Published by
Baltic Sea Academy e.V.
Dr. Max Hogeforster
Blankeneser Landstraße 7
22587 Hamburg, Germany
Editorial Correspondence: editor@baltic-sea-academy.eu
Websites: www.baltic-sea-academy.eu / www.hanse-parlament.eu
Cover design: dienstIT, Hamburg
Printed by Books on Demand GmbH, Germany
ISBN 9783844857320
© 2011 Baltic Sea Academy e.V. All rights reserved.
Part-financed by the European Union (European Development Fund and European Neighbourhood and Partnership Instrument) within the BSR-QUICK project. This publication does not necessarily reflect the opinion of the European Commission.
We are very grateful to the European Commission for the financial support and also to the Joint Technical Secretariat of the INTERREG IVB Programme for the support and advice.
Objectives and strategies for the development of Crafts and SMEs in the Baltic Sea Region
Ziele und Strategien zur Entwicklung von Handwerk und Mittelstand im Ostseeraum
Cele i strategie rozwoju rzemiosła oraz małej i Średniej przedsiębiorczosśi w basenie Morza Bałtyckiego
Цели и стратегии развития малого и среднего бизнеса в Балтийском регионе
Since 1994 chambers and organisations of the SME economy cooperate in the Baltic Sea region within the framework of the Hanseatic Parliament. The organisation of the Hanseatic Parliament was established in 2004, and its members are 47 chambers of industry, trade and crafts, as well as organisations of the SME economy, which collectively represent about 450.000 of Small and Medium - sized enterprises (SMEs).
The Hanseatic Parliament is strongly dedicated to strengthening the Baltic Sea Region and especially to the support for Small and Medium - sized enterprises. The Baltic Sea Academy was created in 2010 on the initiative of the organisations in order to achieve sustainable support for innovation. 12 colleges and universities from 9 countries of the Baltic Sea Region are the members of the Baltic Sea Academy. The members offer dual bachelor courses of studies, ensure knowledge and technology transfer and perform research and development tasks for Small and Medium - sized enterprises.
This publication deals with high-priority economic tasks. Additionally, in 2011 and 2012 the Hanseatic Parliament will develop and publish separate strategic concepts for “education policy“, as well as “innovation and regional policy“.
The economic strategic concept was developed in 2009 – 2011 within the framework of international meetings, conferences and working groups of the Hanseatic Parliament. Representatives of all countries of the Baltic Sea Region participated in the preparation stage, and namely:
• Presidents, members of the Board, directors and employees of 47 member chambers and organisations of the Hanseatic Parliament
• Professors and scientists from 14 colleges and universities of the Baltic Sea Academy
• Representatives of Small and Medium - sized enterprises
• Politician, as well as representatives of public administration and economic promotion institutions at the local, regional and national level
• Secretariat of the Hanseatic Parliament
Herewith a common economic policy strategy for the development of Small and Medium - sized enterprises in the whole Baltic Sea Region will be presented. It includes the objectives and strategies which will be represented and implemented consistently by 47 participating chambers and organisations within the framework of their tasks of representing their interests within the whole Baltic Sea Region in terms of policy and administration on the local, regional, national and international level.
Hence, a common strategy will be presented for by far the largest and the most important economic spheres of the Baltic Sea Region, which is within the interest of both Small and Medium - sized enterprises and their employees, as well as the public interest. It has to be implemented in coordination with politics, administration, chambers, organisations and science.
Chapter 1: Summary
List of political proposals
Chapter 2: The SME economy in the Baltic Sea region
Macroeconomic development
Economic structure
Small and medium-sized enterprises
Population
Knowledge economy
List of requirements and opportunities
Chapter 3: Development of crafts and the SME sector
Economy of the Baltic Sea Region 2020
Political objectives and strategies
Competitiveness
Education
Flexicurity
Innovations, research and development
Taxes and social security contributions
Provision of capital
International cooperation
Economic self-administration
Development and advisory authorities
Members of the Hanseatic Parliament
Members of the Baltic Sea Academy
Literature
The Baltic Sea Region has been recording high growth rates since the middle of 1990s. According to the results of a growth scenario till 2030, the real gross domestic product per capita is increasing in the eastern Baltic Sea neighbouring states more significantly than in the western Baltic Sea neighbouring states. Nevertheless, the differences in the income per capita among the countries of the Baltic Sea Region will be even more significant in the year 2030.
