTQFSJUZHSPXUI UBCMZTMPXEPXO UIF#BMUJD4FB3FHJPOXJMMOFFEUP IBTBDDFMFSBUFEBOEJTPWFSBMMPOBTPMJEQBUI FWFOJG TIPXJUTBCJMJUZUPBEKVTU UIFIJHITQFFEPGUIFMBTUZFBSXJMMCFIBSEUPTVTUBJO 'PSUIF/PSEJDDPVOUSJFT UIFDIBMMFOHFXJMMCF ɨF#BMUJD4FB3FHJPODPOUJOVFTUPCFOFmUGSPNB TVTUBJOJOHTPVOEmTDBMQPMJDJFTBOENJDSPFDPOPNJD TPMJEDPNCJOBUJPOPGTPMJEQSPEVDUJWJUZMFWFMTBOE SFGPSNTXIFOUIFQSFTTVSFGPSEFGFOTJWFTPDJBMBOE IJHIMBCPSNPCJMJ[BUJPOɨF/PSEJDDPVOUSJFTDPO MBCPSNBSLFUQPMJDJFTXJMMJODSFBTF(FSNBOZJTJO UJOVFUPHSPXUIFJSQSPEVDUJWJUZBUIJHIMFWFMTXIJMF BTJNJMBSQPTJUJPOCVUGBDFTBTJHOJmDBOUMZMFTTCF LFFQJOHMBCPSNPCJMJ[BUJPOVQɨF#BMUJDDPVOUSJFT OFWPMFOUTUBSUJOHQPTJUJPO'PSUIF#BMUJDDPVOUSJFT  IBWFDSFBUFEUIFDPOEJUJPOTGPSGBTUDBUDIVQHSPXUI  LFFQJOHPOUIFSJHIUTJEFPGUIFEJWJEFCFUXFFOGBTU FYQBOEJOHQSPEVDUJWJUZUISPVHIFDPOPNJDSFTUSVDUVS MPOHUFSNDBUDIVQHSPXUIBOETIPSUUFSNFDPOPNJD JOHXIJMFBMTPLFFQJOHMBCPSNPCJMJ[BUJPOVQBTXFMM JNCBMBODFTEVSJOHBOPWFSBMMTMPXEPXOXJMMCFIJHI (FSNBOZBOE1PMBOEDPOUJOVFUPTUSVHHMFXJUIMPX POUIFBHFOEBGPSFDPOPNJDQPMJDZ1PMBOEmSTUOFFET MBCPSVUJMJ[BUJPOCVUIBWFTFFOTPNFDZDMJDBMJNQSPWF UPSFMBVODIBOBDUJWFFDPOPNJDSFGPSNBHFOEBCFGPSF NFOUTSFDFOUMZ3VTTJBIBTCFOFmUFEGSPNTUSPOH UIFTFDPODFSOTBCPVUUIFHSPXUIQBUIXJMMDPNFUP PWFSBMMEFNBOEHSPXUIMBSHFMZESJWFOCZPJMSFWFOVFT UIFGPSFGSPOU3VTTJBGBDFTNVDINPSFGVOEBNFOUBM RVFTUJPOTBCPVUUIFFDPOPNJDHSPXUINPEFMoESJWFO *OUFSNFEJBUFJOEJDBUPSTPGDPNQFUJUJWFOFTT PGUFOB CZOBUVSBMSFTPVSDFTPSJODSFBTJOHMZEJWFSTJmFEBOE CFMMXFUIFSGPSUIJOHTUPDPNF TFOENPSFNJYFETJH ESJWFOCZLOPXMFEHFJUXBOUTUPQVSTVFBTBDPVOUSZ

36 STATE OF THE REGION REPORT 2007 2. The foundations of competiti- tThe Baltic Sea Region veness in the Baltic Sea Region continues to be among the most competitive regions in 1SPTQFSJUZBOEJOOPWBUJPOBSFVMUJNBUFMZESJWFOCZ UIFNJDSPFDPOPNJDDBQBDJUZQSFWBMFOUJOUIFMPDB the world economy UJPOTBDSPTTUIF#BMUJD4FB3FHJPOɨ JTTFDUJPOUSBDLT UIFNJDSPFDPOPNJDDBQBDJUZPGUIF#BMUJD4FB3FHJPO SFMBUJWFMZUPLFZQFFST BTXFMMBTPGJOEJWJEVBMDPVO tKey strengths are the Region’s USJFTBDSPTTUIF#BMUJD4FB*UBMTPMPPLTBUUIFCSPBEFS sophisticated companies, its DPOUFYUPGFDPOPNJDHFPHSBQIZ OBUVSBMSFTPVSDF XFBMUI BOEHPWFSOBODFUIBUTIBQFUIFFOWJSPONFOU infrastructure and skill base, JOXIJDINJDSPFDPOPNJDGPVOEBUJPOTBĊFDUUIFQFS its innovative capacity, and its GPSNBODFPGDPNQBOJFT openness for competition at $PNQFUJUJWFOFTTJTESJWFOCZGBDUPSTBUUXPCSPBE MFWFMTMFHBDZBOEHPWFSOBODFPOUIFPOFIBOE BOE equal terms for all companies NJDSPFDPOPNJDDPNQFUJUJWFOFTTPOUIFPUIFS On clusters and skills, two $PVOUSJFTGBDFBMFHBDZBOEHPWFSOBODFTUSVDUVSFUIBU t DSFBUFTUIFPQQPSUVOJUJFTGPSFOHBHJOHJOFDPOPNJD of the Region’s key assets, BDUJWJUZ-FHBDZSFGFSTUPGBDUPSTUIBUBSFFTTFOUJBMMZ conditions remain strong but HJWFOBOEDBOOPUCFDIBOHFEUISPVHIQPMJDZ0OF JNQPSUBOUFMFNFOUPGMFHBDZJTMPDBUJPOUIFBDDFTT can easily deteriorate if no UPPDFBOTBTBDPOEVJUGPSJOUFHSBUJOHJOUPUIFHMPCBM FDPOPNZ UIFOFJHICPSIPPEPGPUIFSDPVOUSJFT‰B action is taken QPJOUBMSFBEZEJTDVTTFEJO4FDUJPO"‰BOEUIF HFOFSBMHFPHSBQIJDQSPmMFPGUIFDPVOUSZɨ FPUIFS FMFNFOUJTUIFQSFTFODFPGOBUVSBMSFTPVSDFTɨF HPWFSOBODFTUSVDUVSFSFGFSTUPUIFCBTJDQPMJUJDBM MF HBM BOETPDJBMTUSVDUVSFTUIBUDPVOUSJFTIBWFDSFBUFE  PGUFOPWFSMPOHQFSJPETPGUJNFɨ FTFTUSVDUVSFTBSF UIFSFTVMUPGQPMJUJDBMDIPJDFTJOUIFCFTU CVUUIFZBSF BMTPIFBWJMZJOnVFODFECZNPSFCBTJDDIBSBDUFSJTUJDT PGTPDJFUJFT MJLFUIFJSDPNQPTJUJPOJOUFSNTPGFUIOJD PSSFMJHJPVTHSPVQTPSUIFHFOFSBMMFWFMPGUSVTUJO TPDJFUZ

$PVOUSJFTUIFODSFBUFNJDSPFDPOPNJDDPNQFUJUJWF OFTTCBTFEPOUIFRVBMJUZPGUIFJSCVTJOFTTFOWJSPO NFOUT UIFTPQIJTUJDBUJPOPGUIFJSDPNQBOJFT BOEUIF EFWFMPQNFOUPGUIFJSDMVTUFSTɨ FCVTJOFTTFOWJSPO NFOUDBQUVSFTBMMBTQFDUTBUBMPDBUJPOUIBUIBWFB EJSFDUJNQBDUPOUIFQSPEVDUJWJUZBOEJOOPWBUJWF DBQBDJUZPGDPNQBOJFTɨ FEJĊFSFOUEJNFOTJPOTPG UIFCVTJOFTTFOWJSPONFOUXPSLJOBIJHIMZJOUFS SFMBUFEXBZGPSFYBNQMFUIFCFOFmUTGSPNBTLJMMFE XPSLGPSDFBSFOPUmYFE CVUEFQFOEPOUIFDPOUFYU GPSDPNQFUJUJPOUIBUDPNQBOJFTGBDF&DPOPNJD QPMJDZOFFETUPJEFOUJGZBOEBEESFTTUIPTFGBDUPSTUIBU BSFUIFNPTUJNQPSUBOUCPUUMFOFDLTBUBHJWFOQPJOU

STATE OF THE REGION REPORT 2007 37 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

The Global Competitiveness Report *OUIJTBOBMZTJT XFESBXPOUIF(MPCBM$PNQFUJUJWFOFTT3FQPSU ($3 BOBO OVBMBTTFTTNFOUPGDPNQFUJUJWFOFTTBDSPTTNPSFUIBODPVOUSJFT*UJTCBTFEPO TUBUJTUJDBMEBUBDPMMFDUFEGSPNJOUFSOBUJPOBMPSHBOJ[BUJPOTBOEPOBTVSWFZPGNPSF UIBO CVTJOFTTFYFDVUJWFTBSPVOEUIFXPSME ɨF($3DBQUVSFTNJDSPFDPOPNJDDPNQFUJUJWFOFTTBMPOHEJNFOTJPOT  PODPNQBOZTPQIJTUJDBUJPOBOEPOCVTJOFTTFOWJSPONFOURVBMJUZɨFTDPSFT DPVOUSJFTHFUPOFBDIPGUIFTFEJNFOTJPOTBSFUIFOBHHSFHBUFEUPUIFMFWFMPG TVCJOEFYFTGPSDPNQBOZTPQIJTUJDBUJPOBOECVTJOFTTFOWJSPONFOURVBMJUZBOE UIFOUPPWFSBMMNJDSPFDPOPNJDDPNQFUJUJWFOFTT XJUIUIFXFJHIUTSFnFDUJOHUIF NFBTVSFEJNQBDUPGJOEJWJEVBMJOEJDBUPSTBOETVCJOEFYFTPO(%1QFSDBQJUB ɨF($3BMTPDPOUSPMTGPSUIFJNQBDUPGMFHBDZBOEHPWFSOBODF VTJOHB OVNCFSPGJOEJDBUPSTDBQUVSJOHOBUVSBMSFTPVSDFXFBMUI MPDBUJPO OFJHICPSIPPE BOEBDDFTT BOEQPMJUJDBMTUBCJMJUZ

JOUJNFɨFOFFEUPTFUBDPOTJTUFOUTFUPGQSJPSJUJFT PQQPSUVOJUJFTBOEDIBMMFOHFTPGBTQFDJmDFDPOPNJD BDSPTTNBOZJOUFSSFMBUFENJDSPFDPOPNJDQPMJDZBSFBT MPDBUJPOJTBOJNQPSUBOUFMFNFOUPGBOBDUJPOPSJ UIBUBMMQSPWJEFQPUFOUJBMCFOFmUTDSFBUFTBWFSZEJG FOUFEDPNQFUJUJWFOFTTBOBMZTJT GFSFOUQPMJUJDBMDIBMMFOHFDPNQBSFEUPTFUUJOHNBDSP FDPOPNJDPSHPWFSOBODFQPMJDJFT XIFSFUIFDIPJDFJT ɨF#BMUJD4FB3FHJPOGBDFTBHFPHSBQIJDQPTJUJPO CFUXFFOCBTJDQPMJDJFTUIBUBSFMBSHFMZHPPEPSCBE  UIBUJONBOZXBZTQPTFTTJHOJmDBOUDIBMMFOHFT"T JOEFQFOEFOUPGUIFTQFDJmDDJSDVNTUBODFT XBTEJTDVTTFEJONPSFEFUBJMJOMBTUZFBST3FQPSU UIF 3FHJPOJTMPDBUFEBUUIFQFSJQIFSZPGUIF&VSPQFBO ɨJT3FQPSUGPDVTFTPOUIFNJDSPFDPOPNJDGPVO FDPOPNZ BMBSHFHFPHSBQIJDBSFBUIBUIBTCFFOMFTT EBUJPOTPGDPNQFUJUJWFOFTT BOBSFBXIFSFDVSSFOU FDPOPNJDBMMZEZOBNJDUIBOPUIFSQBSUTPGUIFXPSME DIPJDFToCZHPWFSONFOUCVUBMTPNBOZPUIFSBDUPST FDPOPNZJOSFDFOUEFDBEFTɨJTJTBDIBMMFOHF BT oIBWFUIFNPTUJNNFEJBUFJNQBDU#VUUIF3FQPSU EFTQJUFHMPCBMJ[BUJPO USBEFBOEJOWFTUNFOUnPXT BMTPXBOUTUPHJWFBCSPBETFOTFPGXIFSFUIF3F DPOUJOVFUPCFNVDIIJHIFSXJUIFDPOPNJFTUIBUBSF HJPOTUBSUTGSPN JOUFSNTPGMFHBDZBOEHPWFSOBODF NPSFQSPYJNBUF"OEUIF3FHJPOIBTBSFMBUJWFMZMPX TUSVDUVSFT QPQVMBUJPOEFOTJUZ XJUIGFXNFUSPQPMJUBODFOUFST UIBUIBWF&VSPQFBOPSFWFOHMPCBMSFBDIɨJTJTBMTP ɨFSFNBJOEFSPGUIJTDIBQUFSJTPSHBOJ[FEJOUISFF BDIBMMFOHFBTFTQFDJBMMZJOUIFDSFBUJPOPGOFXJEFBT  QBSUT'JSTU XFEJTDVTTUIFMFHBDZBOEHPWFSOBODF UIFSFTFFNUPCFBEWBOUBHFTGPSMBSHFNFUSPQPMJUBOSF TUSVDUVSFBDSPTTUIF#BMUJD4FB3FHJPOUIBUQSPWJEFT HJPOTUIBUDBODPNCJOFDSJUJDBMNBTTJOTQFDJmDBSFBT UIFDPOUFYUGPSFDPOPNJDBDUJWJUZ4FDPOE XFBOBMZ[F BOEWFSZEJĊFSFOUBDUJWJUJFTBMMJOPOFMPDBUJPO UIFNJDSPFDPOPNJDDPNQFUJUJWFOFTTPGUIF3FHJPO BOEJOEJWJEVBMDPVOUSJFTɨJSE XFUBLFBDMPTFSMPPL ɨF#BMUJD4FB3FHJPOIBTPUIFSHFPHSBQIJDGFBUVSFT BUTLJMMTBOEDMVTUFST UXPBSFBTPGNJDSPFDPOPNJD UIBUXPSLJOBQPTJUJWFEJSFDUJPO"MBSHFTIBSFPGUIF DPNQFUJUJWFOFTTUIBUBSFPGQBSUJDVMBSJOUFSFTUUPUIF QPQVMBUJPOMJWFTDMPTFUPUIFDPBTUBOEUIVTIBTUIF 3FHJPO QPUFOUJBMUPVTFNBSJUJNFUSBEFUPDPOOFDUXJUIUIF HMPCBMFDPOPNZɨJTIBTCFFOBOJNQPSUBOUGBDUPS Legacy and governance IJTUPSJDBMMZBOEDPOUSJCVUFEUPNBOZFDPOPNJDMJOL (FPHSBQIJDMPDBUJPOIBTBOJNQPSUBOUJOnVFODFPO BHFTUIBUUIJT3FHJPOIBTUPPUIFSQBSUTPGUIFXPSME  FDPOPNJDQFSGPSNBODF"OJNQPSUBOUTFHNFOUPG BOEUPUIFTJHOJmDBOUQPTJUJPOJUIBTJONBSJUJNF UIFBDBEFNJDMJUFSBUVSFPOHSPXUIBSHVFTUIBUJOUIF MPHJTUJDBMTFSWJDFT"OEUIF#BMUJD4FB3FHJPOJTB MPOHSVOHFPHSBQIZEFUFSNJOFTUPBMBSHFEFHSFFUIF OFJHICPSIPPEPGNPTUMZWFSZQSPTQFSPVTDPVOUSJFT MFWFMPGQSPTQFSJUZUIBUBMPDBUJPODBOSFBDI8IJMF UIBUDSFBUFUIFQPUFOUJBMGPSBQPTJUJWFEZOBNJDPG UIJTWJFXJTDIBMMFOHFECZPUIFST SFnFDUJOHPOUIF NVUVBMMZCFOFmDJBMUSBEFBOEJOWFTUNFOUɨJTIBT

38 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Table 4: Legacy and Governance: Selected countries

BCI Rank Context and Endowment Rank Political system Accesibility Neighborhood Natural resources

United States 1 8 Germany 2 4 Finland 3 6 +++ Sweden 4 7 ++ Denmark 5 2 + ++ + Switzerland 6 9 +++ ++ Netherlands 7 3 + ++ + ++ Austria 8 10 + Singapore 9 17 ++ Japan 10 14 United Kingdom 11 13 ++ Hong Kong SAR 12 15 ++ ++ - Norway 13 1 ++ +++ Canada 14 5 + +++ ++ Belgium 15 11 + + France 16 18 + Australia 17 12 ++ Korea 18 19 +++ Israel 19 22 Malaysia 20 21 Estonia 24 23 Lithuania 34 29 Latvia 43 38 Poland 44 40 Russia 55 68 - -

Source: Global Competitiveness Report 2007-08 State of the Region Report 2007

CFFOBDSVDJBMGBDUPSGPSUIPTFQBSUTPGUIF3FHJPO TPNFPGUIFNPTUJNQPSUBOUPJMBOEHBTSFTFSWFTJO UIBUCFDPNFBDDFTTJCMFBHBJOBGUFSUIFGBMMPGUIF UIFXPSME3VTTJBTSFTFSWFTBSFNPTUMZMPDBUFEPVUTJEF $PNNVOJTUSFHJNFTBSPVOE UIFOPSUIXFTUCVUUIFSFBSFJNQPSUBOUPQQPSUVOJUJFT JOUIF"SDUJD0DFBO&TUPOJBIBT POBNVDITNBMMFS 0WFSBMM GPSUIF#BMUJD4FB3FHJPOUIFHFPHSBQIJD TDBMF PJMUBSTUIBUBSFCFDPNJOHNPSFFDPOPNJ MPDBUJPOIBTOPUCFFOUIFESBHPOFDPOPNJDQFS DBMMZBUUSBDUJWFBTPJMQSJDFTJODSFBTF4XFEFOIBT GPSNBODFBTDPVMEIBWFCFFOFYQFDUFE#VUGPSUIJT TJHOJmDBOUEFQPTJUTPGNFUBMT BOBTTFUUIBUIBTCFFO QPTJUJWFCBMBODFUPSFNBJOJOQMBDF UIF3FHJPOOFFET WFSZJNQPSUBOUGPSUIFIJTUPSJDBMEFWFMPQNFOUPGJUT UPXPSLIBSEFSBOECFNPSFQSPBDUJWFJOPWFSDPNJOH JOEVTUSZBOEIBTSJTFOJOWJTJCJMJUZNPSFSFDFOUMZBT CBSSJFSTXJUIJOUIF3FHJPOɨJTXJMMSFEVDFUIFDPTUT DPNNPEJUZQSJDFTIBWFJODSFBTFE0UIFSSFTPVSDFT  PGMPXQPQVMBUJPOEFOTJUZBOENPCJMJ[FUIFCFOFmUT MJLFMBSHFGPSFTUTJO'JOMBOE 4XFEFO BOE-BUWJB UIF PGBQSPTQFSPVTOFJHICPSIPPE BDDFTTUPSJDImTIJOHHSPVOETGPS*DFMBOE /PSXBZ  BOE%FONBSL BOEUIFBWBJMBCJMJUZPGIZESPQPXFSJO /BUVSBMSFTPVSDFTDBOQSPWJEFEJSFDUFDPOPNJDCFOFmUT *DFMBOE /PSXBZ BOE4XFEFO IBWFCFFOCFOFmDJBMBT UISPVHIUIFXFBMUIUIFZFNCPEZ#VUUIFZDBOFBTJMZ XFMMBOETIBQFEUIFFDPOPNJDTQFDJBMJ[BUJPOPGUIFTF IBWFFWFOIJHIFSJOEJSFDUDPTUTCZEJTUPSUJOHFDPOPN DPVOUSJFT JDBOEQPMJUJDBMTUSVDUVSFTɨFBDBEFNJDMJUFSBUVSFIBT UFOEFEUPTFFOBUVSBMSFTPVSDFTPWFSBMMBTMFTTDSJUJDBM ɨF#BMUJD4FB3FHJPOIBTCFFOBCMFUPUBLFBEWBO UIBOPUIFSGBDUPSTUPFYQMBJOMPOHUFSNQSPTQFSJUZ  UBHFPGJUTOBUVSBMSFTPVSDFT MBSHFMZBWPJEJOHUIF BOEJUIBTGPSNBOZDPVOUSJFTGPVOEUIFEZOBNJD QJUGBMMTPGOFHBUJWFEZOBNJDFĊFDUTɨJTJTQBSUJDV OFHBUJWFFĊFDUTPGOBUVSBMSFTPVSDFTUPCFTUSPOHFS MBSMZUIFDBTFGPSUIFSFTPVSDFTPUIFSUIBOPJMBOEHBT UIBOUIFTUBUJDQPTJUJWFFĊFDUT"OFĊFDUJWFDPNQFUJ ɨFTFSFTPVSDFTIBWFCFFOJNQPSUBOUFOPVHIUPIBWF UJWFOFTTBOBMZTJTOFFETUPDBQUVSFUIFJODJEFODFPG BNFBOJOHGVMJNQBDUPOFDPOPNJDEFWFMPQNFOU#VU CPUIGPSDFT UIFZIBWFCFFOFYQMPJUFEJOBDPNQFUJUJWFFOWJSPO NFOU XIFSFUIFHPWFSONFOUQSPWJEFEBDPOUFYUJO ɨF#BMUJD4FB3FHJPOJTIPNFUPBOVNCFSPGWBMV XIJDIOPJOEJWJEVBMDPNQBOZIBEDPOUSPMPWFSUIF BCMFOBUVSBMSFTPVSDFT/PSXBZBOE3VTTJBDPOUSPM SFTPVSDFT"HPPEFYBNQMFJT*DFMBOEJDmTIJOH XIFSF

STATE OF THE REGION REPORT 2007 39 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

UIFSFHVMBUPSZGSBNFXPSLBMMPXFENPSFFċDJFOU IBWFNBEFUIFQVCMJDTFDUPSUIFEPNJOBOUBDUPS DPNQBOJFTUPHBJONBSLFUTIBSFCVUBMTPLFQUSJWBMSZ JOUIFFDPOPNZ BUFOEFODZUIBUSFDFOUQPMJDZ BUBIJHIMFWFM DIPJDFTIBWFGVSUIFSFYBDFSCBUFE"OEUIFXFBMUI DSFBUFEIBTJODSFBTFEUIFJODFOUJWFTUPFOHBHFJO 0JMBOEHBTSFTPVSDFTBSFNPSFDPNQMFYBOEHFOFS DPSSVQUJPOBOEPUIFSJMMFHBMBDUJWJUJFT BOEDSFBUFE BMMZDPOTJEFSFEUPCFNPSFQSPOFUPIBWFOFHBUJWF BOBUNPTQIFSFPGEFBMNBLJOHBOEBTTFUUSBEJOH  EZOBNJDSFQFSDVTTJPOTPODPNQFUJUJWFOFTT SBUIFSUIBOBTTFUDSFBUJPO

t /PSXBZIBTBSHVBCMZCFFOPOFPGUIFNPTUTVD 0WFSBMM UIF#BMUJD4FB3FHJPOIBTCFOFmUFEGSPNJUT DFTTGVMDPVOUSJFTJOUIFXPSMEJOFYQMPJUJOHJUT OBUVSBMSFTPVSDFT'PS3VTTJB NBLJOHTVSFUIBUUIF OBUVSBMSFTPVSDFT CVJMEJOHBTJHOJmDBOUDMVTUFS OBUVSBMSFTPVSDFXFBMUICFDPNFTBNPUPSSBUIFSUIBO BSPVOEPJMBOEHBTSFMBUFETFSWJDFT BOELFFQJOH BCBSSJFSUPXBSETIJHIFSDPNQFUJUJWFOFTTJTPOFPGUIF UIFOFHBUJWFJNQBDUPOFDPOPNJDTUSVDUVSFTBOE DFOUSBMDIBMMFOHFTGPSJUTFDPOPNJDQPMJDZ QVCMJDJOTUJUVUJPOTBUBMPXMFWFMɨJTIBTCFFO QPTTJCMFEVFUPTUSPOHFYJTUJOHJOTUJUVUJPOT BO (PWFSOBODFJOUFSNTPGUIFTUBCJMJUZBOEFĊFDUJWF BMSFBEZXFMMEFWFMPQFECVTJOFTTFOWJSPONFOU BOE OFTTPGUIFQPMJUJDBMBOEMFHBMTZTUFNIBTCFDPNFBO BQVCMJDDPOTFOTVTUPTFQBSBUFUIFPJMTFDUPSGSPN JODSFBTJOHGPDVTPGSFTFBSDIɨFNBKPSJUZPGBDB UIFSFTUPGUIFFDPOPNZ4IPVMEUIJTDPOTFOTVT EFNJDSFTFBSDIOPXBSHVFTUIBUHPWFSOBODF BOEUIF XFBLFO XIJDIJTNPSFUIBOBUIFPSFUJDBMQPT TPDBMMFEAEFFQGBDUPSTUIBUJOnVFODFJU MJLFDPMPOJBM TJCJMJUZ JUDPVMEESBNBUJDBMMZJODSFBTFUIFOFHBUJWF IFSJUBHF BSFUIFNPTUJNQPSUBOUGBDUPSTUPFYQMBJO JNQBDUPO/PSXFHJBODPNQFUJUJWFOFTT MPOHUFSNEJĊFSFODFJOQSPTQFSJUZBDSPTTDPVOUSJFT (PWFSOBODFBOEAEFFQGBDUPSTEPNBUUFSBOEUIFJS t 3VTTJBIBTOPUIBEUIFCFOFmUPGBOZPGUIFUISFF JNQBDUIBTUPCFVOEFSTUPPE FWFOJGUIFZEPOPUQSF GBDUPSTUIBUFOBCMFE/PSXBZUPTVDDFFE0JM EFUFSNJOFFDPOPNJDPVUDPNFTJOJOEJWJEVBMDPVOUSJFT SFWFOVFTIBWFGVFMMFEUIFTUSPOHSFTVSHFODFPGUIF 3VTTJBOFDPOPNZTJODFUIFDSJTJT4PVOE ɨF#BMUJD4FB3FHJPOIBTBUSBEJUJPOPGSFDFJWJOH NBDSPFDPOPNJDQPMJDJFTIBWFLFQUJOnBUJPO WFSZIJHINBSLTGPSHPPEHPWFSOBODFɨF/PSEJD BSZQSFTTVSFBOE%VUDI%JTFBTFFĊFDUT VQXBSE DPVOUSJFTSFHVMBSMZSBOLPOUIFUPQPGJOUFSOBUJPOBM QSFTTVSFPOUIFSFBMFYDIBOHFSBUFEVFUPDBQJUBM BTTFTTNFOUTPGUIFRVBMJUZPGQVCMJDJOTUJUVUJPOTBOE JOnPXTGSPNPJMSFWFOVFTUIBUDSPXEPVUOPOPJM UIFOBUVSFPGUIFQPMJUJDBMQSPDFTT1BSUPGUIFFYQMB FYQPSUT BUCBZ#VUUIFOBUVSBMSFTPVSDFTSFWFOVFT OBUJPOJTUIFIPNPHFOFJUZPGUIFJSTPDJFUJFTBMPOH

Figure 16: Governance, Baltic Sea Region

20%-'2(0%+!2)4%2.+%!$)-'#.3-206'+."!++6

)'( .-20.+.& .003/2).-

.4%0-,%-2 &&%#2)4%-%11

3+%.&!5

.)#%!-$ ##.3-2!")+)26

%'3+!2.06 3!+)26

.+)2)#!+2!")+)26 %$)3,

      

.30#% .0+$!-* !32(.01!-!+61)1 2!2%.&2(%%').-%/.02 

40 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

FUIOJDBOESFMJHJPVTMJOFTɨJTIBTDSFBUFEIJHIMFWFMT 8JUIJOUIF#BMUJD4FB3FHJPO *DFMBOEBOE'JOMBOE PGUSVTU XIJDIJOUVSONBEFJUQPTTJCMFUPDSFBUF HFUUIFCFTUSBOLTBDSPTTBMMBTQFDUTPGHPWFSOBODF IJHIMZTUBCMFJOTUJUVUJPOT ɨFZBSFDMPTFMZGPMMPXFECZ/PSXBZ XJUITPNF XFBLFSTQPUTJOSFHVMBUPSZRVBMJUZ %FONBSLBOE ɨBUNPTUPGUIFGPSNFS$PNNVOJTUDPVOUSJFTJOUIF 4XFEFO CPUIXJUIBXFBLFSTQPUPOQPMJUJDBMTUBCJM #BMUJD4FB3FHJPOXFSFBCMFUPNBLFRVJDLQSPHSFTTPO JUZ(FSNBOZSBOLTBCJUMPXFSPOBMMDBUFHPSJFT BOE HPWFSOBODFEFTQJUFNVDIXFBLFSJOJUJBMDPOEJUJPOTJT NVDIMPXFSPOQPMJUJDBMTUBCJMJUZ&TUPOJBGPMMPXTBU POFUIF3FHJPOTSFNBSLBCMFTVDDFTTTUPSJFTPGUIFMBTU TPNFEJTUBODFBTUIFmSTUGPSNFS$PNNVOJTUDPVO ZFBST5SVTUMFWFMTXFSFNVDIMPXFSBOEJOTUJUV USZ XJUIBQBSUJDVMBSTUSFOHUIJOSFHVMBUPSZRVBMJUZ UJPOTFJUIFSXJUIPVUBOZUSBDLSFDPSE PSEJTDSFEJUFE BOEXFBLOFTTJOQPMJUJDBMTUBCJMJUZ-JUIVBOJB -BUWJB  ɨ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mDBOUDIBMMFOHFJOUIJTBSFB"TB DPVOUSJFT'PS3VTTJB IPXFWFS JUJTUIFSPPUDBVTF SFTVMU 3VTTJBJTGBDJOHUIFSFBMEBOHFSPGBOFHBUJWFDZ GPSNBOZPGJUTDPNQFUJUJWFOFTTQSPCMFNT$PQZJOH DMFXIFSFOBUVSBMSFTPVSDFXFBMUIXFBLFOTJOTUJUVUJPOT XFTUFSOHPWFSOBODFNPEFMTEJSFDUMZJTPGMJUUMFIFMQUP BOEXIFSFXFBLJOTUJUVUJPOTSFEVDFUIFPQQPSUVOJUJFT 3VTTJB CFDBVTFUIFDVSSFOUDPOEJUJPOTJOUIFDPVOUSZ UPEJWFSTJGZBXBZGSPNPJMEFQFOEFODZ BSFWFSZEJĊFSFOUGSPNUIPTFJO4XFEFOPS(FSNBOZ 'JOEJOHUIFSJHIUQBUIGPS3VTTJBUPTUBCJMJ[FJUTJOTUJ *OUIF8PSME#BOLTHPWFSOBODFBTTFTTNFOU UIF#BM UVUJPOTBOEUPNBLFUIFNMFTTSFMJBOUPOUIFQPXFSPG UJD4FB3FHJPOSBOLTBNPOHUIFUPQDPVOUSJFTJO JOEJWJEVBMTJTBDSVDJBMUBTL UIFXPSMEPOUIFDPOUSPMPGDPSSVQUJPO HPWFSONFOU FĊFDUJWFOFTT BOEUIFSVMFPGMBX0OSFHVMBUPSZRVBM Microeconomic competitiveness JUZBOEWPJDFBOEBDDPVOUBCJMJUZJUSBOLTBSPVOESBOL ɨF#BMUJD4FB3FHJPOSFNBJOTUPCFBNPOHUIF *UPOMZSBOLTMPXFSPOQPMJUJDBMTUBCJMJUZ MBSHFMZ NPTUDPNQFUJUJWFSFHJPOTJOUIFXPSMEɨF3FHJPO CFDBVTF(FSNBOZBOE UPBNVDITNBMMFSFYUFOU  JTEPJOHCFUUFSPOPWFSBMMDPNQFUJUJWFOFTT FTQFDJBMMZ %FONBSLBOE4XFEFO ESPQQFEPOUIBUJOEJDBUPSJO UIFTPQIJTUJDBUJPOPGDPNQBOJFT UIBOPOSVMFTBOE UIFMBTUGFXZFBST SFHVMBUJPOTBUUSBDUJWFGPSCVTJOFTTɨF3FHJPOTQPTJ

Figure 17: BCI rankings over time, Baltic Sea Region

$!

