Tag Archives: International Relations

International Relations

3 September 2014 Expert

Area Relazioni Internazionali Politica Internazionale

International Relations

In this webpage we will publish articles about geopolitics, macroeconomics, politics and International Relations. The focus of our attention will be Africa, country where we are more interested in; however we will also publish contents about other territories and geographical areas, when the events could have some consequences in the global macroeconomic scenarios and in the internationalization supporting the export companies.

Information about the foreign countries

SUB-SAHARAN AFRICA
- Benin
- Ghana Country Profile
- Kenya: Renewable energies in kenya
- Fishing in Mauritania
- Nigeria Country Profile
- South Africa Country Profile
- Tanzania Country Profile
- Tanzania Opportunities for investors in the Mining and gold and diamond concessions industries
- Uganda Country Profile

LATIN AMERICA
- Bolivia, the economic miracle in Latin America, the case of Bolivia
- Infrastructures in Brazil
- Brazil: although the Economy slowdown, it is an attractive market

ASIA
- Italy and China Trade Agreement
- China: Incoming in Italy buyer and foreign operators’ from China
- South Korea and Japan, Services for developing “Made in Italy” products
- International Relations Italy Iran
- Iran
- Turkey Country Profile
- Turkey: an emerging country in the middle of the Gulf conflicts
- Turkey and the European Union one step from divorce ?

EU
- EU Values
- European Union e Globalisation
- Antidumping EU
- Schengen
- Paris Agreement
- Brexit
- Brexit consequences
- Bulgaria: Trade Missions Abroad in Bulgaria
- Poland and SEZ
- Spain Canary Islands (startup and innovation)
- Sweden renewable
- Erasmus +
- EU and climate change
- EU, Environment and Strategies
- Africa Europe Partnership

MENA
- Algeria Country Profile
- Morocco Country Profile
- Microcredit and Human Development in Morocco
- Tourism and Microcredit in Morocco
- Morocco and North Africa: new targets for the multinational corporations?
- Tunisia Country Profile
- Tunisian Arab Spring: the success of the Arab Springs
- Tunisia: Jasmine Revolution 5 years later

RUSSIA
- Russia – The Eurasian Customs Union and Trade with Russia

US
- Donald Trump’s economic plan
- Immigration in the US: the permanent and the temporary ways

Socioeconomic issues

- EU Singapore Free Trade Agreement
- Belt and Road Initiative – China
- ONU ( United Nations )
- EU Japan, economic partnership agreement
- ECOWAS – CEDEAO and Nourdign project, to ensure dignity to african women
– Developing countries: how to escape the poverty trap?
- China and Africa: the perfect union
- EU-Mediterranean Partnership and the European Neighborhood policies
- The Transatlantic Trade and Investment Partnership (TTIP): earnings in a high price
- MERCOSUR, the Free Trade Zone in South America: an agreement that have to be renewed
- NAFTA Agreement vs European Union: comparison between agreements
- EU and immigration
- Circular Economy and Waste
- Innovation & Environment
- Renewable Energy

Desk of the IBS Foreign Network – Services and Opportunities

(Italiano) Area Relazioni Internazionali

20 June 2014 Expert

Sorry, this entry is only available in Italiano.

Benin

17 June 2014 Expert

BENIN

BENIN – COUNTRY PROFILE

Capital: Porto-Novo
Largest city: Cotonou
Official languages: French
Government: Presidential republic
Total area: 114,763 km2
Population: 10,872,298 (2016 estimation)
GDP: total $27.177 billion / per capita $2,297 (2017 estimation)
Currency: West African CFA franc

Economy composition

Agriculture accounts for a quarter of GDP and 51 percent of the country’s employment with cotton as its primary export commodity. The informal sector, including subsistence agriculture, contributes up to almost 60 percent of GDP and engages over 80 percent of the labor force. Diversification slowly advances led by the agriculture and service sectors. During the period 2010-2016, the primary sector contributed by 0.5 percent to the real GDP growth while the secondary and tertiary sectors accounted for around 1 percent and 2.2 percent respectively, shares that have changed little since 1990 for when data are first available.

Agriculture

The agricultural sector is highly dependent on rainfall patterns and, mostly, on one major commodity (cotton). Despite its low productivity, agriculture remains one of the main sources of growth and employment of the country. To further contribute to economic growth and poverty reduction, productivity should be considerably strengthened. Agricultural exports are concentrated on three groups of products: cotton, fruits (pineapple), and nuts (cashews) and oilseeds (soy and cottonseed). To address the needs of a growing urban population, the country continues to import a large share of horticultural products from neighboring countries (mostly, Burkina Faso and Nigeria), rice from Asia, wheat, frozen meat and milk from Europe, and frozen poultry from Brazil. The agricultural sector faces the triple challenges of diversifying exports, increasing food production, and sustainably increasing farm and post-harvest productivity. The share of the agricultural sector has declined across low-income countries over time but has remained elevated in Benin.

Growth

During the last decade, growth in Benin has been comparatively highly volatile and per capita GDP growth has been stagnating. Real economy rebounded to 4 percent in 2016 compared to 2015, where the growth rate slowed to 2.1 percent due to weak agriculture output generated by unfavorable weather and negative spillovers from Nigeria. From 2006 to 2016, real GDP growth averaged 4.2 percent driven mainly by the services. The fiscal deficit grew from -0.4 percent of GDP in 2012 to -6.2 percent of GDP in 2016. In addition, economic growth was not inclusive. Notwithstanding recent progress, Benin remains a low-income country with almost 11 million people and a per capita income of US $ 790 in 2015.

The rapid population growth—which averages 3.5 percent per year—led to a modest and unequal increase in household consumption. Indicators related to education, health, access to water, and infant mortality have improved in recent years but at a slow pace. Growth has been accompanied by a low level of job creation with widespread underemployment affecting especially women and the youth in urban areas. FDI (Foreign Direct Investment) is keeping its pace with sub-Saharan Africa countries (SSA) but more investment is needed. Comparing Benin to SSA countries presently, the share of the manufacturing and services sectors is ahead of most of them, reaching 75 percent of GDP.

Export Diversification

Export diversification has not taken place. African benchmark countries diversified quite strongly after 1990 and have caught up to Asian benchmark countries. The number of export partners has increased on average, but the shares of the main export partners remain dominant.

Necessary Policies

Economic policies should focus on addressing weaknesses that hinder entry into new lines of economic activity. In particular, measures that could help improve productivity in the short run include:

• the large-scale adoption of improved agricultural technologies
• the development of productivity through efficient water management, reduction of post-harvest losses and better access to market through warehouses and other facilities
• the institutional support to the Ministry of Agriculture and other stakeholders in the sector
• a better access to financial services

Furthermore, measures to improve education could render significant impacts on the informal economy.

Financial inclusion and development

While access to finance is improving, relatively to other sub-Saharan countries, a number of reforms could foster financial inclusion and complement efforts to promote the expansion of the private sector and employment creation. Benin’s financial sector is shallow, segmented, and with limited financial inclusion. Three main categories operate in it: the banking sectors, the microfinance institutions and other non-bank financial institutions.

As of end-2016, there were 15 commercial banks, with 4 banks holding about 80 percent of credits to the banking system. Although the banking system remains stable, its depth has not improved. The banking sector is broadly sound but plays a limited role in financial inclusion. According to the BCEAO (Central Bank of West African States) 2010 estimations, there is a low level of access to banking service. More precisely, the number of deposit accounts in commercial banks relative to the active population is around 5 percent. Despite banks have developed branch networks in the country, only 17 percent of the population had a bank account in 2015. Access to finance is difficult for some vulnerable groups and for small and medium-sized enterprises.

The microfinance sector plays an important role in providing financing to both sectors of the economy and rural population that are underserved by banks. Despite the fact, that microfinance plays an increasing role in reducing poverty in Benin; it lacks to provide financing to small and medium enterprises, in particular, long term loans. The large number of unauthorized MFIs represents a high risk for the banking system, and requires a further tightening of licensing requirements. Although the number of bank branches has been recently increasing, in particular in rural areas, there is room to further expand financial inclusion by strengthening the regulatory framework.

Access to an account in Benin compares poorly with averages from low income countries. Male reported higher access than females and the level of education is also a factor determining access to an account.

Benin’s financial sector provides limited contribution to private investment because the institutional framework discourages commercial banks from taking risks and because the cost of establishing bank branches in rural area is very high. Benin is performing relatively well regarding use of mobile banking holding around 5 percent of the total volume of mobile transactions in the WAEMU (West African Economic and Monetary Union) region, but there is scope for further progress.