SMEs have a large share in the macro economy and employment in Europe. 99% of all enterprises in the European Union are Small and Medium - sized enterprises; they provide about two thirds of all workplaces for private economy in Europe. These pro-portions are even more significant in the Baltic Sea Region.
Clear population losses in the eastern part of the Baltic Sea Region are confronted with population growth in its western part. These regional differentiations pertain also to the development of labour force. Till 2030 the population will decrease by 11.6% in total, which corresponds to over 11 million people. On the basis of these development tendencies, a shortage of labour force is to be expected, which is already ob-servable in numerous economic sectors. Significant competition for skilled employees and young people emerges between individual market participants and countries/ regions.
Since the trend will involve the increasing importance of knowledge-based services and industries with an increasing demand for qualified employees, “knowledge” shall be the decisive future resource. In a Europe-wide comparison the provision of human capital in the Baltic Sea Region is above the average, and therefore huge development potentials exist in this region.
Also, the Baltic Sea Region is characterised by serious mobility barriers for cross-border labour market integration despite the EU membership of most of the Baltic Sea neighbouring countries. This, however, corresponds to a significant importance of strengthening the development potential of economic regions in the Baltic Sea Region.
Framework requirements foster future development of Small and Medium - sized enterprises and the optimum enterprise size is decreasing. New and additional workplaces within the last 20 years were created almost exclusively in Small and Medium - sized enterprises. This trend will be reinforced in the future even more.
Small and medium-sized enterprises are the backbone of the economy. The Baltic Sea Region has the best prospects to develop into an innovative and economically strong region with international recognition.
Regionalisation and decentralisation processes are developing increasingly as a stable trend which is contrary to globalisation. The Baltic Sea Region can benefit from these phenomena to a large extent as a sizeable economic region with various cultures, strengths and potentials of its component regions.
Cultural diversity of the Baltic Sea Region and the heterogeneity of individual countries and regions constitute a huge opportunity. There is no alternative to open markets. Those who isolate themselves, lose!
Mastering the future requires intensive cooperation: „links are more important than products“. Information technologies come as problem solvers when needed.
Outstanding qualifications on a wider scale are the decisive requirement for sustainable economic success. Small and medium-sized enterprises have a chance in both national and international competitiveness with large innovation potential and on the highest level of quality. Securing the inflow of trainees to excellently qualified enterprises, as well as the management and labour force decide about the future of the SME economy in the Baltic Sea Region, and therefore, these are the most important support tasks.
Outstanding middle- and long term opportunities arise for the SME economy in general and for the Baltic Sea Region in particular. They are however insufficiently recognised, used and supported by politicians and administration on all levels of activity. The SME economy requires directed assistance which can mitigate the current problem areas, and which can facilitate the required adaptations and is oriented towards long-term opportunities for the exhaustion of all potentials and for the accomplishment of the structural transformation.
Reliable implementation of the Europe 2020 Strategy
Increasing and guaranteeing high quality of products and services
Extensive de-bureaucratisation and remodelling of the development of EU support programmes
Improved qualifying and ensuring the growth of enterprises, executive managers, and specialised personnel as the most important support task
Creation of a flexible and transparent educational system
Improved performance of general education with and intensive early-childhood support, as well as the exchange of factual knowledge and personal-social competence
Increasing the attractiveness of vocational training and further education, as well as the development of practical components of education
Upgrade of vocational further education courses and unbureaucratic international recognition of university degrees
Strengthening the practical components of education in academic qualification and an intensive orientation on the needs of SMEs.
