With a total population of over 75 million people and a strategic location between wealthy trading partners, with Russia to the east and a vast market of EU citizens to the west, the Eastern Europe and South Caucasus (EESC) region is attractive as a destination for investment and trade. It is endowed with significant human and resources ranging from the black soil in Ukraine that produces some of the best wheat in the world, to energy reserves in Azerbaijan and unexplored water resources in several countries. However, in spite of recent growth – an average of almost 8% of GDP during 1998-2008 – the region’s productivity levels remain 77% below the world average. The OECD Eastern Europe and South Caucasus Competitiveness Outlook examines the key policies that would increase competitiveness in the countries of the region through developing human capital, improving access to finance for SMEs and creating more and better investment opportunities.

Acknowledgments
Acronyms and Abbreviations
Executive Summary
Chapter 1. The Competitiveness Potential of Eastern Europe and South Caucasus
-Introduction: the unexploited competitiveness potential of the EESC region
-Endowments
-Recent performance and challenges: competitiveness needs to be enhanced
-Policy priorities for the region
-Developing a public-private dialogue
-How to enhance competitiveness
-Conclusion: addressing fundamental structural issues to boost competitiveness
Chapter 2. Strengthening the Pillars of Competitiveness
-Executive summary
-Introduction
-Methodology
-Competitiveness performance of the EESC region: an international comparison
-Institutions
-Country-level competitiveness
-Conclusion
-Computation and structure of the Global Competitiveness Index 2010–2011
-Technical notes and sources for data used in the Global Competitiveness
-Index 2010-2011
Chapter 3. Developing Human Capital
-Executive summary
-The importance of developing human capital
-Human capital development in Eastern Europe and South Caucasus: summary of findings
Human capital development in Eastern Europe and South Caucasus: an assessment
-Initial education: inputs and outcomes
-Post-secondary education: inputs and outcomes
-Other human capital outcomes
-Conclusion: Policies for competitiveness - towards a comprehensive human capital strategy
Chapter 4. Improving Access to Finance for Smaller Enterprises
-Executive summary
-Introduction: the importance of access to finance for SMEs
-SMEs in the EESC region
-Difficult access to finance as a major obstacle for SME development
-Access to finance assessment framework
-Policy implications
-Definitions of SMEs in Eastern Europe and South Caucasus
Chapter 5. Maximising the Potential of Foreign Direct Investment
-Executive summary
-Introduction
-The role of foreign direct investment in building long-term country capabilities
-Evolution of FDI in Eastern Europe and the South Caucasus over the past decade
-The impact of the global crisis on FDI flows
-Assessing investment policy standards and investment promotion trends in the EESC region
-Reducing investment restrictions and building investment promotion capabilities
-Conclusion: investment policies and promotion need to be better targeted
-Annex: Draft Guidelines for investment promotion capabilities in the EESC
Chapter 6. Ukraine: A Case Study on Diversification and Sector Competitiveness
-Ukraine: competitiveness review
-Business environment reforms have been insufficient
-Sectors with high potential should be better promoted to foreign investors
-Investment policies and promotion: the need for a national, sector-specific strategy to optimise FDI
-Competitiveness of target sectors
Bibliography