Efficiency of public investment in Benin

Benin is projected to increase public investment volumes significantly to help close the region’s infrastructure gap. Benin is lagging behind SSA average in electricity supply, paved road density and telecommunication infrastructure. Benin has historically spent much less on public investments than its neighbors. Public investments as a proportion of the national budget were maintained at an average annual rate of 36.7 percent from 2010 to 2014 despite significant needs. The country performances regarding public investment appear weaker in comparison to similar countries. Although Benin’s public investment effort is above the WAEMU countries average, it has drastically decreased since 2010. Access to public infrastructure such as electricity or treated water has scarcely improved since the 1990’s. To close this gap, Benin is envisioning to significantly boost public capital expenditure in the medium term. In addition to the infrastructure gap, however, infrastructure is also perceived as being of low quality, and investment efficiency appears low. The most recent World Economic Forum’s (WEF) Global Competitiveness Indicators ranks Benin behind the SSA average.

Inequality

Benin faced a difficult macroeconomic situation characterized by two factors. Growth has slowed significantly and the public debt-to-GDP ratio reached 47 percent in 2016. At the same time, low tax revenues constrain the government’s ability to achieve social objectives. To address large macroeconomic imbalances Benin launched a reform in 2017 centered on domestic revenue mobilization. The reform sought to boost tax revenues through an increase in the VAT rate and cut non-priority spending to contain the accumulation of public debt. The reform reduces the income of the urban poor and income inequality in rural areas.

Poverty

Benin’s solid macroeconomic performance did not translate in a meaningful reduction in poverty. Following a decade of mediocre economic performance, growth over the last 3 years (2013–15) averaged 5.2 percent, closing the gap with SSA average in per capita GDP growth. Despite the increase in real GDP per capita since 1987, the poverty rate in the country deteriorated in recent years. An overall estimate of poverty in Benin conducted by the National Institute of Statistics and Economic Analysis (INSAE) shows that the percentage of population that lives in poverty conditions grew from 36.2 percent in 2011 to 40.1 percent in 2015. However, Benin’s level of development has remained virtually unchanged, as its Human Development Index has risen from 0.480 in 2015 to 0.485 in 2016 below the average of 0.523 for SSA countries.

The country registers considerable decline in rights, being the seventh most deteriorated country on the continent. There is a concerning regression registered in freedom of expression, association and assembly. At the same time, Benin is the eighth most improved country in Education (+10.6) on the continent, especially in primary education.

References from the International Monetary Fund:

Dabla-Norris, Era, Giang Ho, Kalpana Kochhar, Annette Kyobe, and Robert Tchaidze, 2013, “Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies”. IMF SDN/13/08.
Dabla-Norris, Era, Jim Brumby, Annette Kyobe, Zac Mills, and Chris Papageorgiou, 2011, “Investing in Public Investment Efficiency”. IMF Working Paper 11/97.
Dominguez-Torres, Carolina and Vivien Foster, 2011, Benin’s Infrastructure—A Continental Perspective. Policy Research Working Paper 5689. The World Bank. June Henn, Christian, Chris Papageorgiou, and Nikola Spatafora, 2013,” Export Quality in Developing Countries,” IMF Working Paper 13/108.
IMF, 2014a, “Sustaining Long-Run Growth and Macroeconomic Stability in Low-Income Countries—The Role of Structural Transformation and Diversification.” IMF Policy Paper, March.
Imbs, Jean, and Romain Wacziarg. 2003. “Stages of Diversification.” American Economic Review, 93(1): 63-86.
Medina, Leandro; Andrew W Jonelis, and Mehmet Cangul, 2017, “The Informal Economy in Sub-Saharan Africa: Size and Determinants,” Working Paper No. 17/156 Papageorgiou, Chris, Fidel Perez-Sebastian, and Nicola Spatafora, 2013, Structural Change through Diversication: A Conceptual Framework. International Monetary Fund. March.
Regional Economic Outlook, 2015, African Department. International Monetary Fund. April.
Maria Albino-War, Svetlana Cerovic, Francesco Grigoli, Juan Carlos Flores, Javier Kapsoli, Haonan Qu, Yahia Said, Bahrom Shukurov, Martin Sommer, and SeokHyun Yoon, 2014, Making the Most of Public Investment in MENA and CCA Oil-Exporting Countries. International Monetary Fund, November.
Foster, Vivien, and Cecilia Briceño-Garmendia, 2010, Africa’s Infrastructure: A Time for Transformation, Africa Development Forum. Washington, DC: World Bank.
http://documents.worldbank.org/curated/en/246961468003355256/Africas-infrastructure-atime-for-transformation
Commission for Africa, 2015, Still Our Common Interests, March.
Gelb, A., and S. Grassman, 2010. “How Should Oil Exporters Spend Their Rents?” Working Paper 221, Center for Global Development, Washington, DC.
Grigoli, F., and J. Kapsoli, 2013. “Waste Not: The Efficiency of Health Expenditure in Emerging and Developing Countries.” IMF Working Paper 13/87, International Monetary Fund, Washington, DC.
International Monetary Fund, 2015, “Making Public Investment More Efficient”, Fiscal Affairs Department Policy Paper, Washington, DC.
Keefer, P., and S. Knack, 2007. “Boondoggles, Rent-Seeking and Political Checks and Balances: Public Investment under Unaccountable Governments.” Review of Economics and Statistics 89 (3): 566–72.
Adrian Peralta-Alav, Marina Mendes Tarvares, and Xuan S. Tam, 2017, The Distributional Implications of Fiscal Consolidation in Developing Countries, Manuscript.
Bollinger, Christopher R. and Barry T. Hirsch, 2013, “Is Earnings Nonresponse Ignorable?” Review of Economics and Statistics, May, 95(2): 407–416.
Bollinger, Christopher R. and Barry T. Hirsch, 2006, Match Bias from Earnings Imputation in the Current Population Survey: The Case of Imperfect Matching, Journal of Labor Economics, July, 24, 483-519.
Fabrizio, Stefania, David Furceri, Rodrigo Garcia-Verdu, Bin Grace li, Sandra V. Lizarazo, Marina Mendes Tavares, Futoshi Narita, and Adrian Peralta-Alva, 2017, Macro-Structural Policies and Income Inequality in Low-Income Developing Countries. SDN/17/01. January Institut National de la Statistique et de l’Analyse Economique, 2015, Enquete Modulaire Integree sur les Conditions de Vie des Menages. Octobre.
Medina, Leandro, Andrew Jonelis, and Mehmet Cangul, 20917, The Informal Economy in Sub-Saharan Africa: Size and Determinants, International Monetary Fund. WP/17/156 Tang, Xin, A Tutorial of the Toolkit for Solving a Multisector Heterogeneous Agents General Equilibrium Model, August. Manuscript.
Institut National de la Statistique et de l’Analyse Economique, 2015, Enquête Modulaire Intégrée sur les Conditions de Vie des Ménages. Octobre.
Nora Lustig, ed., Commitment to Equity Handbook: Estimating the Redistributive Impact of Fiscal Policy, The Brookings Institution and CEQ Institute/Tulane University, in progress.
Human Development Report 2016, UNDP, 2016.

OTHER LINKS:

- IMF International Monetary Fund
- Benin Wikipedia
- Benin official Government website

INFRASTRUCTURES IN BRAZIL

17 June 2014 Expert

BRAZIL

The following country profile underlines Brazil traditional aspects and it has been realised thanks to International Monetary Fund information.

FILL THE GAP AND FOSTER INFRASTRUCTURES INVESTMENTS IN BRAZIL

Subsidies for Brazil infrastructures are lower than international standards, as well as the low quality of productivity, market efficiency and competitiveness. In order to increase the economic strength and boost growth, it is necessary to increase investments in infrastructures.

OVERVIEW

DEVELOP AN ECONOMIC STRATEGY TO INCREASE INVESTMENTS IN INFRASTRUCTURES REQUIRES A CONNECTION BETWEEN INFRASTRUCTURE PROVISIONS AND GROWTH, IN ORDER TO DEFINE THE INFRASTRUTURAL GAP AND FINDING THE MOST SUITABLE MEAN TO HAVE FUNDS

The zones in which Brazil competitiveness has decreased are, (but there are also other zones) education, innovation, governance and judiciary. Inadequate infrastructures do not allow to improve the insufficient productivity, stagnant exports, insufficient integration in the domestic market and the weak growth potential. The market segmentation due to the difference between relative prices can have important social and macroeconomic involvements. The incomes inequality can increase according to the market segmentation, for example for rural zones producers with a low income which are negatively influenced by difficulties in access to mass consumption markets. Several years of insufficient investments in infrastructures have contributed to decrease the potential growth.

