Methodological notes
Sector-level transition indicators
(See Table S.1)
The sector-level transition indicators reflect the judgement of the EBRD’s Office of the Chief Economist about progress in transition by sector and the size of the remaining transition “gap” or challenges ahead. The scores range from 1 to 4+ and are based on an assessment of the size of the challenges in two components: market structure and market-supporting institutions and policies. The scoring for the components is based on either publicly available data or observable characteristics of market structure and institutions. Based on the results of this scoring exercise, remaining transition gaps for market structure and institutions were classified as either “negligible”, “small”, “medium” or “large”. The final numerical score is based on these gap ratings as well as the underlying information. Table N.1.1.1 serves as a guide, defining the ranges for those cases where the two component assessments are the same, however exceptions can be made to this rule.
TABLE N.1.1.1
Transition cut-off points
| Cut-off points | |
|---|---|
| Transition gaps (MS/MI) | Potential scores |
|
Large/Large |
from 1 to 2+ |
|
Medium/Medium |
from 2+ to 3+ |
|
Small/Small |
from 3+ to 4 |
|
Negligible/Negligible |
4+ |
The following tables show, for each sector, the weighting attached to the two components (market structure and market-supporting institutions and policies), the criteria used in each case (and the associated weights), and the indicators and data sources that fed into the final assessments. For the corporate and financial sectors as well as the inclusion assessment, the exact sources are listed in the tables. The assessment of remaining transition challenges in the energy sectors is based on cross-country factual data and information on the energy sector (oil, gas, mining, electric power), including from external agencies (International Energy Agency, European Commission progress reports on accession countries, Business Monitor International sector reports, Energy Regulators Regional Association, and so on). The assessment for the natural resources sector has been done by subcomponent (oil and gas and mining), which were then aggregated with a weight reflecting the importance of subcomponents for a country’s economy. For infrastructure sectors, the assessment relied both on quantitative indicators (for example, cost recovery tariffs based on information from EBRD projects) and qualitative assessments of the less quantifiable measures, such as the relations between municipalities and their utilities. Sources encompassed in-house information from investment projects and cross-country data and assessments from several external agencies (including the World Bank, the European Commission and the OECD).
Corporates
TABLE N.1.2.1
TABLE N.1.2.2
TABLE N.1.2.3
TABLE N.1.2.4
TABLE N.1.3.2.1
TABLE N.1.3.2.2
TABLE N.1.3.3
TABLE N.1.4.2
TABLE N.1.4.3
TABLE N.1.4.4
TABLE N.1.5.2
TABLE N.1.5.3
TABLE N.1.5.4
TABLE N.1.5.5
TABLE N.1.6.2
TABLE N.1.6.3
Rating transition challenges in the agribusiness sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Liberalisation of prices and trade [15%] |
Wheat: producer price to world price ratio (FAO GIEWS and PriceSTAT, latest available) |
|
Simple average MFN applied tariff for agricultural products (WTO, 2013) |
||
|
NRA to agriculture, average 2009-11 (World Bank Distortions to Agricultural Incentives, 2013) |
||
|
WTO membership (WTO) |
||
|
Development of private and competitive agribusiness [40%] |
Wheat: yields per ha, average 2010-12 (FAO ProdSTAT, 2014) |
|
|
Wheat: average change in yields per ha in the period 2007-12 (FAO ProdSTAT, 2014) |
||
|
Mass grocery retail sales in per cent of total grocery retail (BMI, latest available data) |
||
|
Processing mark-up in agriculture (EBRD calculation based on UNIDO, 2013) |
||
|
Development of related infrastructure [25%] |
EBRD railways infrastructure (EBRD Transition Report, 2013) |
|
|
EBRD road infrastructure (EBRD Transition Report, 2013) |
||
|
Tractors per 100 ha arable land (World Bank World Development Indicators (WDI), 2014) |
||
|
Pump price for gasoline (World Bank WDI, 2014) |
||
|
Development of skills [20%] |
Ratio of a percentage of tertiary graduates in agriculture over a percentage of agricultural share in GDP (EBRD calculations based on UNESCO and CEIC, 2014) |
|
|
Value-added per worker in agriculture (World Bank WDI, 2014) |
||
|
Market-supporting institutions and policies [50%] |
Legal framework for land ownership, exchanges and pledges [40%] |
Tradeability of land (EBRD Transition Report, 2009, updated in 2014) |
|
Warehouse Receipt Programmes (FAO Investment Centre Working Paper, 2009) |
||
|
Building a warehouse: dealing with construction permits (World Bank Doing Business, 2014) |
||
|
Registering property (World Bank Doing Business, 2014) |
||
|
Enforcement of traceability of produce [40%] |
Quality control and hygiene standards [40%] Overall TC 34 (ISO, 2014) |
|
|
Hygiene standard implementation (EBRD assessment, latest available) |
||
|
Creation of functioning rural financing systems [20%] |
Ratio of percentage of lending to agriculture relative to percentage of agricultural share in GDP (EBRD calculations, latest available) |
Rating transition challenges in the general industry sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [60%] |
Market determined prices [20%] |
Subsidies in % of GDP (CEIC, latest available data) |
|
Energy intensity (World Bank WDI, 2013) |
||
|
Competitive business environment [40%] |
