The Increasing Importance of Internationalized SMEs in the CEI region

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The Increasing Importance of Internationalized
SMEs in the CEI region

• Giorgia Giovannetti
• Università di Firenze and Area Studi ICE
• Giorgia.giovannetti_at_unifi.it

Sofia, 20th November 2007 SME Development
Projects in the CEI Region
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The world is rapidly changing.

• Increase in international integration and
  globalization since 1950
• Major changes in last 10-15 years
• ICT revolution, Production split and diced into
  separate fragments that can be spread around the
  globe.
• The world has changed, so have policies.....
• Changes particularly important for CEI countries

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18 Member States Albania, Austria, Belarus,
Bosnia and Herzegovina, Bulgaria, Croatia, the
Czech Republic, Hungary, Italy, Macedonia,
Moldova, Montenegro, Poland, Romania, Serbia,
Slovakia, Slovenia and Ukraine
A territory of 2.4 million square km and a
population of nearly 260 million.  9  EU and 9
non-EU Member Countries
15 out of 18 grow more than 5 a year
Highly integrated, both trade and FDI
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Employment growth and import penetration
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Changes in export shares of Italy and Germany in
some CEI countries
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Imports from some CEI countries and FDI
increasing integration
Italy and Germany different geographical pattern
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Offshoring in selected countries materials and
services
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Index of outsourcing abroad by goods and services
industries three main sectors
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Italy Changes in offshoring (narrow and broad)
Changes 1997-2003
clothing
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(No Transcript)
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Earnings per worker in some CEI countries (annual
av.) US , 2004
Source, ILO and OECD, 2007
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Need for internationalization
Cost and efficiency of work, 12 new members
Annual average change (2001-2004)
Per capita Labor efficiency - Labor cost
efficiency labor cost
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Skill level of employment
Source OECD, 2007
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Italian SMEs
Profitability of SMEs and BIG a comparison
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A strategic answer
Skill upgrading a way out of price competition
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Conclusions

• Offshoring
• Effects on employment
• All CEI affected, also low costs
• Other answer to globalization is upgrading of
  quality
• Italian firms could be a taken as an example
  restructuring in traditional sectors but through
  offshoring and quality upgrading recovered
  profitability, kept market shares in values
  (though not in volumes)
• EU funds could help restructuring
• Many CEI forecasts take into account good use
  of EU funds