Supporting new forms of internal cooperation with an improvement of management, especially in the times of crisis, as well as a distinctive increase in productivity
Extensive flexibilisation of daily, weekly, annual and life working hours, as well as support for multidimensional working environments
Supporting labour participation of women and elderly employees
Sustainable strengthening of mobility, as well as targeted immigration policy without any link to income limits
Strengthening of material and immaterial employee participation and the utilisation of social energy
Stronger establishment of principles of applied business ethics and the creation of transparency and tangibleness
Intensive support of learning from one another, as well as personal and organisational development as the primary field of innovation for the economy of the Baltic Sea Region
Use of the cultural diversity and balanced regional division of labour according to specific strong points
Focusing on shortage areas with their development potentials: energy, climate and environmental protection, health, information processing and problem-solving capacities, electronic production and communication systems, as well as personal and organisational development
Consequent focusing on the needs of the SME economy
No focus on high-tech cluster but on customer-oriented broad spectrum of innovations’ support
Transfer of innovations, as well as research and development for small and medium-sized enterprises as an obligatory task of colleges and universities
Improvement of cooperation between colleges and universities, as well as small and medium-sized enterprises
Development of theme-oriented competence centres through colleges and universities, jointly with chambers
Creation of a Baltic Sea network of innovation support for the SME economy
Provision of a transparent and simple taxation system with the maximum possible tax equity
Strengthening of own capital provision and the innovation opportunities for small and medium-sized enterprises
Creation of more individual responsibility and stronger disconnection of social expenditure from the labour factor
Organisation of taxes and social security contributions in a way to cause stimulation for innovations
Improvement of the return of investment and own capital provision in small and medium-sized enterprises
Strengthened stimulation for financial institutions for the transfer of support money
Organisation of regional guarantee association with better provision of back bonds
Creation of regional funds for small and medium-sized enterprises for the provision of risk and venture capital
Creation of an investment bank for the Baltic Sea Region for small and medium-sized enterprises
Specific support to small and medium-sized enterprises for the use of the large growth potential in foreign trade
Removal of barriers and support for the mobility and strengthening of personal encounters
Establishment of a liberal exceptional rule to the visa requirement in the region of Kaliningrad
Development of common strategic concept for the SME economy in Russia, Belarus and Ukraine
Recognition and strengthening of the chambers as central supporters of SME economy in the area of the Baltic Sea
Intensive shifting of mandatory tasks to the chambers for a cost-effective, company-specific awareness and provision of services from one source
Creation of comparable legislation for the economic self-administration in all countries of the Baltic Sea Region
Strengthening the awareness of entrepreneurs concerning the importance of innovations, education, quality assurance and international cooperation
Concentration of supporting institutions and creation of uniform networks on the regional level and on Baltic Sea level for the support of small and medium-sized enterprises.
In the following analyses and projections, the developments in particular Baltic States, as well as for the whole Baltic Sea Region have been described by means of selected indices. At the same time, the intended comparisons illustrate different developments, however, they cannot be understood as benchmarks for future objectives and methods applied by particular countries and component regions.
The Baltic Sea region has recorded high growth rates since the middle of the 1990s. Especially in the (former) transformation countries the economic dynamics exceeded markedly the average EU15 value in the period between 1995 and 2009. However, also Finland, Sweden and Norway have been growing considerably faster than the EU average, whereas, Denmark and Germany remain below the EU average. The younger development of the Baltic Sea region is characterised by substantial disparities regarding the economic growth.
Source: EUROSTAT: presentation of the Hamburg Institute of International Economics (HWWI). Original graphic in German language available at page 52 of this publication.
At the same time the development in the Baltic Sea region is characterised by the reduction of disparities between the East and the West. The economies of the new EU Member States converge against a higher development level and higher standard of living of the western neighbours of the Baltic Sea. At present the growth within the relatively young EU states is much differentiated. High growth rates are dominated mostly by metropolitan regions, especially capital regions. The convergence processes will still be in progress and the income differences between ”relatively rich” and ”relatively poor” Baltic Sea neighbouring countries will decrease over time. By the year of 2030 the actual gross domestic product per capita will presumably increase in the eastern Baltic Sea neighbouring countries more than in the western Baltic Sea neighbouring countries. Nevertheless, the differences in the income per capita between the countries in the Baltic Sea Region will still be significant in 2030.
Source: FOOD AND AGRICULTURE ORGANISATION (FAO): World Agriculture: towards 2015/2030 Summary Report, Food and Agriculture Organisation of the United Nation, Rome 2002.
Source: FAO: Report and EUROSTAT: records; calculations of the Hamburg Institute of International Economics (HWWI).