MFN applied tariff, simple average, non-agricultural products (WTO, 2014) |
|
|
Lerner index (EBRD calculation based on UNIDO, 2010) |
||
|
Large-scale privatisation (EBRD Transition Report, 2013) |
||
|
Productivity and efficiency [40%] |
Expenditures on R&D in % of GDP (UNESCO, 2014) |
|
|
R&D effectiveness (EBRD calculation based on WIPO and UNESCO, 2014) |
||
|
Value-added, manufacturing, per employee (UNIDO, 2010) |
||
|
Knowledge Index (World Bank, 2012) |
||
|
Market-supporting institutions and policies [40%] |
Facilitation of market entry and exit [40%] |
Starting a business (World Bank Doing Business, 2014) |
|
Resolving insolvency (World Bank Doing Business, 2014) |
||
|
Per cent of firms identifying business licensing and permits and as a major constraint (EBRD and World Bank, 2013) |
||
|
Enforcement of competition policy [30%] |
Competition policy indicator (EBRD Transition Report, 2013) |
|
|
Corporate governance and business standards [30%] |
Composite country law index (EBRD Legal Transition Team, 2014) |
|
|
ISO certification (EBRD calculation based on ISO and World Bank data, 2014) |
||
|
Protecting investors (World Bank Doing Business, 2013) |
||
|
Corruption Perceptions Index (Transparency International, 2013) |
Rating transition challenges in the real estate sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [40%] |
Sufficient supply of quality assets in all subsegments (warehouse/office/retail/hotels) [60%] |
Class A industry supply per capita (Colliers, DTZ, King Sturge, CB Richard Ellis, Jones Lang LaSalle) |
|
Modern office space per capita (Colliers, DTZ, King Sturge, CB Richard Ellis, Jones Lang LaSalle) |
||
|
Prime retail space per capita (Colliers, DTZ, King Sturge, CB Richard Ellis, Jones Lang LaSalle) |
||
|
Hotel room supply per capita (WEF Travel & Tourism Competitiveness Index, 2013) |
||
|
Market saturation and penetration of innovative construction technologies [40%] |
Market saturation index (EBRD, 2012) |
|
|
Index on penetration of innovative construction technologies (EBRD, 2012) |
||
|
Market-supporting institutions and policies [60%] |
Tradeability and accessibility of land [20%] |
Accessing industrial land: lease rights (World Bank, 2010) |
|
Accessing industrial land: ownership rights (World Bank, 2010) |
||
|
Access to land (BEEPS V, 2012) |
||
|
Development of an adequate legal framework for property development [30%] |
Quality of primary legislation in the property sector (EBRD, 2012) |
|
|
Quality of secondary legislation in the property sector (EBRD, 2012) |
||
|
Mortgage market legal efficiency indicators (EBRD, 2014) |
||
|
Presence and effectiveness of energy efficiency support mechanisms [10%] |
Sustainability of government support mechanisms (EBRD, 2012) |
|
|
Adequacy of property-related business environment [40%] |
Registering property (World Bank Doing Business, 2014) |
|
|
Dealing with construction permits (World Bank Doing Business, 2014) |
||
|
Property rights (WEF Travel & Tourism Competitiveness Index, 2013) |
||
|
Level of corruption for construction-related permits (BEEPS V, 2012) |
Rating transition challenges in the telecommunications sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Competition and private sector involvement: mobile telephony [40%] |
Expansion of services to rural areas, proxied by % of population covered by mobile signal (World Bank, 2014) |
|
Mobile penetration rate (International Telecommunication Union, 2014) |
||
|
Percentage of private ownership in the incumbent mobile operator (Global Insight, BuddeComm) |
||
|
Market share of the largest mobile operator (Business Monitor International, Global Insight, BuddeComm) |
||
|
Mobile number portability (Business Monitor International, Global Insight, BuddeComm) |
||
|
Level of competition for mobile telephone services (World Bank, 2014) |
||
|
Competition and private sector involvement: fixed telephony [20%] |
Fixed-line teledensity (International Telecommunication Union, 2014) |
|
|
Percentage of private ownership in fixed telephony incumbent (Business Monitor International, Global Insight) |
||
|
Market share of the largest fixed telephony provider (Global Insight, BuddeComm) |
||
|
Fixed number portability (Business Monitor International, Global Insight) |
||
|
Level of competition for international long-distance services (World Bank, 2014) |
||
|
Mobile and fixed-line subscribers per employee (World Bank, 2009) |
||
|
IT and high-tech markets [40%] |
Internet users penetration rate (International Telecommunication Union, 2014) |
|
|
Broadband subscribers penetration rate (International Telecommunication Union, 2014) |
||
|
International internet bandwidth (World Bank, 2014) |
||
|
Level of competition for internet services (World Bank, 2014) |
||
|
Piracy rates (Business Software Alliance, 2011) |
||
|
Market-supporting institutions and policies [50%] |
Regulatory framework assessment [70%] |
Market liberalisation (EBRD, 2012) |
|
Sector organisation and governance (EBRD, 2012) |
||
|
Market entry for wired networks and services (EBRD, 2012) |
||
|
Market entry for wireless networks and services (EBRD, 2012) |
||
|
Fees and taxation on electronic communication services (EBRD, 2012) |
||
|
Progress towards implementation of information society (EBRD, 2012) |
||
|
Preparedness of the country to develop a knowledge economy [25%] |
Knowledge Economy Index: Economic Incentives (World Bank, 2012) |
|
|
Knowledge Economy Index: Innovation (World Bank, 2012) |
||
|
Knowledge Economy Index: Education (World Bank, 2012) |
||
|
Freedom of media [5%] |