Shed lights on infrastructures lacks to underline the increasing need bigger of investments in infrastructures

Investments in infrastructures are often seen as a strategy to promote domestic integration and exporters competitiveness. Following this logic, first we have to look at how infrastructures affect the domestic integration, analysing prices convergence in the main cities. After, using qualitative and quantitative indicators it will be possible to see in detail infrastructure lacks in every sector compared to current income levels in Brazil, infrastructures levels and Brazil competitors level in its export markets.
Subsequently, it will be documented the past infrastructure investment trends in Brazil and we will describe the body grant programme according to the most compelling infrastructure needs. In closing, we will talk about policies that may contribute to fill the infrastructure gap.

How much is Brazil integrated?

THE CONVERGENCE OF PRICES IN BRAZIL IS SLOWER IN COMPARISON WITH OTHER COUNTRIES

International data, using empirical approaches and considering CPI data, have shown few periods of price convergence halving in other countries. For China, the average convergence period between 1993 and 2003 (Li and Hung, 2006) was 2.4 months, for Canada between 1978 and 1994 was 5 months (Fan and Wei, 2006). Results for both countries show that more than 90% of shocking prices will disappear within 18 months, very faster than Brazil.

INFRASTRUCTURE Conditions

BRAZIL HAS LOW LEVELS ON A LARGE VARIETY OF QUALITATIVE INDICATORS OF INFRASTRUCTURE ADEQUACY

Brazil ranked 120th on 144 countries examined by the World Economic Forum in 2014 for the overall quality of infrastructures. It had very low quality level in the transport sector and the third sector was worse than those of other countries examined. Brazil results were low in the last 10 years and they have worsen in the last 5 years. However in order to make a better comparison we chose some Brazil infrastructure benchmark and those of its main competitors for the export.

Brazil infrastructure overall quality is lower than almost everyone of its export competitors

Brazil levels of physical capital adequacy in every infrastructure of transport sector (roads, ports, railways and airplanes) are considerably lower than those of its main export competitors. Only electricity and telecommunications sectors have a better quality than some of its competitors. In this sectors Brazil has invested in the same way even more efficiently in the last years through a greater participation in the private sector. Yet, according to the Enterprise Survey 2010 by the World Bank electricity have been one of the main problems for 46% of Brazil companies (38% LAC) and 28% believes that transports are an important problem (23% LAC).

Energy indicators are less negative

Since 1980 electricity production and per capita consumption have more than doubled and the access to electricity is almost universal. However electricity transmission and distribution losses have increased and now they have exceeded 15% of electricity production.

Infrastructure lacks In the transport system emphasize when qualitative and quantitative are indicators are connected to the totality of brazil means of transport

Brazil competitors rely more on railways for goods transport which is more suitable for greater goods amount and for prime materials with a low additional value. In Brazil, 60% of farming products are transported on roads and highways while the majority of iron is transported on railways (Credit Suisse 2013). Transport system is a problem for Brazil exports and competitiveness because of the quality of its roads.

Airports and ports are limited and they have to be improved

In 2013 only Santos Port (Sao Paulo) was in the top 100 world’s ports at the 42 nd position, thanks to a 6.2% increase of throughput in 2012 (International Containerisation). Anecdotal evidence of problems in Brazil ports can easily be found, for example: according to Credit Suisse “There are 10 miles queue of lorries outside ports waiting to unload crops and 200 ships waiting to load goods”.
Yet, part of the increasing infrastructure gap is probably due to an inadequate maintenance and to an increased use, but the main cause is the extended period of inadequate investments compared with other countries.

Brazil infrastructure quality is below the average of countries with a similar GDP

In the period 2005-2010 the overall score of Brazil infrastructure have been lower than an average made by selecting countries according to their GDP per capita (PPP 2.005 $).
Among Brazil export competitors, only Argentina average was higher but the final result hides differences in every sector.
Brazil electricity supply and infrastructures have a high result. On the contrary, roads, railways, airport and ports quality is below the average. Roads and airports have the biggest problems.

Infrastructure investments trend

Infrastructure botttlenecks abovementioned are due to an extended period of scarce investments in infrastructures

In the early eighties, investments in infrastructures in Brazil have considerably decreased from an average of 5.2% of the GDP to 2% in the last two decades and slightly increased of 2% in 2013.
goods and data of standard infrastructure investments, for a comparison are not available, many data source confirm that for two decades investments in infrastructures haven’t been as adequate as those of Latin America and new emerging countries Chile, China and India ( Calderon and Serven, 2010; Frieschtak, 2013). Moreover there are many difference in investments in each sector. In particular, electricity and telecommunications sectors represent the biggest part of Brazil investments, especially because of private sector participation in the framework of granting concessions. On the contrary, Chile has invested more in roads, water distribution and supply and hygiene services.

The decrease of investments it is due to an investments decrease in public infrastructures

1988 Constitution has decreased the federal funds pools available for capital expenditure, because it has replaced sector specific federal taxes for energy, transport, telecommunications with non specific national-level taxes. It has also increased transfer to subnational governments, and it has used money for current public expenditures.
From 1999 the efforts for public accounts recovery has decreased the available fiscal space for public investments due to balance rigidity and current obligatory public expenditure.
As a consequence, since that period public expenditures allocated for infrastructure investments have always been inadequate, despite of initiatives in order to give priority to infrastructure investments. such as the Programa de Aceleração do Crescimento (PAC) started in 2007 by the federal government in order to boost the economy growth.
Currently almost 75% of the overall investments for public administrations is made at subnational level.

Meanwhile, private sector investments have filled the space left by the public sector

In the nineties, privatizations and grants have opened to private investments in key sectors such as telecommunications, energy and transport but private investments haven’t been sufficient to compensate for public investment lacks. Private participation in Brazil infrastructure sector have been lower than other Latin America countries, especially compared with Chile, giving relevance to the fact that investments in environment, included investment opportunities and regulatory and institutional frameworks, have a key role in determining investment levels in overall infrastructures, so they give the possibility to face infrastructure lacks.

Grants program role

Brazil aims to obtain grants in order to delete infrastructure lacks

Grants can bring competences and efficiency in private sector and also bypass some of the public investments challenges (such as contractor obstacles) boosting the investment process.
At the end of ninenties in Brazil there have started a first period of grants. Through privatizations, private sector become the main operator in energy, transports, railways and telecommunications sectors.
There have been grants for 5.000 km of federal roads. It is important to underline that this investments through grants in telecommunications and electricity have contributed to delete the infrastructure lacks and have improved Brazil rank in this areas, as mentioned before.

the current period of grants has started some years ago and it is focused on projects for infrastructure sectors in a critical situation, such as roads, ports and airports

During the period 2011-2014 there have been auctions for grants in the transport and energy sectors, with a total investment of around 183.4 billion R$, divided between airports (R$ 35,8 billion), ports (R$ 8,4 billion), roads (R$ 29.2 billion), urban transport (R$ 6,9 billion), energy production and supply (R$ 96,7 billion) and telecommunications (R $ 6,4 billion). Federal government plans include transport system projects ( roads, railways and ports) energy production and supply, urban transports and telecommunications with a total investment of R$ 109 billion (Secretaria de Acompanhamento Econômico, 2015). The grant period is between 20 to 35 years and the majority of infrastructure investments will take place in the first five years. It is foreseen that past and future grants will be 3 / 4% of the GDP of infrastructure investments per year in the period 2011-2017.
Offer delays and changes in contracts could decrease investments in the future. The infrastructure grant program could be affected by Petrobras corruption as well as many of the main construction companies. These companies could have a decreased accession to financing.

Fill the gap

The Brazil infrastructure gap affects the growth

In the last years, Brazil economy situation and its competitiveness have suffered from problems with the complex fiscal system, administration obstacles, judicial and bureaucracy inefficiencies, the inadequate regulatory framework, called “custo Brasil”.
Infrastructure bottlenecks are not considered part of this “soft” burden, because of the capacity of attract companies, which is one of the biggest restrictions to the increase of the potential growth.
Infrastructures are not suitable for the current revenue levels, to support regional integration and to make Brazil more competitive than its competitors for the main export products.