Currently the Scandinavian countries: Norway, Denmark and Sweden have a share in the service sector which exceeds the average of the EU15- EU25. It is interesting that now Finland and Estonia have a large share in agriculture and forestry which amounted to 2.7 or 2.6% in 2009. In comparison, Poland, Lithuania and Latvia have a large share in agriculture and forestry which is still significantly over the EU25 average. All in all, we can conclude that the transformation into a service society in post-communist countries has not finished yet. The future development of the new EU Member States in the Baltic Sea Region will depend on the pace of the process of transformation into a service society.
*Credit and insurance industry; property and housing, renting of movables, provision of services mostly for enterprises
**Public administration, defence, social security; education; healthcare system, veterinary and social services; provision of other public and personal services; private households
***Trade, maintenance and repairs of motor vehicles and durable goods; catering and hotel industry; transport and communications
Source: EUROSTAT (2010); Presentation of the Hamburg Institute of International Economics (HWWI). Original graphic in German language available at page 55 of this publication.
SMEs have a large share in the overall economic structure in Europe. At the same time 99% of all enterprises in the European Union are Small and Medium - sized enterprises which provide two thirds of all jobs in the private sector in Europe. An average enterprise in the EU employs 6.4 persons. Micro-enterprises (1 - 9 employees) are the predominant type of business in countries such as Poland (96%) and Sweden (94%), whereas the proportion of Small and Medium - sized enterprises (10 - 250 employees) is relatively large in Estonia, in Germany and in Latvia. In certain industries, such as the textile sector, the construction sector and the furniture industry, SMEs provide over 80% of all the employed workers.
Source: EC (2009): European SME's under pressure: Annual Report on EU Small and Medium - Sized Enterprises 2009; calculations of the Hamburg Institute of International Economics (HWWI).
Source: EC (2009): European SME's under pressure: Annual Report on EU Small and Medium - Sized Enterprises 2009; calculations of the Hamburg Institute of International Economics (HWWI).
It is striking that already in smaller countries, such as the three Baltic States and Denmark, the average size of an enterprise is above the EU15 and EU25 average level. Whereas in Poland the enterprise size structure is below the average in relation to EU15 and EU25.
People and their knowledge constitute the central production factors. Therefore, the demographic development is of great significance for the future prospects of the Baltic Sea Region. The demographic development has been strongly diversified in re-cent years among the countries of the Baltic Sea Region. Distinct population losses in the eastern part of this region were opposed to an increase in the western part of this region. This spatial differentiation pertains also to the development of labour force. While the labour force in Norway, Denmark, Finland and Sweden has been positively developing since 1995, a strong net migration since 1990 has led to an enormous decrease in labour force in Poland and in the Baltic states.
The future demographic development in the Baltic Sea Region will be shaped by a decrease in population with a simultaneous ageing of the population. The underlying causes of this phenomenon are continuously low birth rates, constantly increasing life expectancy and migration tendencies.
EUROSTAT population projections for the period up to 2030 all point to more and more negative trends for the Baltic States, Poland and Germany. For Sweden, Denmark and Finland, on the contrary, an easy growth of population is projected. However, in the Baltic Sea region the economically active population will decrease. Population by 2030 will be reduced by a total of 11,6%, which corresponds to more than 11 million people. The increasing demand for skilled labour in the on-going structural change confronts loss of economically active of the population, due to demographic processes.
Source: EUROSTAT: calculations of the Hamburg Institute of International Economics (HWWI).
Source: EUROSTAT: records.
At the same time the labour force in all countries of the Baltic Sea Region is ageing: increasingly more workers are over 45 years old, whereas the number of people who start their professional life will drastically decline. On the basis of these development tendencies skilled worker shortage may be expected – especially in crafts – which is already significant in numerous industrial sectors. Substantial competition for labour forces and young people occurs between individual market participants, as well as countries/regions. Also age-conditioned decline of the willingness to take risks, as well as vocational, regional and trans-regional mobility of labour force may adversely affect the economic dynamics and economic transition capability.
In the light of progressing structural transformation towards knowledge-based services and industries, the importance of education, science, research and technology for economic success is still increasing. New technologies, qualified workers and distinctive innovation skills present substantial requirements for economic growth to national economies. It will have significant consequences for the society: in an increasingly engineered world, which will be shaped by dynamic innovation processes, the requirements for qualifications of the population and its work-related mobility are increasing.