Freedom of press (Reporters Without Borders and Freedom House, 2014) |
Energy
TABLE N.1.3.1Rating transition challenges in the electric power sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [40%] |
Restructuring through institutional separation, unbundling and corporatisation [33%] |
Extent of corporatisation (setting up of joint-stock companies, improved operational and financial performance) |
|
Extent of legal unbundling of generation, transmission, distribution and supply/retail |
||
|
Extent of financial unbundling of generation, transmission, distribution and supply/retail |
||
|
Extent of operational unbundling of generation, transmission, distribution and supply/retail |
||
|
Private sector participation [33%] |
Degree of private sector participation in generation and/or distribution |
|
|
Competition and liberalisation [33%] |
Degree of liberalisation of the sector (third-party access to network on transparent and non-discriminatory grounds) |
|
|
Ability of end-consumers to freely choose their provider |
||
|
Degree of effective competition in generation and distribution |
||
|
Market-supporting institutions and policies [60%] |
Tariff reform [40%] |
Presence of cost-reflective domestic tariffs |
|
Existence of cross-subsidisation among consumers |
||
|
Degree of payment discipline as measured by collection rates and payment arrears |
||
|
Development of an adequate legal framework [20%] |
Energy law in place to support full-scale restructuring of the sector and setting up of a regulator |
|
|
Quality of taxation and licensing regime |
||
|
Existence and relative strength of the regulatory framework for renewables |
||
|
Establishment of an independent energy regulator [40%] |
Degree of financial and operational independence of the regulator |
|
|
Level of standards of accountability and transparency |
Natural resources subcomponent: oil and gas sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [40%] |
Restructuring through institutional separation and corporatisation [40%] |
Degree of unbundling of different business lines into separate legal entities (joint-stock companies) |
|
Existence of separate financial accounts for different lines of businesses |
||
|
Extent of unbundling of different business lines into separate legal entities |
||
|
Extent of measures adopted to improve operational and financial performance |
||
|
Private sector participation [20%] |
Degree of private sector participation in upstream and downstream/supply |
|
|
Competition and liberalisation [40%] |
Degree of liberalisation of the sector (third-party access to network) |
|
|
Ability of end-consumers to freely choose their provider |
||
|
Degree of effective competition in upstream/extraction, supply and retail |
||
|
Market-supporting institutions and policies [60%] |
Tariff reform and price liberalisation [40%] |
Presence of cost-reflective tariffs |
|
Existence of cross-subsidisation among consumers |
||
|
Degree of payment discipline as measured by collection rates and payment arrears |
||
|
Development of an adequate legal framework [40%] |
Energy law in place to support full-scale restructuring of the sector and setting up of a regulator |
|
|
Quality of taxation and licensing regime |
||
|
Extent of transparency and accountability on revenues from extractive industries (e.g. EITI/PWYP compliance) |
||
|
Regulatory structure [20%] |
Degree of financial and operational independence of the regulator |
|
|
Level of standards of accountability and transparency |
Natural resources subcomponent: mining sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Private sector participation [40%] |
Degree of private sector participation in direct mining and processing activities |
|
Diversification of supply chain |
||
|
Price liberalisation, market access and competition [20%] |
Extent of commodities price liberalisation |
|
|
Extent of free market access and free trade |
||
|
Degree of effective competition in the sector |
||
|
Development of related infrastructure [20%] |
Availability and quality of rail/road/port infrastructure |
|
|
Development of processing facilities |
||
|
Knowledge and technology [20%] |
Distance from the technology frontier |
|
|
Availability of skilled labour |
||
|
Extent of foreign participation (technology transfer) |
||
|
Level of EHS&S technology in use in the sector relative to Best Available Technologies |
||
|
Relative carbon intensity of the sector |
||
|
Market-supporting institutions and policies [50%] |
Institutional framework [40%] |
Independent mining regulation agency |
|
Independence of judicial bodies |
||
|
Clarity and stability of licensing and tax regimes including royalties |
||
|
Independent environmental/social regulatory agency |
||
|
Development of adequate legal and regulatory framework [40%] |
Mining law/code: adequacy/quality of legislation/regulation |
|
|
Adequacy/quality of licensing and tax regimes |
||
|
Adequacy of corporate governance and reporting requirements and implementation |
||
|
Status of disclosure/reporting transparency and of accountability on revenues (e.g. EITI/PWYP compliance) |
||
|
Corruption index |
||
|
EHS&S legislative and regulatory framework [20%] |
Extent and quality of specific EHS&S legislation for mining sector |
|
|
Adequacy of environmental legislation/regulations (including tailings/rock management, water management, emissions controls) and effectiveness of enforcement |
||
|
Adequacy of public information and public participation requirements and effectiveness of enforcement |
||
|
Adequacy of public health and safety standards and effectiveness of enforcement |
