CEE in 2020 – Trends and perspectives for the next ... - Roland Berger

CEE in 2020 – Trends and 

perspectives for the next decade 

Study Vienna, November 2010 

CEE_in_2020_Study.pptx 

1

Contents Page 

A. 

B. 

C. 

D. 

E. 

Study setup 3 

Ten assumptions for CEE through 2020 6 

Summary 41 

Appendix – Country analysis 43 

Appendix – Study authors 51 

© 2010 Roland Berger Strategy Consultants 


2

A 

Study setup 


3

CEE in 2020 – Trends and perspectives for the next 

decade 

Introductory remarks 

> In September 2010, Roland Berger Strategy Consultants conducted an online survey among 

320 senior managers in Central and Eastern Europe (CEE) about the future of this region 

from a management perspective 

> For the qualitative part, the survey's results have been discussed with leading economists, 

analysts and CEOs. For the quantitative part, desktop research and analyses based on 

publically available figures were conducted 

> The objective of the study was to identify the development prospects for CEE for the next 

decade 

> Topics covered included general assessments, corporate strategies, overall economic 

challenges and the effects of global trends on Central and Eastern Europe 

> Selected results of this survey were compared with the outcome of the previous study 

"CEE in 2016", which was conducted in 2006 

Source: Roland Berger – CEE 2020 study 


4

CEE-wide participation of around 320 managers and 

in-depth analysis of six selected CEE countries 

Participation structure [%] 

CEE COUNTRIES PARTICIPATING INDUSTRIES 

Countries with in-depth analysis 


Automotive 

Engineering 

Transportation 

Banking & 

Public sector 

2% 

insurance 

Pharma & healthcare 3% 3% 

Metals & mining 

4% 2% 2% 

26% 

Chemicals & oil 

5% 

Energy & utilities 6% 

Construction 9% 

IT/media/telecom 

11% 

13% 

14% 

Services 

Consumer goods & retail 


5

B 

Ten assumptions for CEE through 2020 


6

Quo vadis CEE? –The region has to reinvent itself as a 

European growth region of global significance 

Ten assumptions for CEE through 2020 (1/2) 

1 

2 

3 

4 

5 

CEE in its current form will not exist any more – Europe will consist of EU and 

non-EU countries, and the region will be much more diverse 

The region will not be among the global emerging markets but will remain the main 

European growth region. GDP growth will plateau at about 2% above WE level 

Although the CEE countries continue to develop from "workbenches" to innovation-driven 

economies, the gap between Western Europe and CEE will persist 

Lack of basic requirements (institutions, infrastructure) will remain CEE's main weakness, 

whereas efficiency enhancement is a competitive advantage 

Human capital issues (demographic development, brain drain, education) will remain the 

second bottleneck for further economic development 



7

Quo vadis CEE? –The region has to reinvent itself as a 

European growth region of global significance 

Ten assumptions for CEE through 2020 (2/2) 

6 

7 

8 

9 

10 

In 2020, CEE will still be dependent on Western Europe – Pan-CEE business is developing 

fast and may become a potential way out 

Its unique position as a bridgehead between the emerging markets of Russia, Turkey, China 

and the advanced economies of Western Europe is CEE's future capital 

Counteracting the scarcity of energy & raw materials, the consolidation of public finances 

and the consequences of technological progress are the main tasks for the next decade 

The regional growth industries will be energy & utilities, IT & telecom and pharma & 

healthcare – Shift toward future industries needed 

The main future growth drivers are thought to be energy-related (energy efficiency, 

renewables) and IT solutions 



8

1 

EUROPE – IN THE EU OR NOT 

The definition of the CEE region within Europe will change 

substantially by 2020 – One region, but very diverse 

EU: Economic development from 2010 to 2020, GDP per capita (EU-27 = 100) [%] 

EUROPE AS IT IS TODAY EUROPE 2020 – IN THE EU OR NOT 

EU: 27 countries 

Euro: 16 countries 

EU-15 New EU member states 

EU integration 

New EU 

members 

Source: Roland Berger; International Monetary Fund (IMF) – World Economic Outlook 2015; data for 2020 extrapolated 

€ 

area growth 

EU: >30 countries 

151% 


9

1 EUROPE – IN THE EU OR NOT 

The diverse economic development within the region is 

pushing toward dividing CEE into subregions 

Survey results 

COUNTRY 

TREND TOWARD SUBREGIONS 

Austria 

79% 

Ukraine 

Croatia 

CEE average 

Romania 

Czech Republic 

Poland 42% 

Do you see a trend emerging that is creating subregions such as CE, SEE, Baltics, CIS? 