%#&$$- )%& )* * %$

+) $)) $, (%$#$*'+" *-

  (%%$%#  %#&* * ,$))  

      

%+("%"%#&* * ,$))&%(* +* %()$"-) ) **%*  %$&%(* 

STATE OF THE REGION REPORT 2007 41 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

UJPOIBTJNQSPWFETMJHIUMZUIJTZFBS CFOFmUJOHGSPN $PNQFUJUJWFOFTT*OEFY #$* UIF#BMUJD4FB3FHJPO BCFOJHOCVTJOFTTDZDMFFOWJSPONFOU CVUJUTPWFSBMM SBOLTUIJOUIFXPSME VODIBOHFEGSPNMBTUZFBS EZOBNJTNJOJNQSPWJOHDPNQFUJUJWFOFTTTJODF 0OUIF8PSME#BOLT%PJOH#VTJOFTTJOEFY BNFBT SFNBJOTCFMPXUIFHMPCBMBWFSBHF8BHFTDPOUJOVFUP VSFTQFDJmDBMMZGPDVTFEPOUIFSVMFT SFHVMBUJPOT BOE CFCSPBEMZJOMJOFXJUIDPNQFUJUJWFOFTTCVUQSFTTVSF JOTUJUVUJPOBMDPOEJUJPOTGPSCVTJOFTT UIF#BMUJD4FB JTCVJMEJOHVQGPSUIJTBEWBOUBHFUPXFBLFO 3FHJPOSBOLTTPNFXIBUMPXFSCVUTUJMMBNPOHUIFUPQ DPVOUSJFTJOUIFXPSME0O&DPOPNJD'SFFEPN  0OPWFSBMMNJDSPFDPOPNJDDPNQFUJUJWFOFTTBTNFBT BNFBTVSFGPDVTFEPOUIFBCTFODFPGHPWFSONFOUJO VSFEJOUIF(MPCBM$PNQFUJUJWFOFTT3FQPSUT#VTJOFTT UFSWFOUJPOTJOUPNBSLFUT UIF3FHJPOSBOLTTJNJMBSMZ

Figure 18: Doing business ranking, Baltic Sea Region

."+#!+&*$ 0.&*".. 4"(")"*/

-!&*$ -+.. +-!"-.

*#+- &*$ +*/- /. 

."+#!+&*$ 0.&*".. 

(+.&*$ 0.&*".. 

"$&./"-&*$,-+,"-/4 

"//&*$ -"!&/

/-/&*$ 0.&*".. 

-+/" /&*$&*1"./+-. 

"(&*$2&/%(& "*.".

4&*$/3". 

&-&*$*!#&-&*$ 

+0- "+-(!*'5 +&*$0.&*".. 0/%+-.*(4.&. //"+#/%""$&+*",+-/ 

Figure 19: Economic Freedom over time, Baltic Sea Region

 ! 



#

      

#   "#"  """  "

42 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

BTTUUIJTZFBS0ONFBTVSFTPGJOOPWBUJWFDBQBDJUZ Table 5: BSR BCI RANKINGS: UIF3FHJPO TVCOBUJPOBMSFHJPOTGSPNBSPVOEUIF Competitiveness profile, Baltic Sea Region #BMUJD4FBMFBEUIF&VSPQFBOSBOLJOH COMPANY OPERATIONS AND STRATEGY BSR Willingness to delegate authority 11 Capacity for innovation 13 0OUIFBCTPMVUF#VTJOFTT$PNQFUJUJWFOFTTTDPSF UIF Company spending on research and development 14 #BMUJD3FHJPOIBTJNQSPWFETJODF CVUTPIBWF Production process sophistication 14 Reliance on professional management 14 PUIFSDPVOUSJFTBUBTJNJMBSDPNQFUJUJWFOFTTMFWFM Extent of staff training 16 4JODF UIFmSTUZFBSGPSXIJDIDPNQBSBCMFEBUB Breadth of international markets 17 Extent of regional sales 17 JTBWBJMBCMF UIF3FHJPOIBTPWFSBMMCFFOMFTTEZOBNJD Nature of competitive advantage 19 Value chain breadth 19 JOVQHSBEJOHDPNQFUJUJWFOFTTUIBOUIFHMPCBMBWFSBHF Degree of customer orientation 20 PGDPVOUSJFT0OUIF%PJOH#VTJOFTTJOEFY DPNQB Control of international distribution 21 Extent of performance-based compensation 22 SBCMFEBUBFYJTUTPOMZTJODFɨF3FHJPOTTMJHIU Extent of marketing 24 MPTTPGQPTJUJPOPOUIJTJOEFYTJODFMBTUZFBSXBT Prevalence of foreign technology licensing 34 MBSHFMZEVFUPPUIFSDPVOUSJFTNBLJOHNPSFQSPHSFTT BUSINESS ENIVRONMENT QUALITY BSR POJNQSPWJOHCVTJOFTTSFHVMBUJPOT SBUIFSUIBOEVF A. Factor (input) conditions 1. Physical Infrastructure UPBOZBCTPMVUFEFUFSJPSBUJPOJOUIF#BMUJD4FB3F Quality of port infrastructure 16 HJPO0O&DPOPNJD'SFFEPN UIF3FHJPOHBJOFEPOF Internet users per 10,000 inhabitants 16 Railroad infrastructure 18 SBOLEFTQJUFESPQQJOHTMJHIUMZJOBCTPMVUFTDPSF0O Overall infrastructure quality 20 JOOPWBUJWFDBQBDJUZ SFHJPOTGSPNBSPVOEUIF#BMUJD Cellular Telephones per 100 inhabitants 20 Quality of electricity supply 21 4FB3FHJPOIBWFNPTUMZTUSFOHUIFOFEUIFJSQPTJUJPO Quality of telephone/fax infrastructure 22 PWFSUJNF Air transport infrastructure quality 24 2. Administrative Infrastructure Business costs of corruption 16 ɨF#BMUJD4FB3FHJPOSBOLTCFUUFSPODPNQBOZ Freedom from corruption 16 Efficiency of legal framework 19 TPQIJTUJDBUJPOUIBOPOCVTJOFTTFOWJSPONFOURVBMJUZ Laws relating to ICT 20 ɨJTQBUUFSOIBTCFFOQSFTFOUJOUIFFOUJSFQFSJPEGPS Judicial independence 21 Centralization of economic policymaking 22 XIJDIXFIBWFDPNQBSBCMFEBUB JFTJODFɨF Reliability of police services 23 3. Human Resources HBQCFDBNFQBSUJDVMBSMZWJTJCMFJOBOEIBTGBMMFO Cooperation in labor-employer relations 19 POMZNBSHJOBMMZTJODFUIFO*ODPNQBOZTPQIJTUJDB Quality of primary education 22 Quality of management schools 27 UJPO UIF3FHJPOJTQBSUJDVMBSMZTUSPOHJOUFSNTPG Quality of math and science education 30 NPEFSONBOBHFNFOUUFDIOJRVFTBOEBSFBTSFMBUFEUP 4. Technology Infrastructure Patents per capita 12 JOOPWBUJWFDBQBDJUZɨFXFBLFTUSBOLJOHJTPOUIFFY University/industry research collaboration 18 UFOUPGNBSLFUJOH CVUFWFOUIFSFUIF3FHJPOBDIJFWFT Quality of scientific research institutions 19 Availability of scientists and engineers 20 BSBOLKVTUXJUIJOUIFHMPCBM*OCVTJOFTTFOWJSPO 5. Capital Markets NFOURVBMJUZ UIF3FHJPOSBOLTTUSPOHFTUPONFBTVSFT Ease of access to loans 16 Venture capital availability 16 PGSFMBUFEBOETVQQPSUJOHJOEVTUSJFT UFDIOPMPHJDBM Financial market sophistication 24 Local equity market access 28 DBQBDJUZ EFNBOEDPOEJUJPOT BOEUIFMFWFMQMBZJOH mFMEGPSDPNQFUJUJPO8FBLOFTTFTBSFTFFOJOUIF B. Demand conditions Stringency of environmental regulations 12 JOUFOTJUZPGDPNQFUJUJPOBOEUIFFEVDBUJPOBMTZTUFN Government procurement of advanced technology products 18 *OUFSNTPGCVTJOFTTSVMFTBOESFHVMBUJPOT UIF3FHJPO Presence of demanding regulatory standards 18 IBTJUTSFMBUJWFTUSFOHUITJOUIFSFHVMBUJPOTBTTPDJBUFE Buyer sophistication 23 UPUSBEFBDSPTTCPSEFST UIFFOGPSDFNFOUPGDPOUSBDUT  C. Related and supporting industries Local availability of process machinery 12 UIFDMPTJOHPGCVTJOFTTFT BOEUIFSFHJTUSBUJPOPG Local availability of specialized research and training services 15 CVTJOFTTFTɨFNPTUTUSJLJOHSFMBUJWFXFBLOFTTJTUIF Local supplier quality 17 Local supplier quantity SFHVMBUJPOPGUIFMBCPSNBSLFU0UIFSXFBLOFTTFT 20 JODMVEFUIFSVMFTBOESFHVMBUJPOTPOQBZJOHUBYFT  D. Context for firm strategy and rivalry 1. Incentives EFBMJOHXJUIMJDFOTFT BOEUIFQSPUFDUJPOPGJOWFTUPST Efficacy of corporate boards 14 SJHIUT Favoritism in decisions of government officials 15 Intellectual property protection 21 Property rights 23 2. Competition Effectiveness of antitrust policy 20 Extent of market dominance by business groups 21 Intensity of local competition 22 Prevalence of trade barriers 27

Source: Global Competitiveness Report 2007-08 State of the Region Report 2007

STATE OF THE REGION REPORT 2007 43 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

The diamond of business environment quality .BOZUIJOHTBĊFDUUIFQSPEVDUJWJUZBOEJOOPWBUJWFDBQBDJUZUIBUDPNQBOJFTDBO SFBDIJOBHJWFOMPDBUJPOɨFEJBNPOE BDPODFQUVBMUPPMJOUSPEVDFECZ.JDIBFM 1PSUFSJOIJTCPPLɨF$PNQFUJUJWF"EWBOUBHFPG/BUJPOT QSPWJEFTBO PSHBOJ[JOHQSJODJQMFUPDBQUVSFUIFNBJOEJNFOTJPOTUIBUBSFJNQPSUBOU 'BDUPSDPOEJUJPOT JODMVEJOHTLJMMT JOGSBTUSVDUVSF CVUBMTPBENJOJTUSBUJWF DBQBDJUZ IBWFCFFOUIFJOUVJUJWFQSJPSJUZPGNBOZDFOUFSMFGUHPWFSONFOUT HJWJOH BDMFBSOPUJPOGPSIPXQVCMJDQPMJDZDBOTUSFOHUIFOUIFFDPOPNZɨFDPOUFYU GPSTUSBUFHZBOESJWBMSZoUIFOBUVSFPGMPDBMDPNQFUJUJPO UIFFYQPTVSFUPHMPCBM DPNQFUJUJPO UIFJODFOUJWFTQSPWJEFECZHPWFSONFOUGPSFDPOPNJDBDUJWJUZ BOE UIFJOnVFODFPGHPWFSONFOUPONBSLFUToIBWFCFFOUIFJOUVJUJWFQSJPSJUZPG NBOZDFOUFSSJHIUHPWFSONFOUT TFUUJOHBOBHFOEBGPSMFUUJOHNBSLFUGPSDFTXPSL NPSFFĊFDUJWFMZ %FNBOEDPOEJUJPOToUIFTPQIJTUJDBUJPOPGMPDBMDPOTVNFSTBOEUIFOBUVSFPG SVMFTBOESFHVMBUJPOTPOQSPEVDUT TFSWJDFT BOEQSPDFTToIBWFPOMZSFDFOUMZCFFO VOEFSTUPPEUPCFBOJNQPSUBOUGBDUPS FTQFDJBMMZGPSJOOPWBUJWFDBQBDJUZ ɨFQSFTFODFPGSFMBUFEBOETVQQPSUJOHJOEVTUSJFToUIFBDDFTTUPTQFDJBMJ[FE TVQQMJFSTBOETFSWJDFQSPWJEFSTBOEUIFFNFSHFODFPGWJCSBOUSFHJPOBMDMVTUFSTPG JOUFSDPOOFDUFEDPNQBOJFTBOEPUIFSJOTUJUVUJPOToBMTPIBTCFDPNFBOJODSFBTJOH GPDVT$MVTUFSTFOBCMFIJHIFSQSPEVDUJWJUZBOEJOOPWBUJPOBOEPGUFOCFDPNFUIF QMBUGPSNGPSPSHBOJ[FEDPMMBCPSBUJPO CFUXFFODPNQBOJFTCVUBMTPXJUIVOJWFSTJ UJFTBOENBOZEJĊFSFOUHPWFSONFOUBHFODJFT

Figure 20: Wages versus competitiveness

  #)'#&7#05#)' #)'4*+)*'35*#0 )+7'0%1/2'5+5+7'0'44 ,645+(+'&$:%1/2'5+5+7'0'44

  3.: 6  *1  +0  

 )#2  3+0) 5' 6 6

(#%5  6 #$41.  /#0  +0   45+/#5'& 8#)'

 4 # / 6 #: 6 )#. $.+% 6 $.+% $.+% 6 ! #0+# 453+# 6 6   #&13 3+5+ 6 +%# 6 0&+#   *+.'  6 .)#3+# 6 0)#3: 43#'. ):25 2#+0 6 6 *+0# 453#.+# *+0# #57+# #0-# #2#0 13'# 5#5'4  6 3'.#0& 6  13�  '9+%1 1.#0&

')+10 6 +0.#0& 138#: -3#+0'  "'#.#0& #0#&# '.)+

8'&'0   135 '2 % .17'0+# #0#/#

+0)&1/ '2 #.7#&13 '2 # +5*  1/#0+# '0/#3- '3/#0:     3+ 1.1/$+# #3#) 1548#0# +0)#213' +%#3#) 10) *+.+22+0'4  145# . '# 8+5;'3.#0& '5*'3.#0&4  '8 0+5'& #+8#0 0+5'& ;'%* .17#- 10) #%'&10+# #.5+% 1/+0+%#0

163%' .1$#.1/2'5+5+7'0'44'2135   5#5'1(5*'')+10'2135

44 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

3FMBUJWFUPJUTDPNQFUJUJWFOFTT XBHFTJOUIF#BMUJD BOEQSPEVDUJPOQSPDFTTTPQIJTUJDBUJPO DMVTUFST TU 4FB3FHJPOBSFTMJHIUMZUPPIJHIUPCFTVQQPSUFE POMPDBMTVQQMJFSRVBMJUZBOEMPDBMTVQQMJFSRVBOUJUZ  CZUIFQSPEVDUJWJUZMFWFMUIBUDPNQBOJFTBSFBCMF OEPOMPDBMBWBJMBCJMJUZPGQSPDFTTNBDIJOFSZBOE UPBDIJFWFɨFHBQJTTNBMMFSUIBOJONPTUPUIFS PGTQFDJBMJ[FESFTFBSDIBOEUSBJOJOHTFSWJDFT BOEUIF &VSPQFBOFDPOPNJFT XIJMFJUJTMFTTBEWBOUBHFPVT RVBMJUZPGUIFSFHVMBUPSZBOEMFHBMGSBNFXPSL TUPO XIFODPNQBSFEUPOPO&VSPQFBO0&$%DPVOUSJFT JOUFMMFDUVBMQSPQFSUZ *1 QSPUFDUJPO UIFFĊ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ɨJT TDBMF IPXFWFS UIFDIBMMFOHFTPGXBHFDPTUTBSFSJTJOH HBQQPJOUTUPXBSETPUIFSTUSVDUVSBMJTTVFT QPTTJCMZSF ɨ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ĊFDUJWFOFTTPG BOUJUSVTUQPMJDZ BOEUIFFEVDBUJPOBMTZTUFN TUPO 8JUIJOUIF#BMUJD4FB3FHJPO JOEJWJEVBMDPVOUSJFT UIFRVBMJUZPGQSJNBSZFEVDBUJPOBOEUIFRVBMJUZPG GBDFEJĊFSFOUDIBMMFOHFTGPSVQHSBEJOHUIFJSNJDSP NBUIBOETDJFODFFEVDBUJPO *UBMTPIBTTUSFOHUITJO FDPOPNJDDPNQFUJUJWFOFTT'JWFDPVOUSJFTGSPNUIF UIFUFMFDPNNVOJDBUJPOJOGSBTUSVDUVSF TU BOEBDDFTT #BMUJD4FB3FHJPOBSFJOUIFUPQGPSCPUIUIF#$* UPEFCU TU BOEWFOUVSFDBQJUBM OE 'JOMBOETVĊFST BOEUIF%PJOH#VTJOFTTBTTFTTNFOU.PTUDPVOUSJFT GSPNBOJNCBMBODFCFUXFFOBHFOFSBMMZWFSZTUSPOH JOUIF3FHJPOEPCFUUFSPOPWFSBMMDPNQFUJUJWFOFTT CVTJOFTTFOWJSPONFOUBOEPOBWFSBHFXFBLFSDPN NFBTVSFECZUIF#$*UIBOPOUIFTQFDJmDCVTJOFTT QBOZTPQIJTUJDBUJPO4JODF 'JOMBOEESPQQFE SFHVMBUJPOTNFBTVSFECZUIF%PJOH#VTJOFTTBOBMZTJT NPSFUIBOUFOSBOLTJOFRVJUZNBSLFUBDDFTT MBCPS ɨ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

STATE OF THE REGION REPORT 2007 45 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

UI VODIBOHFEGSPNMBTUZFBS TDIPPMT BWBJMBCJMJUZPGTDJFOUJTUTBOEFOHJOFFST JO MBXTSFMBUFEUP*5 BOEJOUIFFYUFOUPGMPDBMDPNQFUJ 4XFEFO UI ESBXTJUTTUSFOHUIGSPNNPEFSONBOBHF UJPO%FONBSLSBOLTBMTPUIJOUIF%PJOH#VTJOFTT NFOUTUSVDUVSFT SBOLJOHTUPOUIFFċDBDZPGDPS JOEFY IJHIFTUBNPOHBMM#BMUJD4FB3FHJPO*UDPOUJO QPSBUFCPBSET XJMMJOHOFTTUPEFMFHBUFBVUIPSJUZ WBMVF VFTUPCFWFSZFċDJFOUJOQSPDFEVSFTPODSPTTCPSEFS DIBJOCSFBEUI BOESFMJBODFPOQSPGFTTJPOBMNBOBHF USBEFBOEMJDFOTJOH BOEBGUFSBTJHOJmDBOUJNQSPWF NFOU BGPDVTPGCVTJOFTTFTUPXBSEJOOPWBUJPO OE NFOUTJODFMBTUZFBSBMTPJOCBOLSVQUDZQSPDFEVSFT POVOJWFSTJUZJOEVTUSZSFTFBSDIDPMMBCPSBUJPO UIF ɨFDPVOUSZTCJHHFTUXFBLOFTTFTSFNBJOUIFSFHJTUSB MPDBMBWBJMBCJMJUZPGTQFDJBMJ[FESFTFBSDIBOEUSBJOJOH UJPOPGQSPQFSUZBOEUIFFOGPSDFNFOUPGDPOUSBDUT TFSWJDFT BOEDPNQBOJFTDBQBDJUZGPSJOOPWBUJPO  0OFDPOPNJDGSFFEPN JUSBOLTUI VQPOFSBOL BOEBSFHVMBUPSZBOEQPMJDZFOWJSPONFOUPSJFOUFE GSPNMBTUZFBS UPXBSEPQFOBOEJOOPWBUJPOCBTFEDPNQFUJUJPO TU POQSPQFSUZSJHIUTBOEOEPOHPWFSONFOUQSPDVSF /PSXBZT UI CJHHFTUTUSFOHUITBSFJOUIFDBQJUBM NFOUPGBEWBODFEUFDIOPMPHZQSPEVDUT MBXTSFMBUJOH NBSLFU OEPOUIFBDDFTTUPMPBOT SEPOUIFBWBJM UP*$5 UIFTUSJOHFODZPGFOWJSPONFOUBMSFHVMBUJPO  BCJMJUZPGWFOUVSFDBQJUBM BOEUIPOUIFBDDFTTUP BOEUIFBCTFODFPGUSBEFCBSSJFST ɨFNBJOXPSSJFT UIFMPDBMFRVJUZNBSLFU BOEPOTPNFEJNFOTJPOTPG FYJTUBCPVUUIFBEFRVBDZPGUIFFEVDBUJPOBMTZTUFN UIFBENJOJTUSBUJWFJOGSBTUSVDUVSF UIPOUIFOFVUSBM BOE UPPBTNBMMFSEFHSFF UIFQIZTJDBMJOGSBTUSVDUVSF JUZPGHPWFSONFOUPċDJBMT UIPOUIFBCTFODFPG 4XFEFOTMBSHFTUJNQSPWFNFOUTPWFSUIFMBTUTJYZFBST DPSSVQUJPO UIPOMBXTSFMBUJOHUP*5 BOEUIPOUIF XFSFJOFRVJUZNBSLFUBDDFTT UIFMPDBMBWBJMBCJMJUZPG SFMJBCJMJUZPGUIFQPMJDF /PSXBZTNBJOQSPCMFNT QSPDFTTNBDIJOFSZ UIFBCTFODFPGUSBEFCBSSJFST UIF BSFJUTUSBEFCBSSJFSTBOETPNFPUIFSNFBTVSFTPGUIF Fċ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ċDJFODJFTJOUIF UIJOUIF%PJOH#VTJOFTT*OEFYBOEJTTUSPOHPO FOGPSDFNFOUPGDPOUSBDUT0OFDPOPNJDGSFFEPN JU CBOLSVQUDZQSPDFEVSFTBOEUIFFBTFPGDSPTTCPSEFS SBOLTTU VQPOFSBOLGSPNMBTUZFBS USBEFCVUXFBLPOMBCPSNBSLFUSFHVMBUJPOT EFTQJUF TPNFSFDFOUJNQSPWFNFOUT0OFDPOPNJDGSFFEPN JU %FONBSL UI JTQBSUJDVMBSMZTUSPOHJONFBTVSFT SBOLTUI VODIBOHFEGSPNMBTUZFBS SFMBUFEUPBENJOJTUSBUJWFFċDJFODZ SBOLJOHTUPO FċDJFODZPGUIFMFHBMGSBNFXPSLBOEMBXTSFMBUJOHUP *DFMBOE UI SBOLTIJHIMZPOTQFDJmDNFBTVSFTPG *5 OEPOUIFSFMJBCJMJUZPGQPMJDFTFSWJDFTBOEKVEJDJBM QIZTJDBMJOGSBTUSVDUVSF TUPO*OUFSOFUEFOTJUZ SEPO JOEFQFOEFODF BOESEPOUIFBCTFODFPGDPSSVQUJPO  UFMFDPNNVOJDBUJPOJOGSBTUSVDUVSF BOEUIPOFMFDUSJD ɨFDPVOUSZBMTPSBOLTIJHIPOBTQFDUTPGJUTJOGSB JUZTVQQMZ PGBENJOJTUSBUJWFDBQBDJUZ UIPOBCTFODF TUSVDUVSF TUPOFMFDUSJDJUZTVQQMZ UIFDPMMBCPSB PGDPSSVQUJPOBOEPOUIFOFVUSBMJUZPGHPWFSONFOU UJPOCFUXFFOJUTMBCPSNBSLFUQBSUOFST TU BOEUIF PċDJBMT UIPOSFMJBCJMJUZPGUIFQPMJDF BOEUIPO MFWFMQMBZJOHmFMEGPSDPNQFUJUJPO SEPOBCTFODF BDDFTTUPMPBOTɨFNBJOXFBLOFTTFTFYJTUJOUIF PGGBWPSJUJTNPGHPWFSONFOUPċDJBMTBOE*13QSP QSFTFODFPGSFMBUFEBOETVQQPSUJOHJOEVTUSJFTBOEUIF UFDUJPO $PNQBOJFTBSFQBSUJDVMBSMZTUSPOHJOTUBĊ WJUBMJUZPGDPNQFUJUJPO4JODF *DFMBOEHBJOFEJO USBJOJOHBOEUIFXJMMJOHOFTTUPEFMFHBUF SBOLPO TPNFBTQFDUTPGTVQQMJFSQSFTFODFCVUTVĊFSFEGSPN CPUI 8FBLOFTTFTFYJTUJOUIFUFDIOPMPHZBSFB FRVJUZ NPSFEPNJOBOUCVTJOFTTHSPVQT*DFMBOESBOLTUI NBSLFUBDDFTT TVQQMJFSQSFTFODF BOETPNFBTQFDUT JOUIF%PJOH#VTJOFTTJOEFYBOEIBTNBEFTJHOJmDBOU PGDPNQFUJUJWFWJUBMJUZ4JODF %FONBSLIBT QSPHSFTTPOQSPUFDUJOHJOWFTUPSSJHIUT XIJDIOFWFS NBEFJNQSFTTJWFQSPHSFTTJOBSFBTSFMBUFEUPBEWBODFE UIFMFTTSFNBJOTJUTCJHHFTUXFBLOFTT0OFDPOPNJD FEVDBUJPO HBJOJOHUFOPSNPSFSBOLTPORVBMJUZPG GSFFEPN JUSBOLTUI EPXOUXPSBOLTGSPNMBTUZFBS NBUIBOETDJFODFFEVDBUJPO RVBMJUZPGNBOBHFNFOU

46 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

&TUPOJBT UI NBJOTUSFOHUITBSFJOUIFWJUBMJUZPG #VUUIFSFJTBMTPTPNFXPSSZJOHTMJQQBHFPOUIFFG DPNQFUJUJPO JOTPNFBTQFDUTPGBENJOJTUSBUJWFDBQBD mDJFODZPGCPBSET UIFJOUFOTJUZPGMPDBMDPNQFUJUJPO  JUZ JOIVNBOSFTPVSDFT BOEJO*OUFSOFUUFMFDPN BOEUIFGBWPSJUJTNPGHPWFSONFOUPċDJBMT0WFSBMM  NVOJDBUJPOJOGSBTUSVDUVSF#VTJOFTTTPQIJTUJDBUJPO -JUIVBOJBSFHJTUFSFEUIFTUSPOHFTUEZOBNJTNJOUFSNT DPOUJOVFTUPSBOLGBSCFIJOECVTJOFTTFOWJSPONFOU PGDPNQFUJUJWFOFTTVQHSBEJOHTJODFBNPOHBMM RVBMJUZ BOEUIFSFBSFQSPCMFNTJOUIFQSFTFODFPG #BMUJD4FB3FHJPODPVOUSJFT-JUIVBOJBSBOLTUIJO RVBMJm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m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mDBOUMZCFUUFSPOSVMFT MBUFEBOETVQQPSUJOHJOEVTUSJFT BOEPONBOZBTQFDUT BOESFHVMBUJPOTUIBOPODPNQFUJUJWFOFTTPWFSBMM*U SFMBUFEUPUIFOBUVSFPGEPNFTUJDDPNQFUJUJPO4JODF IBTFċDJFOUDSPTTCPSEFSUSBEFSVMFTBOEIBTNBEF  UIFSFIBWFCFFOTJHOJmDBOUJNQSPWFNFOUTJO TJHOJm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ɨFDPVOUSZSBOLTWFSZXFMMPO UPST$FMMQIPOFQFOFUSBUJPOBOENBUIBOETDJFODF DPOUSBDUFOGPSDFNFOUCVUXFBLPOMBCPSMBXT SFH FEVDBUJPOBSFBSFBTUIBUTUJDLPVUBTLFZBEWBOUBHFT JTUSBUJPOPGQSPQFSUZ BOEEFBMJOHXJUIMJDFOTFT0O 8FBLOFTTFTBSFNPTUBQQBSFOUJOEFNBOEDPOEJUJPOT FDPOPNJDGSFFEPN JUSBOLTTU BESPQPGmWFSBOLT BOEBTQFDUTPGUIFmOBODJBMNBSLFUT4JODF UIF TJODFMBTUZFBS4PNFPGUIFEFUFSJPSBUJPOXBTSFMBUFE DPVOUSZIBTJNQSPWFEJUTQPTJUJPOPOBXJEFSBOHF UPUIFNFBTVSFTJOUSPEVDFEPOUIFmOBODJBMNBSLFUT PGNFBTVSFT JOQBSUJDVMBSBTQFDUTPGBENJOJTUSBUJWF UPTMPXEPXODSFEJUHSPXUI JOGSBTUSVDUVSF IVNBOSFTPVSDFT BOEDFMMQIPOFVTF