||
|
Voluntary market incentives: presence and adoption of international standards and market-based mechanisms for EHS&S, cyanide and so on |
Rating transition challenges in the sustainable energy sector: energy efficiency (EE), renewable energy (RE) and climate change (CC)
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [67%] |
Market determined prices [50%] |
Quality of energy pricing: end-user cost-reflective electricity tariffs |
|
Level of enforcement of pricing policies: collection rates and electricity bills |
||
|
Amount of wastage: transmission and distribution losses |
||
|
Quality of tariff support mechanisms for renewables (tradeable green certificate schemes/feed-in tariffs/no support) |
||
|
Presence of carbon taxes or emissions trading mechanisms |
||
|
Outcomes [50%] |
Level of energy intensity |
|
|
Level of carbon intensity |
||
|
Share of electricity generated from renewable sources |
||
|
Market-supporting institutions and policies [33%] |
Laws [25%] |
Index on laws on the books related to EE and RE (such as those that support renewable technologies, compel minimum standards in various areas of energy use, provide guidance for sectoral targets in terms of energy savings and provide incentives and penalties for achieving desirable targets) |
|
Stage of institutional development in implementing the Kyoto Protocol |
||
|
Agencies [25%] |
Existence of EE agencies or RE associations (autonomous/departments within government) |
|
|
Index on employment, budget and project implementation capacity of agencies |
||
|
Index on functions of agencies: adviser to government, policy drafting, policy implementation and funding for projects |
||
|
Policies [25%] |
Sustainable energy (SE) index: existence, comprehensiveness and specific targets of policies on SE |
|
|
Renewable energy index: existence of specific sectoral regulations for RE (renewables obligation, licensing for green generators, priority access to the grid) |
||
|
Climate change index: existence of policies (emissions targets and allocation plans) |
||
|
Projects [25%] |
Index on project implementation capacity in EE, RE and CC |
|
|
Number of projects in EE, RE and CC |
||
|
Expenditure data on projects in EE, RE and CC |
Infrastructure
TABLE N.1.4.1Rating transition challenges in the railways sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [60%] |
Restructuring through institutional separation and unbundling [33%] |
Extent of corporatisation of railways |
|
Extent of unbundling of different business lines (freight and passenger operations) |
||
|
Extent of divestment of ancillary activities |
||
|
Private sector participation [33%] |
Number of new private operators |
|
|
Extent of privatisation of freight operations and ancillary services |
||
|
Competition and liberalisation of network access [17%] |
Extent of liberalisation of network access according to non-discriminatory principles |
|
|
Number of awards of licences to the private sector to operate services |
||
|
Institutional development [17%] |
Extent of introducing good corporate conducts (for example, business plans, IFRS, MIS and so on) |
|
|
Extent of introducing good corporate governance standards |
||
|
Extent of introducing best practice energy and/or energy efficiency accounting and management |
||
|
Market-supporting institutions and policies [40%] |
Tariff reform [50%] |
Extent of freight tariff liberalisation |
|
Extent of introduction of public service obligations (PSOs) |
||
|
Extent of cost recovery tariffs |
||
|
Extent of elimination of cross-subsidies |
||
|
Development of an adequate legal framework [25%] |
Presence of railways strategy and railways act |
|
|
Development of the regulatory framework [25%] |
Establishment of a railway regulator to regulate the network access according to non-discriminatory principles |
|
|
Degree of independence of the regulator and level of accountability and transparency standards |
||
|
Level of technical capacity of the regulator to set retail tariffs and regulate access to the track |
Rating transition challenges in the roads sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [60%] |
Restructuring through institutional separation and unbundling [33%] |
Degree of independence of road management entities |
|
Extent of divestment of construction from road maintenance, engineering and design activities |
||
|
Private sector participation [33%] |
Extent of private sector companies in construction and maintenance (BOT-type concessions, management or service contracts, other types of PPPs) |
|
|
Degree of decentralisation of local roads responsibility |
||
|
Competition [17%] |
Index on rules for open tendering of construction and maintenance contracts |
|
|
Index on practices for open tendering of construction and maintenance contracts |
||
|
Degree of privatisation of road construction and maintenance units |
||
|
Institutional development [17%] |
Extent of introducing good corporate conducts (for example, business plans, IFRS, MIS and so on) |
|
|
Extent of introducing good corporate governance standards |
||
|
Extent of introducing best practice energy and/or energy efficiency accounting and management |
||
|
Market-supporting institutions and policies [40%] |
Tariff reform [50%] |
Level of road maintenance expenditures (that is, it should be sufficient to maintain the quality of state roads and motorways) |
|
Introduction of road user charges based on vehicles and fuel taxes |
||
|
Level of road user charges (that is, it should be sufficient to cover both operational and capital costs in full) |