In order to fill the gap there will be necessary an increase in investments but also the intensification of other reforms

In the last ten years, the infrastructure gap has increased because of scarce public investments and stagnant private investments in every sector. The government grant program can intensify and boost infrastructure investments but it couldn’t be enough to considerably boost potential growth. Other reforms to delete “soft” bottlenecks, included reforms to improve governance standards, will have to support efforts to fill the infrastructure gap to make the business framework more attractive for foreign and national investments. Moreover the regional competitiveness must be intensified to attract investments.

SOURCES:

International Monetary Fund http://www.imf.org/external/index.htm

TRANSLATION:

- Translation and arrangments by Lleana Bonfardeci
- Translation by Matteo Gaipa

Brexit EU DOMINO EFFECT

16 June 2014 Expert

Brexit EU Domino Effect ?

Brexit EU futuro Unione Europea

Brexit EU – FROM THE ENTRY OF UNITED KINGDOM IN THE EUROPEAN UNION TO BREXIT : DOMINO EFFECT . WHAT FUTURE FOR THE EUROPEAN UNION ?

Author : Giulia Turchetti
Translated by : Matteo Aristei
November 2017

” Brexit ” is a watershed event of an essential importance in the contemporary history, it is intended to change the fate of Member States of the European Union and not only . The word Brexit is a neologism that comes from english, it indicates Great Britain ‘ s exit from the economical and political union, that was established after the Second World War .

This union has guaranteed peace, stability and prosperity to many generations for over half century . Indeed, the European Union, whose name was established in 1993 in the Maastricht Treaty with the aim of making the union stronger and more connected with people of Europe, is not just a simple association of 28 countries ( such as Austria, Belgium, Finland, France, Germany and Italy ) because it guarantees essential freedom, for example the one enshrined in the Schengen Agreement, in which european citizens have free movement from a country to another ; it commits itself to protect human rights such as human dignity, freedom, democracy, equality and rule of law in accordance with the Treaty of Lisbon in 2009 ; European Union won a Nobel Peace Prize in 2012 promoting important rights, including reconciliation, democracy and human rights in Europe .

In history, Great Britain ‘ s entry in the European Economic Community ( EEC ) is from 1973 and it was lucky because at the time its gross domestic product ( GDP ) was below the european average . Nevertheless, the outcome of the referendum on 23 rd June 2016 in Great Britain expressed the will of a final closure towards an institution that it has never been attached to, and it follows from the failure to join the Euro from the Country .

According to british euro – sceptics, the exit from European Union would allow the Island to have a better control on the immigration, and most of all to be free from european bureaucracies and taxation . Of course, the first Brexit ‘ s result was David Cameron ‘ s resignation, now ex premier, he was leader of the Conservative Party and he tried until the very last to convince voters to vote for Remain ( people who wanted to remain within EU ). Great Britain was an important country for Europe and, on the other hand, be part of EU allowed the Island to be not isolated from important economical and geopolitical decisions .

But in the light of the victory of Leave ( people who didn’t want to remain within the EU ) with the 51,9 % of votes, this situation has radically changed . People of England, Scotland, Wales and Northern Ireland will be considered as non-EU after the effective exit from EU, not to mention some moods that the New Government have to deal with . This decision was made in the United Kingdom, but it fragments the Country’s population, and it concerns all the citizens of the European Union as well .

It won’t be easier for young people to go to work in Great Britain at this point, even if they just want to learn english . British Government’s restriction is putting an end to freedom of movement of european immigrants who are looking for work, except they have specific qualifications, using the ” Cherry picking ” tactic : it means use only the best of what is offered to United Kingdom from European Union .

Furthermore, family reunification will be limited after the end of the process of London’s exit from EU ( on 29 March 2019 ). The country intends to regain a fully – fledged sovereignty on the control of its borders . The fate will also change for european tourists who are going to stay for a short period in United Kingdom : identity cards will be no longer enough, but passport will be needed . However, now in over one year from the Referendum which was called by Cameron with the aim of reaffirming the United Kingdom’s stay in the European Union and which brought completely unexpected results, the fate of Great Britain is still uncertain and it has to be determined .

United Kingdom’s exit from EU should formally take place on March 2019, but before then there are a lot of hard problems to solve . Indeed, one of those concerns the bill that United Kingdom have to pay to European Union . This amounts to a figure between 60 and 100 billion of euro . The british premier Theresa May, who was elected after Cameron’s resignation, asks to this end for a post-Brexit transitional period in order to honour the economical commitments towards Europe .

However, Theresa May’s contradictions reveal signs of uncertainty, not only for Great Britain’s future, but also for the future of the premier itself . As a result there is ever more criticism against her in order to challenge and remove her . Although many people think that United Kingdom’s exit from the European Union doesn’t represent the Union’s end, there is ever more a domino effect in many other countries, and it is likely to sign an inevitable fate for EU . Therefore, euro-sceptics of Europe come together, and between the Country which have claimed a Referendum copying Brexit’s phenomenon, there are France with the support of Marine Le Pen at Front National for Frexit ( France ’ s exit ), Germany with Beatrix von Storch, leader of AfD party ( Alternative for Germany ), for Germany ’ s exit , Netherlands with Wilders who is favourable for Nexit ( Netherlands ’ exit ).

This situation constitutes a real wake – up call, especially because british people ’ s vote in favour of United Kingdom ’ s exit from EU is the historical event more important that the European continent has ever seen since the fall of the Berlin Wall . As it appears now, the affair has a twofold significance : on one hand, it is of course a freedom demonstration of people who claim his right to decide for itself ; on the other hand, euro – sceptics nationalists are growing, and this constitutes a threat that Europe has to consider for the future .

ARTICLE SOURCES :

- europa.eu/european-union/about-eu/eu-in-brief
- europarltv.europa.eu/it/programme/eu-affairs/uk-referendum
- repubblica.it/plus/articoli/news/eur repubblica.it/economia/brexit_il_guardian_londra
- esteri/brexit-effetto-domino-i-paesi-che-vorrebbero-il-referendum/

Relationships between Italy and Iran

16 June 2014 Expert

Relationships between Italy and Iran

Italia Iran i rapporti tra i 2 paesi

Why should Italian enterprises invest in Iran ?

Author : Lorenzo Giusepponi
Translation by Ilaria Nardella
November 2017

An important country

Iran is a member of the N – 11 ( the next 11 ), meaning the eleven countries that, according to Goldman Sachs ’ evaluations, represent, along with the BRICS countries, the world ’s largest economies of the 21 st century, with promising growth prospects . The Islamic Republic is the 29 th world economy depending on its nominal GDP, the 17th depending on its purchasing power parity GDP and the second in the Middle East, with characteristics that launch it towards a gradual modernization process . There are numerous factors that characterize the Country, making it a desirable destination to the Italian companies . Among them, for example, its geographical strategic position, because it represents a connection point between the West and the East, its demographic composition ( in fact, it has about 80 million inhabitants, 60 % of whom are under 30 ), its high literacy index, its abundance of natural resources and its developed infrastructure and telecommunication network . Furthermore, complementarity between the Iranian and the Italian economy does not lack, because the Country requests different types of products and, above all, know-how and technologies that the local industry is still not producing adequately .

Iran ’s economic picture

The service sector ( 53 % ) is the economic sector that mostly contributes to the GDP . It is followed by the industry sector at 23 % and by the agricultural one at 9 %. However, if we consider it by itself, oil represents 15 % of the GDP, since Iran is the fourth oil producer in the world ( 11.3 % of the world ’s supplies ) and the second natural gas producer ( 18 %). The 2016 data estimate a +5.4 % GDP growth for 2017 . The inflation rate is positive as well . It decreased to 14 %, while the unemployment rate is at 10.7 % . Public debt is balanced and it is about 13 % of the GDP, while foreign debt is inferior to 1.5 % . Economic planning is based on twenty – year plans and implementing reforms based on principles of market economy, such as the privatization of companies and banks owned by the state, is among the main methods . The money that the Public Treasury receives still depends largely on the sale of hydrocarbons and their derivatives . Thus, it is subjected to international price floating. Industry, especially heavy industry, is strongly controlled by the State . In fact, most chief executive officers of the big enterprises are also Deputy Ministers and the authorities control the prices of the energetic, agricultural, credit and currency sector . For the remainder, industry is also composed of small and medium private enterprises .

Bank system

In Iran there are 31 banks, 8 of which are state owned and 23 are private . The majority of banks, among which the Central Bank, have been linked to the SWIFT system with the resulting opportunity to make international transactions .