STATE OF THE REGION REPORT 2007 47 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Latvia - a case study on microeconomic development and macroeconomic challenges -BUWJBTFDPOPNJDEFWFMPQNFOUPWFSUIFMBTUZFBSTIBTCFFOBSFNBSLBCMF TVDDFTTTUPSZ#VUPWFSUIFMBTUGFXNPOUITUIFSFIBWFCFFOHSPXJOHTJHOTUIBU -BUWJBOTDBOOPUUBLFJUGPSHSBOUFEUIBUUIJTTVDDFTTTUPSZXJMMDPOUJOVF*On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ɨFDVSSFOUBDDPVOUEFmDJUJTUPBMBSHFEFHSFF NBUDIFECZUIFJOWFTUNFOUTNBEFCZGPSFJHOBOEEPNFTUJDDPNQBOJFTɨFJOnB UJPOJTUIFSFTVMUPGIJHIHSPXUIFYFSUJOHQSFTTVSFPOUIFSFBMFYDIBOHFSBUFUIBU oHJWFOUIFNPOFUBSZSFHJNFXJUImYFEFYDIBOHFSBUFToSFWFBMTJUTFMGJOSJTJOH EPNFTUJDQSJDFTɨFFNFSHJOHTLJMMTIPSUBHFTBSFUIFDPOTFRVFODFPGBUUSBD UJWFPQQPSUVOJUJFTBCSPBEBOEBUIPNFGPSTLJMMFEFNQMPZFFT"OEUIFXJEFOJOH QSPTQFSJUZEJĊFSFODFTJO-BUWJBOTPDJFUZBSFUIFSFTVMUPGUIFJODSFBTJOHSFUVSOT UPLOPXMFEHF NPCJMJUZ BOESJTLUBLJOHRVBMJUJFTUIBUBSFVOFWFOMZEJTUSJCVUFE BDSPTTTPDJFUZɨBU-BUWJBOTJODSFBTJOHMZGFFMUIFTFDIBMMFOHFTJTBTJHOUIBUUIF DPVOUSZJTFOUFSJOHBOFXTUBHFPGJUTFDPOPNJDEFWFMPQNFOU 8IBUBSFUIFDIBSBDUFSJTUJDTPGUIFOFXFDPOPNJDQPMJDZBQQSPBDIOFFEFE " LFZFMFNFOUoBOEQSPCBCMZUIFCJHHFTUDIBMMFOHFoJTBOFXSPMFGPSHPWFSONFOU QPMJDZ-BUWJBOFFETUPDSFBUFBCVTJOFTTFOWJSPONFOUXIFSFSBQJEQSPEVDUJW JUZHSPXUIJTJODSFBTJOHMZCBTFEPOOFXJEFBTBOEUIFBQQMJDBUJPOPGXPSMEDMBTT LOPXMFEHF OPUPOMZUIFJOWFTUNFOUJONPEFSOQSPEVDUJPODBQBDJUZ*UOFFETB CVTJOFTTFOWJSPONFOUJOXIJDIEPNFTUJDBOEGPSFJHODPNQBOJFTDPNQFUFTVDDFTT GVMMZCBTFEPOTPQIJTUJDBUFETUSBUFHJFT OPUKVTUPOBDDFTTUPSFMBUJWFMZMPXXBHFT "OEJUOFFETBCVTJOFTTFOWJSPONFOUJOXIJDIFDPOPNJDHSPXUIUSBOTMBUFTJOUP XJEFTQSFBEJNQSPWFNFOUTJOUIFTUBOEBSEPGMJWJOH OPUKVTUPQQPSUVOJUJFTJO QBSUTPGUIFFDPOPNZ ɨFOFXTUBHFPGFDPOPNJDEFWFMPQNFOUSFRVJSFTBOFXNPEFMGPSFDPOPNJD QPMJDZ+VTUHFUUJOHPVUPGUIFXBZJTOPMPOHFSFOPVHIGPSHPWFSONFOU#VUPME TUZMFHPWFSONFOUMFEFDPOPNJDEFWFMPQNFOUXJMMOPUEPUIFUSJDLFJUIFS(PW FSONFOUBOEDPNQBOJFTOFFEUPmOEBQSPEVDUJWFQBSUOFSTIJQGPSBHHSFTTJWFMZ VQHSBEJOHDPNQFUJUJWFOFTTBOEQSPEVDUJWJUZ

48 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

1PMBOE UI SFHJTUFSTUIFFEVDBUJPOBMTZTUFNBTUIF SJHIUTBOEJODSFBTJOHGBWPSJUJTNPGHPWFSONFOUPG LFZTUSFOHUI GPMMPXFECZBSFMBUJWFMZCSPBESBOHF mDJBMTBTXFMMBTOBSSPXJOHQPTJUJPOTJOSFMBUFEBOE PGBWBJMBCMFSFMBUFEBOETVQQPSUJOHJOEVTUSJFTBOEB TVQQPSUJOHJOEVTUSJFT3VTTJBJTUIFDPVOUSZJOUIF TVSQSJTJOHMZTUSPOHQPTJUJPOJODPNQBOJFTJOOPWBUJWF #BMUJD4FB3FHJPOJOXIJDIBDUVBM(%1QFSDBQJUB DBQBDJUZ8FBLOFTTFTBSFNPTUQSFWBMFOUJOUIFDPO JTGVSUIFTUBIFBEPGXIBUUIFDPVOUSZTIPVMECFBCMF UFYUGPSSJWBMSZBOETUSBUFHZ CVUBMTPJOUIFFċDJFODZ UPTVTUBJOHJWFOJUTDPOUFYUBOEDPNQFUJUJWFOFTTɨ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mDBOUMZEVFUPUIFMBVODIPGBQSJWBUFDSFEJU TUBSUJOHBCVTJOFTT BOESVMFTBOESFHVMBUJPOTPO SBUJOHBHFODZ0OFDPOPNJDGSFFEPN JUSFNBJOTPO UBYBUJPO*OMBCPSNBSLFUSFHVMBUJPOT JUTVĊFSFEGSPN UIFCPUUPNPGUIF#BMUJD4FB3FHJPOBTUI BHBJO NFBTVSFTUIBUNBEFIJSJOHNPSFEJċDVMUGPSDPNQB PGPOFSBOLTJODFMBTUZFBS OJFT0OFDPOPNJDGSFFEPN JUSBOLTUI BTUBHHFS JOHMPTTPGSBOLTTJODFMBTUZFBSSFMBUFEUPDIBOHFT ɨF&VSPQFBO6OJPOT3FHJPOBM*OOPWBUJPO4DPSFDBSE JOHFOFSBMCVTJOFTTSFHVMBUJPOT 3*4 QSPWJEFTEBUBPOUIFJOOPWBUJWFDBQBDJUZPGTVC OBUJPOBMSFHJPOT JODMVEJOHSFHJPOTMPDBUFEJOUIF 3VTTJBT TU NBJOTUSFOHUITBSFJUTHFOFSBMUFDIOPMPH #BMUJD4FB3FHJPOɨJTEBUBDPNQMFNFOUTUIFBTTFTT JDBMDBQBCJMJUJFT JUTFEVDBUJPOBMTZTUFNBUUIFQSJNBSZ NFOUPGJOOPWBUJWFDBQBDJUZBUUIF#BMUJD4FB3FHJPO BOETFDPOEBSZMFWFM BOEUIFTPMJESBJMSPBEJOGSBTUSVD BOEOBUJPOBMMFWFMEJTDVTTFEJOMBTUZFBST3FQPSU UVSF8FBLOFTTFTBSFNPTUPCWJPVTJOBENJOJTUSBUJWF JOGSBTUSVDUVSFBOEUIFDPOUFYUGPSTUSBUFHZBOESJWBMSZ 4UPDLIPMNTUBOETPVUBTUIFMFBEJOH&VSPQFBOSFHJPO 4JODF IBTTVĊFSFEGSPNBOFSPTJPOPGQSPQFSUZ JOUIF3*4 BQPTJUJPOJUIBTIFMETJODFEBUBXBTDPM

Figure 21: Innovative capacity, regions in the Baltic Sea Region

*&" &#$ 1)*),(  *#1+&$ .),(  0)*( ##%),(  %%(+&$ %$(" & !& )+&$ 1%) +&$ &(( ##%),(  0,( &((#% $+( $2#% $3(% ##()* &((#% *1+&$  #)- &#)* % )*&%  "#%+(&('&$$(%  * +%   *,   /#%

   &%#%%&,* &%&(%"  &+( +(&'% &$$ )) &%  **&*  &%'&(*

STATE OF THE REGION REPORT 2007 49 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Table 6 Universities: Leading universities, Baltic Sea Region

Natural sciences Engineering, IT Life sciences Medicine Business, Law ARWU 2006 Rank

Karolinska Inst Stockholm Sweden 16 9 48 Univ Denmark 76-110 77-106 76-108 77-104 56 Uppsala Univ Sweden 77-106 76-108 65 Univ Oslo Norway 77-104 68 Univ Finland 77-106 51-75 74 Stockholm Univ Sweden 51-75 84 Lund Univ Sweden 76-110 77-106 50 76-108 90 Aarhus Univ Denmark 76-110 102-150 Univ Germany 76-108 102-150 Tech Univ Denmark Denmark 51-75 151-200 Chalmers Univ Tech Sweden 51-75 201-300

Copyright © 2007 Institute of Higher Education, Shanghai Jiao Tong University, All Rights Reserved State of the Region-Report 2007

MFDUFEmWFZFBSTBHP4UPDLIPMNMFBETUIF&VSPQFBO  XJUISFMBUJWFBEWBOUBHFTJOQVCMJD3%BOEJO SBOLJOHTJOMJGFMPOHMFBSOJOH UIFQSFTFODFPGLOPXM UIFQSFTFODFPGLOPXMFEHFXPSLFST#PUI)BNCVSH FEHFXPSLFST BOEUIFQSFTFODFPGIJHIUFDITFSWJDFT  BOE&TUPOJBIBWFMPTUTPNFQPTJUJPOSFMBUJWFUPPUIFS BOESBOLTBNPOHUIFUPQmWFSFHJPOTJOCVTJOFTT &VSPQFBOSFHJPOTPWFSSFDFOUZFBST 3%TQFOEJOHBOEQBUFOUJOHɨF4UPDLIPMNSFHJPO JTBMTPIPNFUPUISFFPGUIFMFBEJOHVOJWFSTJUJFTGSPN Special focus: Skills and cluster UIF3FHJPO XJUIUIFUPQVOJWFSTJUJFTGPDVTJOHPOMJGF *OUIJTZFBST3FQPSU XFEJTDVTTUXPBSFBTJOTPNF TDJFODFTBOENFEJDJOF*USBOLTMPXFSPOIJHIUFDI NPSFEFQUIUIBUBSFPGQBSUJDVMBSJOUFSFTUUPUIF NBOVGBDUVSJOH 3FHJPO#PUIBSFQFSDFJWFEBTDSJUJDBMUPUIFWBMVF QSPQPTJUJPOPGUIF3FHJPOBOENBOZPGJUTDPVOUSJFT 8FTUFSO4XFEFOGPMMPXTPOSBOL XJUIBOPWFSBMM "OECPUIBSFBSFBTJOXIJDIDSPTTOBUJPOBMDPMMBCPSB TJNJMBSQSPmMFCVUNPSFIJHIUFDINBOVGBDUVSJOH UJPOBUUIF#BMUJD4FB3FHJPOMFWFMXPVMEDMFBSMZIBWF JOTUFBEPGTFSWJDFTɨFSFHJPOMFBETUIF&VSPQFBO BQPTJUJWFJNQBDU SBOLJOHTPOCVTJOFTT3% BSFTVMUPGUIFTUSPOHFY QFOEJUVSFPGUIFBVUPNPUJWFDPNQBOJFTMPDBUFEUIFSF 4LJMMTBSFBDFOUSBMGPVOEBUJPOPGBOJOOPWBUJPO ɨJTJTBMTPSFnFDUFEJOTUSPOHQPTJUJPOPG$IBMNFST  ESJWFOFDPOPNZɨFZBMPOFBSFOPUTVċDJFOU BT UIFMFBEJOHSFHJPOBMVOJWFSTJUZ JOFOHJOFFSJOH PUIFSEJNFOTJPOTPGUIFCVTJOFTTFOWJSPONFOUOFFE UPCFJOQMBDFBTXFMM CVUXJUIPVU 4PVUIFSO 'JOMBOE &UFMÊ4VPNJ  'PSUIF#BMUJD4FB3FHJPO  BTPVOETLJMMCBTFJUJTDMPTFUP JTSBOLFEUIPWFSBMM XJUITUSPOH JNQPTTJCMFGPSDPNQBOJFTUPDPN QPTJUJPOTBDSPTTBMMEJNFOTJPOTPG TLJMMTBSFBDSJUJDBMQBSU QFUFCBTFEPOJOOPWBUJWFQSPEVDUT JOOPWBUJWFDBQBDJUZ$PNQBSFEUP PGXIBUNBLFTUIF3FHJPO BOETFSWJDFT'PSUIF#BMUJD4FB UIF MFBEJOH 4XFEJTI SFHJPOT  JU JT DPNQFUJUJWFJOUIFHMPCBM 3FHJPO TLJMMTBSFBDSJUJDBMQBSUPG MFTT XFMM QPTJUJPOFE PO QBUFOUJOH FDPOPNZ XIBUNBLFTUIF3FHJPODPNQFUJ BOECVTJOFTT3% UJWFJOUIFHMPCBMFDPOPNZ

%FONBSL UXPNPSF'JOOJTI BOEUXPNPSF4XFEJTI ɨFTLJMMCBTFPGUIF#BMUJD4FB3FHJPODPOUJOVFTUP SFHJPOTBSFBMTPBNPOHUIFUPQ&VSPQFBOSFHJPOT CFTUSPOH$PNQBOJFTQFSDFJWFUIFBWBJMBCJMJUZPGXFMM PWFSBMM%FONBSLIBTJO$PQFOIBHFOUIFPOMZVOJ FEVDBUFEFNQMPZFFTBTBLFZTUSFOHUIPGUIF3FHJPO WFSTJUZJOUIF3FHJPOUIBUIBTBNFBOJOHGVMJOUFSOB ɨJTQPTJUJWFTJUVBUJPOJTUIFSFTVMUPGNBOZEFDBEFT UJPOBMQPTJUJPOBDSPTTNBOZEJTDJQMJOFT)BNCVSHJT PGJOWFTUNFOUTJOFEVDBUJPO CPUIXJUIJOUIFQVCMJD BUUIFIJHIFTUSBOLJOHSFHJPOPVUTJEFUIF/PSEJD FEVDBUJPOTZTUFNBOEJODPNQBOJFT#VUUIFTUSPOH DPVOUSJFT XJUIBDMFBSGPDVTPOIJHIUFDITFSWJDFT DVSSFOUQPTJUJPODBOOPUCFUBLFOGPSHSBOUFENBOZ BOEBVOJWFSTJUZUIBUIBTBDIJFWFEBTUSPOHQPTJUJPO PUIFSDPVOUSJFTGPDVTPOTLJMMVQHSBEJOHBOEUIF JONFEJDJOF&TUPOJBUPQTUIF#BMUJDDPVOUSJFTBU HMPCBMDPNQFUJUJPOGPSTLJMMTJTHFUUJOHJODSFBTJOHMZ

50 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

JOUFOTFBTUIFCFOFmUTPGTLJMMBSFSJTJOH GPDVTJTDMFBSMZPOCVTJOFTTMBX JO%FONBSL BOEUP BTNBMMFSEFHSFFJO4XFEFO POIFBMUIXFMGBSF BOEJO 7JSUVBMMZBMMDPVOUSJFTJOUIF#BMUJD4FB3FHJPO /PSXBZPOPUIFSmFMET"MMDPVOUSJFTJOUIF3FHJPO BSFSFQPSUJOHJODSFBTJOHTLJMMHBQT JFmSNTGBD GPSXIJDIEBUBJTBWBJMBCMF IBWFBTNBMMFSTIBSFPG JOHQSPCMFNTmOEJOHFNQMPZFFTUIBUIBWFUIFSJHIU VOJWFSTJUZHSBEVBUFTXJUIEFHSFFTJOUIFTDJFODFTUIBO TLJMMTFUGPSUIFKPCTUIBUOFFEUPCFmMMFE"TUVEZ UIF0&$%BWFSBHF GPS(FSNBOZRVBOUJmFEUIFFDPOPNJDDPTUTPGUIFTF TIPSUBHFTXJUIǎCJMMJPOBZFBSɨFTFTLJMMHBQT 4QFOEJOHPOFEVDBUJPOJTBUUIF0&$%MFWFM CVU OPUPOMZFYJTUBNPOHWFSZIJHIMZTLJMMFEFNQMPZFFT  UIFSFBSFTJHOJmDBOUEJĊFSFODFTBDSPTTDPVOUSJFTJO UIFZBMTPBĊFDUBOVNCFSPGNBOVBMPDDVQBUJPOTMJLF UIF#BMUJD4FB3FHJPO/PSXBZTQFOETNPSFQFS DPOTUSVDUJPOTFSWJDFT8BHFQSFTTVSFJTJODSFBTJOHBT TUVEFOUUIBOUIF3FHJPOPWFSBMM GPMMPXFECZ%FO DPNQBOJFTDPNQFUFGPSUIFFNQMPZFFTUIBUIBWFUIF NBSL  BOE4XFEFO  3VTTJBTQFOETPOMZ TPVHIUBGUFSTLJMMTɨFTFEFWFMPQNFOUTBSFUPBMBSHF PGUIFSFHJPOBMBWFSBHFQFSTUVEFOU &TUPOJBBOE FYUFOUUIFSFTVMUPGBCPPNJOHFDPOPNZ4LJMMTHBQT 1PMBOEBCPVUEJĊFSFODFTUIBUBSFNVDIMBSHFS BMTPFYJTUJOPUIFSDPVOUSJFTUIBUFYQFSJFODFSJTJOH UIBOEJĊFSFODFTJO(%1QFSDBQJUB&EVDBUJPOBM FDPOPNJDHSPXUIUIF#BMUJD4FB3FHJPOEPFTOPU BUUBJONFOUTBSFHFOFSBMMZJOMJOFXJUIUIFMFWFMPG TFFNUPCFNPSFBĊFDUFEUIBOPUIFSTɨFTJUVBUJPOJT TQFOEJOH'JOOJTITUVEFOUT IPXFWFS SFHJTUFSIJHI NPSFDSJUJDBMGPSUIF#BMUJDDPVOUSJFTBOE1PMBOE*O QFSGPSNBODFOPUPOMZJOBCTPMVUFUFSNTCVUBMTP UIF#BMUJDDPVOUSJFTJOQBSUJDVMBS UIFSFBSFTJHOTUIBU SFMBUJWFUPTQFOEJOH*O/PSXBZUIFBCTPMVUFTUVEFOU BNFBOJOHGVMTIBSFPGUIFIJHIMZTLJMMFEXPSLGPSDF QFSGPSNBODFJTTJNJMBSUPNBOZPUIFS0&$%DPVO IBTNPWFEBCSPBE MBSHFMZUPUIF6,BOE*SFMBOE CVU USJFTCVUJTXFBLSFMBUJWFUPUIFIJHIMFWFMPGTQFOE BMTPUPUIF/PSEJDDPVOUSJFT"NPEFSBUJPOPGHSPXUI JOHɨFSFIBWFCFFOSFGPSNTJONBOZDPVOUSJFTUP SBUFTXJMMSFEVDFUIFEFNBOEGPSIJHIFSTLJMMT CVUEP JNQSPWFUIFRVBMJUZPGFEVDBUJPOɨFTFSFGPSNTTFFN MJUUMFUPBUUSBDUCBDLIJHITLJMMFEFNQMPZFFT UPIBWFCFFONPSFFĊFDUJWFBUUIFQSFTDIPPMBOE QSJNBSZMFWFM XIJMFMFTTIBTIBQQFOFEBUUIFWPDB UJPOBM TFDPOEBSZ BOEVOJWFSTJUZMFWFMɨFWPDBUJPOBM MFWFMJOQBSUJDVMBSTFFNTUPIBWFCFFOTRVFF[FECZ Education data UIFFĊPSUTUPQSFQBSFBIJHIFSTIBSFPGUIFTUVEFOU ɨF0&$%IBTSFDFOUMZQVCMJTIFEBNBKPSSFWJFXPG QPQVMBUJPOGPSVOJWFSTJUZFEVDBUJPO*OUIF#BMUJD4FB FEVDBUJPOTZTUFNTJOUIF0&$%DPVOUSJFT&EVDB 3FHJPO WJSUVBMMZBMMFEVDBUJPOBMTQFOEJOHJTQVCMJD  UJPOBUB(MBODF EFTQJUFJUTUJUMFBCPPLPGNPSFUIBO XIJMFJOUIF0&$%BWFSBHFQSJWBUFTQFOEJOHPO QBHFT QSPWJEFTEBUBPONBOZBTQFDUTPGUIF FEVDBUJPOBDDPVOUTGPSDMPTFUPPGUPUBMFYQFO FEVDBUJPOBMTZTUFN EJUVSFT"TJHOJmDBOUTIBSFPGUIFQVCMJDTQFOEJOHPO FEVDBUJPOJOUIF4DBOEJOBWJBODPVOUSJFTHPFTUPXBSET TVCTJEJFTGPSUFSUJBSZFEVDBUJPO TDIPMBSTIJQT HSBOUT  MPBOT FUD JO/PSXBZUIJTSBUJPSFBDIFTDPN "TJHOJmDBOUMZIJHIFSMFWFMPGUIFQPQVMBUJPOJOUIF QBSFEUPJOUIF0&$%BWFSBHF #BMUJD4FB3FHJPOUIBOJOUIF0&$%BWFSBHFIBTBU MFBTUBTFDPOEBSZFEVDBUJPOɨFPOMZDPVOUSJFTUIBU 3FUVSOTUPFEVDBUJPOBSFHFOFSBMMZMPXFSJOUIF GBMMCFMPXUIF0&$%CFODINBSLBSF1PMBOEBOE 4DBOEJOBWJBODPVOUSJFTUIBOJOUIFMFBEJOH0&$% *DFMBOE3VTTJBBOE&TUPOJBSFHJTUFSUIFIJHIFTUMFWFMT DPVOUSJFTɨFIJHIFSMFWFMPGXBHFDPNQSFTTJPO JF PGGPSNBMFEVDBUJPOɨFHBQCFUXFFOUIF#BMUJD MPXFSEJĊFSFODFTCFUXFFOXBHFTBDSPTTTLJMMTMFWFMT  4FB3FHJPOBOEUIF0&$%BWFSBHFXJMM IPXFWFS  SFEVDFUIFCFOFmUTGSPNFEVDBUJPO)JHIQVCMJD TISJOLJODPNJOHZFBSTUIFFYQBOTJPOPGFEVDB TVCTJEJFTJNQSPWFUIFBUUSBDUJWFOFTTGPSUIFJOEJWJEVBM UJPOIBTCFFOIJHIFSPVUTJEFUIF3FHJPO*OUFSNT CVUUIFOSFEVDFUIFQVCMJDCFOFmUT4XFEFOQSPWJEFT PGUIFTQFDJBMJ[BUJPOPGUIFXPSLGPSDF (FSNBOZ UIFNPTUESBNBUJDFYBNQMFɨFQSJWBUF QVCMJD JO BOE'JOMBOEIBWFBQBSUJDVMBSMZIJHITIBSFPGQFPQMF UFSOBMSBUFPGSFUVSOGPSPCUBJOJOHBVOJWFSTJUZEFHSFF XJUIVOJWFSTJUZFEVDBUJPOJOFOHJOFFSJOH%FONBSL  JT  GPSBXPNBOJO4XFEFODPNQBSFE 'JOMBOE BOE(FSNBOZBSFJOBQSPCMFNBUJDTJUVBUJPO UP  UPBXPNBOJOUIF6OJUFE4UBUFT UIFZXJMMIBWFNPSFFOHJOFFSTMFBWJOHUIBOFOUFSJOH BOE  BXPNBOJOUIF6,ɨFSFTVMUT UIFXPSLGPSDFPWFSUIFOFYUEFDBEF*O*DFMBOE UIF GPSNFOBSFTJNJMBSBDSPTTDPVOUSJFTJOUFSFTUJOHMZ

STATE OF THE REGION REPORT 2007 51 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

XPNFOJO4XFEFOBOEUIF64CFOFmUMFTTmOBODJBMMZ EBUBBDSPTTDPVOUSJFT UIFSFJTDPODFSOBCPVUGBMMJOH GSPNBVOJWFSTJUZEFHSFFUIBOXPNFOJOUIF6,ɨF TUVEFOUOVNCFSTJOBSFBTMJLFJOGPSNBUJPOUFDIOPM MPXFSSFUVSOTUPFEVDBUJPONJHIUBMTPFYQMBJOXIZ PHZ OBUVSBMTDJFODFT BOEFOHJOFFSJOH*ONBOZDPVO UIFNFEJBOBHFPGVOJWFSTJUZTUVEFOUTJOUIF#BMUJD USJFTJODMVEJOHUIF#BMUJD4FB3FHJPOUIFSFJTJOTVċ 4FB3FHJPOJTPOBWFSBHFBCPVUUXPZFBSTBCPWFUIFJS DJFOUJOGPSNBUJPOGPSTUVEFOUTUPBTTFTTUIFFDPOPNJD QFFSTJOUIF&6BWFSBHF4UVEFOUTJOUIF3FHJPOTFFN JNQBDUPGUIFJSDIPJDFPGBSFBGPSTUVEZ JOMFTTPGBIVSSZUPFOUFSUIFMBCPSNBSLFU FYBDFSCBU JOHTIPSUBHFTJOTLJMMTVQQMZ ɨF#$*EBUBJOEJDBUFTIPXUIFFEVDBUJPOBMTZTUFN JTSFnFDUFEJODPNQBOJFTQFSTQFDUJWFTPOUIFBWBJM ɨFSFJTBOJODSFBTJOHQFSDFQUJPOUIBUDIPJDFTBCPVU BCJMJUZPGTLJMMBOEUIFJOUFOTJUZPGTLJMMVQHSBEJOH XIJDIFEVDBUJPOBMQSPHSBNTUPQVSTVFBSFOPUJOMJOF 4PNFXIBUTVSQSJTJOHMZ TLJMMEPFTPWFSBMMOPUGFBUVSF XJUIUIFOFFETPGUIFFDPOPNZPSUIFmOBODJBMPQ BTBSFMBUJWFTUSFOHUIPGUIF3FHJPODPNQBSFEUPJUT QPSUVOJUJFTUIBUFYJTU8IJMFUIFSFJTMJUUMFDPNQBSBCMF PWFSBMMSBOLJOHPONJDSPFDPOPNJDDPNQFUJUJWFOFTT

Figure 22: Fields of education, Baltic Sea Region countries

!)' *+,&+*  



"&  & "&)"& ,*"&**$- $+!  +!)



