at the UNIDO Regional Forum on Industrial Cooperation and Partnership

in Central and Eastern Europe and the New Independent States,

Budapest, 11 October 2000

Ladies and Gentlemen,

Distinguished Delegates,

I would like to start very traditionally by saying thank you very much to both UNIDO and the Hungarian authorities for inviting the representative of the United Nations Economic Commission for Europe to participate in this Regional Forum.

This certainly allows me to better understand how UNIDO is contributing to the developments of Europe, and I am convinced that after this Forum we will discover new ways, means and instruments for the cooperation of the two United Nations institutions that want to contribute to the development of Europe.

All of us here - those coming from Budapest and those who come to Budapest from time to time - know how good, indeed, it is to come to Budapest. But to come to Budapest to participate in a meeting like this Regional Forum that discusses issues of utmost importance for Europe, is a particular pleasure.

I also believe that, even though you focus, or you „pretend" to focus, on discussing only the problems of Central and Eastern European countries and of Newly Independent States, in reality what we are going to talk today about, is how to create conditions for sustained growth of Europe as a whole. We are going to talk today about a shared goal of converting towards one European economy and this is also what the work of my own institution is about: an integrated Europe.

We meet to discuss problems of a region, which for the last 10 years has been going through massive restructuring. It has not happened in a vacuum. We have been going through this massive change in a global environment characterized by revolutionary changes, which you are going to discuss and which are so well describe in you papers.

These changes around us in Europe are extremely important for European development because they have made us all increasingly dependent on each other, these changes have made in fact everything increasingly depending on everything else, not only in Europe.

What is also important for your debate, for our debate of today, is that Europe in reality is a small continent. Sometimes we tend to forget that in Europe everything is happening just around the corner. I think it was one of the former ministers of foreign affairs of Belgium, who many years ago said that Europe consists of two types of countries: "Those who are small and those who are small and do not realize they are small".

It is important because it makes us in a way condemned to cooperate. There is no other way today to have peace and stability in Europe but through international cooperation. We cannot keep today stability and peace in Europe through well-protected borders and cannot do it through balance of powers. We must cooperate and integrate and that is the only way to be happy in Europe.

What matters, however, and that I can see also in your papers, is that Europe continues to be a highly diversified region. There is a long history of divide in Europe, but it is also important to realize that we have been recently adding to this diversity. After ten years of socially painful changes in Central and Eastern Europe we continue to have sharp disparities in advancement of reforms, in economic performance and also in the outlook for the future.

This coming decade will bring the completion of transition only to a small group of countries. Most of countries with economies in transition will continue to go through those difficult changes.

These European diversities are very often bad and sad, but in these diversities there is also a potential and an excellent opportunity for sharing lessons, for sharing experience, for using the complementarities for cooperation, and these diversities in fact give us an excellent instrument for cooperation, a good basis to work jointly for Europe.

Let me also make one more general remark, which I think is important for our discussions today. Over the last ten years, in most debates we had on Europe, we usually focused on changing Europe, on enlarging Europe, on the Economic and Monetary Union (EMU), on all sorts of macro-economic changes, but we did not have enough discussions on structural change, on structural consequences of enlargement, on structural consequences of the EMU, on new international division of labour, which has been emerging in Europe over the last ten years, on productivity, on competitiveness.

Important about this seminar is that it gives us a chance to look more carefully into those relatively neglected issues in our discussion on Europe. I said a minute ago that we in Europe are condemned to cooperate, but it is extremely important that the cooperation and partnership which we find in the title of the Forum are seen as a major instrument for the countries in transition, for those who need it, and most of us need it, to accelerate growth, reforms and regional structural and social changes, and also to better use opportunities that are brought by globalization.

The partnership and cooperation you have in the title of the Forum, is not only the cooperation between governments of the countries in Europe, but it is also the cooperation between the governments and business community. We all have noticed that recently governments, also in Europe, reach out to the business community much more frequently than in the past, and these governments do not reach to private business community only for investment money that they need especially for infrastructure. You cannot do it without the public private partnership. Governments reach out to the private sector also for ideas, very often for people, and also recently to share social responsibilities.

You might have noticed that around the world we have more and more business advisory councils – nearly for every major initiative, like for the Stability Pact in Europe there is a business advisory council. There was also in July this year the Global Compact launched by the UN Secretary-General reflecting the search for collaborative arrangements with the business sector. There are also many events that UNECE organizes in Geneva, like the ECE Intergovernmental Conference on Financing for Development preceded by the Forum on Public Private Partnership for Infrastructure to be held this coming December. It is obvious also from your papers that to use new technological revolution for the development we cannot make it without this partnership between governments and private sector.

There is also the need for cooperation and partnership between and with the international organizations. There is a tremendous role to be played by the international community in Europe. The role of the international community is not only to provide a stable international environment, to convince governments that it pays to embark on reforms, and to assist in those reforms. The role of the international community is also to see the consequences of their policies, to ensure access to markets, also financial ones, for those in need. It is important that we see the proper role of the international community, sometimes even a very modest role is crucial, for example that we are here to provide a forum getting people together to speak and to share their experiences and lessons.

I want to say also a few words on industrial change in Europe. I think it took us some time - probably too much time - to realize that we need also industrial integration of countries with economies in transition into the broader European economy, which of course must be seen in the light of the fundamental new phenomena in the international market economy, which you are going also to discuss. We must admit that the transition has created in Europe a new regional economic heterogeneity, which opens new production possibilities, which opens also the opportunity of a significant production reorganization that creates and sustains growth and make firms in the region competitive.

Much of Europe’s competitiveness will depend upon the extent, speed and nature of catching-up processes in countries with economies in transition, in the course of which companies must find their competitive positions in Europe and countries must find their comparative advantages within a new market. There is already a great variety in the patterns of eastern entanglement with the western trade, production structures and alliances. There is no doubt that eastern producers have already started to participate in this ongoing reorganization of production in Europe and in the global world

The real debate today should be about the ways and means to accelerate this process, which has already started as it provides possibilities for a continued development.

This is in fact what UNIDO has been doing and this is important, because there are countries that do better but there are also countries that need much more assistance than we have been able to provide so far.

We all know that even though in Central and Eastern Europe most of the countries share much of their experience of transition, there are nonetheless particular national choices which are centred around sequencing and character of liberalization, stabilization, privatization, institution building, transition strategies and policies. These particular national choices generate implicit development strategies. These specific choices have in a natural way generated different mixes of firms and engagements with global and European producers in individual countries. So there is a lot of experience already to share in our efforts to assist countries that need assistance.

To conclude, let me tell you that most successful countries from among those that go through transition, that go through those difficult changes, are the countries which actively shape competitive advantages through education, research and development, institution building, stable regulatory framework, through effective mobilization of financial resources, through developing a framework for an effective public private partnership, and using the bottom-up approach for development. The successful countries are also those, which have first succeeded in learning what is the new pattern of competition in Europe and in the world.

We all know today that competitiveness is man-made. You can develop competitiveness; it is no longer based on inherited factors and endowment. However, to really make it happen there is no doubt that we must work together. That is why I am so grateful for bringing me here. There will be more of us to work in Europe and for Europe.

Thank you very much.