||
|
Comprehensiveness index of road user charges (extent of accordance with road use, extent of incorporation of negative externalities and so on) |
||
|
Development of an adequate legal framework [25%] |
Existence and quality of road act and other road-related legislation |
|
|
Extent and quality of PPP legislation |
||
|
Development of the regulatory framework [25%] |
Extent to which the regulatory and policy-making functions are separate from the road administration functions |
|
|
Degree of regulatory capacity on road safety, environmental aspects, pricing and competition for road construction and maintenance, and so on |
Rating transition challenges in the urban transport sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Decentralisation and corporatisation [33%] |
Extent of decentralisation (that is, transfer of control from the national to the municipal or regional level) |
|
Degree of corporatisation of local utilities to ensure financial discipline and improve service levels, including in smaller municipalities |
||
|
Commercialisation [33%] |
Level of financial performance (no concern for financials/a few financially sound utilities in the country/solid financial performance is widespread) |
|
|
Level of commercial investment financing (only through grants/selective access to commercial finance/widespread access to commercial finance) |
||
|
Level of operational performance: progress in tackling cost control (labour restructuring, energy cost control, reduction of network losses), demand-side measures (metering and meter-based billing, e-ticketing), focus on quality of service |
||
|
Private sector participation and competition [33%] |
Extent of legal framework and institutional capacity for PPPs and competition |
|
|
Extent and form of private sector participation |
||
|
Market-supporting institutions and policies [50%] |
Tariff reform [50%] |
Degree of tariff levels and setting (cost recovery, tariff methodologies) |
|
Existence of cross-subsidisation among consumers |
||
|
Contractual, institutional and regulatory development [50%] |
Quality of the contractual relations between municipalities and utility operators |
|
|
Degree of regulatory authority capacity and risks of political interference in tariff setting |
Rating transition challenges in the water and wastewater sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Decentralisation and corporatisation [33%] |
Extent of decentralisation (that is, transfer of control from the national to the municipal or regional level) |
|
Degree of corporatisation of local utilities to ensure financial discipline and improve service levels, including in smaller municipalities |
||
|
Commercialisation [33%] |
Level of financial performance (no concern for financials/a few financially sound utilities in the country/solid financial performance is widespread) |
|
|
Level of commercial investment financing (only through grants/selective access to commercial finance/widespread access to commercial finance) |
||
|
Level of operational performance: progress in tackling cost control (labour restructuring, energy cost control, reduction of network losses), demand-side measures (metering and meter-based billing, e-ticketing), focus on quality of service |
||
|
Private sector participation and competition [33%] |
Extent of legal framework and institutional capacity for PPPs and competition |
|
|
Extent and form of private sector participation |
||
|
Market-supporting institutions and policies [50%] |
Tariff reform [50%]
|
Degree of tariff levels and setting (cost recovery, tariff methodologies) |
|
Existence of cross-subsidisation among consumers |
||
|
Contractual, institutional and regulatory development [50%] |
Quality of the contractual relations between municipalities and utility operators |
|
|
Degree of regulatory authority capacity and risks of political interference in tariff setting |
Financial institutions
TABLE N.1.5.1Rating transition challenges in the banking sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [35%] |
Degree of competition [43%] |
Asset share of five largest banks (EBRD Banking Survey, 2014; Raiffeisen Research and Bankscope, latest available) |
|
Net interest margin (EBRD Banking Survey, 2014; Bankscope and official statistical sources, latest available) |
||
|
Overhead cost to assets (EBRD Banking Survey, 2014; Bankscope and official statistical sources, latest available) |
||
|
Ownership [29%] |
Asset share of private banks (EBRD Banking Survey, 2014; Raiffeisen Research, Bankscope and official statistical sources, latest available) |
|
|
Asset share of foreign banks (subjective discount relative to home/host coordination) (EBRD Banking Survey, 2014; EBRD assessment, latest available) |
||
|
Market penetration [14%] |
Assets/GDP (EBRD Banking Survey, 2014; Raiffeisen Research, Bankscope and official statistical sources, latest available) |
|
|
Resource mobilisation [14%] |
Domestic credit to private sector/total banking system’s assets ( EBRD Banking Survey, 2014; national statistical sources, latest available) |
|
|
Market-supporting institutions and policies [65%] |
Development of adequate legal and regulatory framework [40%] |
Existence of entry and exit restrictions (EBRD assessment, latest estimates) |
|
Adequate liquidity requirements (EBRD assessment, latest estimates) |
||
|
Other macroprudential measures (EBRD assessment, latest estimates) |
||
|
Supervisory coordination (home/host country) (EBRD assessment, latest estimates) |
||
|
Dynamic counter-cyclical provisioning (EBRD assessment, latest estimates) |