 ')-. &%)# -& )%&. $&  "&$&

',)   ++' +! "'&(')+ 

Table 7 Skills: BCI skill rankings, Baltic Sea Region

Extent of Availability of Quality of Quality of Quality of math BCI staff training scientists and engineers primary education management schools and science education

Finland 3 12 (-9) 3 (2) 1 (0) 12 (-2) 3 (8) Denmark 5 1 (3) 11 (10) 9 (2) 8 (13) 19 (18) Sweden 4 2 (-1) 7 (5) 22 (-1) 16 (-8) 35 (-1) Iceland 16 16 (-5) 16 (0) 16 (-5) 18 (5) 36 (-9) Germany 2 7 (-1) 18 (-10) 25 (-5) 26 (-5) 34 (5) BSR 16 20 22 27 30 Estonia 26 29 (0) 69 (-15) 20 (4) 32 (-4) 22 (-3) Norway 13 11 (7) 24 (2) 21 (5) 22 (-4) 52 (3) Lithuania 39 36 (22) 43 (-7) 37 (5) 42 (11) 17 (13) Latvia 54 51 (-1) 101 (-12) 35 (5) 48 (2) 43 (-2) Poland 56 64 (3) 60 (-22) 44 (-2) 43 (5) 40 (-9) Russia 71 94 (1) 34 (-4) 48 (1) 85 (-11) 42 (-9)

Source: Global Competitiveness Report 2007-08 State of the Region Report 2007

52 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

ɨFTUSPOHFTUSFTVMUJTPOUIFFYUFOUPGTUBĊUSBJOJOH WJEVBMDMVTUFSJOJUJBUJWFTPSOBUJPOBMDMVTUFSQSPHSBNT XJUIJODPNQBOJFTBTJHOPGUIFXJMMJOHOFTTCVUBMTP MJLFUIF'JOOJTI$FOUFSTPG&YDFMMFODF UIF/PSXF UIFOFFEGPSDPNQBOZMFWFMTLJMMVQHSBEJOH"WBJM HJBO$FOUFSTPG&YQFSUJTFFĊPSU BOEUIF4XFEJTI BCJMJUZPGTDJFOUJTUTBOEFOHJOFFSTBMTPSFHJTUFSTBTB 7JOOWÊYU7JTBOVQSPHSBNTɨJTZFBS XFDBOESBX SFMBUJWFTUSFOHUI FWFOUIPVHIUIFQPTJUJWFMFHBDZJO POBOFX&VSPQFBOEBUBCBTF UIF&VSPQFBO$MVT UIFGPSNFS$PNNVOJTUDPVOUSJFTJTDMFBSMZFSPEJOH UFS0CTFSWBUPSZ UPDPNQMFNFOUUIJTBTTFTTNFOUPG ɨFCJHHFTUDPODFSOTFYJTUBCPVUUIFRVBMJUZPGNBUI QPMJUJDBMBDUJWJUZXJUIBOBTTFTTNFOUPGUIFFDPOPNJD BOETDJFODFFEVDBUJPO SFBMJUZPGDMVTUFSTBTSFWFBMFEJOBDUVBMFNQMPZNFOU BHHMPNFSBUJPOT ɨFTLJMMTJUVBUJPOJOUIF#BMUJD4FB3FHJPOSFNBJOT GBWPSBCMF EFTQJUFUIFDZDMJDBMJODSFBTFJOTLJMMTIPSU BHFT#VUUIFSFBSFBOVNCFSPGTUSVDUVSBMDIBMMFOHFT Cluster data UIBUXJMMOFFEUPCFBEESFTTFEUIFEFNPHSBQIJD ɨF&VSPQFBO$MVTUFS0CTFSWBUPSZ IUUQXXX USFOETXJMMSFEVDFUIFBCTPMVUFOVNCFSPGHSBEVBUFT DMVTUFSPCTFSWBUPSZFV QSPWJEFTUIFmSTURVBOUJUBUJWF JONBOZmFMETɨ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ɨ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ĊBJSTJTJOUIF UPESBXPOMFBEJOHFYQFSUJTFBSPVOEUIF3FHJPO QSPDFTTPGQVUUJOHUPHFUIFSDMVTUFSTQFDJmDEBUBPO NPSFTVDIFĊPSUTBSFOFDFTTBSZ QSPEVDUJWJUZBOEDPNQFUJUJWFOFTTGPSUIF#BMUJD4FB 3FHJPO $MVTUFSTHFPHSBQIJDBHHMPNFSBUJPOTPGDPNQBOJFT  SFTFBSDIJOTUJUVUJPOT BOEPUIFSPSHBOJ[BUJPOTTQFDJBM J[FEJOSFMBUFEFDPOPNJDBDUJWJUJFTBSFDSVDJBMGPS ɨF#BMUJD4FB3FHJPOJTIPNFUP/654 JODSFBTJOHUIFQSPEVDUJWJUZBOEJOOPWBUJWFDBQBDJUZPG SFHJPOT NPTUPGUIFNXJUISFMBUJWFMZTNBMMBCTPMVUF FYJTUJOHTLJMMTBOEDBQBCJMJUJFTɨFZDBOOPUTVCTUJUVUF TJ[F5XFOUZPGUIFSFHJPOTIBWFTNBMMFSUPUBMFNQMPZ GPSQPPSCVTJOFTTFOWJSPONFOUTCVUUIFJSQSFTFODF NFOUUIBOUIFNFEJBO&VSPQFBOSFHJPO%FONBSL  DBOFOBCMFSFHJPOTBOEDPVOUSJFTUPSFBDITJHOJmDBOU XIJDIVOGPSUVOBUFMZJTDPWFSFEBTPOF/654 MZIJHIFSMFWFMTPGQFSGPSNBODF'PSUIF#BMUJD4FB SFHJPOJOUIF&VSPQFBOTUBUJTUJDT JTUIFMBSHFTUSFHJPO 3FHJPO DMVTUFSTBSFBOPQQPSUVOJUZUPPWFSDPNFUIF JOUIF#BMUJD4FB SBOLJOHUIBNPOHBMM&VSPQFBO DIBMMFOHFPGTNBMMBCTPMVUFTJ[FUISPVHITQFDJBMJ[BUJPO SFHJPOTCZUPUBMFNQMPZNFOUɨFTNBMMFTUSFHJPO BOEJOUFHSBUJPOPGFYJTUJOHTUSFOHUITGPDVTFEPOB DPWFSFEJOUIFTUBUJTUJDTJT)FENBSLPH0QQMBOE QBSUJDVMBSBSFBPGUIFFDPOPNZ -JMMFIBNNFS JO/PSXBZ PGUIFTJ[FPG%FONBSL

-BTUZFBST4UBUFPGUIF3FHJPO3FQPSUEPDVNFOUFE ɨF#BMUJD4FB3FHJPOIBTPGJUTFNQMPZNFOU UIFIJHIQPMJUJDBMGPDVTPOUIFEFWFMPQNFOUPGDMVT JOUIFDMVTUFSTFDUPS XJUIUIFSFNBJOEFSJOBDUJWJ UFSTJOUIF#BMUJD4FB3FHJPO.BOZDPVOUSJFTJOUIF UJFTTFSWJOHUIFMPDBMNBSLFUPSJOHPWFSONFOUɨJT 3FHJPOIBWFPWFSUIFMBTUGFXZFBSTMBVODIFEJOEJ NBLFTUIFDMVTUFSTFDUPSJOUIF3FHJPOBCPVU

STATE OF THE REGION REPORT 2007 53 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 23: Regions with strong cluster portfolios, Baltic Sea Region

4-"%1/&231/.'#,423%12 



 23!1  23!1 23!1 



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

QPJOUTTNBMMFSUIBOJOUIFSFTUPG&VSPQFɨFEJĊFS DBUFHPSJFTXJUITNBMMFNQMPZNFOUBOEIBTXFBLFS FODFJTESJWFOCZBIJHIFSMPDBMTFDUPS OPUCZIJHIFS QPTJUJPOTJOMBSHFDMVTUFSDBUFHPSJFT SFMBUJWFFNQMPZNFOUJOHPWFSONFOUɨFIJHIFSMPDBM TFDUPSFNQMPZNFOUJTDPOTJTUFOUXJUIBTUSPOHFSGPDVT "DSPTTUIFDMVTUFSDBUFHPSJFT UIF#BMUJD4FB3FHJPO POTFSWJDFT NPTUPGXIJDIBSFMPDBM SBUIFSUIBONBO JTNPTUTQFDJBMJ[FEJOmTIJOHQSPEVDUT GPMMPXFEBU VGBDUVSJOHɨF#BMUJD4FB3FHJPOIBTBMSFBEZHPOF TPNFEJTUBODFCZGPSFTUQSPEVDUT USBOTQPSUBUJPOBOE GVSUIFSUIBOUIFSFTUPG&VSPQFJOUIFEJSFDUJPOPGUIF MPHJTUJDT BOEDPNNVOJDBUJPOFRVJQNFOU-PPLJOH 6OJUFE4UBUFT XIFSFUIFDMVTUFSTFDUPSBDDPVOUTGPS TQFDJmDBMMZBUUIFFNQMPZNFOUJOTUSPOHSFHJPOBM BCPVUPGFNQMPZNFOU DMVTUFST JFUIPTFUIBUIBWFBUMFBTUUXJDFBTNVDI FNQMPZNFOUBTFYQFDUFE UIF#BMUJD4FB3FHJPO 0GJUTUPUBMDMVTUFSFNQMPZNFOU UIF#BMUJD4FB BDDPVOUTGPSDMPTFUPPG&VSPQFBOUPQDMVTUFS 3FHJPOIBTJOSFHJPOBMDMVTUFSTUIBUFYIJCJU FNQMPZNFOUJOmTIJOHQSPEVDUTBOEJOGPSFTUQSPE BIJHIMFWFMPGSFHJPOBMTQFDJBMJ[BUJPO JFXIFSFUIF VDUT*ODPNNVOJDBUJPOFRVJQNFOU NFEJDBMEFWJDFT  OVNCFSPGFNQMPZFFTJTBUMFBTUUXJDFBTMBSHFBT PJMBOEHBT GVSOJUVSF USBOTQPSUBUJPOBOEMPHJTUJDT  XPVMECFFYQFDUFEHJWFOUIFPWFSBMMTJ[FPGUIFSFHJPO BOEQSFGBCSJDBUFEFODMPTVSFT UIF3FHJPOBDDPVOUT ɨJTTIBSFJTTNBMMFSUIBOJOUIFBWFSBHFPGPUIFS GPSCFUXFFOBOEPG&VSPQFBOUPQDMVTUFS &VSPQFBOSFHJPOT XIFSFJUTUBOETBUɨFEJĊFS FNQMPZNFOUɨFBWFSBHFTIBSFPGUIF3FHJPOBDSPTT FODFNBUUFST CFDBVTFBIJHIFSTIBSFPGFNQMPZNFOU BMMDMVTUFSTJTɨ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ɨJTTVHHFTUTUIBUUIF TUSPOHJOUSBOTQPSUBUJPOBOEMPHJTUJDT mOBODJBMTFSW #BMUJD4FB3FHJPOJTTQFDJBMJ[FEJOBOVNCFSPGDMVTUFS JDFT BOECVTJOFTTTFSWJDFT-BUWJBTQPTJUJPOTBSFJO

54 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 24: Strengths of clusters by cluster category, Baltic Sea Region

%-"+#/+/(0-+,"*"),(+4)"*/&*./-+*$ (0./"-. 



"'  /-+*$





 % &( * # 0  / + ! . /( ! -( /- / / + -./  - -,/ !  - 2- */ &(! ., 0 " &* + ,  + 3 ( / + + &. )) "!& 0  -"  *. " +  &./- ++ 0 *./- +   $%/  4 " 0 0    +             - 1    ,-   %-)  +0- " 0-+,"*(0./"- ."-1/+-4  0/%+-.*(4.&. //"+#/%""$&+*",+-/ 

Figure 25: Export specialization by cluster category, Baltic Sea Region

!.1+$,"1*%32("1%   .5%1"++ 

.1%231.$4#32

 )2()-'1.$4#32 1"-2/.13"3).- "-$.')23)#2 41-)341% .,,4-)#"3).-04)/

.-3")-%12%3# )+"-$"2

("1," .6%1"-$04)/ 42)-%22 %15)#%2   .5%1"++  "1)-%04)/,%-3 %3"+ 43.,.3)5%

            ("-'%)-6.1+$,"1*%32("1%   .41#%!  -23)343%&.1 31"3%'7"-$.,/%3)3)5%-%22 "43(.12"-"+72)2 3"3%.&3(%%').-%/.13 

STATE OF THE REGION REPORT 2007 55 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

DPOTUSVDUJPOTFSWJDFT GPPEQSPEVDUT BOEFEVDBUJPO ɨF#BMUJD4FB3FHJPOTUSFOHUITDPOUJOVFUPCFJUT TPQIJTUJDBUFEDPNQBOJFT JUTBTTFUCBTF JUTJOOPWB ɨ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mU GSPN UIF POHPJOH SFMPDBUJPO #BMUJD4FB3FHJPOOFFEDMFBS HJPOMFWFMBSFBQQBSFOU UIFEBUB PGBDUJWJUJFT$MVTUFSFĊPSUTJOUIF TUSBUFHJFT JODMVEJOHTUSPOH SFWFBMTUIBUFBDIDPVOUSZGBDFT 3FHJPO OFFE UP CF DMFBSMZ SPPUFE JUTPXOQSJPSJUJFTJOVQHSBEJOH JOSFHJPOTDVSSFOUDMVTUFSQPSUGP MJOLBHFTBDSPTTCPSEFST UP DPNQFUJUJWFOFTT MJPT  TUSFOHUIFOJOH DMVTUFST UIBU NBLFTVSFUIBUUIFZXJMMCF FYJTUBOEQSPWJEJOHPQQPSUVOJUJFT BNPOHUIFMPDBUJPOTUIBU ɨFTLJMMCBTFSFNBJOTTUSPOH GPSOFXDMVTUFSTUPFNFSHF8IJMF GPSOPXCVUUIFSFBSFDPODFSOT NBOZ PG UIF OFDFTTBSZ BDUJWJUJFT CFOFmUGSPNUIFPOHPJOH XIFUIFSJUXJMMSFNBJODPNQFUJ OFFE UP IBQQFO PO UIF MFWFM PG SFMPDBUJPOPGBDUJWJUJFT UJWFJOBDIBOHJOHGVUVSFFOWJSPO TVCOBUJPOBMSFHJPOTPSOBUJPOT UIF NFOUɨFQSFNJVNGPSTLJMMTJT 3FHJPODBOQMBZBOJNQPSUBOUTVQQPSUJOHSPMF1PMJDZ JODSFBTJOHJOUIFHMPCBMFDPOPNZ CVUJOUIF#BMUJD MFBSOJOHJOOFUXPSLTMJLFUIF#43*OOP/FUQSPWJEFT 4FB3FHJPOFDPOPNJDJODFOUJWFTUPEFWFMPQTLJMMTUIBU DMFBSCFOFmUT"OEUIFDSFBUJPOPGOFUXPSLTPGDMVTUFST BSFFDPOPNJDBMMZWBMVBCMFBOEUPUIFOSFNBJOJOUIF JOPOFBSFB MJLF4DBO#BMUGPSMJGFTDJFODFT DBOTVQQMF 3FHJPOBSFSFMBUJWFMZMPXɨFDMVTUFSQPSUGPMJPPGUIF NFOUSFHJPOBMDMVTUFSDBQBCJMJUJFTXJUIDPNQMFNFOUBSZ 3FHJPOJTTPMJE CVUOFFETUPCFBDUJWFMZEFWFMPQFEUP TLJMMTPGOFJHICPSJOHDMVTUFST NFFUUIFOFXDPNQFUJUJWFSFBMJUJFT$MVTUFSTBSFCF DPNJOHJODSFBTJOHMZJNQPSUBOUJOUIFHMPCBMFDPOPNZ Overall assessment BTESJWFSTPGQSPEVDUJWJUZBOEJOOPWBUJPO XIJMFUIF ɨF#BMUJD4FB3FHJPODPOUJOVFTUPCFBNPOHUIF MFWFMPGDPNQFUJUJPOBOEMJOLBHFTBNPOHUIFNJT NPTUDPNQFUJUJWFFDPOPNJFTJOUIFXPSME BOEUIFSF SJTJOH*OUIF#BMUJD4FB3FHJPO FTUBCMJTIFEDMVTUFST IBWFCFFOGFXDIBOHFTJOUIF3FHJPOTPWFSBMMQPTJ OFFEUPBEESFTTUIFTFDIBMMFOHFTBOEPQQPSUVOJUJFT UJPOTJODFUIF4UBUFPGUIF3FHJPO3FQPSU GPSOFXDMVTUFSTUPFNFSHFOFFEUPCFFYQMPSFE 8IFSFDIBOHFTXFSFWJTJCMF UIFZUFOEFEUPCFQPTJ UJWF SFnFDUJOHUIFCFOJHOFDPOPNJDDMJNBUFUIBUUIF 3FHJPOJTFYQFSJFODJOH

56 STATE OF THE REGION REPORT 2007 3. The Lisbon Agenda tThe countries from the Baltic Sea Region remain ahead of ɨ F-JTCPO"HFOEB PSJHJOBMMZMBVODIFEJO  their European peers in achie- PVUMJOFT&VSPQFTBNCJUJPOUPCFDPNFUIFNPTU DPNQFUJUJWFSFHJPOJOUIFXPSMEFDPOPNZ'SPNUIF ving progress on the Lisbon PVUTFU UIF-JTCPO"HFOEBJOUSPEVDFEUXPJNQPSUBOU OFXBTQFDUTJOUIF&VSPQFBOQPMJDZEFCBUF*UTUSPOH Agenda MZSBJTFEUIFGPDVTPONJDSPFDPOPNJDGPVOEBUJPOT PGDPNQFUJUJWFOFTT HJWJOHBNVDINPSFTJHOJmDBOU The Region also registers XFJHIUUPJOOPWBUJPOBOEFOUFSQSJTFQPMJDJFT"OEJU t DIBOHFEUIFJOUFSBDUJPOCFUXFFOUIF&VSPQFBOJOTUJ the strongest track record on UVUJPOTBOEUIF&6NFNCFSDPVOUSJFT BEEJOHBOFX national policies consistent SPMFGPSUIF$PNNJTTJPOBTBNPEFSBUPSPGDIBOHF BUUIFNFNCFSDPVOUSZMFWFMɨ FSFMBVODIPGUIF with higher competitiveness -JTCPO"HFOEBJOSFJOGPSDFECPUIFMFNFOUT*U DSFBUFEBTUSPOHFSGPDVTPODPSFNJDSPFDPOPNJDQPMJ DJFTBOETUSFOHUIFOFEUIFSPMFPGUIF$PNNJTTJPOJO tTaking on the Lisbon Agenda NPOJUPSJOHQSPHSFTTBUUIFOBUJPOBMMFWFM as a Region rather than only

ɨ F&VSPQFBO$PNNJTTJPOQSPWJEFTBEFUBJMFETFU as individual countries remains PGJOEJDBUPSTDPWFSJOHTJYEJĊFSFOUQPMJDZBSFBTUP an opportunity that has not USBDLDPVOUSJFTQSPHSFTTPOUIF-JTCPO"HFOEB8F TFMFDUUIFCSPBEFSDBUFHPSJFTGPSUIFTFJOEJDBUPSTGPS been exploited PVSDBMDVMBUJPOTɨ FPOMZJOEJDBUPSXFESPQJTUIF SFHJPOBMEJTQFSTJPOPGVOFNQMPZNFOUSBUFT CFDBVTF JUJTOPUBWBJMBCMFGPSUIFNBOZDPVOUSJFTJOUIF#BMUJD 4FB3FHJPOUIBUBSFFRVJWBMFOUUP/654SFHJPOT

5PBHHSFHBUFUIFEBUB XFmSTUOPSNBMJ[FUIFSBX EBUB'PSFBDIJOEJDBUPS UIFWBMVFSFBDIFECZUIF CFTUDPVOUSZJOJTOPSNBMJ[FEUPBOEUIF WBMVFSFBDIFECZUIFXPSTUDPVOUSZJOUP"MM PUIFSWBMVFTCFDPNFWBMVFTCFUXFFOBOEVTJOH BMJOFBSUSBOTGPSNBUJPOɨ JTOPSNBMJ[BUJPOEPFT BMMPXGPSIJHIFSUIBOMPXFSUIBOJOMBUFSZFBST  FOBCMJOHVTUPUSBDLPWFSBMMJNQSPWFNFOUTPWFSUJNF ɨ FOPSNBMJ[FEWBMVFTBSFUIBOBWFSBHFEXJUIJOFBDI PGUIFTJYDBUFHPSJFTɨ FWBMVFTGPSUIFTJYDBUFHPSJFT BSFUIFOTJNQMZTVNNFEVQUPDSFBUFB-JTCPOTDPSF GPSFBDIDPVOUSZBOEZFBS'JOBMMZ (%1XFJHIUTBSF VTFEUPDSFBUFBXFJHIUFEBWFSBHFGPSUIF#BMUJD4FB 3FHJPO

$PNQBSFEUPMBTUZFBS XFJOUSPEVDFBGFXTNBMMFS DIBOHFT'JSTU #VMHBSJBBOE3PNBOJBBSFJODMVEFE JOBMMPVSDBMDVMBUJPOT4FDPOE XFBEEPOFJOEJDBUPS oUIFDIBOHFJOWPMVNFPGGSFJHIUUSBOTQPSUSFMBUJWF UP(%1oJOPVSDBMDVMBUJPOTGPSUIFFOWJSPONFOUBM QPMJDZBSFBɨ FSFTVMUTGPSQSFWJPVTZFBSTBSFWFSZTUB CMFDPNQBSFEUPUIFEBUBQVCMJTIFEMBTUZFBSEFTQJUF

STATE OF THE REGION REPORT 2007 57 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 26: Lisbon Agenda categories

# &! % #

 #  + !#!% &% $ # &  +  #!# &%'%*!#! *

 # # +  $%!#'$ + &$ $$ '$% %#%

&$ $$ ! * % +  %! * %#%  '#  % + ! * %#%  #( ##$ "&%* '%   +  &%&% %%  %' #$# + )! %&#$  

'#  % +   #  &$$$$ $ + #* % $%* % * + # $! #% % $%* % *  %)%   $ + %#$ ! '#%*%#%# $#$ + %#& ! * %#%

Figure 27: Lisbon Agenda performance, Baltic Sea Region



 $+!'%$#$)

 %!"% (!%$

 #&"%,#$)

 $$%+)!%$

%$%#! *)%#( %$%#! %'#

        

%*')'*)*'"$!)%'( *) %'($",(!( ))%)  !%$&%') 

58 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

UIFTFBEKVTUNFOUT"OEUIJSE XFVTFUIFBEEJUJPOBM FODFEGBMMJOHPWFSBMM-JTCPO"HFOEBTDPSFTJO ZFBSPGEBUBUIBUIBTCFDPNFBWBJMBCMF BOECVUIBTJNQSPWFEJUTQFSGPSNBODFTJODF ɨFQPMJDZEJNFOTJPOTGPSXIJDIBOEQSFMJNJ The Baltic Sea Region on the Lisbon Agenda OBSZEBUBJTBWBJMBCMF TVHHFTUUIBUUIJTTUSPOH ɨF#BMUJD4FB3FHJPODPOUJOVFTUPQFSGPSNXFMMPO USFOEJTHPJOHUPDPOUJOVF UIF-JTCPO"HFOEBDSJUFSJB*UTBWFSBHFQFSGPSNBODF JO UIFMBTUZFBSGPSXIJDIBMMEBUBJTBWBJMBCMF  ɨFJNQSPWFNFOUTXFSFNPTUFWJEFOUJODPIFTJPO XPVMEQVUUIF3FHJPOPOSBOLPGBMM&6NFNCFS BOEHFOFSBMFDPOPNJDDPOEJUJPOT4NBMMFSJNQSPWF DPVOUSJFT NFOUTSFMBUJWFUPPUIFS&6DPVOUSJFTXFSFSFHJTUFSFE JOFDPOPNJDSFGPSNTBOEFOWJSPONFOU XIJMFUIF ɨF#BMUJD4FB3FHJPOQFSGPSNTCFTUPOJOOPWBUJPO TUSPOHQPTJUJPOJOJOOPWBUJPOSFNBJOFETUBCMF  BOEFNQMPZNFOU  8JUIBTNBMMHBQGPMMPX TPDJBMDPIFTJPO FOWJSPONFOU BOEHFOFSBMFDPOPNJD Countries in the Baltic Sea Region DPOEJUJPOT XIFSFUIF3FHJPOSBOLTCFUXFFOBOE on the Lisbon Agenda ɨFXPSTUQFSGPSNBODFJTPOFDPOPNJDSFGPSN  ɨFDPVOUSJFTGSPNUIF#BMUJD4FB3FHJPODPOUJOVF BOBSFBNFBTVSFEUISPVHIJUTJNQBDUPOJOWFTUNFOU UPEPNJOBUFUIFUPQQPTJUJPOTPGUIF-JTCPO"HFOEB SBUFTBOEQSJDFMFWFMT XIFSFUIF3FHJPOSFBDIFTB SBOLJOH*DFMBOE 4XFEFO /PSXBZ %FONBSL BOE SBOLPGɨJTQVUTFĊPSUTUPSBJTFUIFJODFOUJWFTGPS 'JOMBOEIBEUIFMFBEJOHmWFQPTJUJPOTJO DPNQFUJOHWJHPSPVTMZPOUIFEPNFTUJDNBSLFUIJHI /PSXBZTVSQBTTFE-VYFNCPVSHJO XIJMFUIF POUIF3FHJPOTBHFOEB PUIFSUPQQPTJUJPOTSFNBJOFEVODIBOHFE&TUPOJB   NPWFTBIFBEPG(FSNBOZ  -BUWJBBEWBODFTPOF 3FMBUJWFUPMBTUZFBS UIF3FHJPODPOUJOVFEUPJNQSPWF SBOLUPXIJMF-JUIVBOJBSFNBJOTPO1PMBOE CPUIJOBCTPMVUF-JTCPO"HFOEBTDPSFBOEJOSBOL"T HBJOTPOFSBOLCVUJTBUTUJMMCZGBSJOUIFXFBLFTU NBOZPUIFSQBSUTPG&VSPQF UIF3FHJPOIBEFYQFSJ QPTJUJPOPGUIF#BMUJD4FB3FHJPODPVOUSJFT

Figure 28: Lisbon Agenda performance, European countries

&. +*$"*! +-"(./1&( ("3"-

  "(*! 2"!"* +-23 &*(*! "*)-' (/& ""$&+*

 ./+*& /1&  "-)*3 &/%0*&



+(*!

       %*$"+#&. +*$"*! +-".//+-"1&+0."-

+0- "/-0 /0-(*!& /+-.  0/%+-. ( 0(/&+*. //"+#/%""$&+*",+-/ 

STATE OF THE REGION REPORT 2007 59 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

*DFMBOEJTUIFMFBEJOHDPVOUSZPOUIF-JTCPO"HFOEB SFNBJOTUIFMBSHFTUXFBLOFTT3FMBUJWFUPMBTUZFBS  XJUIJOUIF&VSPQFBO&DPOPNJD"SFB JFUIF&6BOE (FSNBOZTMJQQFETMJHIUMZPOFOWJSPONFOUBOEJO UIF&'5"DPVOUSJFTɨFDPVOUSZJTJOUIFUPQQPTJ OPWBUJPO UJPOPOFNQMPZNFOUBOEDPIFTJPO BOEQFSGPSNFE SFMBUJWFMZXFMMPOHFOFSBMFDPOPNJDPVUDPNFT0O -BUWJBLFZTUSFOHUITBSFFDPOPNJDSFGPSNT  BOE FOWJSPONFOU JOOPWBUJPO BOEFDPOPNJDSFGPSN UIF UIFFOWJSPONFOU  *OBMMPUIFSBSFBT FTQFDJBMMZ DPVOUSZSBOLTJOUIFTFDPOEIBMGPGBMMDPVOUSJFTɨF HFOFSBMFDPOPNJDPVUDPNFT  DPIFTJPO  BOE CJHHFTUJNQSPWFNFOUJOUIFMBTUZFBSXBTJOFDPOPNJD JOOPWBUJPO  UIFDPVOUSZSBOLTNVDIMPXFSɨF SFGPSN XIFSF*DFMBOECFOFmUFEGSPNIJHIFSJOWFTU DPVOUSZMPTUHSPVOEPODPIFTJPOCVUNBEFTNBMM NFOUSBUFT HBJOTPOFNQMPZNFOU JOOPWBUJPO BOEFDPOPNJD SFGPSNT 4XFEFOTNBJOTUSFOHUITBSFJOOPWBUJPO SBOL DP IFTJPO  BOEFNQMPZNFOU  ɨFNBJOXFBLOFTT -JUIVBOJBJTTUSPOHPOUIFFOWJSPONFOU  GPMMPXFE SFNBJOTFDPOPNJDSFGPSNT XIFSFUIFDPVOUSZPOMZ JOTPNFEJTUBODFCZFDPOPNJDSFGPSNT  *UTNBJO SBOLTBNPOHDPVOUSJFTXJUIBWBJMBCMFEBUB XFBLOFTTFTBSFHFOFSBMFDPOPNJDPVUDPNFT   3FMBUJWFUPUIFQSFWJPVTZFBS4XFEFOLFQUJUTTUSFOHUI BOEDPIFTJPO  3FMBUJWFUPMBTUZFBSUIFDPVOUSZ BOENBSHJOBMMZJNQSPWFEJUTQPTJUJPOJOBSFBTPG HBJOFETJHOJmDBOUQPTJUJPOSFMBUJWFUPJUT&6QFFSTJO XFBLOFTT JOOPWBUJPO XJUITNBMMFSJNQSPWFNFOUTPOFNQMPZ NFOU DPIFTJPO BOEFDPOPNJDSFGPSNT /PSXBZJTTUSPOHPOHFOFSBMFDPOPNJDPVUDPNFT SBOL DPIFTJPO  BOEFNQMPZNFOU  CVUXFBL 1PMBOETNPTUQPTJUJWFSBOLJOHJTPOFOWJSPONFOU   POFDPOPNJDSFGPSNXIFSFJUIPMETUIFMBTUQPTJUJPO 0OFNQMPZNFOUJUSBOLT GPMMPXFECZDPIFTJPO JO&VSPQF  *OFOWJSPONFOUJUSBOLT MBSHFMZ  BOEHFOFSBMFDPOPNJDPVUDPNFT  *OOPWB EVFUPIJHIEPNFTUJDUSBOTQPSUWPMVNFHJWFOUIF UJPOBOE UPBTNBMMFSEFHSFF FDPOPNJDSFGPSNT  HFPHSBQIZPGUIFDPVOUSZ3FMBUJWFUPUIFQSFWJPVT TIPXFETJHOTPGJNQSPWFNFOUSFMBUJWFUPMBTUZFBS  ZFBS JUMPTUTMJHIUMZJOSFMBUJWFQPTJUJPOPODPIFTJPO XIJMFHFOFSBMFDPOPNJDPVUDPNFTESPQQFE BOEFDPOPNJDPVUDPNFTBTUIFSFTUPG&VSPQFTUBSUFE UPHSPXNPSFTUSPOHMZ 0WFSBMM UIFBOBMZTJTSFWFBMTUIBUUIFDPVOUSJFTBSPVOE UIF#BMUJD4FB3FHJPOEJĊFSRVJUFTJHOJmDBOUMZOPU %FONBSLTTUSFOHUITBSF MJLF4XFEFOT JOOPWBUJPO POMZJOUIFJSPWFSBMMQPTJUJPOPOUIF-JTCPO"HFOEB  DPIFTJPO  BOEFNQMPZNFOU  BOEUIFXFBL CVUBMTPJOUFSNTPGUIFJSQSPmMFPGTUSFOHUITBOE OFTTJTBTXFMMJOFDPOPNJDSFGPSNT  ɨFDPVO XFBLOFTTFT1PMJDZSFTQPOTFTOFFEUPCFDPVOUSZ USZTQPTJUJPOSFNBJOFETUBCMFSFMBUJWFUPUIFQSFWJPVT TQFDJmDBOEDBOOPUGPMMPXPOFCMVFQSJOUBDSPTTUIF ZFBS #BMUJD4FB3FHJPO#VUDPPQFSBUJPOBDSPTTUIF#BMUJD 4FB3FHJPODBONBLFUIFTFOBUJPOBMBDUJPOBHFOEBT 'JOMBOEJTTUSPOHPOJOOPWBUJPO  CVUXFBLPO NPSFFĊFDUJWF FDPOPNJDSFGPSNT  BOEFOWJSPONFOU   3FMBUJWFUPUIFQSFWJPVTZFBS UIFDPVOUSZSFHJTUFSFE National Reform Programs JNQSPWFNFOUTSFMBUJWFUPPUIFS&VSPQFBODPVOUSJFTJO "NBKPSQPMJDZJOOPWBUJPOJOUIFSFMBVODIPGUIF-JT FNQMPZNFOU CPO"HFOEBJOXBTUIFJOUSPEVDUJPOPGOBUJPOBM SFGPSNQSPHSBNT /31T *OUIFTFQSPHSBNT OBUJPOBM &TUPOJBTLFZTUSFOHUITBSFFDPOPNJDSFGPSNT  BOE HPWFSONFOUTIBEUPPVUMJOFUIFJSTUSBUFHJDQMBOTVOUJM UIFFOWJSPONFOU  (FOFSBMFDPOPNJDPVUDPNFT XJUIBWJFXUPIPXUIFTFBDUJPOTXFSFHPJOHUP  DPIFTJPO  BOEJOOPWBUJPO  BSFTPGBS BDIJFWFUIFHPBMTMBJEPVUJOUIF-JTCPO"HFOEBɨF SFMBUJWFMZXFBL3FMBUJWFUPUIFQSFWJPVTZFBS UIF &VSPQFBO$PNNJTTJPOXBTDIBSHFEXJUISFWJFXJOH DPVOUSZSFHJTUFSFEJNQSPWFNFOUTJOFOWJSPONFOU  BOEDPNNFOUJOHPOUIFTF/31T"OOVBMMZ OBUJPOBM DPIFTJPO BOEUPBTNBMMFSEFHSFFBMTPJOJOOPWBUJPO HPWFSONFOUTXFSFUPHJWFVQEBUFTPOUIFJSQFSGPSN BODFBOEUIF$PNNJTTJPOXBTUPSFWJFXBOEQVCMJDMZ (FSNBOZTSFMBUJWFTUSFOHUITBSFUIFFOWJSPONFOU   BTTFTTUIFTFQFSGPSNBODFSFQPSUT BOEJOOPWBUJPO  XIJMFFDPOPNJDSFGPSN  

60 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

Figure 29: National reform programs, European countries

!,3**  ,*#,!--

**  ,*#,!--

,*#,!--

%(%.!  ,*#,!--

' ,&  ,#  ( -  ) -  )% / ,% / / '. # '% ) * )% -.  / ) ! .'3 / ( !' / / '#% +%  ,. 0&% )#,3 ) , ,()3$ 3+, , .0% *') / ! -.* %)')1! !) %. ! $!,') * !+ ,!! !  2!( !  '*0!)% . '*  / !   4! $ */, !  --!--(!).-*".%*)'!"*,(,*#,(- /.$*,- ' /'.%*)- ..!*".$!!#%*)!+*,.