Yes/no 


51% 

62% 

60% 

57% 

67% 

COMMENTS 

> Central Europe (CE) consists of the Czech 

Republic, Slovakia and Hungary. Some- Sometimes 

Austria, Slovenia and Croatia are 

included 

> Southeastern Europe (SEE) consists 

of Serbia, Bosnia and Herzegovina, 

Montenegro, Macedonia, Bulgaria and 

Albania. Sometimes Croatia, 

Romania and Slovenia are included 

> The CIS region consists of Russia, 

Ukraine, Kazakhstan, Belarus and other 

former Soviet Republics 

> Larger countries such as Poland and 

Romania will be addressed separately 


10

2 CEE AS A GROWTH REGION 

Due to the economic crisis, CEE lost its position as a global 

growth engine – Structural weaknesses became obvious 

GDP development [2000 ≙ 100%] 

100 

00 

01 

02 

03 

Economic crisis 

04 

05 

06 

07 

08 

09 

10 

11 

487% 

BRIC 1) 

1) Overall growth rate of BRA, RUS, IND, CHN 

2) Overall growth rate of BIH, BGR, HRV, CZE, EST, HUN, LVA, LTU, MKD, MNE, POL, ROU, SRB, SVK, SVN, UKR 

3) Overall growth rate of AUT, BEL, DNK, FIN, FRA, DEU, GRC, IRL, ITA, LUX, NLD, NOR, PRT, ESP, SWE, CHE, GBR 

Source: Roland Berger; International Monetary Fund (IMF) 

COMMENTS 

> During the first decade of the 

CEE2) 378% CEE new century, CEE has been 

2) 

378% new century, CEE has been 

200% 

12 

WE 3) 

one of the global growth regions 

> Growth was driven in particular by 

FDIs from WE, but concealed 

unsolved structural problems 

> CEE's main problems are 

– Institutional weaknesses 

– Inadequate infrastructure 

– Lack of innovation 

> The absence of FDI during the 

crisis revealed these issues 


11


CEE will not regain its status as a global growth engine – 

The region is stuck in the middle and has to redefine itself 


REGION/ 

COUNTRY 

China 

India 

Turkey 

Russia 

CEE 

South America 

Africa & Middle East 

EU-15 

North America 

EXPECTED DEVELOPMENT 

-1 0 1 2 3 4 5 

-5 0 

5 

How will the economic situation develop in the following regions from 2010 to 2020? 

-5… deteriorate / 0… remain the same / +5… improve 

1.0 

0.9 

0.9 

2.0 

1.8 

1.8 

1.6 

Source: Roland Berger – CEE 2020 study; International Monetary Fund (IMF) 

3.0 

2.9 

Growth 

engines 

Growing 

economies 

GDP GROWTH 2010-2015, 

AVERAGE ANNUAL CHANGE [%] 

9.7 

8.4 

4.5 

Moderate 

Growth China India Turkey RUS CEE North EU-15 

America 

4.2 

3.8 

2.6 

1.8 


12


Polish managers are the most optimistic about their 

country's development – Croatian managers skeptical 


CEE COUNTRY 

Poland 


Romania 



Austria 

Croatia 



-1 0 1 2 3 4 5 

-5 0 5 

How will the economic situation in your country develop from 2010 to 2020? 

-5… deteriorate / 0… remain the same / +5… improve 

0.8 

0.8 

1.4 

1.3 

1.7 

2.2 

1.4 

n.a. 

2.0 

2.0 

2.2 

2.5 

2.5 

2010 2006 

Optimists 

Pessimists 

COMMENTS 

> Polish, Czech and Romanian 

managers are optimistic about 

the upcoming decade 

> Ukrainian, Austrian and Croatian 

managers expect only slow growth 

> Optimism has declined in the 

wake of the economic crisis 

> Whereas Polish managers are 

more optimistic than four years 

ago, Croatian managers have 

changed from being very 

optimistic to being pessimistic 


13


Business volume in CEE will increase over the next decade – 

The number of workplaces will only grow slowly on average 


BUSINESS VOLUME NUMBER OF WORKPLACES 

Romania 





Croatia 

Austria 


-1 

-5 

0 

1 2 3 4 

5 

0.5 

1.0 

1.7 

1.6 

2.3 

2.3 

2.1 

In which way will your industry develop in your country in terms of… 

-5… strongly decrease / 0… the same / +5… strongly increase 


Romania 



Croatia 


Austria 

-1 0 1 2 3 4 5 

-5 0 5 

0.4 

0.1 

0.0 

-0.5 

0.6 

1.0 

1.3 


14

3 THE GAP WILL REMAIN 

Whereas CE countries need to succeed in transiting to 

advanced economies, SEE has to compete with BRIC states 

Economic development in 2010 

Economic development 

Factordriven 

UKR 

Source: Roland Berger, World Economic Forum (WEF) 

SRB 

CZE 

SVK 

POLHUN 

HRV 

RUS 

ROU 

BGR 

SVN 

1 Transition 1-2 2 Transition 2-3 3 

Efficiencydriven 

AUT 

Innovationdriven 

t 

COMMENTS 

> Slovenia and Czech Republic 

have completed their transition to 

advanced economies 

> By 2020, Slovakia and Hungary 

have a good chance to complete 

their transition. Poland and 

Croatia will continue to catch up 

> Russia, Romania, Bulgaria and 

Serbia will compete on a global 

level with Brazil, China and Turkey 

> Ukraine has to establish itself as 

an attractive workbench for 

Western companies 


15

3 THE GAP WILL REMAIN 

Although CEE will continue to catch up the gap will persist 

– Attractive opportunities for consumer products 

GDP based on purchasing power parity (PPP) per capita (EU-15 = 100) [%] 