||
|
Deposit insurance scheme with elements of private funding (EBRD assessment based on official sources, latest estimates) |
||
|
Enforcement of regulatory measures [50%] |
Compliance with Basel Core principles (EBRD assessment, latest estimates) |
|
|
Unhedged foreign exchange lending to the private sector/total lending to the private sector (EBRD Banking Survey, 2014; national statistical sources, latest available) |
||
|
Banking strength: total regulatory capital to risk-weighted assets (IMF and national statistical sources, latest available) |
||
|
Sophistication of banking activities and instruments (EBRD assessment, latest estimates) |
||
|
Private sector deposits to GDP (EBRD Banking Survey, 2014; IMF and national statistical sources, latest available) |
||
|
Non-performing loans (EBRD Banking Survey, 2014; IMF and national statistical sources, latest available) |
||
|
Corporate governance and business standards [10%] |
Proportion of banks which have good corporate governance practices (EBRD assessment, latest estimates) |
Rating transition challenges in the insurance and other financial services sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [45%] |
Market penetration [60%] |
Insurance premia (% of GDP) (UBS, World Bank, EBRD, AXCO and national insurance associations, latest available) |
|
Life insurance premia (% of GDP) (UBS, World Bank, EBRD, AXCO and national insurance associations, latest available) |
||
|
Non-life insurance premia (% of GDP) (UBS, World Bank, EBRD, AXCO and national insurance associations, latest available) |
||
|
Leasing portfolio (% of GDP) (Leaseurope and national statistical sources, latest available) |
||
|
Availability of insurance products (AXCO and EBRD assessments, latest estimates) |
||
|
Mortgage debt/GDP (EBRD Banking Survey, 2014) |
||
|
Type of pension system (Pillar I, II, III) (AXCO) |
||
|
Pension fund assets/GDP (AXCO, Renaissance Capital and other official sources, latest available) |
||
|
Competition [10%] |
Market share of top three insurance companies (AXCO and EBRD, latest available) |
|
|
Private sector involvement [10%] |
Share of private insurance funds in total insurance premia (UBS, EBRD and national authorities, latest available) |
|
|
Development of skills [20%] |
Skills in the insurance industry (UBS and EBRD assessments, latest estimates) |
|
|
Market-supporting institutions and policies [55%] |
Development of adequate legal and regulatory framework [88%] |
Existence of private pension funds (ISSA) |
|
Pillar II legislation OECD, World Bank, EBRD and national official sources, latest available) |
||
|
Quality of insurance supervision assessment (UBS and EBRD, latest estimates) |
||
|
Legislation leasing (IFC, EBRD and national authorities, latest available) |
||
|
Business standards [12%] |
IAIS member (IAIS) |
|
|
Internationally accredited actuarial body (official sources) |
Rating transition challenges in the capital markets sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [60%] |
Market penetration [50%] |
Stock market capitalisation/GDP (World Bank, FESE, FEAS and national stock exchanges, 2013) |
|
Number of listed companies (World Bank, FESE, FEAS and official statistical sources, 2013) |
||
|
Securities (bonds and stocks) traded as % of GDP (World Bank, FEAS, ASEA and official statistical sources, 2013) |
||
|
Market infrastructure and liquidity [50%] |
Money Market Index (EBRD assessment, 2014) |
|
|
Government Bond Index (EBRD assessment, 2014) |
||
|
Corporate Bond Index (EBRD assessment, 2014) |
||
|
Turnover ratio (World Bank, FEAS and FESE, 2014) |
||
|
Market-supporting institutions and policies [40%] |
Development of adequate legal and regulatory framework [100%] |
Quality of securities market legislation (EBRD Legal Transition Survey, 2007; EBRD assessment, 2014) |
|
Effectiveness of securities market legislation (EBRD Legal Transition Survey, 2007; EBRD assessment, 2014) |
Rating transition challenges in the private equity (PE) sector
| Components | Criteria | Indicators |
|---|---|---|
|
Market structure [50%] |
Competition [35%] |
Effective number of fund managers per thousand companies (Preqin, EMPEA and company websites, latest available) |
|
Market penetration [65%] |
Scope of fund type/strategy (EMPEA, Preqin, Zawya, S&P Capital IQ, Thomson Reuters, Mergermarket, EVCA and EBRD estimates, latest available) |
|
|
Active PE capital as % of GDP (EMPEA, Preqin, Zawya, S&P Capital IQ, Thomson Reuters, World Bank, Mergermarket, EVCA, EBRD estimates, latest available) |
||
|
PE capital available for investment as % of GDP (EMPEA, Preqin, Zawya, S&P Capital IQ, Thomson Reuters, World Bank, Mergermarket, EVCA and EBRD estimates, latest available) |
||
|
Market-supporting institutions and policies [50%] |
Development of adequate legal and regulatory framework [70%] |
Barriers to institutional investor participation (EBRD, latest estimates) |
|
Quality of securities market legislation (EBRD Legal Transition Survey, 2007) |
||
|
Effectiveness of securities market legislation (EBRD Legal Transition Survey, 2007) |
||
|
Corporate governance [30%] |
Effective framework (EBRD Corporate Governance Legislation Assessment, 2007) |
|
|
Rights and roles of shareholders (EBRD Corporate Governance Legislation Assessment, 2007) |
||
|
Equitable treatment of shareholders (EBRD Corporate Governance Legislation Assessment, 2007) |
||
|
Responsibilities of board (EBRD Corporate Governance Legislation Assessment, 2007) |
||
|
Disclosure and transparency (EBRD Corporate Governance Legislation Assessment, 2007) |