Why invest in Iran ? And in which sectors ?

Because Tehran ’s government is now aiming to recover the market share that lost during the embargo . They intend to be a hub for the movement of goods in the region, in other words for a market that could go over 350 million inhabitants in its entirety . Authorities include also the touristic potential among the advantageous factors . In fact, Iran has as well as 19 locations, which are part of the UNESCO patrimony . However, they especially talk a lot about significant investments for the retrofitting of plants and the building of new infrastructures, which need the participation of foreign companies as well . These are the main sectors in which you can invest :

Constructions : there has been a real construction boom during the last years . It concerned especially residential areas ad shopping centres . Among the large-scale projects there is that of the new Towns .
Electrical energy : authorities have developed a plan for the development of alternative sources, saying that they will invest in the renewable sources as well . This is a sector where they aim to produce 5000 MW every year by 2018, hoping in the participation of foreign companies for the transfer of technology and know – how .
Water supply, sewerage system and waste treatment : in Iran, water is becoming an ever – rare resource and they need modern irrigation and desalination systems .
Motor vehicles : there is high request for joint – venture with foreign brands for the production of motor vehicles, farm machines and public transports .

International relationships

Thanks to its large energy resources, Iran is in the OPEC first positions . In spite of its tensions with Saudi Arabia, it continues to have an important influence in the region . Russia has announced its support to Iran ’s entry in the Shanghai Cooperation Organization ( China, Russia, India, Pakistan, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan ). There is also the possibility of a more concrete involvement of Tehran in the Eurasian Economic Union ( Russia, Kazakhstan, Belorussia, Kyrgyzstan and Armenia ). There is also an ongoing action of regeneration of Iran ’s accession process to the World Trade Organization . Its request dates back to 1996, but it had been later blocked by a series of American vetoes . However, the main development in Iran ’s international relationships is the conclusion in 2015 of the Joint Comprehensive Plan of Action, which came into force on October 18 of the same year . It establishes the abolition of the sanctions that are still valid, caused by the Country ’s activity in the nuclear sector, through a series of different steps . On January 16 2016, after the positive report of the International Atomic Energy Agency ( IAEA ), the United Nations, the USA and the EU have suspended the application of the sanctions . The next phases are those expected for 2023, when they will wait for a report of the United Nations regarding the civil objectives of the Iranian nuclear sector and the final end of the sanctions .

Political and commercial relationships between Iran and Italy

After the sanctions have been suspended, people in Europe started to talk about the great opportunities that the Iranian market offers again . Italy is very interested in this market and it is one of the few Countries that has kept in good relationships with Iran in the last three decades, in other words after the revolution of 1979, which transformed the Country in an Islamic Republic, antagonist of the West . The Iranian president Hassan Rohuani has said more than once that Italy is a “ door ” to Europe for Iranians . The two governments established official diplomatic relationships in the 1950 s, when the Democrazia Cristiana ( Christian Democracy ) governed in Italy and the shah governed in Iran . When the conservative Mahmud Ahmadinejad was president ( 2005 – 2013 ), the relationships with Italy became more rigid, but did not stop . For example, in 2009, Frattini, Minister of Foreign Affairs of the Berlusconi government, invited Iranian politicians to Trieste to discuss Pakistan and Afghanistan safety . In 2003, Emma Bonino, Minister of Foreign Affairs of the Letta government, was the first European diplomat to visit Iran after a long time . Finally, in January 2006, Rouhani visited Rome, while Prime Minister Renzi went to Teheran in the April of the same year . In the business sector, Italy is the second commercial partner of Iran in Europe. Germany is its first, but Italy has been first from 2006 to 2012 . After the Iran nuclear deal had been concluded, an Italian delegation of 180 small and medium – sized enterprises and 12 banks went to Iran .

Recent developments

At the moment, the Iranian authorities want to take economic stabilization measures, such as the opening of Free Zones and Special Economic Zones . Commercial trades have increased since 2002 and have reached their historic maximum in 2011 . ( 7.97 million euros ). Italy is among the first countries that exports to Iran . In 2016, the value of the exports was 1.5 million euros and it marked a +29 % increase compared to 2015 . Imports have also registered a + 123.7 % increase, for a total value of 1 billion euros . Italy mainly exports machinery to Iran, while it imports crude oil and steel products . The Italian Bank, SACE and other institutions have supported exporting to Iran through loan disbursement of 4 billion euros as borrowed funds and 4 billion euros as a guarantee to the so – called lines of credit . They gave also 800 million euros for the restart of the small and medium-sized enterprises in the Country . Consequently, in spite of the latest difficulties caused by the commercial and financial sanctions, Iran still represents a good investment opportunity .

References :

www.infomercatiesteri.it
www.ilpost.it

MOROCCO AND NORTH AFRICA: NEW TARGETS FOR MULTINATIONAL ENTERPRISES?

12 June 2014 Expert

MOROCCO AND NORTH AFRICA NUOVI OBIETTIVI PER LE MULTINAZIONALI

MOROCCO AND NORTH AFRICA: NEW TARGETS FOR MULTINATIONAL ENTERPRISES?

Author: Diego Caballero Vélez
21/12/2014
d.caballerovelez(a)gmail.com

The Arab Spring of 2010 that started at Tahir Square in Cairo and is spread around the entire Arab world represents a cultural, social and economic impact for the countries of Middle East and North Africa.
With the Arab Spring, the speculation about the economic situation of the North Africa countries grows because of the series of social protests producing radical changes in the governments.

The economic outlook changes producing a major fear in international enterprises for investing in this region, but currently, is it still being a not very good region to export?

First of all, we must make differences between the different Arab countries of the region. Meanwhile Algeria and Libya are economies based on one only sector: hydrocarbon exportation; Morocco, Egypt and Tunisia base their economies on diverse sectors: manufacturing exports, agricultural products, foreign investment, tourism, etc.

We can see in Libya and Algeria a surplus in the economy, unlike the others with important economic deficit because their economies are based on more irregular sectors. In Egypt, the Muslim Brotherhood are reluctant to external debt and interact with external funding organizations so they are opting for alternative measures such as increasing income tax and recuperate lands given to private companies, that is to say, they use a populist politics because of the political situation of the country applied to economic politics, growing the speculation between multinationals that are interested in export there.

In Tunisia, are getting down to business to facilitate the entry of international investment so are negotiating a plan with the World Bank to simplify the way of doing business in the country. Finally, Morocco is the most reliable country for doing business because the Moroccan government pretends to consolidate his growing economy with consistent economic politics.

Regarding to foreign direct investment we could talk about the big beneficiary: Morocco. Foreign investment has increased significantly in the Maghreb country thanks to an increased social stability, economic liberalization and purchase of public enterprises by foreign investors. Morocco has also established free trade agreements with third parties as USA, Turkey and the Arab free trade zone. The most important sectors
in which foreign enterprises invest are telecommunications, industry, finance and insurance, mining and petrochemical. But the obstacles are still a lot, because the difficulty access to the country such as the cost of financing and the high required bank guarantee (226 %), makes that many multinationals think twice before fixing his eyes on this country.

In conclusion, investing in these countries always involve know risks. North Africa sees little by little signs of international investment recovery after the decline suffered in 2011 due to social riots. In my opinion, the key of investment would be being aware about the movements that occur in the region to take advantage of the opportunities that are appearing.

SOURCES
- www.Africainfomarket.com Situación de la Inversion Directa en Marruecos, 2007 July
- ESCRIBANO, G. La Reconfiguración de las Políticas Económicas en el Norte de África, Real Instituto Elcano http://www.realinstitutoelcano.org/wps/portal/rielcano/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_es/zonas_es/mediterraneo+y+mundo+arabe/ari48-2012

Russia EURASIAN CUSTOMS UNION

7 June 2014 Expert

RUSSIA EURASIAN CUSTOMS UNION

THE EURASIAN CUSTOMS UNION AND TRADE WITH RUSSIA

Written and translated by Lorenzo Giusepponi
January 2018

The Eurasian Customs Union

Russia is currently interested in strengthening the Customs Union with Belarus and Kazakhstan, founded in 2010. As Ukraine is increasingly out of the Russian sphere of influence, we are now observing a further political and economic integration among the Union’s member states and a widening of its membership, with the participation of two more countries: Armenia and Kyrgyzstan. The promotion of economic integration among the CIS ( Commonwealth of Independent States ) member states was first conceived in 1994, when these countries began discussing the opportunity of establishing the Eurasian Economic Community.