110 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

00 

01 

02 

03 

04 

05 

06 

07 

08 

09 

Source: Roland Berger; International Monetary Fund (IMF) 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

Austria 

EU-15 = 100 

Slovenia 


Slovakia 


Hungary 

Russia 

Croatia 

Bulgaria 

Romania 

Serbia 


COMMENTS 

> In 2000, Slovenia (64%), the 

Czech Republic (55%) and 

Hungary (44%) were the most 

developed CEE countries 

> Today, Slovenia reaches 79% 

of Western European average, 

followed by the Czech Republic 

(72%) and Slovakia (58%) 

> In ten years, Slovenia will reach 

more than 80% of the EU-15 

average. Czech Republic 

(>75%) and Slovakia (>70%) 

will follow 


16

4 INTERNATIONAL COMPETITIVENESS 

Compared to 2006, CEE countries are losing significantly on 

competitiveness – Only Poland is improving continuously 

International competitiveness: Global Competitiveness Report (2004-2010) 1) [rank] 

2004 2006 2010 Change 2004-2010 

AUT 

SVN 

HUN 

CZE 

SVK 

BGR 

POL 

HRV 

ROU 

RUS 

UKR 

SRB 

17 

33 

39 

40 

43 

59 

60 

61 

63 

70 

86 

89 

AUT 

CZE 

SVN 

SVK 

HUN 

POL 

HRV 

RUS 

ROU 

BGR 

UKR 

SRB 

17 

29 

1) The Global Competitiveness Report has only existed in this form since 2004 

Source: Roland Berger; World Economic Forum (WEF) 

33 

37 

41 

48 

51 

62 

68 

72 

78 

87 

AUT 

CZE 

POL 

SVN 

HUN 

SVK 

RUS 

ROU 

BGR 

HRV 

UKR 

SRB 

18 

36 

39 

45 

52 

60 

63 

67 

71 

77 

89 

96 

AUT 

CZE 

POL 

SVN 

HUN 

SVK 

RUS 

ROU 

BGR 

HRV 

UKR 

SRB 

-1 

+3 

+21 

-12 

-13 

-17 

+7 

-4 

-12 

-16 

-3 

-7 


17

4 BACK UP 

Efficiency drivers are the region's competitive advantage, 

but basic requirements will remain weak 

International competitiveness: Global Competitiveness Report 2010-2011 

COUNTRY 

Austria 

Czech Rep. 


Slovenia 

Hungary 

Slovakia 

Russia 

Romania 

Croatia 


Serbia 

OVERALL 

RANK 

18 

36 

39 

45 

52 

60 

63 

67 

77 

89 

96 

Source: Roland Berger; World Economic Forum (WEF) 

Key for factor-driven 

economies 

BASIC 

REQUIREMENTS 

15 

44 

56 

34 

59 

53 

65 

77 

50 

102 

93 

> Institutions 

> Infrastructure 

> Macroeconomic stability 

> Health and primary education 

Key for efficiency-driven 

economies 

EFFICIENCY 

ENHANCERS 

19 

28 

30 

46 

41 

37 

53 

54 

76 

72 

93 

> Higher education and training 

> Goods market efficiency 

> Labor market efficiency 

> Financial market sophistication 

> Technological readiness 

> Market size 

Key for innovation-driven 

economies 

INNOVATION AND 

SOPHISTICATION 

13 

30 

50 

35 

51 

63 

80 

91 

85 

88 

107 

> Business sophistication 

> Innovation 


18

4 BASIC REQUIREMENTS 

Major challenges will remain bureaucracy, corruption and 

legal uncertainty as well as the lack of infrastructure 

Survey results, Global Competitiveness Report 2010-2011 

FACTOR 

Geographical position 

Cultural similarity to Western countries 

Higher education and training 

Primary education 

Language skills 

Workforce resources 

Political and social stability 

Labor costs 

Infrastructure 

Innovation, R&D 

Fiscal framework 

Legal framework 

Corruption 

Bureaucracy 

DISADVANTAGE/ADVANTAGE 

-5 0 5 

-2.1 

-0.4 

-0.5 

-1.8 

2.8 

2.1 

1.8 

1.7 

1.3 

1.1 

0.6 

0.6 

0.4 

0.3 

Compared to other countries, what are the advantages/disadvantages of your country regarding 

long-term investments? -5… strong disadvantage/ 0… the same / +5… strong advantage 

Source: Roland Berger – CEE 2020 study; World Economic Forum (WEF) 