*OMBTUZFBST4UBUFPGUIF3FHJPO3FQPSUXFEJTDVTTFE &TUPOJBSFDFJWFETVQQPSUGPSTFUUJOHVQBTUSBUFHZ UIFDPOUFOUPGUIF/31TUIBUUIFDPVOUSJFTGSPNUIF PċDF JODSFBTJOHMBCPSNBSLFUnFYJCJMJUZ JOUSPEVDJOH #BMUJD4FB3FHJPOIBETVCNJUUFE#ZOPX UIFmSTUSF FOWJSPONFOUBMUBYFT BOETUSFOHUIFOJOHJOOPWBUJPO TVMUTBSFJOBOEUIF&VSPQFBO$PNNJTTJPOIBTHJWFO QPMJDJFT*UXBTBMTPDPNNFOEFEGPSUIFBNCJUJPVT JUTBTTFTTNFOUPGUIFmSTUZFBSPGJNQMFNFOUBUJPO CSFBEUIPGJUTSFGPSNBHFOEB)PXFWFS UIF$PNNJT TJPOBMTPQPJOUPVUUIFOFFEUP 0WFSBMM  DPVOUSJFT JO UIF #BMUJD 0WFSBMM DPVOUSJFTJOUIF TFUDMFBSQSJPSJUJFTBOETUSFOHUIFO 4FB3FHJPOBSFBNPOHUIFTUSPOH #BMUJD4FB3FHJPOBSF DPPSEJOBUJPOBDSPTTUIFEJĊFSFOU FTU QFSGPSNFST XJUIJO UIF &6 JO SFGPSNQSPKFDUT JNQMFNFOUJOH/31TUIBUBSFDPO BNPOHUIFTUSPOHFTUQFS TJTUFOU XJUI UIF -JTCPO "HFOEB GPSNFSTXJUIJOUIF&6JO 'JOMBOEXBTQSBJTFEGPSJUTFĊPSUT %FONBSL  &TUPOJB  'JOMBOE  BOE JNQMFNFOUJOH/31TUIBU POQFOTJPOSFGPSNT JUTHFOFSBM 4XFEFOSFDFJWFEUIFIJHIFTUBTTFTT BSFDPOTJTUFOUXJUIUIF NBDSPFDPOPNJDQPMJDJFT BOEJUT NFOU BOE(FSNBOZBOE-JUIVBOJB DPOUJOVFEGPDVTPOLOPXMFEHF DBNF BU UIF TFDPOE IJHIFTU MFWFM -JTCPO"HFOEB $IBMMFOHFTSFNBJO IPXFWFS JO ɨF NBKPSJUZ PG BMM &6 NFNCFS DPNQFUJUJPO FTQFDJBMMZJOUIFTFSW DPVOUSJFTDBNFBUUIJTTFDPOEPVUPGGPVSMFWFMT JDFTFDUPS BOEJOMBCPSNBSLFUnFYJCJMJUZ

%FONBSLXBTBQQMBVEFEGPSUIFIJHIMFWFMPGJOUF 4XFEFOHPUBDDMBJNGPSJUTJOOPWBUJPOQPMJDJFT JUT HSBUJPOBDSPTTJUTQPMJDJFT QSFTVNBCMZIFMQFECZUIF FĊPSUTPOFOWJSPONFOUBMTVTUBJOBCJMJUZ JUTHFOFSBM FYJTUFODFPGUIFDPVOUSZTHMPCBMJ[BUJPODPVODJMɨF NBDSPFDPOPNJDQPMJDJFT UIFSFDFOUUBYBOEMBCPS nFYJDVSJUZMBCPSNBSLFUTZTUFNBOEUIFDPVOUSZT NBSLFUDIBOHFTUPJODSFBTFMBCPSTVQQMZ BOEJUTFG NBDSPFDPOPNJDQPMJDJFTXFSFBMTPSFNBSLFEVQPO GPSUTUPSFEVDFUIFBENJOJTUSBUJWFCVSEFOPOCVTJ QPTJUJWFMZɨFNBJOBSFBTGPSGVUVSFBDUJPOXFSFTFFO OFTTFT-BCPSTVQQMZSFNBJOTBOJTTVFGPSGVSUIFS BTBEEJUJPOBMFĊPSUTUPJODSFBTFMBCPSTVQQMZ TUSFOHUI BDUJPOBOEDPNQFUJUJPOJOUIFTFSWJDFTFDUPSOFFETUP FOJOHDPNQFUJUJPOJOBSFBTPGSFNBJOJOHCBSSJFST  CFJNQSPWFENPSF BOEPWFSBMMGPDVTJOHPOJNQMFNFOUJOHUIFBNCJUJPVT UBSHFUTTFUJONBOZQPMJDZBSFBT

STATE OF THE REGION REPORT 2007 61 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

(FSNBOZTBDIJFWFNFOUTJOTUBCJMJ[JOHQVCMJDm 8IFUIFSPSOPUPOFBHSFFTXJUIBMMUIFDPVOUSZBT OBODFT JOTVQQPSUJOHJOOPWBUJPO BOEJOSFEVDJOH TFTTNFOUTCZUIF$PNNJTTJPO UIFQSPDFTTJTHFOFSBU CVSFBVDSBDZXFSFQPTJUJWFMZBDLOPXMFEHFECZUIF JOHQPTJUJWFSFTVMUT$PVOUSJFTIBWFUPFOHBHFJOBO $PNNJTTJPO#VUUIF$PNNJTTJPOBMTPQPJOUFEPVU FYUFSOBMEJBMPHVFBCPVUUIFJSQPMJDJFTUIBUEJSFDUMZ UIBUNBDSPFDPOPNJDQPMJDJFTTUJMMOFFEUPCFTUSFOHUI DPOOFDUTUIFTFQPMJDJFTUPUIFHPBMPGJODSFBTJOHDPN FOFE DPNQFUJUJPOJNQSPWFEJOTQFDJm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ɨF$PNNJTTJPOTFFTBTQSJPSJUJFT NPEFMGPSPUIFSQBSUTPG PG&VSPQFUPHFUIFS8IJMFUIF GPSUIFGVUVSFJOOPWBUJPOQPMJDJFT QSPDFTTXBTOPUEFTJHOFEXJUI BOENFBTVSFTUPJODSFBTFUIFMBCPS &VSPQFUPGPMMPX TVDIDSPTTOBUJPOBMDPPQFSBUJPO TVQQMZ JONJOE UIFZBSFOPUJODPOTJTUFOU XJUIJUTTQJSJU8IZOPUGPSNVMBUFBKPJOU3FHJPOBM -BUWJBIBTNBEFTPNFQSPHSFTTPOCVTJOFTTSFHVMB 3FGPSN1SPHSBNBOEQSPQPTFJUUPUIF&VSPQFBO UJPOTBOEMBCPSNBSLFUnFYJCJMJUZ#VUUIF$PNNJT $PNNJTTJPOBTBSPMFNPEFMGPSPUIFSQBSUTPG&V TJPOIBEDMFBSDPODFSOTBCPVUNBDSPFDPOPNJDQPMJ SPQFUPGPMMPX ɨFDPVOUSJFTJOUIF#BMUJD4FB3FHJPO DJFT JOOPWBUJPO BOEUIFMBCPSTVQQMZJOUIFDPVOUSZ TIPVMEFYQMPSFUIJTPQQPSUVOJUZBTUIFZDPOUJOVFUP JNQMFNFOUUIFJSTUSBUFHJFTEJSFDUFEBU&ĊPSUT 1PMBOETUBYSFGPSNTXFSFOPUFEBTBQPTJUJWFTUFQ#VU UPJODSFBTFJOOPWBUJPOBSFBUZQJDBMFYBNQMFUIFZBSF UIF$PNNJTTJPOBMTPIBEBMPOHMJTUPGBDUJPOTUPCF QBSUPG/31TJOWJSUVBMMZBMMDPVOUSJFTBOEDPVMECF MBVODIFE GSPNmTDBMQPMJDZ DPNQFUJUJPO JOOPWBUJPO  NPSFQPXFSGVMJGTVQQPSUFECZBSFHJPOBMDPNQPOFOU UPBDUJWFMBCPSNBSLFUQPMJDJFT

62 STATE OF THE REGION REPORT 2007 SECTION B THE CONTEXT FOR CROSS-NATIONAL COOPERATION IN THE BALTIC SEA REGION

STATE OF THE REGION REPORT 2007 63 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

Prosperity is ultimately created in goods and services that consumers value more than it costs companies to provide them. Competitiveness and regional integration across the Baltic Sea Region are important for the standard of living in this Region through their impact on what com- panies located here do and how well they do it. This section of the State of the Region Report takes the perspectives of companies in the Region and reviews from different angles how being located here influences their performance. It aims to provide decision-makers in the Region with a better view on the realties of doing businesses when considering public policy choices.

64 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

SECTION C: Doing business in the Baltic Sea Region – the company perspective

*OUIJT3FQPSU XFQSPWJEFPWFSBMMPCTFSWBUJPOTBOE t 'JSTU XFMPPLBUUIF#BMUJD4FB3FHJPOBTBNBSLFU DPNNFOUTPOUIFBUUSBDUJWFOFTTPGUIF#BMUJD4FB ɨFBUUSBDUJWFOFTTBOEJOUFHSBUJPOPGNBSLFUT 3FHJPOBTBQMBDFUPEPCVTJOFTT$POEJUJPOTOBUV BDSPTTUIF3FHJPOJTPGmSTUPSEFSJNQPSUBODFGPS SBMMZWBSZTJHOJmDBOUMZBDSPTTJOEVTUSJFTCVUUIFSFBSF DPNQBOJFTCVUUFOETUPCFOFHMFDUFEJONBOZ BOVNCFSPGDPNNPOUIFNFTSFMFWBOUGPSNBOZCVTJ QVCMJDQPMJDZEJTDVTTJPOTBCPVUDPNQFUJUJWFOFTT OFTTFTJOUIF3FHJPO t 4FDPOE XFMPPLBUUIF#BMUJD4FB3FHJPOBTB ɨFSPMFPGMPDBUJPOPODPNQBOZTVDDFTTJTFNFSHJOH TPVSDFPGDPNQFUJUJWFBEWBOUBHFT.BOZDPN BTBOJODSFBTJOHMZJNQPSUBOUUPQJDJOUIFEFCBUFPO QBOJFTMPDBUFEJOUIF3FHJPODPNQFUFPOHMPCBM XIBUESJWFTFDPOPNJDQFSGPSNBODF5SBEJUJPOBMMZ UIF NBSLFUTXIFSFUIFJSTVDDFTTEFQFOETCPUIPOUIFJS BOBMZTJTPGDPNQBOJFTIBTGPDVTFEPOBTQFDUTJOUFSOBM JOUFSOBMRVBMJUJFTCVUBMTPPOUIFVOJRVFPQQPS UPDPNQBOJFT JOQBSUJDVMBSUIFJSBDUJWJUJFTBOEDBQB UVOJUJFTBOEDIBMMFOHFTUIBUBIPNFCBTFJOUIF CJMJUJFT BOEPONBSLFUTUSVDUVSFT&WFOUIFBOBMZTJT #BMUJD4FB3FHJPOPĊFSTUIFN PGNBSLFUTUSVDUVSFTXBTEPOFXJUIMJUUMFDPODFSOGPS HFPHSBQIJDMPDBUJPO DPNQBSJOHNBSLFUTUSVDUVSFT t ɨ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ompanies in the Baltic Sea Region *OUIJT3FQPSUXFDBQUVSFUIFSPMFPGMPDBUJPOBTBESJWFS ɨFIFUFSPHFOFJUZBNPOHDPNQBOJFTJOUIF#BMUJD4FB PGDPNQBOZQFSGPSNBODFBMPOHUISFFEJNFOTJPOT 3FHJPOJTIVHF BTJUJTJONPTUDPVOUSJFTBOESFHJPOT

Understanding the company perspective on the Baltic Sea Region ɨFBOBMZTJTJTCBTFEPORVBMJUBUJWFJOUFSWJFXTBOEQVCMJDTUBUJTUJDTɨFJOUFSWJFXT XFSFDPOEVDUFEXJUIBOVNCFSPGCVTJOFTTMFBEFSTGSPNEJĊFSFOUJOEVTUSJFTBOE DPVOUSJFTJOUIF#BMUJD4FB3FHJPOɨFJOUFSWJFXTEPOPUQSPWJEFBTUBUJTUJDBMMZ SFQSFTFOUBUJWFJNQSFTTJPOPGUIFWJFXUIBUDPNQBOJFTJOUIF#BMUJD4FB3FHJPOIBWF BCPVUUIFDPOEJUJPOTGPSEPJOHCVTJOFTTIFSF#VUUIFZHJWFJNQPSUBOUJOTJHIUT JOUPUIFQFSTQFDUJWFTPGCVTJOFTTMFBEFSTUIBUBSFFOHBHFEJOUIJT3FHJPOBOEXPSL UPXBSETBDIJFWJOHUIFCFTUQPTTJCMFSFTVMUTHJWFOUIFDPOEJUJPOTUIFZGBDF8F XPVMEMJLFUPUIBOLUIFTFCVTJOFTTMFBEFSTGPSUIFJSPQFOOFTTBOEXJMMJOHOFTTUP QSPWJEFJOTJHIUTJOUPUIFJSWJFXTPOUIJT3FHJPOɨFZBSFOPUSFTQPOTJCMFGPSBOZ PGUIFDPODMVTJPOTESBXOJOUIJT3FQPSU

STATE OF THE REGION REPORT 2007 65 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

ɨFSFBSFMBSHFOVNCFSTPGTNBMMBOENFEJVNTJ[FE OVNCFSPGBHHSFTTJWFMZJOUFSOBUJPOBMJ[JOHDPNQBOJFT  DPNQBOJFTUIBUUSBEJUJPOBMMZBDDPVOUGPSUIFNBKPSJUZ TPNFPGXIJDIIBWFRVJDLMZSFBDIFETJHOJmDBOUHMPCBM PGFNQMPZNFOUBOE(%1ɨFTFDPNQBOJFTUFOEUP TJ[F(FSNBOZIBTCPUIMBSHFNVMUJOBUJPOBMTCVUBMTP CFFTQFDJBMMZTUSPOHJOTFSWJDFTBOEJOBDUJWJUJFTUIBU BWJCSBOU4.&TFDUPS PGUFOXJUITUSPOHHMPCBMNBS TFSWFMPDBMNBSLFUTɨFMBSHFDPNQBOJFTUSBEJUJPOBMMZ LFUQPTJUJPOT/PSUIFSO(FSNBOZ IPXFWFS UFOETUP BDDPVOUGPSUIFNBKPSJUZPGFYQPSUTBOE3% XJUI IBWFGFXFSTUSPOH4.&TBOEGFXIFBERVBSUFSTPGUIF POFHSPVQ PGUFOJONBOVGBDUVSJOH TFSWJOHHMPCBM MBSHF(FSNBONVMUJOBUJPOBMT1PMBOEBOEUIF#BMUJD NBSLFUTBOEUIFPUIFS PGUFOTFSWJDFTBOEVUJMJUJFT  DPVOUSJFTIBWFTJHOJmDBOUOVNCFSTPGWFSZTNBMM TFSWJOHOBUJPOBMNBSLFUTɨFTFQBUUFSOTSFNBJO DPNQBOJFTCVUGFXNFEJVNTJ[FEDPNQBOJFTBCMFUP MBSHFMZJOUBDU FWFOUIPVHITNBMMFSDPNQBOJFTIBWF DPNQFUFBDSPTTCPSEFST-BSHFDPNQBOJFTBSFFRVBMMZ CFDPNFNPSFJNQPSUBOUJOFYQPSUTBOEBSFCFDPNJOH GFXBOE JOUIFDBTFPG1PMBOE MBSHFMZIFBERVBSUFSFE DSVDJBMJOJOOPWBUJPOJOBOVNCFSPGTDJFODFESJWFO JOUIFDFOUSBMBOETPVUIFSOQBSUPGUIFDPVOUSZɨF DMVTUFSTMJLFMJGFTDJFODFT 3VTTJBOFDPOPNZJTEPNJOBUFECZMBSHFDPNQBOJFT BOECVTJOFTTHSPVQTXIJMFUIFTNBMMDPNQBOZTFDUPS *OUIF#BMUJD4FB3FHJPO mSNEFNPHSBQIJDTEJĊFS DPOUJOVFTUPCFSFMBUJWFMZTNBMM RVJUFTJHOJmDBOUMZBDSPTTDPVOUSJFT4XFEFOTUBOET PVUBTUIFIPNFCBTFGPSBTJHOJmDBOUOVNCFSPGMBSHF ɨFMBSHFTUDPNQBOJFTJOUIF#BMUJD4FB3FHJPOSFnFDU NVMUJOBUJPOBMDPNQBOJFTUIBUQMBZBNPSFJNQPSUBOU UIFHFOFSBMQBUUFSOTPGFDPOPNJDBDUJWJUZJOUIF3F SPMFJOUIFOBUJPOBMFDPOPNZUIBOJONPTUPUIFS HJPO4XFEJTIDPNQBOJFTBSFUIFMBSHFTUHSPVQ JOMJOF DPVOUSJFT*O/PSXBZBOE'JOMBOEUIFOVNCFSPG XJUIUIFDPVOUSZTTIBSFJO3FHJPOBM(%1%FONBSL MBSHFDPNQBOJFTJTTNBMMFS BMUIPVHIUIFZUPPBSF JTVOEFSSFQSFTFOUFE SFnFDUJOHUIFTUSPOH4.&CJBT JNQPSUBOU%FONBSLJTQBSUJDVMBSMZEPNJOBUFECZ PGJUTFDPOPNZ(FSNBOZBOE3VTTJB UPP BSFVOEFS TNBMMBOENFEJVNTJ[FEDPNQBOJFT*DFMBOEIBTB SFQSFTFOUFE BDPOTFRVFODFPGNPTUIFBERVBSUFST

Table 8: List of largest companies in the Baltic Sea Region

Company Country Industry Sales (€bn) Profits (€b) Assets (€bn) Market Value (€bn)

Top 20 Statoil Group Norway Oil & Gas Operations 51.44 4.93 38.32 41.38 Nokia Finland Technology Hardware & Equip 41.12 4.31 21.81 65.48 Edeka-Group N Germany Retail 37.17 n/a n/a n/a Gazprom Russia Oil & Gas Operations 36.48 8.20 114.59 163.83 Volvo Group Sweden Capital Goods 26.59 1.67 27.80 23.57 Möller-Maersk Denmark Transportation 25.06 2.41 34.04 32.12 Norsk Hydro Norway Conglomerates 24.38 2.11 28.42 28.74 LM Ericsson Sweden Technology Hardware & Equip 19.69 2.90 22.29 42.80 Danske Bank Group Denmark Banking 19.09 1.82 367.27 23.95 IKEA Sweden Retail 17.80 n/a n/a n/a OTTO-Group N Germany Retail 15.25 n/a n/a n/a Stora Enso Finland Materials 14.59 0.58 17.39 9.85 Skanska Sweden Construction 13.91 0.40 7.68 6.45 Nordea Bank Sweden Banking 12.94 3.00 345.91 29.81 Neste Oil Finland Oil & Gas Operations 12.73 0.63 4.34 6.23 SCA-Svenska Cellulosa Sweden Household & Personal Products 11.23 0.60 14.79 9.16 Telenor Norway Telecommunications Services 11.06 1.93 18.87 23.53 Electrolux Group Sweden Consumer Durables 10.67 0.27 7.31 4.73 SEB-Skand Enskilda Bank Sweden Banking 10.22 1.39 214.18 15.68 TeliaSonera Group Sweden Telecommunications Services 10.08 1.88 20.74 28.62

Top companies in remaining countries Mazeiku Nafta Lithuania Oil & Gas Operations 3.43 0.06 1.21 n/a Grupa Lotos N Poland Oil & Gas Operations 2.98 0.10 1.56 n/a Kaupthing Bank Iceland Banking 2.64 0.78 40.19 9.89 ELKO Gruppa Latvia Technology, media & telecom 0.47 n/a 0.14 n/a Eesti Energija Estonia Energy production & distribution 0.54 0.14 1.50 n/a

Sources: Forbes, Die Welt, Deloitte State of the Region Report 2007

66 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

PGMBSHFDPNQBOJFTJOUIFTFDPVOUSJFTCFJOHMPDBUFE UIBOBWFSBHFQSPEVDUJWJUZDBOFOUFSUIFNBSLFU XIJMF PVUTJEFUIFJSOPSUIFSOOPSUIXFTUFSOSFHJPOT1PMBOE PMEDPNQBOJFTXJUIMPXFSUIBOBWFSBHFQSPEVDUJWJUZ BOEUIF#BMUJDDPVOUSJFTSFHJTUFSOPFOUSJFTɨFUPQ DBOFYJUJU DPNQBOJFTGSPNUIFTPVUIFBTUFSOQBSUTPGUIF#BMUJD 4FB3FHJPOBSF.BäFJLJDŽOBGUB"#JO-JUIVBOJBBOE *OUIF#BMUJD4FB3FHJPO FOUSZBOEFYJUSBUFTBSFPO (SVQB-PUPTJO/PSUIFSO1PMBOE UXPDPNQBOJFTJO BWFSBHFTNBMMFSUIBOJOUIFNPTUEZOBNJDDPVOUSJFT UIFPJMSFmOFSZCVTJOFTT JOUIFHMPCBMFDPOPNJFT#VUUIFSFBSFTJHOJmDBOU EJĊFSFODFTXJUIJOUIF3FHJPO*OUIF#BMUJDDPVOUSJFT  4VDDFTTGVMDPNQBOJFTFOBCMFDPVOUSJFTBOESFHJPOTUP FOUSZPGNPSFQSPEVDUJWFDPNQBOJFTIBTCFFOBNBKPS TVTUBJOIJHIMFWFMTPGQSPTQFSJUZɨFZQSPWJEFNPSF ESJWFSPGSFDFOUQSPEVDUJWJUZHSPXUI8IJMFUIJTJTB BOECFUUFSKPCTBOEDSFBUFBUUSBDUJWFSFUVSOTGPSUIFJS IFBMUIZTJHOJOUFSNTPGNBSLFUPQFOOFTT UIJTJOnPX PXOFST1SPEVDUJWJUZHSPXUIBUUIFDPNQBOZMFWFMJT PGOFXDPNQBOJFTXJMMFWFOUVBMMZTMPXEPXOBTUIF MJOLFEUPQSPEVDUJWJUZHSPXUIBUUIFBHHSFHBUFMFWFM #BMUJDDPVOUSJFTBQQSPBDINPSFTUBCMFTUSVDUVSFT JOUISFFQPTTJCMFXBZT'JSTU FYJTUJOHDPNQBOJFTDBO 1SPEVDUJWJUZHSPXUIXJMMUIFOIBWFUPDPNFGSPN CFDPNFNPSFQSPEVDUJWF4FDPOE FYJTUJOHDPNQBOJFT DIBOHFTXJUIJO BOECFUXFFO FYJTUJOHPSHBOJ[BUJPOT  XJUIIJHIFSUIBOBWFSBHFQSPEVDUJWJUZDBOHBJOIJHIFS PGUFOBNVDINPSFDPNQMFYQSPDFTT NBSLFUTTIBSFTɨJSE OFXDPNQBOJFTXJUIIJHIFS

STATE OF THE REGION REPORT 2007 67 tMarkets around the Baltic Sea 1. The Baltic Sea Region are not integrated because as a market customers want to be served $PNQBOJFTmSTUJOUFSFTUXIFOMPPLJOHBUBMPDBUJPO locally and regulations and JTJUTBUUSBDUJWFOFTTBTBNBSLFUGPSUIFJSQSPEVDUTBOE TFSWJDFT.BSLFUTUSVDUVSFTPGUFOEJĊFSGSPNSFHJPOUP market structures differ across SFHJPO ESJWJOHDPNQBOJFTUPBEPQUEJĊFSFOUTUSBUF the Region HJFTUPDPNQFUFBDSPTTMPDBUJPOT8IJMFTPNFPGUIFTF EJĊFSFODFTBSFUIFSFTVMUPGOBUVSBMNBSLFUFWPMV UJPO EJĊFSFODFTJOCVTJOFTTFOWJSPONFOUT QBSUJDV tCompanies increasingly com- MBSMZJOUIFSVMFTBĊFDUJOHDPNQFUJUJPO BMTPQMBZBO bine national sales and marke- JNQPSUBOUSPMF6OEFSTUBOEJOHUIFTJNJMBSJUJFTBOE EJĊFSFODFTPGNBSLFUTUSVDUVSFTBDSPTTUIF#BMUJD4FB ting organizations with structu- 3FHJPOQSPWJEFTBOJNQPSUBOUJOTJHIUJOUPUIFMFWFM res on the Baltic Sea Region PGNBSLFUJOUFHSBUJPOBDUVBMMZBDIJFWFE level that manage investments $PNQFUJUJWFOFTTTFUTUIFMFWFMPGQSPEVDUJWJUZXJUI XIJDIBDPNQBOZDBOPQFSBUFBUBHJWFOMPDBUJPO and production .BSLFUTUSVDUVSFTUIFOEFmOFIPXNVDIPGUIFWBMVF DSFBUFEUIFDPNQBOZ CZCPUIJUTPXOFSTBOEJUT Markets in the Baltic Sea FNQMPZFFT JUXJMMCFBCMFUPLFFQ BOEIPXNVDIPG t JUXJMMCFDBQUVSFECZDPOTVNFST Region are attractive where ɨ F'JWF'PSDFTGSBNFXPSLQSPWJEFTBTUSVDUVSFEBQ the base of customers with QSPBDIUPJEFOUJGZXIFUIFSNBSLFUTBDSPTTUIF#BMUJD purchasing power and will- 4FB3FHJPOBSFBUUSBDUJWFGPSDPNQBOJFT*UBMTPHJWFT JOTJHIUTJOUPXIFUIFSUIFTFNBSLFUTBSFJOUFHSBUFE ing ness to pay for advanced *OUFHSBUFENBSLFUTIBWFUIFTBNFTUSVDUVSBMDIBSBD products outweighs the costs UFSJTUJDTBDSPTTHFPHSBQIJDBSFBTBOEDPNQBOJFTDPN QFUJUJWFBEWBOUBHFTJOPOFHFPHSBQIJDNBSLFUFBTJMZ of serving many small markets USBOTMBUFJOUPDPNQFUJUJWFBEWBOUBHFTJOBOPUIFS *OUFHSBUJPOSFWFBMTJUTFMGJOUIFOBNFTPGMFBEJOHDPN QBOJFTXJUIJOBOJOEVTUSZBDSPTTEJĊFSFOUMPDBUJPOT tAs markets are integrating XJUIJOUIF#BMUJD4FB3FHJPOBOEJOUIFPSHBOJ[BUJPO more, Baltic Sea Region BMTUSVDUVSFTUIBUJOEJWJEVBMDPNQBOJFTIBWFDSFBUFE UPTFSWFUIFNBSLFUTJOUIF#BMUJD4FB3FHJPO management structures are becoming more important and .BSLFUTUSVDUVSFTEJĊFSXJEFMZBDSPTTJOEVTUSJFT FWFO XJUIJOBDPVOUSZ"OEDPNQBSBCMFEBUBPOUIFBWFS the markets in the Region BHFQSPmUBCJMJUZPGDPNQBOJFTJOOBUJPOBMNBSLFUTJT more attractive OPUSFBEJMZBWBJMBCMF#VUUIFBWBJMBCMFEBUBQSPWJEFT BRVBMJUBUJWFWJFXPOIPXDPOEJUJPOTJOUIF#BMUJD 4FB3FHJPOUFOEUPEJĊFSGSPNUIFTFJOPUIFSNBS LFUT QBSUJDVMBSMZJOUIFNBJOFDPOPNJFTPG&VSPQF *UQSPWJEFTJNQPSUBOUJOTJHIUTJOUPUIFQFSDFQUJPOT UIBUDPNQBOJFTIBWFBCPVUUIF#BMUJD4FB3FHJPOBTB NBSLFU

68 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

The Five Forces-framework ɨFNPTUQPQVMBSUPPMGPSBOBMZ[JOHNBSLFUTUSVDUVSFTJTUIFmWFGPSDFTGSBNF XPSL EFWFMPQFECZ.JDIBFM1PSUFSJOUIFT*UMPPLTBUUIFSFMBUJWFQPXFS PGDVTUPNFST TVQQMJFST DPNQFUJUPST BOETVCTUJUVUFTBTXFMMBTBUUIFOBUVSFPG DPNQFUJUJPOCFUXFFOEJSFDUSJWBMTɨFTQFDJmDOBUVSFPGUIFTFGBDUPSTDBOCF EJĊFSFOUGSPNMPDBUJPOUPMPDBUJPOBTBDPOTFRVFODFPGEJĊFSFODFTJOQVCMJDQPMJDZ  MFHBDZNBSLFUQPTJUJPOT PSDVTUPNFSOFFET*GUIFSFBSFTUSPOHEJĊFSFODFTBDSPTT SFHJPOTBMPOHBOZPGUIFmWFEJNFOTJPOT NBSLFUTBSFDPOTJEFSFEUPCFMPDBMPS OBUJPOBMJGUIFTFEJĊFSFODFTBSFTNBMMUIFNBSLFUTBSFDPOTJEFSFEUPCFHMPCBM *OMPDBMNBSLFUT DPNQBOJFTTVDDFTTJOPOFMPDBMNBSLFUEPFTOPUBVUPNBUJDBMMZ USBOTMBUFJOUPTVDDFTTJOBOPUIFSMPDBMNBSLFU(MPCBMDPNQBOJFTDBODPNQFUFJO NBOZOBUJPOBMPSMPDBMNBSLFUTUIFJSQSFTFODFBMPOFJTOPUJOEJDBUJWFPGXIFUIFSB NBSLFUJTHMPCBM

