BLR Economic Research and Outreach Center - fas III BEROC

1. Objectives of the intervention - The aim of the project «To develop the next phase of ‘Belarusian Economic Research and Outreach Center’ (BEROC)», (activity period Apr. 2016 – Dec. 2020) is: «to develop market economy in the Republic of Belarus through high-quality public dialogue that is supported by high standard analytics and expertise, generated by BEROC, with the aim to spread knowledge in economics by way of research, as well as to increase skills in economics of policy-makers, business and academic communities through educational programmes. BEROC’s motto is «modern economic thinking for Belarus»». The project aims to: - (a) promote macro-economic stability and financial development - (b) provide analytics and knowledge for business community - (c) improve economics skills of labour force, needed by private business - (d) improve business climate and promote favourable institutional setting for the development of SMEs - (e) contribute to the promotion of green economy - (f) contribute to the promotion of gender equality, in particular on the labour market and in entrepreneurship, through research, policy advice and participation in international projects, aiming to promote gender equality 2. Summary of main results achieved in 2019-2020 - (a) Monetary policy - This output has been implemented in collaboration with the National Bank of Belarus --- accomplished the large Dynamic Stochastic General Equilibrium (DSGE) model (the state-of-the-art workhorse instrument for most of the central banks around the world), which allows for both forecasting and understanding interrelationships and cause-and-effect channels in the economy of Belarus; in 2019 and during the first half of 2020, BEROC researchers continued to consult the National Bank’s experts on how to work with the model --- continued work on estimating inflation expectations (crucial for monetary policy; if expectations are high, which is the case in Belarus, the opportunities of monetary policy to stimulate the economy are limited, where stimulation attempts by way of easier access to credit may result in inflation); research presented and discussed at joint seminar - (b) Macro-economic analysis and economic growth --- continued quarterly outlooks, presenting analysis of current economic situation, discussing the major events (target groups: business, academic/expert community, policy-makers, media) --- analysed the fiscal multiplier (how increase in government expenditure affects the GDP - the pro-cyclical nature of expenditure leads to multipliers that are less than one, implying that government expenditure does not play a stabilising role in the economy/is inefficient; research presented to the Financial Stability Department and Research Department of the National Bank; resulted into a FREE policy brief) --- prepared a research paper on how institutions affect trade (implications for development of the Belarusian Great Stone Industrial Park, a novel attempt to build a hardware production hub; without drastic improvement this project will not attract investments) --- analysed how productivity and external environment influences growth in emerging markets (external environment may have medium-term effects, whereas only productivity growth is capable of sustainable growth in the long run) - prepared a report (jointly with EBRD) on the current state/perspectives of the Great Stone Industrial Park and other special economic zones in Belarus (report aimed at investors) - Policy advice provided to policy-makers (before Aug. 2020): --- for the past 3 years, BEROC has worked hard to establish itself as a reliable partner of policy-makers for independent expertise; in 2019, various governmental bodies officially requested analytical support from BEROC: ------ Ministry of Economy and its Scientific-Research Institute on the draft Strategy on social economic development until 2035; ------ Ministry of Natural Resources on waste management in two regions of the country; ------ two BEROC experts officially became members of the inter-governmental working-group on preparing the draft Programme of socio-economic development of the Republic of Belarus for the period of 2021-2035; ------ Ministry of Economy invited another two BEROC experts to become members of their SME development board - (c) Socio-economic policy analysis --- produced a paper (with the WB) on the effects of the most recent crisis (2015-2016) (unlike previous crises, this has affected primarily socio-economic groups with high vulnerability levels (families with children, households with unemployed or partially employed, people residing in small towns/rural areas) with no savings/other insurance mechanisms, decreased Government transfers (pensions, child benefits)), which once again stressed the need to introduce needs-based assistance and unemployment benefits --- produced annual bulletin on poverty, presenting in-depth poverty analysis (results show that absolute poverty, following the economic recession, decreased from 29.3% to 23.9%; the highest incidence of poverty was observed in Mogilev oblast) --- launched a large study (with IPM Research Centre) of population attitudes towards social assistance (focus group discussions, two surveys («high childcare benefits poverty trap»; «pension system») primary and secondary data analysis) - (d) Entrepreneurship and private sector in Belarus --- BEROC (with IFC) supported Belarus participation in the Global Entrepreneurship Monitor (GEM) for the first time, due to an increasing demand from policy-makers, connected with private sector further liberalisation --- BEROC participated in GUESS (Global University Entrepreneurial Spirit Students’ Survey), one of the largest global entrepreneurship research projects that focuses on students’ entrepreneurial intentions and activities (showing that student entrepreneurship activity is lower than the international average; however, there are positive dynamics, compared to the previous study in 2016) --- initiated study on how SMEs use information and communication technologies (showing that the service sector uses ICTs more often than the manufacturing sector; compared to the E.U., Belarusian companies use web technologies more often) - (e) Gender issues in economics --- gender dimension was added to most of the papers on socio-economic issues, and, where possible, on papers in other topics as well, produced by BEROC --- continued work on data from the generations and gender survey, studying inter-generational mobility, with special focus on gender