The acceleration of this process, however, only occurred in November 2009, when Russia, Belarus and Kazakhstan signed an agreement for the establishment of a Customs Union characterized by a common external tariff, a common customs code, the elimination of non-tariff barriers and the distribution of incomes on a proportional basis, that is 88 percent to Russia, 7 percent to Kazakhstan and 5 percent to Belarus. The Eurasian Customs Union came officially into existence on 1 January 2010. Two years later, the three countries established the Eurasian Economic Space, a single market for the free movement of goods, services, capital and labor. In May 2014, the presidents of Russia, Belarus and Kazakhstan signed the treaty on the Eurasian Economic Union, which came into effect on 1 January 2015. Armenia and Kyrgyzstan joined in the same year.

One question about this organization concerns the real possibility of achieving an effective economic union in such a short time, taking into consideration how much time it took the European Union to achieve the same goal. A second problem is related to the Customs Union’s membership. If the Union really wants to become an influential block between Europe and China, as President Putin has affirmed, the increase in the number of member states is a priority. In fact, the Russian economy accounts for almost 90 percent of the Union’s total economic volume, making the participation of Belarus and Kazakhstan almost symbolic. Belarus in fact depends on Russia economically, while Kazakhstan has joined just to have a market for the export of raw materials, rather than for the benefits of a common economic space.

The challenge of the Eurasian Economic Union also concerns the real economic benefits that it should generate for its member states. In 2011, trade between member states increased by more than 34 percent, and by 15 percent in the first semester of 2012. This result, however, seemed to be related to the post-crisis recovery of 2009, when the Russian GDP fell by more than 8 percent. By the second half of 2012, the growth of trade had already declined to 3 percent. According to some observers, such figures indicated the end of the Customs Union’s beneficial effects. Such trend was further confirmed during the first semester of 2013, which saw a -5 percent downturn in trade with Belarus and just a 2 percent increase with Kazakhstan. Finally, another difficulty that the Customs Union has to face concerns the entry of its member states into the WTO and the need for regional regulations to be in line with the multilateral ones.

Importing in Russia

Because of complex procedures, importing goods in Russia is not easy. The access of western products to Russia is difficult due to the sanctions imposed by western countries following the political tensions with Ukraine. In case of import declaration, the declarer has to be a Russian physical or legal person, except for physical persons importing personal effects. Non-residents can address to a customs broker, that is a person authorized to provide customs services to third parties.

For the import of some kinds of products (such as food commodities, medicines, detergents, cosmetics, perfumes, electric appliances and electronic components), it is necessary to have a certificate ensuring the products compliance to Russian standards as regards consumer protection and safety. The Rosstandart is the responsible body. The products requiring the certificate of compliance can be cleared only if they are accompanied by the Gost-R certificate.

Russia, as well as the European Union, uses the Commodity Description and Coding System, called “Harmonized System”. Commodities are usually subject to three kinds of taxes: the customs duty, the value added tax and, for some products, the excise tax. According to the kind of commodity, it is possible to impose specific, ad valorem and compound duties. The Russian tariff is divided into 4 sections according to countries. European countries benefit from the “most favored nation” clause, they are thus subject to the basic tariff.

The Gost R certificate

The Russian regulatory framework is different from the European one; it requires most products to be accompanied by a specific certificate proving that they meet Russian standards. The Gost is a system launched with the aim of protecting public health and the quality of the products in the Russian market. Such document can be issued by a Russian institution or a foreign one, as long as it is authorized by the Rosstandart. Most products have to be accompanied by this certification in order to be cleared and marketed in Russia.

Trade between Italy and Russia

Italian companies operate in the majority of Russian regions, but most of them are located in Moscow and St. Petersburg. Trade between Italy and Russia is still suffering from the effects of the economic and financial crisis that hit the country in 2014 – 15, as well as from European sanctions. In 2016, trade volume amounted to €17.4 billion, while in 2015, it amounted to over 21 billion. Italian imports have suffered the worst downturn (-46 percent). Fuels, which represent a considerable share of Italian purchases (65 percent), have confirmed the decline of the years before. Moreover, such sector curbed again in 2016, with a decrease of 31.2 percent compared to 2015. However, despite the reduction of the imported quantity, such figures also result from a decrease in the price of hydrocarbons.

Italian exports, which sharply contracted in 2015 ( – 25.3 percent ), saw again a 5 percent decrease in 2016. The sales decline affected several trade sectors; the machinery sector, which accounts for 26 percent of total exports, has registered a 21 percent loss. On the contrary, food commodities had a slight recovery in 2016 ( + 4.1 percent ) and the same goes for clothing ( + 6.2 percent ), chemical products ( + 9 percent ), pharmaceuticals ( + 3.2 percent ), rubber and plastic items ( + 12 percent ).

Today, Italy is the 6th main exporter to Russia and occupies the same position in imports. At European level, Italy is Russia’s second largest trade partner, preceded only by Germany. Prospects for Italian exports to Russia are improving, however, achieving the before crisis sales level is quite difficult. Sectors were investments are advisable are: electrical energy, gas, steam and air conditioning, pharmaceuticals, health, means of transport and foodstuffs.

Sources:

- ITA
- www.ubibanca.com
- www.informercatiesteri.it

Immigrate to the United States: permanently or temporarily

5 June 2014 Expert

Stati Uniti d'America - immigrare

Immigrate to the United States: permanently or temporarily

Author: Pierre Varasi

Translation by Matteo Gaipa

March 2015

Since 1965 with the Hart-Cellar Act, the United States created the so called “preferences system” in order to facilitate the immigration of certain categories of persons. In addition to family members of citizens, and permanent residents, also workers sponsored by private companies have been favored.

140.000 places were available for them. They had to find a job in an American company willing to start the immigration procedure.

Today the “employment-based” category is divided into five subgroups. Every subgroup has a numerical limit.

1. You may be eligible as first preference with a 40,000 limit if you have an “extraordinary ability” in arts, science, education, business, athletics;

2. You may be eligible as second preference with a 40,000 limit if you have an advanced degree or extraordinary abilities above mentioned;

3. You may be eligible as third preference with a 40,000 limit if you are a skilled worker with two years work experience, graduates, and unskilled workers for jobs in which qualified workers are not available in the United States;

4. You may be eligible as forth preference with a 10,000 limit if you are a special immigrant such as religious workers, and people who has worked for the US government;

5. You may be eligible as fifth preference with a 10,000 limit if you are willing to invest between 500,000 and 1 million dollar for a company which will create at least 10 job. This is the easiest way, but of course it can be pursued by few people.

Unused quotas will be distributed between the underlying categories. Fifth category quotas, which are not assigned, will be added to the first category.

Moreover it is important to remember that there are other ways to be resident, for example the random “diversity lottery”. Once you have reached the chosen destination, the labor market is more flexible and accessible than in Europe, also promotions and career progressions are relatively easier if you know the language and you are willing to rise through the ranks.

If you are a resident worker it is not difficult to get a citizenship, it requires a quite long period, indeed if you have a Green Card you will obtain rights and duties of citizens after five or six years.

This is not an easy path but on the other hand it is possible to obtain a temporary job. In the United States million “non-immigrants” people arrive every year with a temporary visa. In 2013, they were 9,164,349. There are different ways of admission: tourism visas, worker visas, student visas, everyone with a temporary legal status. It is important for economical and political reasons to better describe the H category which includes workers, that in 2012 has obtained 611,912 concessions. 135,911 for people in specialty occupation: 65,345 agricultural workers, 50,000 seasonal workers, 80,015 families of workers with a H visa.

The main temporary worker categories are divided into three visas:

H-1B: this visa allows companies and American companies to hire foreign people in specialty occupations. They are highly skilled workers, and the ones who are likely to become permanent residents. This program allows people to work in the US for up to a total of three years, and it can be renewed only one time. The application for a permanent residence must be followed by the company sponsor. This visa has a 65,000 annual limit, and 20,000 places for students with a specialized degree obtained in the US. Renewals are not deducted from these quotas.

H-2A: this visa allows the entry of seasonal agricultural workers. They must be citizens of one of the 59 states, annually updated, which are allowed to send their citizens. Although there is no acceptance limit, visas are valid for one year and they can be renewed up to three years.

H-2B: these are seasonal visas but not agricultural. The application must be drafted by one of the 59 states annually chosen by the government. Validity and renewability are the same of H-2A visa. However there is a 66.000 limit.