Rating transition challenges in the MSME finance sector
| Components | Criteria | Indicators | |
|---|---|---|---|
| Market structure [50%] | Non-banking financing [10%] | Leasing (respective ATC score) | |
| Private equity (respective ATC score) | |||
| Capital markets (respective ATC score) | |||
| Banking financing [90%] | Competition | Competition in banking (respective ATC score) | |
| Interest margin between bank lending to SMEs and large corporates (short-term and long-term) (EBRD assessment, 2014) | |||
| Access to finance | Share of SME lending to total lending weighted by distance of domestic credit to GDP to that in EU area (EBRD assessment, 2014) | ||
| Outreach of commercial banks (branches per 100,000 adults) (IMF, 2012) | |||
| Skills | Existence of specialised SME department in banks (EBRD assessment, 2014) | ||
| Extent of use of SME lending methodologies (EBRD assessment, 2014) | |||
| Presence of trained loan officers in SME lending (EBRD assessment, 2014) | |||
| Market-supporting institutions and policies [50%] | Development of adequate legal framework [100%] | Ability to offer and take security over immovable property (cadastre) (EBRD assessment, 2014) | |
| Credit information services (EBRD assessment, 2014) | |||
| Registration system for movable assets: ability to offer and take non-possessory security over movable property (EBRD assessment, 2014) | |||
| Collateral and provisioning regulatory requirements (EBRD assessment, 2014) | |||
| Enforcing secured creditor rights (EBRD assessment, 2014) | |||
Inclusion
TABLE N.1.6.1Inclusion gaps for gender
| Components | Indicators | Sources |
|---|---|---|
|
Legal and social regulations
|
Addressing violence against women |
The Economist Intelligence Unit – Women’s Economic Opportunity (EIU-WEO), 2012
|
|
Property ownership rights |
||
|
Inheritance laws in favour of male heirs |
OECD Social Institutions and Gender Index, 2009 |
|
|
Access to health services
|
Sex at birth: f/m ratio |
World Bank WDI, 2013
|
|
Maternal mortality ratio (maternal deaths per 100,000 live births) |
||
|
Contraceptive prevalence (percentage of women aged 15-49) |
||
|
Education and training
|
Literacy rate: f/m ratio |
UN Social Indicators, latest available |
|
Primary school completion rate: f/m ratio |
World Bank Education Statistics, latest available
|
|
|
Gender parity index (GPI) for net enrolment rate in secondary education |
||
|
Percentage of female graduates in tertiary education |
||
|
GPI for gross enrolment in tertiary education |
||
|
Labour policy
|
Equal pay policy |
EIU-WEO, 2012
|
|
Non-discrimination policy |
||
|
Policy on maternity and paternity leave and its provision |
||
|
Policy on legal restrictions on job types for women |
||
|
Differential retirement age policy |
||
|
CEDAW ratification |
||
|
Assessment of labour practices
|
Equal pay practice |
EIU-WEO, 2012
|
|
Non-discrimination practice |
||
|
Access to child care |
||
|
Female top manager |
BEEPS V, 2012 |
|
|
Gender pay gap |
UNECE, latest available |
|
|
Employment and firm ownership
|
Female ownership (equal or more than 50 per cent) |
BEEPS V, 2012 |
|
Share of women in non-agricultural employment |
World Bank WDI, latest available |
|
|
Labour force participation rate: f/m ratio (age 15+) |
World Bank Gender Indicators, latest available
|
|
|
Unemployment with tertiary education: f/m ratio |
||
|
Unemployment rate: f/m ratio |
||
|
Access to finance
|
Account at a formal financial institution: f/m ratio (age 15+) |
Global Financial Inclusion (Global Findex) Database, 2011 (updated 2014 version)
|
|
Account used for business purposes: f/m ratio (age 15+) |
||
|
Credit card: f/m ratio (age 15+) |
||
|
Debit card: f/m ratio (age 15+) |
||
|
Mobile phone used to receive money: f/m ratio (age 15+) |
||
|
Mobile phone used to send money: f/m ratio (age 15+) |
||
|
Saved at a financial institution in the past year: f/m ratio (age 15+) |
||
|
Loans rejected for firms with female versus male top management |
BEEPS V, 2012
|
|
|
Women’s access to finance/seen as an obstacle or not/for firms with female versus male top management |
||
|
Women’s access to finance programmes |
EIU-WEO, 2012 |
Inclusion gaps for youth
| Components | Indicators | Sources |
|---|---|---|
|
Labour market structure |
Hiring and firing flexibility |
Global Competitiveness Index, WEF, 2013-14
|
|
Redundancy costs |
||
|
Wage-setting flexibility |
||
|
Opportunities for youth |
Difference in unemployment rate from youth (age 15-24) to adult (age 25-65) |
World Bank and ILO, 2013 or latest available |
|
Difference between youth not in education, employment or training (NEET) |
Eurostat, 2013; Silatech, 2009 |
|
|
Quantity of education |
Average years of education for people aged 25-29 |
Barro-Lee, 2010 (updated 2014 version); Human Development Index, 2012
|
|
Percentage of youth (age 15-24) with no schooling |
||
|
Quality of education
|
Test performance relative to highest possible score |
PISA, 2012; supplemented by TIMSS, 2011
|
|
Schools’ accountability (achievement data tracked over time) |
||
|
Teacher/instruction material shortage |
||
|
Employers’ perception of the quality of the education system |
WEF, 2013-14 |
|
|
Households’ perception of the quality of the education system |
LITS, 2010 |
|
|
Universities in top 500 (cumulatively) |
ARWU, 2003-14 |
|
|
Financial inclusion |
Difference between youth (age 15-24) with bank account compared with adults (age 25+) |
Global Findex Database, 2011 (updated 2014 version)
|
|
Difference between youth (age 15-24) with debit card compared with adults (age 25+) |