Market integration OJFTQVSTVFBMPDBMBQQSPBDIUPEFMJWFSJOHHPPETBOE .BSLFUTJOUIF#BMUJD4FB3FHJPOUPEBZBSFMBSHFMZ TFSWJDFTUPDVTUPNFST XIJMFUIFHPPETBOETFSWJDFT OBUJPOBMBOEOFFEUPCFBQQSPBDIFECZDPNQBOJFT UIFNTFMWFTBSFJODSFBTJOHMZTJNJMBS4XFECBOL GPSFY BTTVDIɨJTJTUIFDMFBSWJFXPGCVTJOFTTMFBEFST BNQMF TQFBLTPGJUTFYQBOTJPOUPUIF#BMUJDDPVOUSJFT JOUFSWJFXFEGPSUIJT3FQPSUBOEJUJTSFn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mOBODJBMTFSWJDFT GPS &6 BOE &'5" NFNCFST JO UIF 5SBEFCBSSJFSTPSJOGSB FYBNQMF SFHVMBUPSTJOUIF#BMUJD SFHJPOIBWFSFNPWFENPTUJNQPSU DPVOUSJFTBOEUIF/PSEJDDPVO CBSSJFST BOE IBWF B HFOFSBMMZ FG TUSVDUVSFQSPCMFNTQMBZBO USJFTDPPQFSBUFXFMM/FWFSUIFMFTT  mDJFOU USBOTQPSU JOGSBTUSVDUVSF UP JODSFBTJOHMZTNBMMFSSPMFJO SFHVMBUPSZmMJOHTIBWFUPCFNBEF DPOOFDU OBUJPOBM NBSLFUT 0UIFS FYQMBJOJOHUIFMBDLPGNBS UPUIFOBUJPOBMBVUIPSJUJFT OPU JOUFSWFOUJPOT JOUP UIF GVODUJPO LFUJOUFHSBUJPOBDSPTTUIF BOJOUFHSBUFE#BMUJD4FB3FHJPO JOHPGNBSLFUTUIBUDSFBUFBSUJmDJBM BHFODZ*OTFDVSJUZTFSWJDFT EJG BEWBOUBHFT GPS MPDBM DPNQBOJFT #BMUJD4FB3FHJPO GFSFODFTJOQSJWBDZSVMFTBĊFDUUIF BSF BMTP JODSFBTJOHMZ BCTFOU 'BD BCJMJUZUPVTFNPEFSOTVSWFJMMBODF UPSTUIBUDPOUJOVFUPXPSLBHBJOTUNBSLFUJOUFHSBUJPO  UFDIOPMPHJFT*OUFMFDPNNVOJDBUJPOT UIFSFHVMBUPSZ IPXFWFS  BSF EJĊFSFODFT JO DVTUPNFS OFFET  SFHVMB USFBUNFOUPGJODVNCFOUTWFSTVTOFXFOUSBOUTEJG UJPOT UIFOBUVSFPGDPNQFUJUPST BOE UPTPNFEFHSFF  GFSTGSPNDPVOUSZUPDPVOUSZ*OGPPEQSPEVDUT UIF UIFQSFTFODFPGEJĊFSFOUDVSSFODJFTBDSPTTUIF3FHJPO &VSPQFBO6OJPOQSPWJEFTNJOJNVNTUBOEBSETCVU OBUJPOBMHPWFSONFOUTIBWFJOUSPEVDFESFHVMBUJPOT $VTUPNFSTBDSPTTUIF#BMUJD4FB3FHJPOFYQFDUUPCF UIBUEFmOFBEEJUJPOBMSFRVJSFNFOUT MBSHFMZSFMBUFEUP TFSWFEMPDBMMZ FWFOXIFOUIFJSBDUVBMOFFETBSFTJNJ IFBMUIPSFOWJSPONFOUBMPCKFDUJWFT4XFEFOSFRVJSFT MBS$PNQBOJFTSFQPSUUIBUFWFOCFUXFFOUIF/PSEJD QSFTTFEPJMUPCFVTFEJOBMMNBSHBSJOFTXIJMFPUIFS DPVOUSJFTBOEUIF#BMUJDDPVOUSJFTUIFEJĊFSFODFT &6NFNCFSDPVOUSJFTEPOPU/PSXBZJNQPTFTIJHI JODVTUPNFSOFFETBSFTNBMM4UBOEBSETPGMJWJOHEP JNQPSUUBSJĊTPOQSPEVDUTUIBUVTFSBXNBUFSJBMT BĊFDUQVSDIBTJOHQPXFSBOEUIFSFMBUJWFTJ[FPGEJG MPDBMMZBWBJMBCMF%FONBSLJNQPTFTFYUSBUBYFTPO GFSFOUNBSLFUTFHNFOUT CVUXJUIJONBSLFUTFHNFOUT TVHBSBOEPUIFSQSPEVDUT$PVOUSJFTBMTPVTFEJĊFSFOU UIFDVTUPNFSOFFETBSFSBQJEMZDPOWFSHJOH$PNQB MBCFMTGPSQSPEVDUTUIBUQSFTFSWFUIFFOWJSPONFOU

STATE OF THE REGION REPORT 2007 69 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

$PNQFUJUPSTBDSPTTUIF#BMUJD4FB3FHJPOEJĊFS 5FMFOPS BOE5%,EJĊFSTJHOJmDBOUMZBDSPTTUIF/PS CZOBUJPOBMNBSLFU FWFOXIFOUIFPWFSBMMNBSLFU EJDDPVOUSJFTEFQFOEJOHPOJODVNCFODZFWFOUIPVHI TUSVDUVSFJTTJNJMBS'JSTU JONBOZNBSLFUTUIFSFJTB BMMUISFFDPNQBOJFTBSFQSFTFOUUPEJĊFSFOUEFHSFFT UXPUJFSTUSVDUVSFXJUIMPDBMQSPWJEFSTBDUJWFPOMZPO JONPTU/PSEJDNBSLFUT4JNJMBSQBUUFSOTFYJTUJO POFOBUJPOBMNBSLFUBOEHMPCBMQSPWJEFSTBDUJWFPO FOFSHZ mOBODJBMTFSWJDFT BOEGPPESFUBJM*OmOBODJBM NBOZOBUJPOBMNBSLFUTɨFMPDBMDPNQFUJUPSTEJĊFS TFSWJDFT 4XFECBOL 4&# BOE/PSEFBIBWFTUSPOH GSPNDPVOUSZUPDPVOUSZ XIJMFUIFHMPCBMDPNQFUJ QPTJUJPOTBDSPTTEJĊFSFOUDPVOUSJFTJOUIF3FHJPO*O UPSTBSFUIFTBNFBDSPTTUIF3FHJPO4FDPOE NBSLFU GPPESFUBJM *$"HSPVQIBTNBSLFUTIBSFTBCPWF TIBSFTBSFTUSPOHMZBĊFDUFECZMFHBDZQPTJUJPOT*OUFMF JO4XFEFO /PSXBZ &TUPOJBBOE-BUWJB DPNNVOJDBUJPO NBSLFUTIBSFTCFUXFFO5FMJB4POFSB 

Figure 30: Market shares in banking, Baltic Sea Region

 

-/#$  4$#! ,)   ,0)$ ,) ,-/   /$5! ,)  ,)(  ,#0! ,)(  0* ,#0! ,)(  ,)/-2. . /$! ,)**( ,"$   ,#$*0! ,)$, 1'$/



/) 6

/4 ,( $#$, -  13( 2 $,+  (,* ,# "$* ,# 01-,( 1' 4  ( -2/"$-+.$1(1(-,(,-/#("$1 (* ,)(,&  , 1(-, *! ,)(,& 00-"( 1(-,0 1 1$-%1'$$&(-,$.-/1 

Figure 31: Market shares in mobile phone services, Baltic Sea Region

 /)$10' /$  

$*$  $*( -,$/ $*$,-/ -!(*  (+(,,    *(0 (,,$1 (1$  (  1'$/

 5 13( 4 ,(  2 4$#$, -/ (,* ,# "$* ,# 01-,( (1'  $,+ /)  -2/"$-+.$1(1(-, ,#/$&2* 1(-,(,1'$-/#("+-!(*$+ /)$10  4$#(0' / #$-2,"(*   1 1$-%1'$$&(-,$.-/1 

70 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

'JOBMMZ UIFQSFTFODFPGEJĊFSFOUDVSSFODJFTBDSPTTUIF CZUIF½SFTVOEJOTUJUVUFUJOGPVOEUIBUPG #BMUJD4FB3FHJPOIBNQFSTNBSLFUJOUFHSBUJPO UIFTFSFHJPOBMIFBERVBSUFSTXFSFJO4XFEFOBOE "DPNQBOZMJLF"NFSJDBO&YQSFTT PQFSBUJOHJODPO JO%FONBSL XJUIUIFSFNBJOEFSJO/PSXBZBOE'JO TVNFSmOBODF GBDFTBEEJUJPOBMUSBOTBDUJPODPTUTGSPN MBOE(FSNBOZ 1PMBOE BOE3VTTJBBSFBMNPTUBMXBZT IBOEMJOHNVMUJQMFDVSSFODJFTBOEOFFETUPEFBMXJUI UIFSFTQPOTJCJMJUZPGPUIFSPSHBOJ[BUJPOBMVOJUT*OUIF UIFSJTLPGFYDIBOHFSBUFnVDUVBUJPOT XPSME PG DPNQBOJFT  UIF #BMUJD 4FB 3FHJPO JODMVEFT UIF/PSEJDBOE#BMUJDDPVOUSJFT OPUNPSF0OFPGUIF Company organization GFXFYDFQUJPOTJT.BFSTLXIFSFUIFNBSLFUSFTQPOTJ "TBSFTVMUPGUIFTFEJĊ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mOFECZQSPEVDUHSPVQBOESFHJPO DIFNJDBMBOEQIBSNBDFVUJDBMDPNQBOZ*UEFDJEFE UPTFUVQB/PSEJDIFBERVBSUFSJO$PQFOIBHFO BOE .PTUJOUFSOBUJPOBMDPNQBOJFTPQFSBUJOHJOUIF#BMUJD OBUJPOBMDPNQBOJFTJOBMM/PSEJDDPVOUSJFT MBUFSFY 4FB 3FHJPO IBWF TFU VQ PSHBOJ[BUJPOT BCPWF UIF OB UFOEJOHUPUIF#BMUJDDPVOUSJFTBTXFMMɨJTTUSVDUVSF UJPOBMMFWFMUPNBOBHFPQFSBUJPOT IBTCFDPNFBSPMFNPEFM BOE BDSPTT HSPVQT PG DPVOUSJFT ɨFSF *OUIFXPSMEPGDPNQBOJFT  #BZFSOPXPQFSBUFTSFHJPOBM JTBNPSFHFOFSBMUSFOEJOUIJTEJ UIF#BMUJD4FB3FHJPOJO IFBERVBSUFSTBSPVOEUIFXPSL SFDUJPO*#. GPSFYBNQMF IBTJO $PQFOIBHFOGVODUJPOTBTUIF  NPWFE GSPN POF SFHJPOBM DMVEFTUIF/PSEJDBOE#BMUJD DFOUSFGPSTIBSFETFSWJDFTJOUIF IFBERVBSUFST GPS BMM PG &VSPQF DPVOUSJFT OPUNPSF SFHJPO JODMVEJOHBENJOJTUSBUJWF UP B OVNCFS PG TNBMMFS SFHJPOT  GVODUJPOT NBSLFUJOH TBMFT QSPE JODMVEJOHPOFPSHBOJ[BUJPOGPSUIF#BMUJD4FBɨFTF VDUTVQQPSUBOESFTFBSDIɨFUBCMFCFMPXQSPWJEFT PSHBOJ[BUJPOTUFOEUPDPWFSUIF/PSEJDDPVOUSJFTBOE GVSUIFSFYBNQMFTPGTVDIPSHBOJ[BUJPOBMTUSVDUVSFT TPNFUJNFTBMTPJODMVEFUIF#BMUJDDPVOUSJFT"TUVEZ GSPN%FONBSLBOE4XFEFO

Table 9: Regional headquarters and shared service centers, Denmark and Sweden

Company Location Activities

Akzo Nobel Sweden Internal auditing Daimler Chrysler Sweden Logistics DHL Sweden Customer service, finance, IT, marketing Goodyear Dunlop Sweden Finance, Accounting, Customer service, Sales support, Logistics Honda Sweden Sales administration, Marketing, Finance, Accounting, HR, IT, Technical training, logistics Ingram micro Sweden Logistics Motorola Sweden Finance, Accounting Siemens Financial Services Sweden IT, Accounting, Controlling, Funding Schneider Electric Denmark IT, Telecom Fuji Heavy Inds. Subaru Denmark n/a Bayer AG Denmark Administrative functions, sales and marketing, product support, research

Source: Invest in Denmark, Invest in Sweden State of the Region Report 2007

STATE OF THE REGION REPORT 2007 71 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

.BOZDPNQBOJFTGSPNUIF/PSEJDDPVOUSJFT QBSUJDV .BSLFUBUUSBDUJWFOFTTBMTPEJĊFSTBDSPTTDPVOUSJFT MBSMZGSPN4XFEFO IBWFVTFEUIFOFXNBSLFUPQQPS PGUIF#BMUJD4FB3FHJPOɨF/PSEJDDPVOUSJFT UVOJUJFTJOUIF#BMUJDDPVOUSJFTBOE TPGBSUPBMFTTFS BOE(FSNBOZQSPWJEFBOBUUSBDUJWFCBTFPGBČVFOU FYUFOU JO1PMBOEBOE3VTTJB UPHSPXɨFTFHSPXUI DPOTVNFST PGUFODPOTDJPVTPGGBTIJPO CSBOET BOE TUSBUFHJFTIBWFFYQPSUFETVDDFTTGVM RVBMJUZ.BSLFUTIBSFTBSFMBSHFMZ QSPEVDUTBOETFSWJDFDPODFQUTGSPN $PNQBOJFTIBWFHSPXO EJTUSJCVUFECFUXFFOFYJTUJOHSJWBMT UIFJSSFTQFDUJWFIPNFCBTFT TFSW UIFTJ[FPGUIFJSFYJTUJOH BOEOFXFOUSBOUTIBWFUPHBJO JOHBOFXTFUPGDVTUPNFST$PN CVTJOFTTGSPNUIFNUPHSPXɨF QBOJFTIBWFHSPXOUIFTJ[FPGUIFJS CVTJOFTTNPEFMT CVUIBWF #BMUJDDPVOUSJFT 1PMBOE BOE3VT FYJTUJOHCVTJOFTTNPEFMT CVUIBWF OPUVTFEHFPHSBQIJDFY TJBBSFTUJMMTNBMMFSNBSLFUTBOE OPUVTFEHFPHSBQIJDFYQBOTJPOBT QBOTJPOBTBUSJHHFSGPS NBOZDPOTVNFSTBSFNPSFQSJDF B USJHHFS GPS TJHOJmDBOU DIBOHFT TFOTJUJWF#VUQVSDIBTJOHQPXFSJT XJUIJO UIFTF CVTJOFTT NPEFMT TJHOJmDBOUDIBOHFTXJUIJO HSPXJOHRVJDLMZ PGUFOFTQFDJBMMZ UIFTFCVTJOFTTNPEFMT JOUIFIJHIFOETFHNFOUT BOEUIF Market attractiveness MBSHFHSPXUIPGUIFNBSLFUDSFBUFT .BSLFUBUUSBDUJWFOFTTJTOPUBOFDPOPNJDQPMJDZPC PQQPSUVOJUJFTGPSOFXDPNQBOJFTUPHSPXCZUBQQJOH KFDUJWFQFSTFJGJUTJHOBMTUIFQSJDJOHQPXFSPGTUSPOH JOUPUIFOFXEFNBOE DPNQBOJFT JUJTOFHBUJWFGPSUIFQSPTQFSJUZPGUIF QPQVMBUJPO#VUJUJTJNQPSUBOUUPVOEFSTUBOENBSLFU 0WFSBMM UIFBUUSBDUJWFOFTTPGUIF#BMUJD4FB3FHJPOBT BUUSBDUJWFOFTTBTBNBHOFUGPSJOWFTUNFOUTCZDPNQB BNBSLFUEFQFOETPOUIFCBMBODFCFUXFFOUXPGBD OJFT CPUIFYJTUJOHEPNFTUJDBOEOFXGPSFJHO UPSTPOUIFQPTJUJWFTJEF UIF3FHJPOEPFTQSPWJEFB SFTFSWPJSPGBUUSBDUJWFDPOTVNFSTBOEBCVTJOFTTFOWJ .BSLFUTJOUIF#BMUJD4FB3FHJPOEJĊFSXJEFMZJO SPONFOUUIBUBMMPXTGPSSFMBUJWFMZFċDJFOUPQFSBUJPOT UIFJSBUUSBDUJWFOFTTSFMBUJWFUPDPNQBSBCMFNBSLFUT POUIFOFHBUJWFTJEF UIFMBDLPGJOUFHSBUJPOBDSPTT FMTFXIFSF OBUJPOBMNBSLFUTJOUIF#BMUJD4FB3FHJPONVMUJQMJFT UIFmYFEFOUSZDPTUTGPSTFUUJOHVQPQFSBUJPOTJO t *ONBSLFUTXJUIIFBWZHPWFSONFOUJOWPMWFNFOU NBSLFUTXJUIMJNJUFEBCTPMVUFTJ[F$PNQBOJFTUIBU JOUIFTFUUJOHPGQSJDFTMJLFQIBSNBDFVUJDBMT UIF DBOFYQMPJUUIJTCBMBODFUPUIFJSBEWBOUBHFIBWFDMFBS BWFSBHFQSPmUBCJMJUZPGDPNQBOJFTPQFSBUJOHJO PQQPSUVOJUJFT UIF/PSEJDDPVOUSJFTBOE(FSNBOZJTTJNJMBSUP PUIFS&VSPQFBONBSLFUTCVUCFMPXUIFMFWFMPGUIF Trends 6OJUFE4UBUFTɨF#BMUJDDPVOUSJFTBOE1PMBOEBSF ɨFDVSSFOUMFWFMTPGNBSLFUJOUFHSBUJPOBOENBSLFU EJĊFSFOU XJUIBNVDIIJHIFSTIBSFPGHFOFSJDT BUUSBDUJWFOFTTBDSPTTUIF#BMUJD4FB3FHJPOSFnFDUUIF VOEFSMZJOHTUSVDUVSBMDPOEJUJPOTPGUIFQBTU OPUPG t *ONBSLFUTXJUITUSPOHMPDBMSJWBMSZCFUXFFOJO UIFQSFTFOUPSUIFGVUVSFɨF#BMUJD4FB3FHJPOIBT DVNCFOUTMJLFmOBODJBMTFSWJDFT QSPmUBCJMJUZ UPP  PWFSUIFMBTUEFDBEFTFFOUSBEFCBSSJFSTGBMMJOHBOE JTDPNQBSBCMFUPNBOZPUIFS&VSPQFBONBSLFUT USBOTQPSUBUJPOMJOLBHFTJNQSPWJOH BUSFOEUIBUXJMM CVUPOMZGPSDPNQBOJFTUIBUDBOBDIJFWFIJHIMFW GVSUIFSDPOUJOVF$VTUPNFSOFFETBOESFHVMBUPSZ FMTPGDPTUFċDJFODZJOUIFJSPQFSBUJPOT0QFSBU QSPDFEVSFTBSFBMTPHPJOHUPDPOWFSHFNPSFPWFSUJNF JOHDPTUTJO/PSEJDCBOLTBSFTJHOJmDBOUMZMPXFS BTBTIBSFPGSFWFOVFTUIBOJONPTUPUIFSQBSUTPG ɨFTFUSFOETXJMMDPOUSJCVUFUPBHSBEVBMSFPSHBOJ[B &VSPQF NBLJOHJUMFTTBUUSBDUJWFGPSGPSFJHOCBOLT UJPOPGDPNQBOJFTBOENBSLFUT$PNQBOJFTXJMM XJUIIJHIFSDPTUTUSVDUVSFTUPFOUFSUIFNBSLFU JODSFBTJOHMZCFBCMFUPDSFBUFCVTJOFTTTUSVDUVSFTUIBU DPNCJOFOBUJPOBMTBMFTBOENBSLFUJOHGVODUJPOT t *ONBSLFUTXJUIBNJYPGHMPCBMBOEMPDBMDPNQFUJ XJUI#BMUJD4FB3FHJPOQMBUGPSNTGPSQSPEVDUJPOBOE UPST QSJDFTBSFBUUSBDUJWFGPSDPNQBOJFTUIBUDBODSF PQFSBUJPOTɨFOFXPQQPSUVOJUJFTXJMMESJWFSFMBUFE BUFFDPOPNJFTPGTDBMFJOUIFJSCVTJOFTTNPEFMTɨF DIBOHFTJOUIFXBZDPNQBOJFTDPNQFUF JOUIFXBZ DPNQFUJUJPOJOUIFTFNBSLFUTJOUIF/PSEJDDPVOUSJFT DPNQBOJFTBSFPSHBOJ[FE BOEJOUIFXBZGPSFJHO UFOETUPCFMFTTJOUFOTFUIBOJO(FSNBOZPSUIF6,  DPNQBOJFTXJMMWJFXNBSLFUPQQPSUVOJUJFTJOUIF XIJDIBSFMBSHFNBSLFUTUIBUBVUPNBUJDBMMZBUUSBDUUIF #BMUJD4FB3FHJPO BUUFOUJPOPGBMMHMPCBMMZPQFSBUJOHDPNQBOJFT

72 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

t $PNQBOJFTXJMMIBWFJODSFBTJOHPQQPSUVOJUJFTUP #VU NPSF JOUFHSBUJPO XJMM IBQQFO OFJUIFS BVUPNBUJ DPNQFUFXJUIBDPNNPOCVTJOFTTNPEFMBDSPTT DBMMZOPSJOTUBOUMZ*USFRVJSFTQVCMJDQPMJDZUPSFNPWF UIFNBSLFUTJOUIF#BMUJD4FB3FHJPOɨFZXJMM SFNBJOJOHCBSSJFST BOEJUSFRVJSFTCVTJOFTTFTUPBDUJWFMZ CFCFUUFSBCMFFYQMPJUJOHFDPOPNJFTPGTDBMFXIJMF UBLFBEWBOUBHFPGUIFPQQPSUVOJUJFTDSFBUFE XIFSFFBSMZ QSPWJEJOHQSPEVDUTBOETFSWJDFTPGQSFEJDUBCMF NPWFSTXJMMCFBCMFUPCFOFmUNPTU RVBMJUZUISPVHIUIF3FHJPO Overall assessment t $PNQBOJFTPQFSBUJOHJOEJĊFSFOUNBSLFUTBDSPTT .BSLFUTJOUIF#BMUJD4FB3FHJPOBSFBUUSBDUJWFCVUTVG UIF3FHJPOXJMMCFOFmUGSPNUIFTUSFOHUIFOJOHPG GFSGSPNUIFJSTNBMMTJ[F.BOZPGUIF3FHJPOTDPOTVN JOUFHSBUFENBOBHFNFOUGVODUJPOTBUUIF#BMUJD4FB FSTIBWFTJHOJmDBOUQVSDIBTJOHQPXFSBOEBSFXJMMJOHUP 3FHJPOMFWFM.BOZEFDJTJPOTBCPVUQSPEVDUJPO QBZGPSBEWBODFEBOEIJHIRVBMJUZQSPEVDUTBOETFSWJDFT BOEPQFSBUJPOTXJMMCFNPSFFċDJFOUMZNBEFBU #VUUIFBCTPMVUFOVNCFSPGUIFNJTMJNJUFE FTQFDJBMMZ MFWFMPGUIF3FHJPO XIJMFEFDJTJPOTBCPVUNBSLFU SFMBUJWF UP HSPXUI NBSLFUT PVUTJEF PG &VSPQF ɨFSF JT JOHBOETBMFTXJMMDPOUJOVFUPSFRVJSFBMPDBMPS OPJOUFHSBUFE#BMUJD4FB3FHJPONBSLFU CVUBDPMMFDUJPO OBUJPOBMBQQSPBDI PGOBUJPOBMNBSLFUTUIBUBSFMJOLFEUISPVHINBOZDPN QBOJFTUIBUBSFBDUJWFBDSPTTUIFNɨFMBDLPGNBSLFUJO t 'PSFJHODPNQBOJFTXJMMmOEJODSFBTJOHMZJOUFSFTUJOH UFHSBUJPOSBJTFTPQFSBUJOHDPTUTGPSDPNQBOJFTBOESBJTFT PQQPSUVOJUJFTJOUIF#BMUJD4FB3FHJPOɨFZXJMMCF UIFDPNQMFYJUJFTPGJOWFTUJOHJOUIF3FHJPO FTQFDJBMMZGPS BCMFUPTQSFBEUIFmYFEDPTUTPGTFUUJOHVQBOPSHBOJ GPSFJHODPNQBOJFT [BUJPOBDSPTTBMBSHFSQPUFOUJBMNBSLFU ɨFUSFOEJTUPXBSETNPSFNBSLFUJOUFHSBUJPOBOETUSPOH .PSF JOUFHSBUJPO XJMM DPOUSJCVUF UP IJHIFS QSPTQFS FSQBO#BMUJD4FB3FHJPOPSHBOJ[BUJPOBMTUSVDUVSFT$PN JUZDPNQBOJFTXJMMCFBCMFUPJODSFBTFUIFFċDJFODZPG QBOJFTUIBUBSFmSTUNPWFSTJOTFSWJOHOBUJPOBMNBSLFUT UIFJSPQFSBUJPOTBOESJWBMSZJTMJLFMZUPJODSFBTFQSJDF XJUIBOJOUFHSBUFE#BMUJD4FB3FHJPOCVTJOFTTNPEFMXJMM QSFTTVSFPODPNQBOJFT BMMPXJOHDPOTVNFSTUPDBQUVSF CFOFmUNPTUGSPNUIFTFDIBOHFT"OEGPSFJHOJOWFTUPST BTJHOJmDBOUTIBSFPGUIFQSPEVDUJWJUZJNQSPWFNFOUT XJMMmOEUIF3FHJPOJODSFBTJOHMZBUUSBDUJWF

STATE OF THE REGION REPORT 2007 73 tThe Baltic Sea Region 2. Competitive advantages provides clear attractions for in the Baltic Sea Region companies looking for test $PNQBOJFTDPNQFUFPOJOUFSOBUJPOBMNBSLFUTOPU markets, technical skills, design POMZXJUIUIFJOUFSOBMDBQBCJMJUJFTPGUIFJSSJWBMTUIFZ BMTPDPNQFUFXJUIUIFCVTJOFTTFOWJSPONFOUTUIBU capabilities, environmental UIFTFSJWBMTIBWFBDDFTTUPJOUIFJSIPNFMPDBUJPOT*O expertise, strengths in specific TPNFJOEVTUSJFTUIFBEWBOUBHFTPGUIFTFIPNFMPDB UJPOTBSFTPMBSHFUIBUDPNQBOJFTGSPNBGFXMPDBUJPOT clusters, and more BSPVOEUIFXPSMEDPNFUPEPNJOBUFJUTNBSLFUT -PDBUJPOTUIBUCFDPNFHMPCBMIVCTJOTVDIJOEVTUSJFT The Baltic countries have TUBOEUPSFBQDPOTJEFSBCMFCFOFmUTGSPNUIFWBMVF t UIBUUIFTFDPNQBOJFTDSFBUF opened up new opportunities $PNQFUJUJWFOFTTTFUTUIFMFWFMPGQSPEVDUJWJUZXJUI that companies from the Nordic XIJDIBDPNQBOZDBOPQFSBUFTQFDJmDGVODUJPOTBUB countries have benefited from HJWFOMPDBUJPO$PNQBOJFTUIBUIBWFUPEFDJEFXIFSF UPQVUXIJDIBDUJWJUJFTOFFEJOGPSNBUJPOBCPVUUIF TQFDJmDRVBMJUJFTPGBMPDBUJPO OPUKVTUUIFBHHSFHBUF tSuccessful companies MFWFMPGDPNQFUJUJWFOFTTUIBUEFUFSNJOFTQSPTQFSJUZ from the Baltic Sea Region ɨ FJOUFSWJFXTXJUICVTJOFTTMFBEFSTIBWFHJWFOBO JOEJDBUJPOUPXIJDIRVBMJUJFTPGUIF#BMUJD4FB3FHJPO have leveraged the specific BSFNPTUJNQPSUBOUGPSDPNQBOJFT

opportunities that they have $PNQBOJFTSFBDUUPUIFRVBMJUJFTPGBMPDBUJPOCZ found in the Region QMBDJOHTQFDJmDGVODUJPOT MJLF3%PSUIFNBOBHF NFOUPGBCVTJOFTTVOJUTPSQSPEVDUMJOF UIFSFɨF TUBUJTUJDBMEBUBBOEUIFJOUFSWJFXTQSPWJEFJOUFSFTUJOH FYBNQMFPGUIJTQSPDFTTGPSUIF#BMUJD4FB3FHJPO#VU JUBMTPTIPXTUIBUUIJTQSPDFTTJTTMPXBOENBOZUJNFT UIFMPDBUJPOPGTQFDJmDBDUJWJUJFTSFNBJOTMPZBMUPUIF IJTUPSJDBMMFHBDZ"OEJUJTBQSPDFTTUIBUJTSFMBUFEUP UIFBUUSBDUJWFOFTTPGBMPDBUJPOBTBNBSLFU

Qualities of the Baltic Sea Region $PNQBOJFTBSFBCMFUPESBXDPNQFUJUJWFBEWBOUBHFT GSPNUIFJSMPDBUJPOJOUIF#BMUJD4FB3FHJPOUISPVHI BOVNCFSPGDIBOOFMTɨ FDIBSBDUFSJTUJDTPGUIF CVTJOFTTFOWJSPONFOUBDSPTTUIF#BMUJD4FB3FHJPO  FTQFDJBMMZUIF/PSEJDDPVOUSJFT QSPWJEFCFOFmUTGPSB TQFDJmDTFUPGBDUJWJUJFTBOEJOEVTUSJFT

ɨ FTPQIJTUJDBUJPOPGEFNBOEJOUIF#BMUJD4FB 3FHJPO FTQFDJBMMZJOUIF/PSEJDDPVOUSJFT JTBNPSF JNQPSUBOUNBHOFUGPSDPNQBOJFTUIBOJTXJEFMZ SFBMJ[FEɨ FCFIBWJPSPGDPOTVNFSTJOUIJT3FHJPO GPSFTIBEPXTUIFCFIBWJPSPGDPOTVNFSTJOPUIFS QBSUTPGUIFXPSMEɨ FDPOTVNFSNBSLFUJTGBTIJPO BOECSBOEDPOTDJPVTXIJDIDSFBUFTPQQPSUVOJUJFTGPS OJDIFQMBZFSTBOEEJĊFSFOUJBUFETUSBUFHJFTɨ FDPO

74 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

Figure 32: Attractiveness of the Region

%!#  ##% " " " &" $""" %!# !#% "#!# !%!' 

