CASE Belarus implemented the study of relationship between development of capital and labour market of the country – two factor markets that make companies operate and grow, provide citizens with jobs and salaries. We argue that full employment in Belarus leads to underdevelopment of financial market in Belarus, thus creating barriers for companies in getting capital for further investments. The results of the study are presented in two new analytical research reports.
Project title: Capital and labour market in Belarus: equal status for long run growth
Project duration: March 2014 – February 2015
The research project for the first time in Belarus implemented the study of relationship between development of capital and labour market of the country – two factor markets that make companies operate and grow, provide citizens with jobs and salaries. We proved that full employment in Belarus leads to underdevelopment of financial market in Belarus, thus creating barriers for companies in getting capital for further investments. The study provided specific policy recommendations for financial sector development and labour market reforms in Belarus, including pension reform and institutional development of financial sector. Policy recommendations were presented and discussed with official representatives of Ministry of Economy, Ministry of Labour and Social Policy, and National Bank of Belarus.
The main objective of the project was to shed the light on deeper causal relationships and reasons for lack of synchronicity between the two factor markets in Belarus, namely, capital and labour, and to propose changes that allow more dynamic and sustainable economic development.
- The detailed database on financial development of Belarus at macro (country) level was prepared.
- The unique econometric model of interdependence between labour and capital markets in Belarus was developed and tested (using macro-data).
- On micro level (level of companies) the potential change in sales and productivity of private sector was calculated for the situation when financial constraints for Belarusian companies removed.
- The potential change benefit for Belarus economy in terms of GDP growth as a result of labour and capital market reform was estimated.
- Analytical research report about influence of financial constraints on return on capital/ investment for Belarusian companies (36 pages).
- Analytical research report about influence of labour market on financial market and GDP in Belarus (84 pages).
- Policy-paper on key proposals for Belarus government actions towards faster development of financial sector (up to 5 pages).
- Public presentation of the study results in Minsk for officials, media, and civil society groups on February 27, 2015 (31 participants).