||
|
Difference between youth (age 15-24) with bank account used for business purposes compared with adults (age 25+) |
Inclusion gaps for regions
| Components | Indicators | Sources |
|---|---|---|
|
Institutions
|
Corruption in administrative, health and education systems |
LITS, 2010
|
|
Quality of administrative, health and education systems |
||
|
Trust in local government |
||
|
Satisfaction with the local government |
||
|
Access to services
|
Access to water |
LITS, 2010
|
|
Access to heating |
||
|
Perception of the quality of the health care system |
||
|
Labour markets |
Unemployment |
LITS, 2010
|
|
Formal or informal job? |
||
|
Education
|
Years of education |
Gennaioli et al. data set, Quarterly Journal of Economics, 2013 |
|
Households’ perception of the quality of the education system |
LITS, 2010 |
Country-level transition indicators
(See Table S.7)
The country-level transition indicators discussed above reflect the judgement of the EBRD’s Office of the Chief Economist about country-specific progress in transition.
The scores range from 1 to 4+ and are based on a classification system that was originally developed in the 1994 Transition Report, but has been refined and amended in subsequent reports.
Large-scale privatisation
1 Little private ownership.
2 Comprehensive scheme almost ready for implementation; some sales completed.
3 More than 25 per cent of large-scale enterprise assets in private hands or in the process of being privatised (with the process having reached a stage at which the state has effectively ceded its ownership rights), but possibly with major unresolved issues regarding corporate governance.
4 More than 50 per cent of state-owned enterprise and farm assets in private ownership and significant progress with corporate governance of these enterprises.
4+ Standards and performance typical of advanced industrial economies: more than 75 per cent of enterprise assets in private ownership with effective corporate governance.
Small-scale privatisation
1 Little progress.
2 Substantial share privatised.
3 Comprehensive programme almost completed.
4 Complete privatisation of small companies with tradeable ownership rights.
4+ Standards and performance typical of advanced industrial economies: no state ownership of small enterprises; effective tradeability of land.
Governance and enterprise restructuring
1 Soft budget constraints (lax credit and subsidy policies weakening financial discipline at the enterprise level); few other reforms to promote corporate governance.
2 Moderately tight credit and subsidy policy, but weak enforcement of bankruptcy legislation and little action taken to strengthen competition and corporate governance.
3 Significant and sustained actions to harden budget constraints and to promote corporate governance effectively (for example, privatisation combined with tight credit and subsidy policies and/or enforcement of bankruptcy legislation).
4 Substantial improvement in corporate governance and significant new investment at the enterprise level, including minority holdings by financial investors.
4+ Standards and performance typical of advanced industrial economies: effective corporate control exercised through domestic financial institutions and markets, fostering market-driven restructuring.
Price liberalisation
1 Most prices formally controlled by the government.
2 Some lifting of price administration; state procurement at non-market prices for the majority of product categories.
3 Significant progress on price liberalisation, but state procurement at non-market prices remains substantial.
4 Comprehensive price liberalisation; state procurement at non-market prices largely phased out; only a small number of administered prices remain.
4+ Standards and performance typical of advanced industrial economies: complete price liberalisation with no price control outside housing, transport and natural monopolies.
Trade and foreign exchange system
1 Widespread import and/or export controls or very limited legitimate access to foreign exchange.
2 Some liberalisation of import and/or export controls; almost full current account convertibility in principle, but with a foreign exchange regime that is not fully transparent (possibly with multiple exchange rates).
3 Removal of almost all quantitative and administrative import and export restrictions; almost full current account convertibility.
4 Removal of all quantitative and administrative import and export restrictions (apart from agriculture) and all significant export tariffs; insignificant direct involvement in exports and imports by ministries and state-owned trading companies; no major non-uniformity of customs duties for non-agricultural goods and services; full and current account convertibility.
4+ Standards and performance norms of advanced industrial economies: removal of most tariff barriers; membership in WTO.
Competition policy
1 No competition legislation and institutions.
2 Competition policy legislation and institutions set up; some reduction of entry restrictions or enforcement action on dominant firms.
3 Some enforcement actions to reduce abuse of market power and to promote a competitive environment, including break-ups of dominant conglomerates; substantial reduction of entry restrictions.
4 Significant enforcement actions to reduce abuse of market power and to promote a competitive environment.
4+ Standards and performance typical of advanced industrial economies: effective enforcement of competition policy; unrestricted entry to most markets.