# $"" "#"#  " !# # #"

 $!#$! # !"# !$#" $"#! !'  !$#" 

$#"## 

""#'##  $#"

!  ##' # !"#!$#$!

State of the Region Report 2007

TVNFSNBSLFUJTBMTPUFDIOPMPHZTBWWZBOEXJMMJOHUP JOUFSWJFXQBSUOFSTNFOUJPOFEUIBUUIFHPWFSONFOUT UFTUOFXEFWJDFTɨ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ɨF QSFTFODF PG DMVTUFST QSPWJEFT DPNQBOJFT XJUI B UIF3FHJPO#VUJUNBLFTUIF3FHJPOBHPPEQMBUGPSN DPODFOUSBUJPOPGTQFDJBMJ[FELOPXMFEHFBOEDBQBCJMJ UPEFWFMPQBOEUFTUOFXQSPEVDUT UJFTɨJTIBTESJWFO(&UPNBLF BOETFSWJDFDPODFQUT"HPPEFY ǰF3FHJPOJTOPUBOFBTZ B NBKPS JOWFTUNFOU JO UIF -JGF BNQMF JT UIF GPDVT PO GVODUJPOBM NBSLFU CVUBHPPE 4DJFODFT DMVTUFS JO 6QQTBMB *U GPPET  JF GPPET UIBU QSPWJEF QMBUGPSNUPEFWFMPQBOE IBT NPUJWBUFE #.8 UP FTUBCMJTI IFBMUICFOFmUT$POTVNFSTJOUIF BQSFTFODFJOUIFDBSUFTUJOHDMVT #BMUJD4FB3FHJPOBSFWFSZIFBMUI UFTUOFXPąFSJOHT UFS JO "SKFQMPH *U IBT DPOWJODFE DPOTDJPVT BOEBSFPGUFOXJMMJOHUP 8*130 UP JOWFTU JO UIF 'JOOJTI QBZNPSFGPSGVODUJPOBMGPPET*O'JOOJTI7BMJP *5$DMVTUFS"OEJUIBTCFFOUIFSFBTPOGPS)VBXFJ XBTUIFm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nVFODF UPP BMUIPVHI (PWFSONFOUSFHVMBUJPOT FTQFDJBMMZJOUFSNTPG NBOZDPNQFUJOHMPDBUJPOTQSPWJEFTJNJMBSRVBMJUJFT FOWJSPONFOUBMSFHVMBUJPOT DPOUSJCVUFUPUIFEF 8IBUNBLFTUIF#BMUJD4FB3FHJPOFTQFDJBMMZBUUSBD NBOETUIBUDPNQBOJFTIBWFUPNFFUJOUIF#BMUJD UJWFJTUIFSFMBUJWFMZMPXDPTUMFWFMBOEDPOTJTUFOU 4FB3FHJPO*OUFSFTUJOHMZ IPXFWFS WFSZGFXPGPVS RVBMJUZBUXIJDITLJMMTBSFBWBJMBCMF FTQFDJBMMZJOUFDI

STATE OF THE REGION REPORT 2007 75 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

OJDBMEJTDJQMJOFT'PSZFBSTUIFXBHFDPNQSFTTJPOIBT The impact of the Baltic countries MJNJUFEUIFXBHFHSPXUIJOTVDITLJMMDBUFHPSJFT FWFO on the Baltic Sea Region BTHMPCBMEFNBOEGPSUIFNIBTJODSFBTFEESBNBUJDBMMZ .PTUPGUIFGBDUPSTEJTDVTTFETPGBSSFGFSUPRVBMJUJFTPG ɨFDIBMMFOHFGPSUIF3FHJPOJTUIFSFMBUJWFMZTNBMM UIF/PSEJDDPVOUSJFTBOEUPTPNFEFHSFF PG(FSNBOZ  TJ[FPGJUTMPDBUJPOT.BFSTL GPSFYBNQMF GPVOEJU CVUOPUPGUIF#BMUJDDPVOUSJFT 1PMBOE PS3VTTJB#VU IBSEUPTUBĊBMMNBOBHFNFOUQPTJUJPOTBUJUT$PQFO XFIFBSEGSPNNBOZPGPVSJOUFSWJFXQBSUOFSTUIBU IBHFOIFBERVBSUFST XIJDIXBTPOFPGUIFSFBTPOT UIF#BMUJDDPVOUSJFTJOQBSUJDVMBSQMBZBOJNQPSUBOU GPSNBOBHJOHUIF#BMUJD4FB3FHJPOCVTJOFTTPVUPG SPMFJOJODSFBTJOHUIFBUUSBDUJWFOFTTPGUIF#BMUJD4FB (PUIFOCVSHJOTUFBE 3FHJPOɨF#BMUJDDPVOUSJFTBSFTJHOJmDBOUMZNPSF JNQPSUBOUGPSUIFDPNQFUJUJWFOFTTPGUIFPWFSBMM3F ɨFNPEFSONBOBHFNFOUTUSVDUVSFTBOEDBQBCJMJUJFT HJPOUIBOUIFJSFDPOPNJDTJ[FBMPOFXPVMETVHHFTU JONBOZDPNQBOJFTNBLFJUFBTZUPJOUFHSBUF/PSEJD BOE#BMUJDPQFSBUJPOTJOUPHMPCBMPSHBOJ[BUJPOTɨJT 'JSTU UIF#BMUJDDPVOUSJFTIBWFGPSTPNFDPNQBOJFT  IBTNBEFJUFBTJFSGPSDPNQBOJFTDSFBUFEJOUIF#BMUJD FTQFDJBMMZGPSUIPTFGSPNUIF/PSEJDDPVOUSJFT CFDPNF 4FB3FHJPOUPJOUFSOBUJPOBMJ[FBOEGPSGPSFJHODPNQB BO JNQPSUBOU TPVSDF PG FYQFSJFODF GPS IPX UP DPN OJFTUPDPNFUPUIF#BMUJD4FB3FHJPO.BOZGPSFJHO QFUFJOUIFDPOUFYUPGBO&BTUFSO&VSPQFBOFDPOPNZ DPNQBOJFT USZ UP NPWF UPXBSET MPDBM NBOBHFNFOU ɨFTUBHFPGHFOFSBMFDPOPNJDEFWFMPQNFOU CVUFWFO UFBNTTPNFUJNFBGUFSUIFZIBWFBDRVJSFEPSMBVODIFE NPSF TP  UIF TQFDJmD DVMUVSBM MFHBDZ PG UIF DPNNV BOPQFSBUJPOBCSPBE*OUIF#BMUJD4FB3FHJPOUIJTIBT OJTUTZTUFN IBTNBEFUIF#BMUJDDPVOUSJFTBUSBJOJOH CFFO SFMBUJWFMZ FBTZ  BOE UIF NVMUJOBUJPOBM DPNQB HSPVOEGPS/PSEJDDPNQBOJFTUIBUBSFOPXFYQBOEJOH OJFT XFSF RVJDLMZ BCMF UP SFDSVJU JOUPUIF6LSBJOF #FMBSVT BOE3VT DPNQFUFOU MPDBM NBOBHFST ɨF ǰF#BMUJDDPVOUSJFT TJB -JOTUPX  B /PSXFHJBOPXOFE TBNF IBQQFOFE XJUIJO UIF 3F BSFTJHOJmDBOUMZNPSF QSPQFSUZ EFWFMPQFS  JT BO FYBNQMF HJPO4XFECBOL GPSFYBNQMF IBT JNQPSUBOUGPSUIFDPN PGB/PSEJDDPNQBOZUIBUVTFTJUT MBSHFMZ MPDBM NBOBHFNFOU UFBNT QFUJUJWFOFTTPGUIFPWFSBMM -BUWJBOCBTFUPUFTUNBSLFUTGVSUIFS JO JUT TVCTJEJBSJFT JO UIF #BMUJD FBTU‰NBSLFUTXIJDIJUNJHIUOPU DPVOUSJFT 3FHJPOUIBOUIFJSFDPOPNJD IBWF FOUFSFE XJUIPVU UIF FYQFSJ TJ[FBMPOFXPVMETVHHFTU FODFPGCFJOHBDUJWFJOUIF#BMUJDT ɨFHFOFSBMPQFOOFTTPGUIF *UIBTBMTPIFMQFETPNFDPNQBOJFT NBSLFUTBSPVOEUIF#BMUJD4FB3FHJPOXJUIUIFJSMFWFM GSPNUIF#BMUJDDPVOUSJFTJOUIFJSFYQBOTJPOFBTUXBSE QMBZJOHmFMEGPSEPNFTUJDBOEGPSFJHODPNQBOJFTJT &MLP GPSFYBNQMF B-BUWJBO*5EJTUSJCVUPSBDUJWFJOB OPUBTPVSDFPGDPNQFUJUJWFBEWBOUBHFTQFSTF#VU OVNCFSPG$*4DPVOUSJFT DPVMEBQQMZJUTLOPXMFEHF KVTUBTUIFNBOZCVTJOFTTMJOLBHFTUIBUBSFBMSFBEZJO PGUIFFDPOPNJDFOWJSPONFOUJOBQPTU$PNNVOJTU QMBDFCFUXFFOUIF#BMUJD4FB3FHJPOBOEPUIFSQBSUT FDPOPNZXIJMFCFJOHBCMFUPMFWFSBHFUIFNVDINPSF PGUIFXPSME UIFZBSFBOJNQPSUBOUFOBCMFSUIBUBM FċDJFOUCVTJOFTTDPOEJUJPOTJO-BUWJBBTBQMBUGPSNGPS MPXTGPSFJHODPNQBOJFTUPUBQJOUPUIFRVBMJUJFTUIBU JUTFBTUFSOPQFSBUJPOT FYJTUIFSF ɨJTJTMFTTSFMFWBOUGPSDPNQBOJFTGSPNPVUTJEFUIF *OUFSFTUJOHMZ UIF#BMUJD4FB3FHJPOQMBZTMJUFSBMMZOP #BMUJD4FB3FHJPO JODMVEJOHPUIFSQBSUTPG1PMBOE SPMFJOUIFCSBOEJOHPGDPNQBOJFTGSPNUIJT3FHJPO BOE(FSNBOZUIBUDBOFOUFS&BTUFSO&VSPQFBOE ɨFOBUJPOBMCBTFPSUIFMPDBUJPOJOUIF/PSEJDPS UIF$*4DPVOUSJFTGSPNPUIFSEJSFDUJPOT"OEJUEPFT 4DBOEJOBWJBODPVOUSJFTJTVTFETMJHIUMZNPSFPGUFO  OPUOFDFTTBSJMZNFBOUIBUOFXCVTJOFTTFTJO3VTTJB CVUNPTUDPNQBOJFTGSPNUIJT3FHJPOUIBUBSFBDUJWF PSFMTFXIFSFJO&BTUFSO&VSPQFTIPVMECFNBOBHFE POHMPCBMNBSLFUTXBOUUPCFQFSDFJWFEBTHMPCBM UISPVHIUIFTVCTJEJBSJFTJOUIF#BMUJDDPVOUSJFT DPNQBOJFT OPUDPNQBOJFTGSPNUIF#BMUJD4FB 4XFECBOL GPSFYBNQMF FOUFSFE3VTTJBUISPVHIBO 3FHJPOɨFFYDFQUJPOT MJLF4XFECBOLXIJDIGPVOE BDRVJTJUJPONBEFCZJUT&TUPOJBOTVCTJEJBSZ)BO UIBUUIFSFMBUJPOTIJQUP4XFEFOIBTQPTJUJWFDPOOPUB TBCBOLCVUXBTGBDJOHQSPCMFNTXIFOUIFQPMJUJDBM UJPOTGPSQPUFOUJBMDMJFOUT UBSHFUBNBSLFUJOPSDMPTF SFMBUJPOTCFUXFFO3VTTJBBOE&TUPOJBDPPMFEEPXO UPUIF3FHJPO UIJTTVNNFS#VUJUBEETCVTJOFTTPQQPSUVOJUJFTGPS DPNQBOJFTCBTFEJOUIF3FHJPO

76 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

4FDPOE UIF#BMUJDDPVOUSJFTPĊFSDPNQBOJFTBO BSFGVMMZUBLFOXJUIJOUIFDPNQBOZ JUJTCFDPNJOH PQQPSUVOJUZUPFYQFSJNFOUXJUIUIFNPTUNPEFSO JODSFBTJOHMZSFDPHOJ[FEUIBUUIFBWBJMBCMFDIPJDFTBSF CVTJOFTTNPEFMTXJUIPVUBOZMFHBDZSFTUSJDUJPOTBOE TJHOJmDBOUMZJOnVFODFECZUIFFOWJSPONFOUJOXIJDI BUMPXFSDPTUT*OmOBODJBMTFSWJDFT GPSFYBNQMF  UIFDPNQBOZPQFSBUFT*OPVSJOUFSWJFXTXJUIFYFDV 4XFECBOLXBTBCMFUPFYQMPJUUIFGVMMQPUFOUJBMPG UJWFTGSPNUIF#BMUJD4FB3FHJPO BOVNCFSPGGBDUPST OFXUFDIOPMPHJFT JOQBSUJDVMBSUIFJOUFSOFU XIFO DBNFVQUIBUMFGUUIFJSNBSLPOIPXUIFTFDPNQBOJFT EFWFMPQJOHJUTCBOLJOHBDUJWJUJFTɨFSFXBTOPMFHBDZ PQFSBUF PGBOFTUBCMJTIFECSBODIOFUXPSLUIBUDVTUPNFSTFY QFDUFEUPCFUIFSF FWFOXIFOUIFJSBDUVBMJOUFSBDUJPO ɨF#BMUJDT4FB3FHJPOTTNBMMNBSLFUTJ[FIBTCFFO XJUIUIFCBOLIBETIJGUFENVDINPSFUPUIFQIPOF BOJNQPSUBOUGBDUPSUIBUJOnVFODFEUIFXBZUIBU BOEUIFJOUFSOFU*OSFUBJM /BSWFTFODPVMEUSZOFX DPNQBOJFTIBWFPQFSBUFE*UIBTCFFOXJEFMZSFD TUPSFEFTJHOTJO-BUWJBBUNVDIMPXFSDPTUTUIBOJOJUT PHOJ[FEUIBUUIFTNBMMIPNFNBSLFUESPWFDPNQB /PSXFHJBOIPNFNBSLFU OJFTGSPNUIF#BMUJD4FB3FHJPOUPJOUFSOBUJPOBMJ[F NPSFBHHSFTTJWFMZUIBONBOZPGUIFJSQFFSTJOPUIFS ɨJSE UIF#BMUJDDPVOUSJFTPĊFSBMFWFMPGFOUSFQSF DPVOUSJFT#VUJUIBTBMTPJOnVFODFEIPXDPNQBOJFT OFVSTIJQBOEEZOBNJTNUIBUDIBMMFOHFTNPSFNBUVSF DPNQFUFJONBSLFUTBUIPNFBOEBCSPBEUIFZOFFEFE BOETFUUMFEPSHBOJ[BUJPOTJOUIFSFTUPGUIF3FHJPO UPCFNVDINPSFnFYJCMFJOUFSNTPGSFBDUJOHUP *ONBOZDPNQBOJFT UIFXJMMJOHOFTTPGPSHBOJ[BUJPOT EJĊFSFOUDVTUPNFSOFFET BOEPGCFJOHDVTUPNFSGP JOUIF#BMUJDDPVOUSJFTUPBHHSFTTJWFMZQVSTVFNBSLFU DVTFEJOUIFTFSWJDFTQSPWJEFE8IFSF64DPNQBOJFT PQQPSUVOJUJFTBOENPWFCFZPOEFTUBCMJTIFEXBZTPG MJLF"NFSJDBO&YQSFTTSPMMPVUUIFJSCVTJOFTTNPEFM EPJOHUIJOHTIBTDIBMMFOHFEUIFFTUBCMJTIFE/PSEJD XJUIPVUMBSHFSBEKVTUNFOUTBDSPTTNBOZDPVOUSJFT  DPNQBOJFTUIBUUIFZBSFQBSUPGɨFNBUVSJUZPG #BMUJD4FB3FHJPODPNQBOJFTDSFBUFDVTUPNFSTQFDJmD /PSEJDNBSLFUTNBEFJUMFTTMJLFMZGPSOFXJEFBTUPCF TPMVUJPOTɨJTIBTCFFOUIFDBTFJONPCJMFQIPOFT JNQMFNFOUFEɨFEZOBNJTNPGUIF#BMUJDNBSLFUT GPS/PLJBUIBUUISPVHIJUTIJTUPSZXBTPQFOUPPQFSB PĊFSTQMFOUZPGPQQPSUVOJUJFTUPEPTP UPSTXJTIFTJOUFSNTPGOFUXPSLUFDIOPMPHZ*UIBT CFFOUIFDBTFJONPCJMFUFMFQIPOFTFSWJDFTGPS5FMFOPS 'PVSUI UIF#BMUJDDPVOUSJFTBEEHSPXUIQPUFOUJBMUIBU BTJUEFWFMPQFEOFXPQFSBUJOHNPEFMTGPSNBSLFUT NBLFTUIFFOUJSF3FHJPONPSFBUUSBDUJWFGPSDPNQB PVUTJEFUIF#BMUJD4FB3FHJPO"OEJUIBTCFFOUIF OJFTUPJOWFTUJOɨFBCTPMVUFNBSLFUTJ[FPGUIF#BMUJD DBTFGPS4FDVSJUBT4ZTUFNTUIBUGPDVTFEPOQSPWJEJOH DPVOUSJFTJTTNBMM1PMBOEJTTJHOJm NPSFDVTUPNFSPSJFOUFETFSWJDF DBOUMZMBSHFS CVUJTBMTPQFSDFJWFE 'PSGPSFJHOJOWFTUPST UIFSF QBDLBHFTJOUIFJSFYQBOTJPOUPUIF BTBEJĊFSFOU TUBOEBMPOFNBSLFU JTBDMFBSDPOOFDUJPOCF 6,BOEPUIFSDPVOUSJFTUIBOUIFJS #VUUIF#BMUJDDPVOUSJFTEPHFOFS UFDIOPMPHZESJWFODPNQFUJUPST BUFIJHIHSPXUIBOEUIJTHSPXUIJT UXFFOUIFBUUSBDUJWFOFTT JNQPSUBOU CFDBVTF JU DSFBUFT PQ PGUIF3FHJPOBTBNBSLFU ɨF#BMUJD4FB3FHJPOTUFDIOPMPHJ QPSUVOJUJFT GPS OFX JOWFTUNFOUT BOEUIFXJMMJOHOFTTUPNBLF DBM DBQBCJMJUJFT IBWF CFFO BOPUIFS 'PSNVMUJOBUJPOBMDPNQBOJFTMJLF JOWFTUNFOUTUIBUVTFUIF GFBUVSFUIBUBMMPXFEDPNQBOJFTUP (&$POTVNFS'JOBODFUIFQPUFO EFWFMPQEJĊFSFOUJBUFENBSLFUQP UJBM PG UBQQJOH JOUP HSPXJOH OFX 3FHJPOBTBQMBUGPSNGPS TJUJPOT&WFOXIFSFUIFDPNQBOJFT NBSLFUT NBEF BO JNQPSUBOU EJG BDUJWJUJFTXJUIHMPCBMSFBDI GSPNUIF3FHJPOMBDLFEUIFTJ[FPS GFSFODF GPS JUT JOWFTUNFOU JO UIF NBSLFUJOHDMPVUPGPUIFSTUPUBSHFU #BMUJD4FB3FHJPO'PS#BMUJDDPNQBOJFTMJLF5BMMJOL UIFFOEVTFSNBSLFUEJSFDUMZ JUDPVMEQSPWJEFUIFUFDI UIFHSPXUIJOUSBċDCFUXFFOUIF/PSEJDBOE#BMUJD OPMPHZJOTJEF0.9EFWFMPQFEBTUSPOHQPTJUJPOJO DPVOUSJFTCFDBNFBQMBUGPSNUPUBLFNBSLFUTIBSFTJO USBEJOH QMBUGPSNT GPS TFDVSJUZ FYDIBOHFT BSPVOE UIF UIFNVDINPSFNBUVSF/PSEJDNBSLFU XPSME OPUKVTUJOTFDVSJUJFTUSBEJOH'"454FBSDI 5SBOTGFSCFDBNFPOFPGUIFNPTUTVDDFTTGVMQSPWJEFST The impact of the Baltic Sea PGJOUFSOFUTFBSDIUFDIOPMPHZUPXFCQPSUBMTBOEDPN Region on company strategy QBOZXFCTJUFT FWFOUIPVHIJUDPVMEOPUDPNQFUFXJUI $IPJDFTBCPVUBDPNQBOZTTUSBUFHJDQPTJUJPOJOHPO (PPHMFJOUIFDPOTVNFSNBSLFU4LZQFEFWFMPQFEB UIFNBSLFUBSFBNPOHUIFLFZEFDJTJPOTUIBUCVTJOFTT UFDIOPMPHZ GPS JOUFSOFU UFMFQIPOZ UIBU XBT UIFO BD FYFDVUJWFTIBWFUPNBLF#VUXIJMFUIFTFEFDJTJPOT RVJSFECZB64DPNQBOZXJUITVQFSJPSDBQJUBMJ[BUJPO

STATE OF THE REGION REPORT 2007 77 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

Figure 33: Location and company strategy

                   

              

               State of the Region Report 2007

BOEFOEDVTUPNFSSFBDI"OE&SJDTTPOIBTCFFONPSF PGHSPXJOHNBSLFUTJTPGUFONVDITUSPOHFSUIBOUIF TVDDFTTGVM JO GPDVTJOH PO OFUXPSL FRVJQNFOU BOE JNQBDUPGCVTJOFTTFOWJSPONFOUEJĊFSFODFTUIBU  NPCJMFQIPOFUFDIOPMPHZ FWFOUIPVHIJUEFDJEFEUP FTQFDJBMMZCFUXFFOBEWBODFEFDPOPNJFT BSFPGUFO NBUDIVQXJUI4POZBTBOFYQFSUJODPOTVNFSFMFD TNBMM USPOJDTUPPQFSBUFJOUIFDPOTVNFSNBSLFU (&)FBMUIDBSFJTPOFFYBNQMFPGBQBSUPGBHMPCBM ɨF#BMUJD4FB3FHJPOTTPQIJTUJDBUFEDPOTVNFSEF NVMUJOBUJPOBMDPNQBOZUIBUIBTBMMPDBUFEHMPCBM NBOEJODPOOFDUJPOXJUISJDIEFTJHOUSBEJUJPOIBT SFTQPOTJCJMJUZGPSJUT-JGF4DJFODFTEJWJTJPOUPUIF CFFOBOPUIFSGFBUVSFUIBUTVQQPSUFEUIFFNFSHFODF VOJUMPDBUFEJOUIF#BMUJD4FB3FHJPO"GUFSNBLJOHB PGBDMBTTPGDPNQBOJFTUIBUIBWFEFWFMPQFETUSPOH TJHOJmDBOUBDRVJTJUJPOJO4XFEFO UIF6QQTBMBCBTFE DPOTVNFSCSBOET*ODPOTVNFSFMFDUSPOJDT #BOH DPNQBOZCFDBNFSFTQPOTJCMFGPSBMMPG(&TBDUJWJUJFT 0MVGTFOIBWFFTUBCMJTIFEBTUSPOHNBSLFUQPTJUJPO JOUIJTBSFBɨFTUSPOHSFTFBSDIDBQBCJMJUJFTXJUIJO CBTFEPOTVQFSJPSEFTJHOɨJTIBTBMMPXFEUIFNUP UIFDPNQBOZBOEUIFDMVTUFSTJUJTQBSUPGNBEFJU DIBSHFQSJDFTUIBUUIFUFDIOPMPHZBMPOFXPVMEIBWF BOBUUSBDUJWFCBTJTGPSUIJTSPMF"OPUIFSFYBNQMFJT OPUTVQQPSUFE*,&"BOE).BSFCPUIFYBNQMFT 4V[MPO&OFSHZTJOWFTUNFOUJO%FONBSLXIFSFJUIBT PGDPNQBOJFTUIBUIBWFDPNCJOFEEFTJHOXJUIBĊPSE MPDBUFEJUTHMPCBMIFBERVBSUFSTGPSUIFXJOEUVSCJOF BCJMJUZ DSFBUJOHBNBSLFUTFHNFOUUIBUEJEOPUFYJTU CVTJOFTT%FONBSLJTIPNFUPPOFPGUIFTUSPOHFTU JOUIJTQSPNJOFODFJONBOZPUIFSDPVOUSJFTCFGPSF XJOEFOFSHZDMVTUFSTJOUIFXPSME

Activities with global reach in the Baltic Sea Region "MUIPVHIUIFQSPDFTTPGSFMPDBUJPOJTPGUFOTMPX JU .PTUCVTJOFTTBDUJWJUJFTMPDBUFEJOUIF#BMUJD4FB3F JTDMFBSMZIBQQFOJOH8IFOBTJHOJmDBOUOVNCFSPG HJPOUIBUIBWFHMPCBMSFBDI FJUIFSCZTFSWJOHHMPCBM NVMUJOBUJPOBMDPNQBOJFTGSPNUIF#BMUJD4FB3F NBSLFUTPSCFJOHJOUFHSBUFEJOUPHMPCBMWBMVFDIBJOT  HJPO FTQFDJBMMZ4XFEFO CFDBNFGPSFJHOPXOFEJO BSFDPOUSPMMFECZDPNQBOJFTUIBUIBWFUIFJSSPPUTJO UIFT DPODFSOTXFSFSBJTFEBCPVUUIFSFMPDBUJPO UIJT3FHJPOɨJTJTOPUTVSQSJTJOHBOESFnFDUTQBU PGLFZDPNQBOZGVODUJPOT"UUIBUUJNF UIFNBJO UFSOTUIBUBMTPIPMEJONBOZPUIFSQBSUTPGUIFXPSME EJTDVTTJPOXBTBSPVOEIFBERVBSUFSGVODUJPOT#VU FDPOPNZɨFHFPHSBQIJDBMSFMPDBUJPOPGBDUJWJUJFTUP PUIFSUZQFTPGGVODUJPOT TVDIBTSFTFBSDI QSPEVDU UBQJOUPBQPSUGPMJPPGDMVTUFSTBSPVOEUIFXPSME UIBU EFWFMPQNFOU QSPEVDUJPO MPHJTUJDT BOEUIFQSPWJTJPO UIFNBOBHFNFOUMJUFSBUVSFIBTQSPQPTFEGPSZFBST  PGPVUTPVSDFETFSWJDFT BSFSFMFWBOUBTXFMM JTBTMPXQSPDFTT-FHBDZFĊFDUTNBUUFS BOEUIFQVMM