LINK : USA GOV

SOURCES :

Immigration Policy Center
Report of the Visa Office
JH Wilson , Immigration Facts
Temporary Foreign Workers

TUNISIA COUNTRY PROFILE

2 June 2014 Expert

TUNISIA COUNTRY PROFILE

LINK TUNISIA GOVERNMENT
LINK TUNISIA ARAB SPRING

GENERAL INFORMATION

- Official name: Tunisia;
- Tunisia surface: 163.610 km2;
- Population: 10.480.934 million of which 17.7% is labour force;
- GDP: 45.407 million $
- GDP per capita: 4.213 $
- GPD forecasted growth: more than 3.3% ;
- Capital: Tunisi around 2 million citizens;
- Other cities: Hammamet, Susa, Tabarka, sea cities with a high flow of tourists, industrial Sfax, Qayrawan (Kairouan), religious capital, Tozeur, Gabéz, Biserta, last city before the desert, Douz (also known as “The desert door”);
- Government: Unitary semi-presidential republic;
- Main religions: Muslim, Catholic minority, Jewish;
- Languages: Arab, French (around 63% of the population speak it);
- Currency: Tunisian dinar

TUNISIA POLITICAL FRAMEWORK

CHANGES AND POSITIVE ASPECTS

- Political changes and the Revolution have been made in order to ensure stable conditions ;
- Economic and policy reforms;
- The economic opening-up supports foreign investments ;
- Important strategic position due to its geographic position as an access to Africa and “zero problems with neighbours”
- Actions in order to intensify and diversify foreign relations;

PROBLEMS AND NEGATIVE ASPECT

- The democracy is “in progress”;
- Risk of terrorist attacks.

MACROECONOMIC FRAMEWORK AND TUNISIA OUTLOOK

LEGAL ASPECTS

The economic dynamism of Tunisia has developed important production plants, very productive, especially in the service sector. Currently trade and tourism sectors are the main puller of a fragile economy.
Other important sectors are agriculture and the transformation of agricultural products, local craftsmanship, and mineral extraction (oil,lead, silver, zinc and mercury).
Other important aspects :
- Sing up of the FTA (Free Trade Agreement) in 1995.
- Inflation around 6%;
- The relation between foreign trade volume and GDP is around 49,5%; Tunisia integration in the international trade system is excellent.
It is important to underline that Tunisia economy rely a lot on foreign trades. According to world report on Davos competitiveness, Tunisia ranks among first places for its competitiveness( 40th in 133 countries for and 35th for infrastructure quality); the report Index of Economic Freedom, ranks Tunisia 95th on 179 countries and 12th on 17 Middle-East and North Africa countries, with a “mostly unfree” Index of Economic Freedom.
Moreover Tunisia has started to liberalise foreign trade since 1990, becoming member of G.A.T.T. Currently, foreign trades are based on the law n.94-41 of 07/03/1994.

TUNISIA has also signed many bilateral trade agreements that contribute to consolidate the position and the subscription of the international framework, in particular:

• Bilateral agreement that creates a free trade zone in Tunisia;
• Agadir fee trade agreement between Jordan, Egypt, Morocco and Tunisia
Signed and subscribed in 2004;
• Bilateral agreements with Libya Iraq and agreement with Gulf countries to create a free trade zone.
TUNISIA is a CIRDI member and supported in May 2012 the OECD declaration for international investments and multinational companies.

STRENGHTS

- Balanced country and commercially attractive;
- Structural reforms implementation;
- Basic economic indicators are solid;
- Strategic geographic position;
- Access to many markets and diversification through different bilateral agreements with African countries;
- Growing domestic market and young population;
- Tourism sector has a continuous growing.

WEAKNESSES

- Young democracy;
- Dependence increased by foreign capital flows and investors trust;
- Tunisia depends on foreign energy supply;
- Deficit of current accounts;
- Corruption.

GROWING SECTORS

- Clothes/textile;
- Iron and steel sector;
- Car sector;
- Banks;
- Costruction of big infrastructures;
- Air and sea transport
- Environment and Ecology;
- Renewable energies and sources;
- Personnel training;
- Tourism;
- Craftsmanship;
- Agriculture.

REAL ESTATES AND CONSTRUCTIONS

The construction industry is one of the most important sectors in Tunisia.There are around 20.000 companies with a turnover of 3.000 million € per year.

That is 10% of Tunisia turnover and around 7% of its GDP, for this reason the construction sector is the fourth most important sector of Tunisia economy ( after textile, clothes, agri-food and agricultural sectors). However cements is the most exported good.

FINANCIAL SECTOR

Since 1995, after the have signed up the Association Agreement with EU (in effect since 1998), the Tunisia opening to the foreign trade has progressively increased in order to prepare the country to the definitive access at the free trade zone with the European Union which has been completed, for industrial products, in 2008. Tunisia has created a series of important structural reforms in order to improve the competitiveness of its economy, to support private investments, to rely more on its business and to modernise its financial and bank systems.

From several years the Italian cooperation has contributed to supports the balance of payments; a 95 million € credit program that has started in 2012. Despite important reform progresses in order to rebalance development banks and policies against laundering, Tunisia financial system does not completely answers to investors expectations, because there isn’t competition nor innovation.
Tunisia Central Bank has started a decreased the regulation system giving to credit companies a higher flexibility in the classification of risky loans. In this way, it has given considerable amount of money to te financial system.

This politics has created a re-financing dependence between many companies and the Central Bank. Risky credits, represented around 13% of the loan portfolio of the banking system.
The banking system is divided, with more than 20 credit companies that represent 100% of the GDP, with a 11 million people population.
In Tunisia the government controls around 40% of the sector, this has negative effects on productivity, overall efficiency and the creation of innovative structures.
A risk for the Tunisian economy is the increase of the deficit, due not only to the increase of interests on public debt, which is constantly increasing, but in particular to “peace” policies of temporary governments that have indulged the increase of minimum wage, created thousands of new jobs in the public sector, post-crisis compensation costs, and supported retail prices for commodities.

In 2013 the value of Tunisian dinar have decreased of 12%. It was due to unbalances between demand and offer (weaken because of the crisis of the biggest export companies) and the demand of foreign currency (increased by higher imports). The crucial variable for the development of Tunisian economy in short and medium period is the recovery of social and political balance and adequate security conditions. Because of the continuous Tunisian export market fragility, this recovery will have to be based on the main components of the domestic demand (families consumption and investments).

Consumption is subjected to a negative influence both from uncertain salary prospects and from the decreased availability of finances from banks. Tunisia is committed to take important actions to improve the banking system. The main problems are assets quality weakness and limited levels of capitalisations, especially for public banks. The public bank consolidation strategy wants to create an Asset Management Company (AMC) that has to absorb non-performing loans of the sector. The AMC will be on effect for nine years but is not certain whether it will work on NPL or just those linked to tourism sector.

ENERGY

After a series of bilateral agreements (also with the EU) Tunisia can be considerer an excellent access to the North Africa area; in Tunisi there is the Mediterranean Centre of Renewable Energies (MEDREC) IMET, which is a perfect context fro contacts and information on renewable energy sector in the wide Maghreb area.
Indeed the Maghreb region has an high potential for renewable energy development, especially for solar and wind-power energy. It is foreseen that the use of these energies will strongly increase in the near future.

Renewable energy projects, currently in the framework of bilateral agreements between IMET and Tunisia, will be part of the MEDREP. Future projects will focus on the electricity distribution to rural isolated populations, thorough a small scale electricity network. It is important to pursue an increased and accelerated integration of renewable energies in the national electricity network, with the goal of reaching a balance on the network, between demand and offer.

The idea is indemnify the global approach of the introduction of renewable energies (in particular solar and geothermic energies) in the construction sector according to the norms in force for energy efficiency: MEDA results programs for the integration of solar technologies in the sector. Moreover, focus on the sea water desalination, in order to increase potable water stocks and the availability of water resources for irrigation. Increase the use of pumps that work with solar, wind-power, biomasses energies in the farming sector.

Another area of interest is the diffusion of refrigeration systems for food storage, renewable energy systems, in farms and fish shops; the goal is promoting in urban areas the use of solar system at home, the installation of small wind-turbines or energy technologies that work with biogas and biomasses;

PHARMACEUTICAL AND SANITARY SECTORS

The progressive improvement of socio-economic conditions, even if slowly and with limits in the real access for the entire population to fundamental services, and an increased attention to health topic, are important factors for healthcare , sanitary and pharmaceutical markets in which work the main multinational companies of this sector. The current Tunisian government is improving healthcare establishments, extending, among the other things, also services opening hours. Industrial Tunisian pharmaceutical production regards around fifty companies with 50.000 employees. The production is focused on therapeutic and preventive drugs 45% are generic drugs.

