The EBRD has urged emerging economies to undertake structural reforms to strengthen their competitiveness as they emerge from the global economic crisis, including placing a greater emphasis on the role of exports to drive growth.

In its Transition Report 2010, a section entitled “Invigorating trade integration and export-led growth” (Chapter 4) notes that, despite strong export growth, pre-crisis growth in the region was driven primarily by buoyant capital inflows and domestic demand, a trend that led to large external deficits in many countries.

“However as the transition region emerges from the crisis, a return to this growth pattern looks neither feasible nor desirable,” it says, adding that policy-makers should use fiscal and macro-prudential instruments to prevent a resurgence of growth that is excessively reliant on domestic demand.

“As a result, exports will need to become a much more prominent driver of growth if the convergence process is to continue,” the report says. This required overcoming significant challenges.

The report notes, for example, that factors that had helped exporters during the past decade – including low unit labor costs and a number of new free trade agreements – can no longer be taken for granted as the region catches up with trading partners and foreign market penetration slows.

As a result, the EBRD’s report concludes, policy measures will be necessary to sustain export growth. Such measures include strengthening the rule of law, fighting corruption, and reforming customs. In addition, policy-makers could support export growth by lowering or helping exporters manage non-tariff trade barriers that impede access to new and major existing export markets.

The report also concludes (Chapter 2, Box 2.4) that countries with a wide export base are best placed to benefit from a global economic recovery. Countries with more concentrated export structures will need to look to a significant increase in competitiveness in order to raise export growth.

In a separate section of the Transition Report (Chapter 5), EBRD economists point to continuing barriers to an improving business environment in the EBRD region, highlighting availability of skills, corruption and tax administration as key obstacles.

Further east in the transition region, there was evidence that poor physical infrastructure and crime also count among important concerns.

The report proposes that countries in the region should look to examples from fellow emerging economies for ways to unblock these bottlenecks to growth. “For example, Georgia can provide its peers with ideas on fighting corruption and Estonia on improving tax administration,” the report says.