It is important that such cooperation be guided from a set of consolidated principles with regional relevance. Fifth, there is urgent need for policies that would encourage stronger inward FDI and other non-bank flows. The region’s growth model might need to be more self-reliant, emphasizing domestic savings, better mobilization of labor resources, and a much greater role for the traded good sector as an engine of growth. Dear participants, Let me conclude by pointing out that our region offers an interesting combination of countries, languages, culture and geographical composition. Analyzed individually, it is difficult to think that our economies generate substantial incentives for foreign investors, particularly for strategic and technologically advanced investors, able to use the advantages provided by the economies of scale. Moreover, the cost associating different strategic projects at a national level would be higher for our still lagging economies. I do believe that there is plenty of room to establish a joint regional market and our duty is to make utmost use of it. There are still a few gaps in the region with respect to infrastructure, energy, tourism, financial architecture, mining and agriculture. Out task is to jointly identify missed opportunities, to jointly incorporate those into realistic business plans and to jointly present 2  BIS Review 164/2009  these regional projects in a contemporaneous way to private investors and supranational agencies, to benefit their political, financial and technological support and finally ensure a stable growth model.

On a national level, there is still the need for deep structural reforms and all efforts should be made for them to operate in a concerted way across the SEE region. I believe that the European Union structures should closely orientate, monitor and assess this process. This is the only way to steadily convert our countries into highly productive economies, attractive to foreign investors against the backdrop of favourable labour cost. This all makes sense once we fully re-dimension our educational capacities, particularly in technology and other areas where we could discover and explore advantages compared to other economies. Instead of looking at each other merely as competitors, we should approach the regional cooperation as a non-zero-sum game, where each country has to gain in partnership. Summarizing, this process calls for risk adverse macro and development policies; well coordinated policy mix; stronger cross border co-operation, and concerted efforts – perhaps harmonized and motivated across the region – to deepen the quality of structural reforms. Structural reforms targeted to improving the business environment will help foster new capital inflows and strong and sustainable growth. In this respect (and in the light of the last crisis lessons), countries can make better use of the EU fiscal surveillance process as explicit policy commitment devices. Candidate and potential candidate countries on one side and the EC on the other have the opportunity to transform this surveillance process (possibly enhancing it with an analytical input form IMF) into an efficient foreign anchor. BIS Review 164/2009  3