Progress in transition: structural reform

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Structural reform

Structural reforms continue to face serious obstacles. 2013 has seen a relatively high number of downgrades in sector and country-level indicators. At the sector level, reversals occurred in a few countries where the economic downturn has eroded popular support for reforms. However, positive trends are evident in certain sectors where restructuring efforts continue and regulatory reforms have been implemented. At the country level, transition indicator downgrades outnumber upgrades for the first time.

The reform assessments in the Transition Report have become increasingly subdued in recent years. The EBRD measures reform progress in two ways: one is a long-standing review of country-level reforms (such as privatisation, price liberalisation or competition policy) which affect enterprises and markets more generally; the other is a disaggregated sector-level assessment. Both assign scores to express reform progress or reversal. At the country level downgrades have outnumbered upgrades in 2013, for the first time since the transition indicators were introduced in 1994. At the sector level upgrades have continued to exceed downgrades,¹ but in 2010, 2011 and 2012 downgrades increased each year relative to the previous year. This was driven mainly by European Union (EU) countries, but also by Belarus, Kazakhstan, Turkey and Ukraine. Downgrades have receded only slightly in 2013.

As in previous years, upgrades and downgrades have been more frequent in central Europe and the Baltic states (CEB) and south-eastern Europe (SEE) than elsewhere. In EBRD countries of operations in the southern and eastern Mediterranean (SEMED), where transition challenges were assessed for the first time in 2012, there have been very few changes, most of them in the financial sector. This is a result of the continued political uncertainty and unrest in the region, which has either made reforms difficult to implement or sidelined them entirely. Resuming sector-level reforms is important for many reasons, including stimulating structural change that will create better-quality jobs (see Box S.1).

For the first time the Transition Report presents a set of scores for Kosovo, which became a member of the EBRD in December 2012.

Transition indicators at sector and country level are reported as numerical scores, ranging from 1 (indicating little or no progress with reform relative to the initial position) to 4+ (indicating that standards match those of an advanced market economy; for an interpretation, see the methodological notes in the 2013 Transition Report, at www.tr.ebrd.com).

1. This applies to upgrades and downgrades of numerical scores, not the sector-level transition gaps. [back]

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