ardian fullani : on building capacities for policy design and implementation opening remarks by mr ardian fullani, governor of the bank of albania, at the workshop “ on building capacities for policy design and implementation ", tirana, 3 december 2009. * * * dear participants, it is a very great pleasure for me to open the proceedings of this two - day workshop, entitled “ building capacities for policy design and implementation ”, organised for the first time in albania by the bank of albania, in co - operation with the center of excellence in finance ( cef ), ljubljana, with support from the european commission, european central bank, and international monetary fund. welcoming you here in tirana, allow me to express my gratitude for the excellent work done by the cef in the course of these years, to the benefit of our region. since our washington meeting last april, the effects of the global crisis increased their presence in our region ; however, as i have already emphasised even earlier, they did not immediately concert to full blown economic and financial problems. the extension of crisis effects to the real economy, to the budgets of governments and to financial sectors of the region, was mitigated by sound macroeconomic policies pursued in the recent years and by the availability of international monetary fund funding on an unprecedented scale, in coordination with support from the european commission and the ebrd. due to this intervention, and mostly due to prudential policies pursued by the central banks with regard to financial stability and financial supervision, the region prevented not only twin crises in our banking systems and foreign exchange markets, but also any kind of meltdown. nonetheless, this crisis has been a wake - up call. we agreed on this in our meeting last april, in washington, among senior policy - makers from the region and from eu and ifis. now that we have managed to prevent the crisis, we must start the evaluation of the collateral damage of our response to the crisis. in this respect, it is very important to asses not only the long run sustainability of our region ’ s equilibrium, but also the effectiveness of our short run response. it is crucial to plan and implement our future moves intelligently for its reversal in line with new normalities. while we are not out of the woods yet, it is important to make sure that the past year ’ s fiscal appetite that characterised our region does not become part of this new normality. actually, we need to do some deep thinking about aspects of our

redefine strategies geared towards building the capacity of domestic enterprises and thereby enhancing their contribution to growth of the domestic economy. in addition, efforts have also been made to develop new areas of growth to ensure a more diversified economy. countries have increasingly shifted to areas of their natural comparative advantages, whether in agriculture, ict, construction and infrastructure or services - related sectors in order to benefit from their inherent strengths. seven, a new wave of fdi in the region apart from intra - regional trade, intra - regional foreign direct investment ( fdi ) flows have increasingly operated as a strong force for growth in the east asian region. regional fdi has largely been traderelated. early fdi in east asia was mainly derived from western multinationals, particularly the us. the second wave of fdi after the late 1970s was predominantly japanese capital which flowed into east asia, in search of lower costs of production. today, the cumulative stock of japanese fdi has surpassed that of american investments. since the late 1980s, as taiwan, hong kong and singapore transformed into capital surplus economies that moved up the value chain, investments by these newly industrialised economies gained significance in asia. this has represented the “ third wave ” of fdi in the region. the east asian region is thus witnessing a steady inflow of fdis from the nies to asean and china. in the more recent period, this trend has been reinforced with increased overseas investments by korea and malaysia. eight, engaging the emergence of large new markets in the region. overall, as a high level of integration exists at the regional level in terms of trade and fdi, shifts in trading and investment patterns both from external sources into the region and within the region itself have been a dynamic process. hence, given the emergence of large new markets in the region, the opportunities present in these markets show complementarities in the region. countries in the region need to therefore focus on these complementarities in new potential areas of growth. in an increasingly competitive environment, economic progress in the region is benefiting from the strategic specialisations which are supported by the leverage on comparative advantages. nine, regional cooperation gathers momentum given the existing mutual interest amongst countries in the region, regional cooperation efforts are gathering momentum in east asia, notably in the context of asean + 3 and emeap. to - date, the focus of such cooperation by governments has been on regional surveillance, developing institutional arrangements and according high priority to co - operation in trade and investment. the drive