engleski

Estimation of comparative position of Central and South-east European transition countries

The decision making process in economic, political and social context needs evaluation of a large set of diversified factors. Policy makers, managers of international lending institutions, multinational firms and investors have access to substantial amounts of information from specialized sources. The problem is how to use such vast and diverse information in a systematic way in the management decision process. The best choice for such multidimensional analysis is using of multicriteria methods. Nowadays, there is evident globalization of economic and industrial activities. Production is spreading throughout the world in pursuit of economic and labor advantages. These advantages offer greater flexibility in maintaining quality, lowering costs and improving competitiveness. In addition, the type of government running a country and its political outlook affect the internal administration and the international image of that country which could encourage or deter companies from seeking business there. It must be considered the international situation as a macroenvironment in which economic, financial and political factors create new conditions. These conditions, directly and indirectly, could represent threats or opportunities to business. This problem is of the special interest in the group of transition countries. This study employs the PROMETHEE method, as one of the most popular and widely used multicriteria decision methods, in estimation of comparative position of 15 Central, Baltic and South-East European transition countries. Comparative analysis of results is done for 2000, 2004 and 2005. An initial pre-processing of the available data led to the selection of 13 country risk indicators: electoral process, civil society, independent media, governance, judicial framework & independence, corruption, life expectancy of birth, GDP (US$) billions, exports of goods and services/GDP, current account balance/GDP, annual GDP growth, inflation (CP), FDI-net flow (US$) billions. These indicators are selected according to: (1) their relevance to country analysis on the basis of the existing literature of the subject and (2) the availability of the data. In the paper a statistical analysis (ANOVA) is presented for the selected indicators, with regard to their statistical significance in differentiation of two groups of countries, Central and Baltic versus South-East European transition countries, for every year in analysis. On the basis of ANOVA results it was decided to proceed with two different groupings of criteria. In one case all of socio-political criteria are included. In another case, all of them are included as democracy score indicator which is an average of ratings for all 6 socio-political indicators. For each criterion, one of the six offered preference function types and its thresholds has been chosen, and in this way the problem was completely prepared for implementation of the PROMETHEE. Its advantages are seen in the possibilities to define indifference and preference thresholds which have the real economic importance. The PROMETHEE method is used for final ranking of 15 transition countries.

transition economies; country's comparative position; political factors; economic-financial factors; promethee

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