Basic requirements 

BASIC REQUIREMENTS WEF 

AUT 

CZE 

HRV 

POL 

ROU 

UKR 

INSTI- INFRA- 

# (out of 139) TUTIONS STRUCTURE 

15 

44 

50 

56 

77 

102 

15 

72 

86 

54 

81 

134 

20 

39 

41 

72 

92 

68 


19

4 EFFICIENCY 

In the medium term, the main advantage of CEE will still be 

its competitive labor costs 

Unit labor costs in % of EU-15, 2009 [%] – "Erste Group" analysis 

Slovakia 


Hungary 

Croatia 

Bulgaria 


Romania 

Austria 

Slovenia 

Source: Eurostat; Erste Group 

70 

74 

80 

81 

81 

84 

94 

102 

103 

COMMENTS 

> Unit labor costs put 

productivity in relation to 

compensation 

> The CEE average within the 

EU is about 83% of the EU-15 

average 

> Especially Slovakia, Poland 

and Hungary will remain 

attractive production locations 

> Countries like Austria and 

Slovenia have to score with 

innovation and business 

sophistication 


20

4 EFFICIENCY 

Efficiency improvement and innovation will be on top of 

managers' agendas during the next decade 


GENERAL STRATEGY 

Efficiency improvement 

Innovation 

Enhancement of cost structures 

Increase in service share 

Brand differentiation 

Entering new markets 

Penetrating new customer segments 

Consolidating supplier structures 

Location shifts 


RELEVANCE FOR CEE 

-1 0 1 2 3 4 5 

-5 0 5 

2.5 

2010 2006 

n.a. 

Which general strategies will shape your industry in your country during the next ten years? 

-5… much less / 0… the same / +5… much more 

1.8 

1.5 

1.5 

1.4 

1.4 

1.4 

0.9 

1.9 

1.4 

2.1 

2.4 

2.5 

n.a. 

2.5 

2.3 

2.8 

COMMENTS 

> Efficiency improvement is at 

the top of the agenda in 

all countries surveyed 

> In the advanced economies 

(AUT, CZE, HRV), innovation 

is thought to be more important 

than in other CEE countries 

> Compared to 2006, costrelated 

topics became more 

important than innovationdriven 

topics 

> Location shifts are not on the 

agenda of CEE managers 


21

4 EFFICIENCY/INNOVATION 

A clear focus on high tech offers the best possibilities for 

productivity gains – Hungary and Czech Republic lead 

Share of high-tech exports in 2009 [% of total exports] – "Erste Group" analysis 

0-5% 

5-8% 

8-15% 

15-18% 

18-59% 

Source: Eurostat; Erste Group 

COMMENTS 

> A clear focus on high tech 

offers the best possibilities for 

high productivity gains and 

boosts development toward 

innovative-driven economies 

> Hungary and Czech Republic 

are already overtaking Western 

European competitors 

> Poland, Romania and Bulgaria 

are lagging behind 


22

4 INNOVATION 

A structural problem of the CEE countries is that R&D 

spending continues to be far below Western European levels 

Innovation – Research & development in 2006 1) [% of GDP] 

AUT 2.45 

SVN 1.59 

CZE 1.54 

RUS 1.18 

HUN 1.00 

CEE average 0.87 

HRV 0.80 

POL 0.60 

SLK 0.49 

BUL 0.47 

ROM 0.45 

SRB n.a. 

UKR n.a. 

1) Latest available data, published 2008 

Source: WEF; Eurostat; Roland Berger 

excl. AUT and RUS 

3% EU target 

COMMENTS 

> The Europe 2020 strategy 

recommends that 3% of the EU's 

GDP should be invested in R&D 

> In 2008, only Finland and Sweden 

achieved this goal 

> Austria, Germany & Denmark are 

on their way to meeting this target 

> Only Slovenia, Czech Republic 

and Hungary have R&D spending 

over 1% 

> Although R&D spending is going 

up, all other countries are lagging 

far behind 


23

5 HUMAN CAPITAL 

Human capital will remain a major bottleneck for the region's 

economic development 

A growing and a shrinking Europe – Projected change: 2008-2030 [%] 

More than -10% 

-10 to -5% 

-5 to -2% 

-2 to 0% 

0 to +2% 

+2 to +5% 

+5 to +10% 

More than +10% 

Source: Eurostat; UN; EIU; Erste Group 

COMMENTS 

> Demographic development, an ongoing 

brain drain and "at best" average education 

systems are limiting factors 

> The population will decline by 2030 in all 

CEE countries 

> Economic growth will be generated 

through productivity gains 

> Austria profits from migration from 

Germany, Central Europe and 

Southeastern Europe 

> Shrinking populations will be a 

phenomenon of rural areas, regional and 

urban centers will grow or stagnate 


24


A declining population in CEE will be compensated for by 

additional productivity – Wealth is spreading 

Economic growth: GDP vs. GDP per capita – "Erste Group" analysis 

ECONOMIC GROWTH UP THROUGH 2020 

AUT 

-8% 

HRV 

2020 GDP growth 

Source: EIU; Erste Group 

0% 

+3% 

CZE 

+5% 

HUN 

2020 growth in GDP per capita 

+7% 

ROU 

+9% 

RUS 

0% 

SVK 

+14% 

UKR 

COMMENTS 

> Economic growth in CEE will 

be generated also through 

productivity gains 

> The effect is that GDP per 

capita will grow stronger than 

GDP. The wealth of the 

population will rise more 

quickly than GDP 


25


The ongoing brain drain to Western Europe and North America 

will remain a limiting factor for economic development 

World Economic Forum, Brain Drain Index 2010-2011 

COUNTRY 

Austria 

Slovenia 



Russia 

Hungary 

Slovakia 


Croatia 

Bulgaria 

Serbia 

Source: Roland Berger – CEE 2020 study; World Economic Forum (WEF) 