Tunisian drugs production covers 50% of the domestic real needs. Added to the Tunisian national production, Tunisia has to import drugs from France (44% of imports), Germany, Switzerland and Italy (6%) for a total amount of 550 million TND (270 million €), with an average rate growth of 10% per year. 98% of imported drugs have a therapeutic purpose. Tunisia export are around 15 million €, 60% is exported to North Africa, in part in Europe (France, Belgium; Switzerland) and only a few to other African countries. Recent evolution, concern the development of a cooperation agreement between the Tunisian government and the British company”Hygiene Worldwide” in order to supply to the healthcare national service a liquid with bacterial properties “Genie” which doesn’t contain alcohol in order to respect Koran rules.

SERVICES

Currently the main branch of service sector are the telecommunication and IT (Information technology) that in the last years have been supported by the government, in order to make Tunisia a regional hub, capable of linking the African continent, Middle-East, Europe thanks to its strategic position in the Mediterranean Basin. Currently trade is the second sector, followed by tourism that despite the decrease after the 2011 revolution , is an important sector for Tunisia future. Bank and finance sectors liberalisation and privatisation processes are an obstacle to the attraction of new foreign capitals and to improve the access to the credit by companies, despite past improvements.

TEXTILE SECTOR

Textile and clothes are 35% of the overall Tunisian production and attracts investors for 15% of the overall manufacturing sector. Around 90% of Tunisian companies working in the textile sector works in the clothing sector and in the knitwear packaging. In this branch work thousands of companies, of which around 2000 have more than 10 or more employees. Among those 83% are exporting companies, which is 41% of the manufacturing industry. Tunisia is a large producer of clothes for third parts, thanks to its low cost labour and for its strategic position in the middle of the Mediterranean, moreover, near to a wide and rich market of potential buyers. Companies with more than 10 employees are around 200.000 and 178.000 are totally engaged in the export and 17.000 employees work in companies with a partial export, this underlines the Tunisian vocation for exports.

2/3 of foreign capital companies are owned by foreign people. 350 from France, 240 from Italy, 82 from Germany and 120 from Belgium. The division and distribution of countries that invest in the textile sector in Tunisia represent its political and economic relations. In 2010 before the “Jasmine Revolution”, that have slowed down the main sectors of the economy, the Tunisia textile sector export toward the most important Tunisian market, the European Union, it reached 2.3 billion €. Even if Tunisia has less citizens than Morocco, it is the 5th largest EU supplier , after China, Turkey, India and Bangladesh. The main EU clients of Tunisia are France (36%) Italy (32%) and Germany (10%)

AGRI-FOOD SECTOR

Agri-food sector is a strategic sector for Tunisia. Companies of this sector are around 1000 and 18% work only in the export. There is a national inclination for agricultural production , food transformation and food for domestic consumption. Employees working in companies with more than 10 employees are 70.000. One of the features of this sector that we signal is that 11% of agricultural sector companies and food transformation , are supported by foreign finances,only 2.8% is totally owned by foreign investors. Italy has 40% of foreign participations in this sector, France around 35%. As it is for other sectors of the country the proximity with our country is at the same time and advantage but also a limit for the competition with our companies.

There are several ways to penetrate the agri-food sector, however the best two are bought local companies or participate in existing companies. Currently the agri-food sector situation doesn’t allow an horizontal expansion with the buying market quotas, but is better to enter in local companies specialised in food transformation and production processes mechanisation. There are many investment projects in this sector, some of those collected 2 million €. However, it is important to underline that the territorial proximity, excellent trade political and cultural relations, could persuade soma Italian companies to modernise the Tunisian industry through a continuous growth, the creation of high-tech machineries in order to transform, store and package products.

BUSINESS ENTITIES

Analysis of the creation of a society in Tunisia. Tunisian trade code has 6 kinds of business entity:

- S.A – Anonym society
- S.A.R.L. – (limited reliability companies)
- S.U.A.R.L. – ; Limited reliability one-man company
- S.N.C – General partnership;
- S.C.S – Limited partnership companies;
- S.C.A. – Limited partnership joint-stock companies
Most spread business entities in Tunisia are Anonym Society (S.A.) Limited Reliability Societies (S.A.R.L.) and Limited Reliability One-man Company (S.U.A.R.L.); these societies are ruled by laws alike to European laws, in particular French ones.
For societies with a foreign participation, the Tunisian investment code supports the creation of:
- Foreign company branches: in order to establish a branch it is necessary to create and give to the authorities the original copy of the company statute or the equivalent certificate of corporation, with attached the company address or the address of the main bureau;
- Partnership: there is no limitation for number of partners; however every partner is responsible for company debts. The law does not provide the obligation of account revision and it is not necessary to publish budgets;
- Joint venture: This type is supported through government agencies, and JV can be created both with a partnership and as limited companies. Tunisian law rules the majority of trade activities, and JV can be established only after a formal application, and after the deposit of declaration, released by authorities:
- A.P.I.I. – Agency for the promotion of industry and innovation , for every industrial activity and services linked to industry;
- CEPEX – Center of exports promotion, for projects linked to international trade;
- A.P.I.A. – Agency for the promotion of agricultural investments, for projects in agricultural sector, agri-food and fishing sector;
- O.N.T.T. – National body for tourism, for projects in the field of tourism;
- O.N.A.T. – National body for craftsmanship, for craftsmanship activities;

SUBSIDIES

Law number 93-120 regulates subsidies for entrepreneur investments in Tunisia, Tunisian or foreign investors, resident or not, also in the joint-venture form. JV are supported by government agencies and they can be established with a partnership or by limited companies.
Moreover it is important to underline that the Tunisian fiscal system has been reformed. The 16th May 1979 the Italian and Tunisian Republics have signed and subscribed in Tunisi the Agreement to avoid double taxations on the revenue, in order to avoid tax evasions, through a protocol, in force since 17th September 1981.
The agreement on double taxation is adopted to residents in one or both signing States (Italy and Tunisia) and it is applied on revenue taxations withdrew for every signing country, through administrative or political subdivisions, whatever the withdraw system is.
Taxes on the overall revenue, taxes on the purchase of movable or immovable assets, taxes on the total amount of salaries paid by companies, and taxes on added value. It is interesting to underline subsidies for export societies.

Society that only export are:

- Societies whose production is intended only for exports;
- Societies that work abroad or in Tunisia but giving services abroad;
- Societies that work only with foreign companies or in free zones or with foreign financial institutes;
Export companies have a taxation similar to those of the free zones except for administrative orders limitations after 2015.
Best subsidies give the possibility of a total exemption from revenue taxes and revenues of first ten years of activity and a 50% reduction for the following years. Extension of the period in which the revenue deduction is in effect (and export profits).
Fiscal relief on revenues and profits re-invested in the initial capital or to increase on condition of minimum taxation.
Fiscal relief on profits re-invested in the company, on condition of minimum taxation.
Faculty and possibility of import (total exemption of rights and taxes) goods needed for the company production.
Total exemption from registration rights and VAT on company activities.
Possibility of earning on the domestic market 30% of the income.
Possibility of hiring at most 4 foreign employees or workmen.

TRADE AGREEMENTS

- Trade agreement with 41 countries;
- Free trade zone agreement with 11 countries;
- Multilateral agreements with 50 countries;

COUNTRIES WITH FREE TRADE ZONE AGREEMENT (IN EFFECT)

- Bilateral agreement to create a free trade zone with Turkey;
- Agadir free trade agreement with Jordan, Egypt, Morocco and Tunisia signed in 2004;
- Bilateral agreements with Libya, Iraq, and other agreement with Gulf Countries in order to create a free trade zone;
- Arab League multilateral agreement;
- Arab-Mediterranean free trade zone;
- Free trade agreement between Tunisia and EU.

DEFENSE AND JUSTICE

The Tunisian judiciary system is based on French right.
2014 Constitution is very advanced compared with near countries constitutions. It has been drafted according to democratic constitutionalism and parties request, inspired to Islam, in the Constituting Assembly.

Tunisian judiciary institutions are:

- 1 Court of Cassation;;
- 10 Appellate Courts;
- 23 Courts of first Instance;
- 83 Cantonal Courts;

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