and on how parental education impacts on the income of individuals --- published a FREE policy brief on the gender wage gap in state and private sectors, based on previous research results (wage gap size being higher in the state sector) --- continued research on female entrepreneurs with the study on leadership styles (findings indicate women being more prone to a hybrid decision-making strategy than men) --- produced a total of 8 working-papers and 11 policy papers (6 working-papers of which were submitted to international peer-reviewed journals, 4 of which were published in international peer-reviewed journals or books; working-papers are cited by other Belarusian think tanks and research organisations, international organisations and researchers, covering topics such as the Belarusian macro-economic situation in 2019, recent developments in foreign direct investment, fiscal incidence) --- BEROC research and analytics has had a multi-dimensional impact on the economic development in Belarus, both directly and indirectly, providing policy-makers with research-based evidence and policy recommendations (particularly the National Bank and the Ministry of Economy, as well as open forums (Annual Conference on Economics and Finance, Conference on Green Economy, etc.), also in partnership with WB, EBRD, IFC, UNICEF, UNDP, IPM Research Centre) --- published at least 130 opinion articles and interviews in local and international media (with more than 300 quotes of BEROC experts published in the media - these numbers confirm high demand for BEROC’s research and expertise in the Belarusian society) --- produced five FREE policy briefs: (i) on monetary policy dilemmas in Belarus, (ii) on gender wage gap in the state and private sector, (iii) on influence of institutions on trade, (iv) on Belarusian poverty dynamics, (v) on development of the Belarusian higher education - (f) Circular (green) economy --- having finalised analysis in 2018-2019 of pre-conditions for a green economy project component, it was concluded to be more aimful to concentrate on circular economy at the current Belarusian development stage, with a need to support both state and private sectors in adopting a modern approach in improving resource allocation efficiency and waste management solutions (the circular economy concept offers a practical basis for implementing the green economy concept with effective business models for a more environmentally-friendly resource use, contributing to the achievement of the goals of sustainable development of society) --- elaborated a questionnaire for the Belarusian enterprise survey, regarding barriers for developing a circular (green) economy, and on how waste and secondary materials are managed (the survey was then implemented by the Research Institute of the Ministry of Economy, covering 330 industrial enterprises, 185 construction companies, 136 trade organisations, and subsequently analysed by BEROC) --- developed two business plans and two feasibility studies to identify potential areas, assessing business opportunities: ------ 1. Business plan on the environmental initiative «Creating a system for collecting waste of electronic and electrical equipment on the territory of Soligorsk raion of Minsk oblast» (project financed by EU and implemented by UNDP, together with the Ministry of Natural Resources and Environmental Protection; BEROC calculated market capacity for electronic and electrical equipment waste, showing the project to be cost-effective) ------ 2. Business plan on the environmental initiative «Compact waste – clean air» in Lida raion, where the acquisition of new equipment allows for the landfill (??????) to function without interruption, as caused by the repair of old equipment, thus extending the landfill life period (project financed by EU and implemented by UNDP, BEROC calculations confirmed the effectiveness of the initiative) ------ 3. Feasibility study «Production of fertilisers, based on poultry manure in Belarus: opportunities for investment» that involved a review of the market for fertilisers from poultry manure (purpose was to assess the feasibility of investing in a new organic fertiliser company; study showed that majority of fertiliser consumers in Belarus are insolvent, and that EU market demand is satisfied by local producers) ------ 4. Feasibility study «Tires recycling in Belarus: current state and opportunities for development» that involved a review of the market for worn tires (purpose was to assess opportunities for investing in a new used tires’ processing company; study showed that Belarus has excess capacity in this field, and a new recycling company would not be cost-efficient) --- researchers under the supervision of an academic mentor published 6 policy papers and 1 article in a local journal: ------ «Decision-making in waste management at Belarusian enterprises: survey results» (examination of relation between enterprise size and waste amount) ------ «State vs. private companies: differences in waste management» (whether the effectiveness of waste management depends on the form of enterprise ownership) ------ «Barriers to the circular economy: evidence from Belarus» ------ «Waste management in industrial enterprises of Belarus: when the amount matters» (enterprises, in general, positively evaluate existing legislation that regulates waste management, but identify significant barriers: lack of recycling technologies, economic inexpediency, mainly caused by the expectation of high initial investment costs for the implementation of innovative business models) ------ «Circular economy in Belarusian agriculture» (survey of agricultural producers on waste management and factors affecting the reuse of their waste) ------ «Circular economy: ways to finance a business entity?» ------ «Circular economy in action: organisation forms and best practice» --- These papers present the findings of studies on public and private funding opportunities for circular projects (crowd-funding, grants, venture capital, government support, bank loans, etc.)

- The aim of the project «To develop the next phase of ‘Belarusian Economic Research and Outreach Center’ (BEROC)» is «to develop market economy in the Republic of Belarus through high-quality public dialogue that is supported by high standard analytics and expertise, generated by BEROC, with the aim to spread knowledge in economics by way of research, as well as to increase skills in economics of policy-makers, business and academic communities through educational programmes. BEROC’s motto is «modern economic thinking for Belarus»