BRAIN DRAIN RANK (out of 139) 

30 

48 

61 

79 

82 

99 

101 

115 

122 

127 

136 

COMMENTS 

> Especially in Southeastern 

Europe, the brain drain to 

Western Europe and North 

America is a serious problem 

for the country's further 

development 

> In Central Europe, Austria is 

the main target of pan-CEE 

migration – Austria is the only 

country in CEE with a growing 

population 


26


Education currently seen as a competitive advantage – 

Good school systems but universities need to improve 


FACTOR 








Labor costs 





Corruption 

Bureaucracy 

DISADVANTAGE/ 

ADVANTAGE 

-5 -4 -3 -2 -1 0 1 2 3 4 5 

-1.8 

-2.1 

-0.4 

-0.5 

Compared to other countries, what are the advantages/disadvantages of your country regarding 

long-term investments? -5… strong disadvantage / 0… average / +5… strong advantage 

Source: Roland Berger – CEE 2020 study; PISA study 2006; QS world university ranking 2010 

2.8 

2.1 

1.8 

1.7 

1.3 

1.1 

0.6 

0.6 

0.4 

0.3 

RANKINGS 

> In QS world university ranking 

2010, CEE countries did not 

achieve any top results – Only 

AUT and CZE have 

universities in the top 300 

> In the latest PISA ranking, CZE 

is number 10, followed by 

Austria (12), Hungary (15), 

Poland (17) and Slovakia (22) 

– other CEE countries did not 

participate 


27


The demand for soft skills will increase – Language skills are 

on top of the agenda 


REQUIREMENT 


Personal development 

Complexity handling 

Project management 

Creativity 

Commercial and 

marketing abilities 

Sales abilities 

Technical abilities 

Corporate mgmt. abilities 

Intercultural abilities 


2.6 

2.6 

2.6 

2.5 

2.4 

2.3 

2.2 

2.1 

2.0 

1.9 

LANGUAGE SKILLS 

English 

Russian 

German 

Chinese 

Spanish 

French 

-5… strongly decreasing /0 … same level /+5 … strongly increasing 

3.1 

1.7 

1.5 

1.2 

0.3 

0.2 

COMMENTS 

> Good language skills – 

especially German and 

Russian – are an advantage 

for CEE countries 

> English is developing from a 

foreign language to a valuable 

business tool 

> Nearly all countries – with the 

exception of Austria – neglect 

intercultural abilities 


28

6 PAN-CEE BUSINESS 

CEE will depend predominantly on Western Europe in the 

upcoming decade as well – China may be a "blind spot" 


North America 

1.81 

South America 

0.62 

4.01 

EU-151) EU-151) 3.29 

CEE2) CEE 

1.45 

Turkey 

Russia 2.85 

India 

1.42 

China 

COMMENTS 

> Managers view EU-15 

countries as their main 

trade partners and 

investors 

1) EU-15: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom 2) Excl. Russia 



2.17 

How strong will the influence of the following regions be on the economic development of the CEE region? 

0… no influence /5… strong influence 

> Pan-CEE business will gain 

importance over the next 

decade 

> Russia and China will play 

a significant role 

> Turkey is not perceived as 

overly important 

29


But increasing pan-CEE business will reduce the dependance 

on Western Europe – Growing shares of imports 

Imports from CEE countries in 2009 [%] 

22 

60 

29 

17 

10 

61 

Source: Eurostat; Roland Berger 

31 

28 

10 

15 

53 

62 

20 

25 

51 

42 

29 

33 

41 

27 

25 

39 

23 

36 

54 

40 

19 

37 

Avg. 

2005 

Avg. 

2009 

Imports from new EU-12 ("CEE") Imports from old EU-15 Imports from other countries 

16 

44 

17 

21 

28 

29 

52 

50 

+26% 

-4% 

+2% 

[%] 

COMMENTS 

> Since 2005, the share of 

imports from other new EU 

member countries increased in 

most CEE countries by 26% 

> The share of imports from 

EU-15 decreased by 4%, but 

remains high 

> In six countries, the share of 

imports from other CEE 

countries is still below 20%, 

providing huge potential for the 

future 


30


The share of exports to other new EU member countries is 

still less than 20%, providing huge potential for the future 

Exports to CEE countries in 2009 [%] 

15 

65 

31 

20 

16 

54 

31 

17 

52 

32 

32 

36 26 

Exports to new EU-12 ("CEE") Exports to old EU-15 Exports from other countries 

Source: Eurostat; Roland Berger 

21 

21 

59 

15 

64 

20 

14 

56 

30 

26 

38 

14 

60 

36 

35 

14 

51 

Avg. 

2005 

Avg. 

