Trade and economic relations between the EU and the Western Balkans

01-09-2008

This paper presents an overview of the current state (mid‐2008) of the economic relations between the EU and the Western Balkan countries. The text starts with a description of bilateral relationships, followed by recent data on trade and investment. Then follows a brief description of intra‐Balkan integration. After that, each Western Balkan countryʹs integration into the global economy is discussed. The last section concludes. The paper argues that integration has proved to be a successful tool in support of the economic development and also, to some extent, in stabilising a politically sensitive region. Therefore, for the EU, it is worth pushing for the next steps in bilateral and regional integration as strongly as possible and thus enhancing stability and sustainable growth. The EU is in an ideal position to press on reforming Western Balkan institutions and condition its assistance in fighting corruption. Within the trade‐related measures, the focus should be on the effective reduction of non‐tariff barriers to trade, as this may strongly accelerate catch‐up processes in the region. Given the economic recovery so far and the earlier experience of the current new member countries, it can be foreseen that the returns to unskilled labour in the region will gradually decrease over time. Therefore, it is desirable to support actions which may increase the skills of the whole working‐age population in the Western Balkans and help to lessen current and future social pressures. Although EU–Western Balkan relations have been dominated by the concern of enhancing security in the region, the paper does not address this issue, at least not directly.

This paper presents an overview of the current state (mid‐2008) of the economic relations between the EU and the Western Balkan countries. The text starts with a description of bilateral relationships, followed by recent data on trade and investment. Then follows a brief description of intra‐Balkan integration. After that, each Western Balkan countryʹs integration into the global economy is discussed. The last section concludes. The paper argues that integration has proved to be a successful tool in support of the economic development and also, to some extent, in stabilising a politically sensitive region. Therefore, for the EU, it is worth pushing for the next steps in bilateral and regional integration as strongly as possible and thus enhancing stability and sustainable growth. The EU is in an ideal position to press on reforming Western Balkan institutions and condition its assistance in fighting corruption. Within the trade‐related measures, the focus should be on the effective reduction of non‐tariff barriers to trade, as this may strongly accelerate catch‐up processes in the region. Given the economic recovery so far and the earlier experience of the current new member countries, it can be foreseen that the returns to unskilled labour in the region will gradually decrease over time. Therefore, it is desirable to support actions which may increase the skills of the whole working‐age population in the Western Balkans and help to lessen current and future social pressures. Although EU–Western Balkan relations have been dominated by the concern of enhancing security in the region, the paper does not address this issue, at least not directly.

Externý autor

Malgorzata Jakubiak and Nermin Oruc (Centre for Social and Economic Research Warsaw, Poland - CASE)