Source: EUROSTAT: calculations of the Hamburg Institute of International Economics (HWWI).
Since the trend will involve the increasing importance of knowledge-based services and industries with an increasing demand for qualified employees, “knowledge“ will be the decisive future resource. In a Europe-wide comparison, the provision of human capital in the Baltic Sea Region is above the average, and therefore huge development potentials exist in this region.
Relatively good provision of qualified labour force and specialisation in knowledgebased spheres of economy is reflected in the international innovation capability of these enterprises. However, Small and Medium - sized enterprises connected with crafts obtain their trainees mostly from vocational training and further education. This form of education loses its attractiveness in many Baltic Sea neighbouring countries, therefore, a problem with trainees will arise. Currently the innovation capability – especially of production innovations – is an important factor for competitiveness, but also for the crafts. Research and development tasks in knowledge economies are important for the future development, whereas, incremental product and process innovations are more important for the crafts. This form of innovation takes place mainly through the diffusion of knowledge, which is best transferred by mobile labour force, because in crafts it often involves personal (implicit) knowledge. Thus, implicit knowledge represents a type of knowledge which cannot be codified, i.e. which cannot be formulated in an explicit way. For example the technique of marquetry can be codified, but the experience of a joiner with such skills can be spread only through professional mobility between two enterprises. Special knowledge can be spread further through the mobility of labour force, combined anew, and in this way regional development barriers can be overcome.
It can be expected that in the future the „West-East-slopes“ of innovation capability and the contribution of knowledge economy to the economic development between the Baltic Sea neighbouring countries will be reduced. In the course of catching-up processes of the Baltic States and Poland the research and development capabilities of these countries will expand. These economies will benefit from close proximity with leading knowledge countries, such as Finland and Sweden, since the transmission of knowledge spill overs and information is distance-dependent. The smaller the distance between the countries, the larger is their spatial development dependency. An important role for the transfer of knowledge – also for cross-border transfer – is performed by face to face contact and cross-border mobility of labour force, the intensification of which can be expected in the course of the upcoming reduction of mobility barriers.
Source: Tom VANDENBRANDE (Ed.) (2006): Mobility in Europe: Analysis of the 2005 Eurobarometer survey on geographical and labour market mobility,
European Foundation for the Improvement of Living and Working Conditions, Dublin.
Also the Baltic Sea Region is characterised by serious mobility barriers for cross-border labour market integration despite the EU membership of most of the Baltic Sea neighbouring countries. In view of the demographic transformation and the threat of a resultant shortage in labour force in many European countries, it is of great importance to facilitate cross-border labour market integration in order to strengthen development potentials of economic regions. It is also applicable in the case of the Baltic Sea Region.
1. |
Framework requirements foster future development of Small and Medium - sized enterprises and the optimum enterprise size is decreasing. However, in order to use the opportunities connected with it for the benefit of all, the SME economy requires comprehensive support. |
2. |
A profound structural transmission makes Small and Medium - sized enterprises face enormous requirements. Globalisation requires especially swiftness and flexibility; SMEs are very fast and flexible in principle. Many craft enterprises fail to use their potentials in a sufficient way and in fact they are still too slow and insufficiently innovative. “Only“ about 20% of them are really brilliant. Small and Medium - sized enterprises in the new EU Member States are frequently more hungry, faster, more innovative and dynamic. The SME economy requires directed assistance which can mitigate the current problematic areas, facilitate the required adaptations and is oriented towards long-term opportunities for the exhaustion of all potentials and for the accomplishment of the structural trans-formation. |
3. |
Regionalisation and decentralisation are evolving increasingly as a stable trend contrary to globalisation. The Baltic Sea Region can benefit to a large extent from these phenomena as a sizeable economic region with various cultures, strengths and potentials of its component regions. Cooperation of the component regions focused on specific strengths optimally facilitates both small-scale and large-scale development and international competitiveness of the Baltic Sea Region. |
4. |
Cultural diversity of the Baltic Sea Region and the heterogeneity of individual countries and regions constitute a huge opportunity. Different experiences and cultures effect innovations and offer an opportunity to learn from one another. Reorganisation in middle- and eastern-European countries brings about large dynamics and various innovations. Common history of the historic Hanseatic League creates a solid foundation for a courageous shape of the future. Various cultures are an asset. They can break decrepit structures and provide innovation stimuli. Therefore, regional identities and cultures have to be invigorated. |