2009 

18 

21 

25 

26 

53 

57 

+16% 

-7% 

+6% 

[%] 

COMMENTS 

> In most CEE countries, the 

share of exports to the other 

EU-12 states has increased 

> In POL, CZE and SVK, the 

distribution of exports did not 

change significantly 

> The share of exports to other 

CEE countries is still relatively 

low and provides potential for 

more intense trade relations 

between neighboring countries 

in the CEE region 


31

7 CEE AS BRIDGEHEAD 

The geographical position between WE and Russia and 

similarities to Western countries viewed as main advantages 


FACTOR 

Compared to other countries, what are the advantages/disadvantages of your country regarding long-term investments? 

-5… strong disadvantage /0… average /+5… strong advantage 









Labor costs 





Corruption 

Bureaucracy 

DISADVANTAGE/ 

ADVANTAGE 

-5 0 5 

-1.8 

-2.1 

-0.4 

-0.5 

2.8 

2.1 

1.8 

1.7 

1.3 

1.1 

0.6 

0.6 

0.4 

0.3 


32


Russia has a major economic influence on CEE and will 

keep a strong role as investor 


RUSSIA'S INFLUENCE ON 

THE COUNTRIES 


Croatia 

Romania 


Austria 

Czech Rep. 


-1 0 1 2 3 4 5 

-5 0 5 

0.5 

1.4 

1.3 

1.3 

1.3 

1.1 

Political 


2.0 

1.3 

2.2 

2.1 

2.4 

2.1 

2.1 

2.1 

Economic 

RUSSIA'S INFLUENCE AS AN 

INVESTOR 

Croatia 


Czech Rep. 


Austria 

Romania 


-1 0 1 2 3 4 5 

-5 0 5 

COMMENTS 

> Especially Croatian and 

Ukrainian managers expect 

stronger Russian influence 

In your opinion, how will the influence of Russia on CEE develop within the next ten years? 

Russia's role in 2020 as an important investor in CEE will be… -5… less relevant /0… the same /+5… more relevant; multiple answers possible 

2.4 

2.2 

2.1 

2.0 

1.9 

1.8 

0.8 

> Polish managers are skeptical 

of Russia's emerging power 

> Except Ukraine, CEE 

managers expect only a small 

increase in Russian political 

influence 


33


Russian investments in Europe will concentrate on CEE – 

Focus on resource-driven industries 


TARGET COUNTRY 


"New" EU members 

Belarus 

Serbia 

EU-15 

Other SEE countries 

Turkey 


30% 

21% 

34% 

46% 

45% 

65% 

61% 

TARGET INDUSTRY 

Energy & utilities 

Chemicals & oil 


Real estate 

Bank. & insurance 

Tourism 

IT/media/telecom 


Automotive 

Cons. goods & retail 

Pharma 

What will be the main target countries/industries for Russian investments? 

-5… less relevant / 0… the same /+5… more relevant; multiple answers possible 

14% 

11% 

8% 

6% 

15% 

31% 

26% 

56% 

46% 

87% 

79% 

COMMENTS 

> Ukraine and the CEE EU 

members lead the ranking 

> Belarus and Serbia, the 

traditional target countries, are 

viewed as not that important 

> Russian investments mainly 

concentrate on resource and 

energy-intensive industries – 

Diversification needed 


34

8 TASKS FOR 2020 

Raw material shortage will have a major impact on the 

region and will boost innovation in the energy sector 


TENDENCY 

IMPORTANCE ∆ 

0 

1 2 3 4 5 

Raw materials/energy 

3.12 

Consolidation of public finances 2.78 2.97 

Technological progress 

2.91 

Capital markets influence 

2.62 2.96 

Demographic development 

2.34 3.02 

Growing social imbalance 

2.18 2.76 

Migration & labor mobility 

2.17 2.69 

Growing influence of the state 

2.14 2.26 

Change of values 

2.07 2.35 

Climate change 

1.76 

2.70 

Political conflicts/terrorism 

1.43 

2.63 

3.56 

0.44 

-0.19 

0.48 

0.34 

0.68 

0.58 

0.52 

0.12 

0.28 

0.94 

1.20 

Local Global 

Which of the following leading tendencies will influence the global and local economy within the next ten years? 

0… no importance / 5… high importance 


3.39 

COMMENTS 

> Raw material shortage 

and the dependency on 

fossil fuels are on top of 

the agenda 

> The consolidation of 

public finances has only 

regional importance 

> Demographic development 

and climate 

change are only 

important on a global 

level – CEE managers 

underestimate the 

relevance for CEE 


35


Renewable energy is viewed as the primary task for the next 

decade – Investment boost needed to reach EU targets 

Europe 2020 target – RES 1) as share of energy supply [%] 

