ewald nowotny : european integration in a global economic setting – cesee, china and russia opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the conference on european economic integration ( ceei ) 2011 : “ european integration in a global economic setting – cesee, china and russia ”, vienna, 21 november 2011. * * * good morning, ladies and gentlemen, it is a great pleasure for me to welcome you to the conference on european economic integration 2011 on “ european integration in a global economic setting – cesee, china and russia ”. a particularly warm welcome goes to governor erkki liikanen from suomen pankki – finlands bank and to all the representatives of the finnish central bank who have joined us here in vienna for the conference. moreover, i am pleased to welcome, for the first time, all our viewers at suomen pankki who are watching a live webcast of the ceei on screen in helsinki. in the history of the ceei, this is a very special year. while there has been international cooperation in organizing the ceei in the past, for example with the ecb or the imf, this is the first ceei we have jointly organized with a eurosystem ncb – the finnish central bank. moreover, this is the first time we have extended the conference topic to include new economic areas – china and russia. of course, there are several very good reasons both for this cooperation and for broadening the conference topic. some of you may know that the oenb focuses its economic analysis and research on central, eastern and southeastern europe ( cesee ), mainly because of austria ’ s strong historical and economic links to the region. similarly, suomen pankki – or more specifically the bofit, the bank of finland institute for transition economies – has a regional research focus, namely on russia and china, thus covering two of the most interesting and promising emerging markets of the world. given this year ’ s conference topic, it was therefore only logical to invite our finnish friends to organize the ceei 2011 with us – and we were very pleased that they accepted our invitation and supported us with their valuable expertise. for two decades, this conference series has been devoted to spreading and deepening the knowledge of european economic integration with a particular emphasis on cesee economies in transition. yet we decided to expand our focus this time. of course, you might

a key term in this discussion : foreign direct investment ( fdi ). particularly in cesee and in china, increasing openness to fdi has contributed largely to growth performance. many empirical analyses have provided evidence on the relationship between fdi and growth. however, not only the fact that capital inflows take place, but in particular the way this capital is put to use plays a major role in achieving sustainable convergence. 4 direct fdi linkages between cesee, china and russia are very small in terms of volume. 5 our business panel discussion in the late afternoon will give us an opportunity to examine fdi from a practitioner ’ s perspective. at this point, let me draw a first conclusion. the relocation of production sites, catching - up in technology - intensive production and dynamic export growth in general are challenges to any economy. at the same time, they can be seen as opportunities to adapt institutional settings to promote sustainable, growth - enhancing development in the home markets. in this sense, the emergence of china and russia as global economic players offers clear opportunities. china and russia can become attractive target markets for exports – from cesee as well as from other regions. not only is china expanding its role as a supplier of goods, but both china and russia increasingly demand final products from abroad. although the eu - 15 remain the major trading partner for cesee, the region should make active use of china ’ s and russia ’ s growing demand for imported goods – particularly in the light of the recent economic and financial crisis. russia ’ s forthcoming accession to the wto will open new possibilities to strengthen the linkages in the real economy via fdi and trade and to foster financial linkages as well. so far, the financial ties between russia and cesee have been closer than those between china and cesee. chinese banks have started to invest in cesee only recently. moreover, china ’ s increasing investment in several sectors in europe proves that the financial linkages between these two economic areas will gain importance in the future. see e. g. firdmuc, j. and m. reiner ( 2011 ). fdi, trade and growth in cesee countries. in : focus on european economic integration q1 / 2011. oenb. china ’ s stock of fdi in cesee is very small and has been decreasing since 2000. bis central bankers ’ speeches in this context, i may add that only two weeks ago the oenb and the people ’ s bank