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Private Sector Alignment with the European Green Deal in the Western Balkans

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  • Sahin, Sebnem

Abstract

The aim of this paper is to estimate how the role of the private sector in the Western Balkans aligns with the European Green Deal. For this purpose, we developed an economy-wide Computable General Equilibrium (CGE) model based on the net economic and environmental benefits obtained from climate finance projects in North Macedonia. We focus on two types of investments: those that target green/digital startups and innovative SMEs (MSME Fund), and others that support large enterprises and infrastructure PPP SPVs (Special Purpose Vehicle) in European Green Deal (EGD) sectors (GSIF). Our analysis focuses on the time frame 2023-2050; the rate of return of those two investments at the end of 5 cycles of investment is around 1.15 to 1.16 for the MSME and GSIF. Both Funds contribute towards decoupling in the approach to 2050. GDP increases by around 1.22 and 2.67 percentage points above the baseline in 2050 while CO2 emissions decrease by about 5.28 and 6.6 (under MSME and GSIF respectively). Overall effects on GDP components (consumption, exports, imports) are positive and higher for GSIF which is a larger fund than MSME. The model estimates a cross-economic increase by 0.69% (or 9,468 jobs) for the MSME Fund and a 1.36% increase (or 18,648 jobs) for the GSIF when above the baseline in 2050. This estimate includes a 0.38% increase in employment in the “sectors within the MSME portfolio”, hence an additional 867 jobs above the baseline in 2050. Regarding the “sectors within the GSIF portfolio”, the model estimates a 1.35% increase in employment, equivalent of 17,867 new jobs in 2050 compared to the baseline.

Suggested Citation

  • Sahin, Sebnem, 2022. "Private Sector Alignment with the European Green Deal in the Western Balkans," Conference papers 333471, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333471
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