June 27 (SeeNews) - Governments in Southeast Europe (SEE) should create an environment encouraging companies to take advantage of innovation to address the challenges of a widening inequality gap, Arup Banerji, regional director for the European Union countries for the World Bank Group, told SeeNews.
New disruptive technology is allowing countries to become much more productive and competitive, but it is accelerating the process of their growing inequality, Banerji told SeeNews on the sidelines of the Plovdiv Economic Forum last week, where he presented a World Bank report on the challenges of economic inequality.
According to the Growing United report, the share of workers in EU member states in SEE, particularly in their lagging regions, who lack the skills needed to position themselves well on the labour market, is increasing. At the same time, in some countries and regions companies do not enjoy a supportive innovation environment, which cuts further into their productivity and competitiveness.
“Countries such as Croatia, Romania and Bulgaria have converged quite rapidly to the EU average in terms of per capita GDP for example. So in that sense the convergence machine is working and working well,” Banerji said. However, looking below the surface, inequality between the regions within the countries and their population is growing, he added.
According to the World Bank, the economies in Central and Eastern Europe, which include Bulgaria, Croatia, Hungary, Poland, and Romania are expected to expand by 4.2% this year and by 3.7% in 2019. However, according to Eurostat figures, in 2017 the GDP per capita in the countries in the region amounted to 85% of the EU average in Slovenia, 63% in Romania, 61% in Croatia and just 48% in Bulgaria. Bulgaria and Croatia also ranked at the bottom among 28 EU member states in terms of actual individual consumption per capita in 2017, with 61% and 55% of the EU average, respectively.
“The challenge for every one of these countries in Europe, including SEE, is how to make sure that the poorest people and the smallest firms are able to compete better in the new economy and with the available technologies,” Banerji said.
“We find that firms in Southern Europe, and including parts of SEE, […] are remaining small rather than grow and take advantage of technological innovation and invest in research and development. And that is partly because of the business environment that does not allow them or incentivise them to grow. These are the challenges that these countries have to take very, very squarely."
You can read the full text of the interview in the forthcoming edition of SEE TOP 100, a ranking of the biggest companies, banks and insurers in Southeast Europe compiled by SeeNews.