5. |
The eastward enlargement of the EU which included Poland, Lithuania, Latvia and Estonia is a profound advantage for the whole Baltic Sea Region and it presents new perspectives. The cooperation with the non-EU state of Norway is already very intensive. Also, the cooperation with Russia is of outstanding importance and it requires further intensification. At the same time, the development directions and the achieved position of the old EU states cannot represent a benchmark for the former "transformation countries". On the contrary, the objective must be the support of specific strengths, independent ways towards opening and the development of the whole Baltic Sea Region together for the benefit of all participating countries through cooperation into an efficient region with international standing. |
6. |
Each economic region has its specific strengths and weaknesses. The objective cannot be the levelling and synchronisation but a targeted development, cooperative use of specific strengths, as well as an activation of a driving force, which may arise from differences. Also the differences in the amount of labour costs between the East and the West will still exist. But there are still cheaper countries worldwide. There is an alternative: to be better, faster and more innovative, pro-vide highest quality, offer complex solutions to problems and be strong through similarity. |
7. |
There is no alternative to open markets. Those who isolate themselves, lose! Individual economic regions have won increasingly large open markets in the course of history. Especially the industry and foreign trade benefit from it. Crafts benefit domestically from a strong economy and increasing outsourcing from larger, international enterprises which execute their business internationally, as well as partners from foreign markets. Opening and export can, however, be a one-way road. |
8. |
Mastering the future requires intensive cooperation: “links are more important than products“. Information technologies come as problem solvers when needed. Cooperation’s concentrate strengths, however, they preserve independence. Trust and cooperation management is sought after. Successful enterprises and cooperative cultures have to be based on strengths, encompass integration of employees and use the creative potential of all minds. And indeed, SMEs require specific assistance for the creation of cross-border activities, as well as the use of opportunities and minimising the risks. In this case especially economic organisations, as well as political and administrative bodies are especially called for. |
9. |
New and additional workplaces within the last 20 years were created almost exclusively in Small and Medium - sized enterprises. This trend will be reinforced in the future even more. There are large potentials for the growth of employment, especially in the case of smaller sizes of enterprises and on the grounds of their existence. Medium-sized enterprises experience particular pressure in almost all Baltic Sea neighbouring countries. The development of small business entities into larger ones, the revival of SME manufactures, and strengthening medium-sized enterprises promise good growth opportunities. However, political frame-work conditions and support are required, which should be focused on varied issues of different size classes within the SME economy. |
10. |
Small and medium-sized enterprises are the backbone of the economy. At the same time, they stabilise the development of the society. They are anchored in their region and can use the possibilities of international cooperation, and strengthen their position without relocating their workplaces abroad. The economy of the Baltic Sea Region will be shaped mainly by Small and Medium - sized enterprises, which provide over 99% of all services and about 70% of all workplaces. The Baltic Sea Region, with its efficient SME economy, has excellent opportunities for economic strengthening and mastering international competitiveness. The Baltic Sea Region has the best prospects to develop into an innovative and economically strong region with international recognition. |
11. |
The Baltic Sea Region has excellent potentials at its disposal in the field of know-ledge economy, university education, as well as research and development. Employees are the most important asset especially in Small and Medium - sized enterprises. However, in this respect significant shortages are looming for the future. Securing the inflow of trainees to excellently qualified enterprises, management and labour force, as well as significant innovations decide about the future of Small and Medium - sized enterprises, and therefore, they are the most important support task for SMEs and crafts. |
12. |
Outstanding qualifications on a wider level are the decisive requirement for sustainable economic success. Small and Medium - sized enterprises have a chance in both national and international competitiveness in the case of large innovation potential and on the highest levels of quality. Both require the best qualifications. Clear deficits occur already, which will significantly increase in the future, and therefore, decisively limit the growth and innovations. The following developments are to be expected: |