SWOT analysis of transition countries in the Baltic Sea region

  SWOT Analysis of Transforming Countries Ledderhos Page 3 of  3

  in the Baltic Sea Region  

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3.1.1  POLITICAL OPPORTUNITIES  10

3.1.2  ECONOMIC OPPORTUNITIES  10

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3.2.1  FOREIGN DIRECT INVESTMENT (FDI)  11

3.2.2  OPPORTUNITIES THROUGH THE STOCK EXCHANGE  13

3.2.2.1  Going Public under Governmental Control  14

3.2.2.2  Opportunities of Private Companies to Go Public  15

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4.2.1  THE EU AS A SAFE HARBOUR  17

4.2.2  THREAT OF LOSING NATIONAL IDENTITY THROUGH EU ENLARGEMENT  17

4.2.3  THREAT OF A SPLIT REGION  18

4.2.4  COSTS OF A MEMBERSHIP AS THREAT  18

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5.1.1  LEGAL BASE  20

5.1.2  STATE OF PRIVATISATION  20

5.1.3.  LIBERTY OF MARKETS  21

5.1.4  MACROECONOMIC STABILISATION  21

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5.2.1  NATURAL STRENGTH  22

5.2.2  INTRA BALTIC COOPERATION AS STRENGTH  23

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5.3.1  STRENGTH ATTRACTING FDI  24

5.3.2  STRENGTHS OF STOCK-MARKETS  25

SWOT Analysis of Transforming Countries Ledderhos, Page 4 of 4

in the Baltic Sea Region

6.3.2 SPECIAL PROBLEMS WITH POLAND 31

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Works Consulted

SWOT Analysis of Transforming Countries Ledderhos, Page 5 of 5

in the Baltic Sea Region

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Hiermit versichere ich an Eides Statt, dass ich die vorliegende Arbeit selbständig und ohne Benutzung anderer als im Literaturverzeichnis angegebenen Quellen angefertigt habe.

With my signature I guarantee, that the paper “SWOT Analysis of Transition Countries in the Baltic Sea Region” was written by myself. I have not used any other sources than those cited in my footnotes and list of consulted literature.

Kiel, October, 16th 2001

Manja Ledderhos

SWOT Analysis of Transforming Countries Ledderhos, Page 6 of 6

in the Baltic Sea Region

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Map 1: Map of The Baltic Sea Region

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Chart 1: FDI from Baltic Region to Baltic States and Poland 22

Chart 2: FDI Inflows in the Baltic Countries and Poland 23

Chart 3: Recent Performance of the Baltic Stock exchanges 26

SWOT Analysis of Transforming Countries Ledderhos, Page 7 of 7

in the Baltic Sea Region

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The Baltic Sea Region, including relatively poor countries such as Poland, Latvia, Estonia and Lithuania but also economic giants such as Denmark, Finland or Sweden, is discussed controversially in literature. The Financial Times calls the region an “economic tiger” or even “the Engine Room of Europe” (Burt 1999, 1). Others do not see such good prospective and rather warn that “positive trends should not lead to total optimism … [because, in their view,] economic integration comprising all states bordering the Baltic Sea is not easily to be visualized in the near future” (NEBI Yearbook 1998, 5). The decision of a company, whether to invest or to go public in a certain country, should be based (mainly) on the analysis of the region which is not always an easy task.

The main objective of this paper is thus to analyse the economic situation in the Eastern Baltic Rim countries by looking at the integration process into the EU, the successes in attracting foreign investors, and the success of the transforming process in general by the means of a SWOT analysis. Theoretical information will give the ability to understand Chapters three through seven on strengths, weaknesses, opportunities and threats of the region.

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At the beginning of any analysis, it is necessary to define the area of the Baltic Sea region, its background and the importance of the sub-region of the Transition Countries. In map one the topography of all of the countries that are part of the Baltic Sea Region are shown.

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in the Baltic Sea Region

Whereas the west shore consists of rich, stable and democratic countries such as Denmark, Finland and Sweden, countries on the east shore have, with the exception of West-Germany, adopted to democratic patterns only recently and still have one of the lowest GDP per capita in Europe.

Despite differences between east- and west shore, countries around the Baltic Sea are often referred to as one “region” which means that there is “an administrative or industrial economic unit at the sub national and trans national level (NEBI Yearbook 1998, 4) where people are economically, mentally and politically united” (Microsoft Encarta 1998). The Baltic Sea has always connected the countries economically; first trade started hundreds of years ago. As will be seen later, people of the region also feel connected.

Crucial for the unity of the Baltic Sea Region is, however, the successful transforming process of the east shore countries into stable and democratic systems because it is the only chance for unity of the whole region. Therefore, the Baltic States and Poland are the subject of the upcoming analysis.