Industries in developing and transitioning countries are often unable to compete in international markets, and instead concentrate mostly on foreign markets for low value-added goods. Their reliance on a few markets entails a higher susceptibility to shocks, and their concentration on goods of low value-added intensity restricts the growth of their economies; furthermore, their export structures often rely on traditional trade relationships – countries of the former Soviet Union, for example, tend to export their high-value-added and technology-intense products to other former Soviet states, and only their low value-added products to a larger number of trading partners.
In addition, many developing and transitioning countries show negative trade and current account balances, which can present macroeconomic vulnerabilities. Diversifying their export markets and strengthening the range of products they export are integral elements of successful transformation processes.
Sustainably Strengthening the Business Environment
All sectors and industries – and in particular small- and medium-sized enterprises – profit from a general improvement in the business environment, meaning the institutional structures responsible for administration, taxation, and bureaucratic regulation. Berlin Economics helps economic policy decision-makers with the design of reforms, for example tax frameworks, administrative structures, and special topics such as those covered by the World Bank’s “Doing Business” reports, in order to help sustainably strengthen the business environment.
In addition, by applying scientifically-grounded and innovative methods, we are in a position to analyze the potentials of individual sectors and generate recommendations to achieve specific goals within these fields. These can range from an improved investor involvement to the improvement of sector-specific conditions to instruments to support clusters.
Attraction of Foreign Direct Investment
Closely connected to the promotion of an export economy is the attraction of foreign direct investment (FDI). Large-scale industrial structures in transformation countries are often unproductive, and can profit from the introduction of new technologies and sustainable management techniques. Berlin Economics advises on the design of strategies to attract FDI and identify promising investment goals.
Aside from macroeconomic and sector-specific analyses of industrial structures, as well as the conditions surrounding them, we also advise on specific and acute topics that affect businesses. These thematic analyses include suggestions for approaches to specific problems, like the sudden loss of an established trade route due to political developments.
In our consulting work, we work closely with local trade associations and international organizations, allowing us to produce multi-level analysis and contribute more to economic development.