78 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

ɨFFYQFSJFODFTPG"TUSBBOEUIFBVUPNPUJWFEJWJ Overall assessment TJPOTPG4BBCBOE7PMWPVOEFSGPSFJHOPXOFSTIJQ $PNQBOJFTMPDBUFEJOUIF#BMUJD4FB3FHJPOIBWF QSPWJEFBOJOEJDBUJPOPGUIFTUSFOHUITBOEXFBLOFTTFT BDDFTTUPBOVNCFSPGMPDBUJPOBMDPOEJUJPOTUIBUDBO JOUIF#BMUJD4FB3FHJPO"TUSB;FOFDBTUJMMSFUBJOTJUT CFUVSOFEJOUPTPVSDFTPGVOJRVFDPNQFUJUJWFBEWBO HMPCBM3%IFBERVBSUFSTJO4ÚEFSUÊMKF ESBXJOHPO UBHFT GSPNUFDIOPMPHJDBMDBQBCJMJUJFTUPTPQIJTUJDBUFE UIFTUSPOHMPDBMDBQBCJMJUJFTUIBU"TUSBIBEEFWFMPQFE DVTUPNFST.BOZDPNQBOJFTGSPNUIF#BMUJD4FB JOUIFQBTU8IJMFUIFDPNQBOZNJHIUOPUNBLFB 3FHJPOIBWFJOUIFQBTUCFFOTVDDFTTGVMCFDBVTFUIFZ (SFFOmFMEJOWFTUNFOUPGUIJTUZQFJOUIF#BMUJD4FB MFWFSBHFEUIFTFPQQPSUVOJUJFT4PNFGPSFJHODPNQB 3FHJPOUPEBZ UIFDPOEJUJPOTBSFTUSPOHFOPVHIUP OJFTIBWFBMTPDPNFJOUPUIF3FHJPOUPEPUIFTBNF TVTUBJOBOEVQHSBEFUIFMFHBDZBTTFUTUIBUFYJTU4BBC #VUNPSFDPVMEIBQQFOBOEXPVMEIBQQFO JGUIF BOE7PMWPIBWFDPOUJOVFEUPIBWFTJHOJmDBOUNBOV #BMUJD4FB3FHJPOXPVMECFBNPSFBUUSBDUJWFNBSLFU GBDUVSJOHDBQBDJUJFTJO4XFEFO FWFOUIPVHIFTQFDJBM ɨFRVBMJUJFTPGMPDBUJPOTBTNBSLFUTBOEBTTPVSDFT MZUIF4BBCGBDUPSJFTXFSFVOEFSTUSPOHDPNQFUJUJWF PGDPNQFUJUJWFBEWBOUBHFTBSFDPODFQUVBMMZEJĊFSFOU  QSFTTVSFGSPNPUIFS&VSPQFBOMPDBUJPOTɨF4XFEJTI CVUUJHIUMZDPOOFDUFEJOUIFSFBMJUZPGDPNQBOJFT MPDBUJPOTIBWFBMTPDPOUJOVFEUPQMBZBOJNQPSUBOU SPMFJOUFSNTPGQSPEVDUEFWFMPQNFOU FTQFDJBMMZJO ɨF#BMUJDDPVOUSJFT BOEUPTPNFEFHSFFBMTP/PSUI UFSNTPGTBGFUZGFBUVSFT FSO1PMBOEBOE/PSUIXFTUFSO3VTTJB IBWFIBEBO JNQBDUPODPNQBOJFTJOUIF3FHJPOUIBUJTNPSFTJH 'PSGPSFJHOJOWFTUPST UIFSFJTBDMFBSDPOOFDUJPO OJmDBOUUIBOUIFJSNFSFFDPOPNJDTJ[FXPVMETVHHFTU CFUXFFOUIFBUUSBDUJWFOFTTPGUIF3FHJPOBTBNBSLFU ɨFZIBWFQSPWJEFEJNQPSUBOUHSPXUIPQQPSUVOJUJFT  BOEUIFXJMMJOHOFTTUPNBLFJOWFTUNFOUTUIBUVTFUIF JOUFSFTUJOHTLJMMT OFXPQQPSUVOJUJFTGPSJOOPWBUJPO  3FHJPOBTBQMBUGPSNGPSBDUJWJUJFTXJUIHMPCBMSFBDI BOEIFMQFEUPSFKVWFOBUFNBUVSFPSHBOJ[BUJPOTJOUIF .BSLFUTXJUITNBMMNBSLFUQPUFOUJBMGBDFTJHOJmDBOU /PSEJDDPVOUSJFT"UUIFTBNFUJNF IPXFWFS DPN CBSSJFSTJOUIFBUUSBDUJPOPG GPSFYBNQMF SFTFBSDIPS QBOJFTGSPNUIF/PSEJDDPVOUSJFTBOE(FSNBOZIBWF QSPEVDUEFWFMPQNFOUBDUJWJUJFT FWFOXIFODPOTVN POMZSPMMFEPVUUIFJSFYJTUJOHCVTJOFTTNPEFMTUPUIF FSTBSFTPQIJTUJDBUFEBOEDPVMEQSPWJEFBOJOUFSFTU #BMUJDDPVOUSJFTUIFZIBWFOPUDSFBUFEOFXCVTJOFTT JOHTPVSDFPGJEFBT'PS6OJMFWFS GPSFYBNQMF UIF NPEFMTUIBUUBLFGVMMBEWBOUBHFPGUIFDPNCJOBUJPOPG IBSNPOJ[BUJPOPGMFHJTMBUJPOSFMBUJOHUPGPPEQSPEVDUT BTTFUTBOETLJMMTQSPWJEFEJOUIFEJĊFSFOUQBSUTPGUIF JOUIF#BMUJD4FB3FHJPOJOMJOFXJUIPUIFS&VSPQFBO #BMUJD4FB3FHJPO DPVOUSJFTDPVMEJODSFBTFUIFMJLFMJIPPEPGBUUSBDUJOH BSFHJPOBMJOOPWBUJPODFOUFS8JUIUIFJODSFBTJOH JOUFHSBUJPOPGUIF#BMUJD4FB3FHJPO OPUPOMZEJE UIF3FHJPOCFDPNFNPSFBUUSBDUJWFBTBNBSLFUCVUJU BMTPSBJTFEJUTDIBODFTPGQMBZJOHBMBSHFSSPMFJOUIF DPNQBOZTQSPEVDUEFWFMPQNFOUBDUJWJUJFT

STATE OF THE REGION REPORT 2007 79 tWhile competitiveness poli- 3. Competitiveness upgrading cies in the Region are better than in many other countries, ɨ FDPNQFUJUJWFOFTTPGBMPDBUJPOJTOPUPOMZBTUBUJD BTTFTTNFOUPGDVSSFOUCVTJOFTTFOWJSPONFOUDPOEJ companies want to see more UJPOT*UJTBMTPBĊFDUFECZJNQSPWFNFOUTPGUIF CVTJOFTTFOWJSPONFOUPWFSUJNF BOEUIFBCJMJUZUP focus on fundamental issues JEFOUJGZBOEBEESFTTCBSSJFSTUPXBSETIJHIFSQSPEVD like infrastructure and UJWJUZBOEJOOPWBUJPOɨ FTFEZOBNJDDBQBCJMJUJFT EFQFOEPOUIFJOUFSOBMRVBMJUJFTPGHPWFSONFOUBOE incentives QVCMJDBHFODJFTCVUUIFBMTPEFQFOEPOUIFFOHBHF NFOUPGUIFQSJWBUFTFDUPSBOEJUTBCJMJUZUPNPVOU tLarge companies tend to be DPMMFDUJWFBDUJPO more engaged in clusters $PNQBOJFTIBWFBWJFXPOXIFUIFSUIFQSJPSJUJFT UIBUHPWFSONFOUTTFUJOUIFJSDPNQFUJUJWFOFTTFĊPSUT efforts in this Region than BSFBQQSPQSJBUF6MUJNBUFMZ UIFTFHPWFSONFOUFĊPSUT elsewhere OFFEUPSFTVMUJODIBOHFTXJUIJODPNQBOJFT*GUIFZ EPOPU CFDBVTFUIFZBEESFTTBSFBTUIBUBSFPOMZPG NBSHJOBMSFMFWBODFUPDPNQBOJFTPQFSBUJPOT UIFJS tThe dialogue between JNQBDUPOQSPTQFSJUZXJMMCFTNBMM business and government $PNQBOJFTIBWFBSPMFPODPNQFUJUJWFOFTTVQHSBE works generally well on the JOHɨ FZBSFFOHBHFEJODMVTUFSBOEJODPNQFUJUJWF OFTTFĊPSUTBUEJĊFSFOUMFWFMTPGHFPHSBQIZ8IJDI national level, but the Baltic DPNQBOJFTQBSUJDJQBUF BOEIPX IBWFBOJNQPSUBOU Sea Region has so far not JNQBDUPOUIFFĊFDUJWFOFTTPGUIFTFFĊPSUT"OEUIF DPNQBOJFTBSFQBSUOFSTJOUIFQPMJDZEJBMPHVFXJUI become an important arena HPWFSONFOU)PXQSPEVDUJWFUIJTEJBMPHVFJT BOE for public-private policy IPXXFMMDPNQBOJFTBSFBCMFUPPSHBOJ[FUIFJSWPJDF  IBWFBOJNQPSUBOUJNQBDUPOUIFFĊFDUJWFOFTTPGUIF discussions EJBMPHVFJOTVQQPSUJOHCFUUFSQPMJDZEFDJTJPOT

Focus of current public efforts to upgrade competitiveness 5SBEJUJPOBMEJNFOTJPOTPGUIFCVTJOFTTFOWJSPONFOU OFFEUPSFNBJOBGPDVTGPSQPMJDZUIJTJTUSVFPG FNFSHJOH CVUBMTPPGIJHIMZBEWBODFEFDPOPNJFT ɨ JTXBTBDMFBSNFTTBHFGSPNUIFCVTJOFTTMFBEFSTJO UIF#BMUJD4FB3FHJPOUIBUXFUBMLFEUP*OWFTUNFOUT JOTDJFODF DMVTUFSVQHSBEJOH BOEPUIFSFĊPSUTUP JNQSPWFUIFDBQBDJUZGPSJOOPWBUJPOBSFXFMDPNFBOE JNQPSUBOU#VUUIFZBSFOPUBTVCTUJUVUFGPSBDPO UJOVFEGPDVTPOJOGSBTUSVDUVSF TLJMMT BOEJODFOUJWFT

t *OGSBTUSVDUVSF QBSUJDVMBSMZUSBOTQPSUBUJPOJOGSB TUSVDUVSF JTPGJODSFBTJOHJNQPSUBODFJOUIFHMPCBM FDPOPNZBOEJOB#BMUJD4FB3FHJPOFDPOPNZ UIBUJTCFDPNJOHNPSFJOUFHSBUFE*OBEEJUJPO  IJHIHSPXUIPWFSUIFMBTUGFXZFBSTIBTBEEFEUP UIFEFNBOETPOUIFJOGSBTUSVDUVSF*OUIF/PSEJD

80 STATE OF THE REGION REPORT 2007 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

DPVOUSJFT 4XFEFOJOQBSUJDVMBS JUJTDSVDJBMUIBU DBOUJNQBDUPOUIFFDPOPNZJTUIFCFODINBSLGPS GVSUIFSJOWFTUNFOUTBSFNBEFUPLFFQUIFHFOFSBMMZ TVDDFTT NPSFJTOFFEFE IJHIMFWFMPGUSBOTQPSUBUJPOJOGSBTUSVDUVSFUIBUFY JTUT'PS4"4 GPSFYBNQMF GVSUIFSJOWFTUNFOUTJO Company participation in competitiveness efforts UIFGBDJMJUJFTJUVTFTBU"SMBOEBBJSQPSUBSFDSVDJBM $PNQBOJFTJOUIF#BMUJD4FB3FHJPOIBWFCFDPNF GPSJUTBCJMJUZUPDPNQFUF JODSFBTJOHMZBDUJWFJODMVTUFSBOEDPNQFUJUJWFOFTT FĊPSUT4PNFPGUIFTFFĊPSUTUBLFUIFGPSNPGJOEJWJE t 4LJMMT BOE JODFOUJWFT XFSF NFOUJPOFE  CVU TFFN VBMDMVTUFSJOJUJBUJWFTXIJMFPUIFSTQSPWJEFEJTDVTTJPO MFTTPGBOVSHFOUQSJPSJUZGPSCVTJOFTTMFBEFST4LJMM QMBUGPSNTUPJNQSPWFUIFDPNQFUJUJWFOFTTPGTQFDJm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ĊPSUTJOPUIFS&VSPQFBODPVOUSJFT JUTFFNTUIBU UIF#BMUJD4FB3FHJPOJTCFUUFSQMBDFEUPBWPJETPNF t 0OFJOUFSFTUJOHQFSTQFDUJWFXBTPĊFSFEBCPVUUIF DIBMMFOHFTGBDFEFMTFXIFSF*OUIF#BMUJD4FB3FHJPO  OFFEUPEFWFMPQBDMFBSOBUJPOBMFDPOPNJDTUSBUFHZ NBOZMBSHFDPNQBOJFTQBSUJDJQBUFJODMVTUFSJOJUJB $VSSFOUHPWFSONFOUQPMJDJFT FTQFDJBMMZJO4XF UJWFT(&)FBMUIDBSFJO6QQTBMB "##JO3PCPU EFOCVUBMTPJOPUIFSDPVOUSJFTJOUIF#BMUJD4FB EBMFO 4DBOJB 7PMWP BOE4BBCJO*744*OUFMMJHFOU 3FHJPO TFFNTGPDVTFEPONBOBHJOHUIFCVTJOFTT 7FIJDMF4ZTUFNT /PWP/PSEJTLJO.FEJDPO7BMMFZ  DZDMFBOENBLJOHHFOFSBMJOWFTUNFOUTJOUIFGV BOE%BOGPTTJO4PVUIFSO+VUMBOEQMBZBOJNQPSUBOU UVSFɨFTFQPMJDJFTBSFXFMDPNFBOEOFDFTTBSZCVU SPMFJOUIFTFFĊPSUT*ONBOZPUIFSDPVOUSJFTMBSHF UIFZEPOPUBOTXFSUIFRVFTUJPOUIBU GPSFYBNQMF  DPNQBOJFTIBWFCFFOFOHBHFENVDIMFTT BOENBOZ UIF%BOJTI(MPCBMJ[BUJPO$PVODJMJTBTLJOHIPX DMVTUFSFĊPSUTIBWFCFFOFTTFOUJBMMZ4.&EFWFMPQ JTPVSDPVOUSZHPJOHUPDPNQFUFJOUIFGVUVSF  NFOUTDIFNFTɨFSFBSFBMTPBOVNCFSPGDMVTUFS JOXIBUBSFBT BOECBTFEPOXIJDIDPNQFUJUJWF JOJUJBUJWFT MJLF4DBO#BMUJO-JGF4DJFODFT UIBUIBWFB BEWBOUBHFT $PVOUSJFTOFFEUPEFWFMPQBOBOTXFS DSPTTCPSEFSBQQSPBDIɨJTJTMBSHFMZESJWFOCZUIF BOETUBSUUBLJOHTUFQTJOUIFEJSFDUJPOUIFZJEFOUJGZ TNBMMTJ[FPGUIFDPVOUSJFTJOUIF3FHJPOCVUDBOTUJMM CFBQPTJUJWFTUFQUPXBSETBNPSF *OUIF#BMUJD4FB3FHJPO QPMJUJDBM *OUIF#BMUJD4FB3FHJPO  OBUVSBMDPNCJOBUJPOPGJOUFSOBM MFBEFSTBSFFOHBHFEJOEJTDVTTJPOT NBOZMBSHFDPNQBOJFT DPMMBCPSBUJPOBOEFYUFSOBMMJOL POIPXUPJODSFBTFUIFFċDJFODZ QBSUJDJQBUFJODMVTUFS BHFTPGDMVTUFST PG UIF NBOZ JOTUJUVUJPOBM TUSVD JOJUJBUJWFT UVSFTUIBUDVSSFOUMZFYJTU#VTJOFTT -BSHFDPNQBOJFTJO%FONBSLBOE MFBEFSTXFSFRVJUFDMFBSJOUIFJSBTTFTTNFOUUIBUNBS 4XFEFOBSFBMTPFOHBHFEJOUIFSFTQFDUJWFHMPCBMJ[B HJOBMJNQSPWFNFOUTJOUIFJOUFSOBMFċDJFODZPGTVDI UJPODPVODJMT*O%FONBSL UIFTF$PVODJMTBSFOPX CPEJFT XPVME OPU IBWF BOZ NFBOJOHGVM JNQBDU PO SPMMFEPVUPOUIFSFHJPOBMMFWFM BOFĊPSUUIBUCVJMET DPNQBOJFT-BSHFSTUFQT JOUFSNTPGQPMJDZEFDJTJPOT POUIFXPSLPGUIFQSJWBUFTFDUPSMFEHSPXUIDPVODJMT CVUBMTPJOTUJUVUJPOBMSFPSHBOJ[BUJPOT XPVMECFOFDFT TBSZUPSFHJTUFSXJUIUIFCVTJOFTTDPNNVOJUZ Interaction between the public and private sector .BOZPGUIFDPNQBOZMFBEFSTUIBUXFTQPLFUPJOUIF 8IJMFUIJTWJFXPGCVTJOFTTMFBEFSTEPFTOPUJOEJDBUF #BMUJD4FB3FHJPOIBEBHFOFSBMMZQPTJUJWFPQJOJPOPG UIBUUIFDVSSFOUEJTDVTTJPOTBCPVUCFUUFSDPPSEJOBUJPO UIFRVBMJUZPGUIFQVCMJDBENJOJTUSBUJPO$PNQBSFE CFUXFFOFYJTUJOHCPEJFTJTXSPOH JUEPFTTVHHFTUUIBU UPNBOZPUIFSDPVOUSJFT QVCMJDBHFODJFTXFSFTFFOBT POFIBTUPIBWFSFBMJTUJDFYQFDUBUJPOTBTUPXIBUUIFZ GBJS USBOTQBSFOU BOESFMBUJWFMZFċDJFOU"OJOUFSFTU XJMMNFBOGPSUIFFDPOPNZPGUIF3FHJPO*GTJHOJm JOHFYBNQMFJT5FMFOPSTJOJUJBUJWFUPCSJOHSFHVMBUPST

STATE OF THE REGION REPORT 2007 81 SECTION C DOING BUSINESS IN THE BALTIC SEA REGION – THE COMPANY PERSPECTIVE

GSPNUIFPUIFSDPVOUSJFTJOXIJDIJUPQFSBUFTUP/PS BMTPQPJOUFEUPXBSETBDMFBSJNCBMBODFJOUIFXBZUIF XBZ GPSUIFNUPNFFUBOEMFBSOGSPNUIF/PSXFHJBO WPJDFPGUIFQSJWBUFTFDUPSJTPSHBOJ[FEɨFGPDVTPG SFHVMBUPSZBVUIPSJUZɨJTEPFTOPUNFBOUIBUDPNQB USBEJUJPOBMCVTJOFTTPSHBOJ[BUJPO BTXFMMBTPGNBOZ OJFTJOUIF#BMUJD4FB3FHJPOEPOPUEFNBOEGPSMFTT CVTJOFTTMFBEFSTJOEJWJEVBMMZ JTUPJOnVFODFOBUJPOBM CVSFBVDSBDZBOENPSFFċDJFODZJNQSPWFNFOUTJOUIF PSJOTPNFDBTFT&VSPQFBOQPMJDZNBLFSTɨF#BMUJD QVCMJDTFDUPS#VUUIFZBMTPSFDPHOJ[FUIBUUIFTJUVB 4FB3FHJPOJTOPUIJHIPOUIFBHFOEBBOEUIFSFJTOPU UJPODPVMECFTJHOJmDBOUMZXPSTF BOEJTTP JONBOZ NVDIPGBOPSHBOJ[FEWPJDFPGCVTJOFTTBDSPTTUIF PUIFSDPVOUSJFT #BMUJD4FB3FHJPOQSFTFOUBUUIFNPNFOU8JUIUIF QPMJUJDBMTJEFBJNJOHUPJODSFBTFUIFFċDJFODZPGJUT ɨFSFXBTBMTPBHFOFSBMMZQPTJUJWFBTTFTTNFOUPGUIF PXOJOTUJUVUJPOTBUUIJTMFWFM BUMFBTUQBSUJBMMZXJUIB MFWFMPGEJBMPHVFCFUXFFOCVTJOFTTBOEHPWFSONFOU WJFXUPCFUUFSFOHBHFUIFQSJWBUFTFDUPS UIFSFJTOP &TQFDJBMMZJOUIF#BMUJDDPVOUSJFT XIFSFFDPOPNJD PCWJPVTDPVOUFSQBSUUIBUDPVMETQFBLGPSUIFMFBEJOH HSPXUIJTPOUIFUPQPGUIFHPWFSONFOUBHFOEB  DPNQBOZJOUFSFTUTJOUIF3FHJPO UIFSFJTUIFQFSDFQUJPOUIBUQPMJUJDJBOTVOEFSTUBOE  GPSFYBNQMF UIFSPMFPGJOWFTUNFOUTJOBJSQPSUBOE Overall assessment PUIFSJOGSBTUSVDUVSFJOWFTUNFOUTJOGBDJMJUBUJOHGVSUIFS $PNQBOJFTBOEHPWFSONFOUTJOUIF#BMUJD4FB3FHJPO FDPOPNJDHSPXUI*O-BUWJB UIF'PSFJHO*OWFTUPST XPSLRVJUFXFMMUPHFUIFSɨFSFBSFNBOZBSFBTJO $PVODJM '*$*- IBTGPSTPNFZFBSTOPXFTUBCMJTIFE XIJDIJNQSPWFNFOUTBSFQPTTJCMF CVUDPNQBSFEUP BXFMMGVODUJPOJOHEJBMPHVFXJUIUIF-BUWJBOHPWFSO PUIFSDPVOUSJFTBOEXPSMESFHJPOTUIFEJBMPHVFJOUIJT NFOU*OUIF/PSEJDDPVOUSJFTBOE(FSNBOZ CVTJOFTT 3FHJPOTFFNTQSPEVDUJWFɨFEJBMPHVFJT IPXFWFS  JOUFSFTUTIBWFUPDPNQFUFXJUIBCSPBEFSTFUPGPUIFS MBSHFMZOBUJPOBMPS&VSPQFBO'SPNUIFQFSTQFDUJWFPG JOUFSFTUT BOEDPOnJDUTBSFNPSFOBUVSBM DPNQBOJFT UIF#BMUJD4FB3FHJPOIBTOPUZFUFTUBC MJTIFEJUTFMGBTBDSJUJDBMMFWFMPGQPMJDZNBLJOH %FTQJUFUIFTFHPPEFYBNQMFTPGFĊFDUJWFQVCMJDQSJ WBUFEJBMPHVFUIFJOUFSWJFXTXJUICVTJOFTTMFBEFST

82 STATE OF THE REGION REPORT 2007 Final observations

*UIBTCFFOBHPPEZFBSGPSUIF#BMUJD4FB3FHJPO&DPOPNJDPVUDPNFTBSFHFOFSBMMZ TUSPOH DVSSFOUDPNQFUJUJWFOFTTJTTPMJE BOEUIFNFEJVNUFSNPVUMPPLJTQPTJUJWF  FWFOUIPVHIUIFSJTLTIBWFJODSFBTFEJOUIFMBTUGFXXFFLTɨFSFBSFTFSJPVTDIBMMFOHFT JOQBSUTPGUIF3FHJPOUIF#BMUJDDPVOUSJFTOFFEUPNBOBHFUIFUSBOTJUJPOUPBOFX HSPXUINPEFMXJUIPVUTVĊFSJOHPWFSIFBUJOH BOE3VTTJBOFFETUPmOBMMZHFUTFSJPVT BCPVUBEESFTTJOHJUTXFBLHPWFSOBODFTUSVDUVSFBOEMPXMFWFMTPGDPNQFUJUJPO#VU UIFTFDIBMMFOHFTIBWFUPCFBEESFTTFEBUUIFOBUJPOBMMFWFMɨF3FHJPODBOBUCFTUQMBZ BTVQQPSUJWFSPMFBOEFBTFUIFOFDFTTBSZDIBOHFT

ɨFSFBMUFTUGPSUIF#BMUJD4FB3FHJPOJTXIFUIFSJU UJPOJOHXIFUIFSUIFNVMUJUVEFPGFYJTUJOHHPWFSO DBODSFBUFUIFNFDIBOJTNTUIBUXJMMNBLFJUTFDPOP NFOUJOTUJUVUJPOTQSPWJEFTUIFPQUJNBMQMBUGPSNUP NJFTmUGPSUIFDIBMMFOHFTPGUIFGVUVSF'PSUIFJNQBDU TUFFSSFHJPOBMDPPQFSBUJPOBIFBEɨF$PVODJMPG PGJODSFBTJOHHMPCBMNPCJMJUZBOEDPNQFUJUJPOPOUIF #BMUJD4FB4UBUFTEFDMBSFEBUJUT+VOF.BMNÚ BCJMJUZ PG UIJT 3FHJPO UP OVSUVSF  SFUBJO  BOE BUUSBDU NFFUJOHUIBUJUXPVMEXFMDPNFUIFEFWFMPQNFOUPGB XPSMEMFBEJOHTLJMMTBOEJOEJWJEVBMT'PSUIFJNQBDUPG #BMUJD4FB3FHJPOTUSBUFHZXJUIDMFBSBDUJPOQSJPSJUJFT  UIFEFNPHSBQIJDUSFOETPOUIFSFMBUJWFQPTJUJPOPGUIJT UIFCBTJTGPSEFmOJOHXIJDIJOTUJUVUJPOBMBSDIJUFDUVSF 3FHJPOJOUIFXPSMEFDPOPNZ POUIFTVQQMZPGTLJMMFE UPDIPPTF*OUIFTBNFNPOUI UIF1SJNF.JOJTUFST FNQMPZFFT BOEPOUIFTPMJEJUZPGQVCMJDmOBODFT'PS PGUIF/PSEJDDPVOUSJFTEJTDVTTFEPQQPSUVOJUJFTGPS UIFJNQBDUPGDMJNBUFDIBOHFBOEJODSFBTJOHFOWJSPO EFWFMPQJOH/PSEJDDPPQFSBUJPOJOUIFGBDFPGJODSFBT NFOUBM DIBMMFOHFT PO DPOTVNFST  QSPEVDFST  TFSWJDF JOHHMPCBMJ[BUJPOBUUIFJS1VOLBIBSKVNFFUJOHɨF QSPWJEFST  BOE HPWFSONFOUT JO UIF 3FHJPO "OE GPS /PSEJD$PVODJMPG.JOJTUFSTXJMMEJTDVTTUIFJNQBDU XIBUFWFSPUIFSDIBMMFOHFTNJHIUEFWFMPQ PGHMPCBMJ[BUJPOPOSFHJPOBMDPPQFSBUJPOBUBIJHI MFWFMNFFUJOHJO"QSJM "UUIFMFWFMPGJOEJWJEVBMDPVOUSJFTJOUIF#BMUJD4FB 3FHJPO UIFFWJEFODFJTNJYFEPOXIFUIFSUIFQSFQB 'PSUIJTQSPDFTTUPNBLFUIF3FHJPOmUGPSUIFGVUVSF SBUJPOGPSUIFGVUVSFJTVOEFSXBZ4PNFDPVOUSJFT  IBTUPCFESJWFOGPSXBSEBHHSFTTJWFMZ OPUBCMZ%FONBSL IBWFJOWFTUFETJHOJmDBOUFOFSHZ JOEJTDVTTJOHXIBUJUXJMMUBLFUPTVTUBJODPNQFUJUJWF t 'JSTU UIFTUSVDUVSFPGQVCMJDJOTUJUVUJPOTHPWFSO OFTTJOBDIBOHJOHHMPCBMFOWJSPONFOU#VUNBOZ JOHDPPQFSBUJPOJOUIF#BMUJD4FB3FHJPOOFFET PUIFSTIBWFCFFOQSFPDDVQJFEXJUINBOBHJOHUIF UPCFSFWBNQFE*NQSPWJOHUIFDPPQFSBUJPOBOE CVTJOFTTDZDMF NBLJOHTVSFUIBUUIFNBDSPFDPOPNJD BMMPDBUJPOPGSFTQPOTJCJMJUJFTCFUXFFOFYJTUJOH DPOUFYUXJMMSFNBJOIFBMUIZɨJTJTOFDFTTBSZ CVU JOTUJUVUJPOTXJMMMFBEUPTPNFJNQSPWFNFOUTCVUJT OPUTVċDJFOU$PNQFUJUJWFOFTTSFRVJSFTNPSFUIBO OPUTVċDJFOUUPBDIJFWFUIFTUFQDIBOHFJOJOTUJ SFEVDJOHSFNPWJOHXFBLOFTTFTBOEEJTUPSUJPOTUPUIF UVUJPOBMDBQBCJMJUZUIBUUIF3FHJPOOFFET"OFX GVODUJPOJOHPGNBSLFUT$PNQFUJUJWFOFTTSFRVJSFT BSDIJUFDUVSFOFFETUPCFGPVOE FWFOJGUIFQSPD BTUSBUFHZGPSEFWFMPQJOHBDMFBSQSPmMFPGTUSFOHUIT FTTPGDIBOHJOHBOENBZCFDMPTJOHEPXOFYJTUJOH JOUIFNJDSPFDPOPNJDCVTJOFTTFOWJSPONFOUUIBU JOTUJUVUJPOTJTQPMJUJDBMMZDPNQMFY DPNQBOJFTDBOMFWFSBHFUPEFWFMPQVOJRVFDPNQFUJ UJWFBEWBOUBHFT t 4FDPOE UIFSFOFFETUPCFBOFĊFDUJWFQSJWBUF TFDUPSDPVOUFSQBSUPOUIFMFWFMPGUIF3FHJPOGPS "UUIFMFWFMPGUIF#BMUJD4FB3FHJPO BIFBMUIZEFCBUF UIFQVCMJDTFDUPSJOTUJUVUJPOT4VDIBWPJDFGPS IBTCFFOMBVODIFEBCPVUUIFJOTUJUVUJPOBMBSDIJUFD #BMUJD4FB3FHJPOCVTJOFTTEPFTOPUFYJTUUPEBZ UVSFGPSSFHJPOBMDPPQFSBUJPOTJODFUIFQVCMJDBUJPOPG *OTUJUVUJPOTMJLFUIF#BMUJD$IBNCFSPG$PNNFSDF UIFMBTU4UBUFPGUIF3FHJPO3FQPSU4XFEJTI'PSFJHO "TTPDJBUJPO #$$" QMBZBVTFGVMSPMFCVUEPOPU .JOJTUFS$BSM#JMEUIBTCFFOJOTUSVNFOUBMJORVFT IBWFUIFJOTUJUVUJPOBMTUSFOHUITUPDSFEJCMZTQFBL

STATE OF THE REGION REPORT 2007 83 GPSBMMCVTJOFTTFTBĊFDUFECZUIF3FHJPO BTBQMBDF PGUIF$#44QSPWJEFTBOJNQPSUBOUSPMFCVUJT XIFSFUIFZEPCVTJOFTT"OFXQMBUGPSNIBTUPCF VMUJNBUFMZKVTUXIBUJUTOBNFTVHHFTUTBOBEWJTPS  GPVOE CSJOHJOHUPHFUIFSUIPTFDPNQBOJFT JODMVE OPUBOFRVBMQBSUOFS0UIFSDPVOUSJFTBOETVCOB JOHGPSFJHOJOWFTUPSTUIBUIBWFBTJHOJmDBOUTUBLF UJPOBMSFHJPOTIBWFDSFBUFEDPNQFUJUJWFOFTTDPVO JOGVSUIFSJOHSFHJPOBMJOUFHSBUJPOBOEDPMMBCPSB DJMTB#BMUJD4FB3FHJPO$PNQFUJUJWFOFTT$PVODJM UJPO DPVMECFDPNFBLFZDPPSEJOBUJPONFDIBOJTNGPS UIJT3FHJPOBTXFMM t ɨJSE UIFQSJWBUFBOEQVCMJDTFDUPSTXJMMOFFEUP mOEBQMBUGPSNGPSXPSLJOHUPHFUIFSJOPSEFSGPS ɨFTFTUFQTBSFXFMMXJUIJOSFBDIGPSUIF#BMUJD4FB UIF3FHJPOUPNFFUUIFDIBMMFOHFTPGUIFGVUVSF 3FHJPOɨJT3FQPSUIPQFTUPNBLFBDPOUSJCVUJPOUP $VSSFOUTUSVDUVSFTBSFMBSHFMZEPNJOBUFECZHPW UIFNBOZEJTDVTTJPOTUIBUXJMMOFDFTTBSZPOUIFXBZ FSONFOUɨF#VTJOFTT"EWJTPSZ$PVODJM #"$  UPNBLFUIF3FHJPOmUGPSUIFDIBMMFOHFTBIFBE

84 STATE OF THE REGION REPORT 2007 About the author

Dr. Christian Ketels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altic Development Forum The leading high-level network for decision-makers from business, politics, academia and media in the Baltic Sea Region.

We initiate and facilitate processes to make the Baltic Sea Region the most dynamic and prosperous economic centre in Europe and the world.

Nygade 3, 5th floor P.0. Box 56 DK-1002 Copenhagen K Denmark Telephone +45 70 20 93 94 Fax +45 70 20 93 95