34.0 

23.3 

13.0 

6.1 

25.0 

16.0 

2005 2020 target 

1) RES = Renewable Energy Sources 

Source: Roland Berger; Eurostat 

7.2 15.0 

4.3 

6.8 

13.0 

14.0 

24.0 

17.8 

9.4 

16.0 

COMMENTS 

> The "20/20/20" climate/energy targets 

should be met – including an increase 

to 30% in emissions reductions if the 

conditions are right 

> Goal of EU is to realize a "Resourceefficient 

Europe" to help decouple 

economic growth from the use of 

resources, support the shift toward a 

low-carbon economy, increase the 

use of renewable energy sources, 

modernize the transport sector and 

promote energy efficiency 


36


CEE managers view the consolidation of public finances as 

very important – Debt rates below WE, but growing quickly 

General government debt 1) , 2009 [% of GDP] 

Change 

2008- 

2009 [%] 

Country 

rating 

S&P 

+5.1 +6.6 +6.0 +2.0 +8.4 +6.8 +9.3 -5.7 +9.9 +3.9 +0.7 +0.1 

78.0 

69.3 

46.8 

46.5 

37.1 

34.1 

31.8 

31.3 

30.0 

24.0 

14.8 

HUN AUT HRV POL SVK CZE SVN SRB UKR ROU BGR RUS 

BBB 

neg. 

AAA 

stable 

BBB 

neg. 

Source: Eurostat; CIA World Factbook; Roland Berger 

A 

stable 

A+ 

stable 

A 

pos. 

AA 

stable 

BB 

stable 

B+ 

stable 

BB+ 

stable 

BBB 

stable 

1) The general government sector comprises central government, state government, local governments and social security funds 

6.3 

BBB 

stable 

COMMENTS 

> With the exception of 

Hungary, government 

debt rates are much less 

than those of the EU-15 

> Governmental debt saw 

relatively moderate 

growth of 4.2% in 2009 – 

But in some countries, 

deficits are growing 

much faster 


37

9 GROWTH INDUSTRIES 

Regional growth industries are energy & utilities, IT & telecom 

and pharma & healthcare – Implementation? 


INDUSTRY 

Energy & utilities 

IT & telecom 

Pharma & healthcare 

Consumer goods & retail 


Banking & insurance 

Construction 

Public sector 

Automotive 

Oil & gas 

Chemicals 



DEVELOPMENT 

-5 0 5 

-0.3 

How relevant will the following industries be for your country? 

5… lose importance / 0… remain on same level / +5… gain importance 

2.2 

2.0 

1.9 

1.8 

1.5 

1.4 

1.1 

0.6 

0.6 

0.6 

0.4 

COMMENTS 

> Current focus on automotive, 

metals & mining and chemicals 

> CEE also successful in 

machinery and food 

processing 

> Future industries play only 

a minor role 

> Shift toward future 

industries needed 

! 


38

9 GROWTH INDUSTRIES 

The service sector will see a boom in the next decade – 

More and more mature economies push development 


COUNTRY 



Austria 


Croatia 


Romania 


Shift toward 

Shift toward 

industries -1 4 services 

In the next decade, will there be a tendency in your country toward industries or services? 

-5… strong shift to industries / 0… remain on same level / +5… strong shift to services 


1.3 

1.3 

1.6 

1.5 

1.9 

1.8 

2.1 

COMMENTS 

> Over the next ten years, CEE 

will not experience "re- "reindustrialization" 

> Poland, Czech Republic and 

Austria will face a strong shift 

toward services within the next 

decade 

> Croatia, Ukraine and Romania 

will see only a moderate shift 


39

10 FUTURE BUSINESS BRANCHES 

The main future growth drivers are viewed as being energy 

related topics (energy efficiency, renewables) and IT solutions 


CEE 

Energy efficient construction 

Renewable energies 

IT solutions 

Sustainable tourism 

Secondary healthcare market 

Biotechnology 

Organic and ethical products 

E-mobility 

RELEVANCE 

How relevant will the following future topics be for your country? 

0… not relevant /5… extremely relevant 


Not 

Extremely 

0relevant relevant5 

1.9 

2.2 

2.2 

2.5 

2.8 

2.7 

3.0 

3.0 

COMMENTS 

> Energy-related branches will 

be the main future industries – 

Energy-efficient construction 

and renewables are top 3 in 

every country 

> IT solutions lead the ranking in 

Poland and Ukraine and are 

ranked No. 2 in the Czech 

Republic 

> E-mobility and organic 

products are not viewed as 

important future business 

models 


40

C Summary 


41

Summing up the findings – The CEE region has chosen its 

path and to pick up speed considerably 

Conclusions 

1. 

2. 

3. 

4. 

5. 

CEE has to redefine itself – Austria's and Russia's roles as gatekeepers are changing 

Companies must consider the EU as one home market with 500 m inhabitants. Additionally, 

they should put a focus on pan-CEE business based on self-sustaining business models 

Governments will have to (finally) do their homework: strengthen their institutions (less 

bureaucracy, corruption), developing public services (health system, educational system, social 

& pension system) and improving the infrastructure 

CEE should not copy bad budget behavior of Western Europe 

The importance of global growth markets and growth industries has not yet been 

adequately recognized as such so far. Companies will need to redesign their business 

models and footprints for a globalized world 



42

D 

Appendix – Country analysis 


43

A SPECIAL LOOK AT AUSTRIA 

Austria has to redefine its role as a gatekeeper to Eastern 

Europe 

Austria 

COUNTRY FACTS 

> Population (millions) 8.4 

> GDP/capita (USD) 45,989 

> Unemployment rate 4.8% 

> GDP composition 

– Agriculture 1.5% 

– Industry 29.8% 

– Services 68.7% 

Source: Roland Berger – CEE 2020 study; CIA World Factbook, WEF GCR 2010 

MANAGER ASSESSMENT 

Above CEE average Below CEE average 

> Political and social 

stability 

> Legal framework 


> Geographical position 

> Cultural similarity to 

Western countries 

> Primary education 

> Corruption 

> Higher education and 

training 

> Fiscal framework 

> Innovation, R&D 

> Language skills 

> Workforce resources 

> Bureaucracy 

> Labor costs 

CONCLUSIONS 

> Due to the economic crisis, 

Austria has lost the benefit of 

the booming CEE region 

> Austria's economy will see only 

moderate economic development 

– business volume will stagnate 

and the number of jobs will decline 

> Especially the stable markets of 

Central Europe will be the main 

markets until 2020 

> The aging society will be the main 

challenge over the next decade 


44

A SPECIAL LOOK AT CROATIA 

Croatia has to start structural reforms immediately and 

position itself as a hub for Southeastern Europe 

Croatia 

COUNTRY FACTS 



















stability 


Source: Roland Berger – CEE 2020 Study; CIA World Factbook, WEF GCR 2010 



> Labor costs 


> Bureaucracy 

> Corruption 

CONCLUSIONS 

> Croatia switched from the most 

optimistic to most pessimistic – 

Business volume and jobs will 

grow slowly from a low basis 

> The consolidation of public 

finances will be on top of the 

agenda, growing social imbalance 

is ranked No. 4 

> Croatian managers expect more 

Russian influence and a 

stagnating EU 

> Main future industry will be 

sustainable tourism 


45

A SPECIAL LOOK AT THE CZECH REPUBLIC 

The Czech Republic is on the way towards an advanced 

economy with a focus on high tech 


COUNTRY FACTS 
















stability 


> Labor costs 


> Fiscal/legal framework 





> Bureaucracy 

> Corruption 

CONCLUSIONS 

> Czech managers are optimistic 

about the next ten years – 

Business volume will increase 

but the number of jobs will 

stagnate 

> Tech. progress viewed as the 

main trend over the next decade 

> Czech Republic will continue to 

establish itself as a high-tech 

business location 

> Institutional reforms needed – 

Corruption and bureaucracy are 

the main hurdles for development 


46

A SPECIAL LOOK AT POLAND 

Poland will continue to catch up – Infrastructure and 

institutions will remain weaknesses 


COUNTRY FACTS 


















> Labor costs 


stability 




> Corruption 



> Bureaucracy 

CONCLUSIONS 

> Poland will continue its catch-up 

process – On the one hand, the 

country will remain an attractive 

workbench, but on the other, it will 

face a strong shift toward services 

> Higher education and the market 

size are Poland's main 

advantages 

> Infrastructure and institutions as 

well as tax regulations are a 

disadvantage – Reforms needed 


47

A SPECIAL LOOK AT ROMANIA 

Romania faces a challenging decade – Attractiveness as a 

workbench declines, capital market represents a hurdle 

Romania 

COUNTRY FACTS 











> Labor costs 












stability 


> Bureaucracy 

> Corruption 


CONCLUSIONS 

> Romanian managers are most 

optimistic about business volume 

and the number of jobs in their 

country; they believe in CEE as 

one management region 

> But high unit labor costs (94% of 

WE average) are a disadvantage 

as a production location 

> Capital markets are an important 

topic – Access to financing is the 

main problem for companies 

> Lack of infrastructure and 

institutions 


48

A SPECIAL LOOK AT UKRAINE 

Ukraine will stabilize on a low level and has the chance to 

develop into a bridgehead between CEE and Russia 


COUNTRY FACTS 











> Labor costs 












stability 



> Bureaucracy 

> Corruption 

CONCLUSIONS 

> Ukrainian managers are slightly 

optimistic – business volume and 

the number of jobs will rise 

> Ukrainian managers are most 

skeptical about the further 

development of CEE as one 

management region and expect 

a strong shift toward subregions 

(CIS) 

> Political instability, corruption, 

bureaucracy and access to 

financing are considered to be 

the main disadvantages 


49

E 

Appendix – Study authors 


50

About the authors 

DR. VLADIMIR 

PREVEDEN 

> Partner in the Vienna Office 

and Managing Partner for 

Southeastern Europe 

MATTHIAS 

STURM 

Contact: office_vienna@rolandberger.com; Freyung 3/2/10, 1010 Vienna, Austria 

Source: Roland Berger 

> Marketing Coordinator for CEE, 

based in Roland Berger's 

Vienna office 

MARLENA 

KOPPENDORFER 

> Global Marketing 


51

It's character that creates 

impact! 


52

CEE in 2020 – Trends and perspectives for the next ... - Roland Berger

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?