Abstract
Considering the regional trade pattern and business potential in the Western Balkans, we argue that despite the significant political, institutional and socio-economic advances of the individual countries during the last 20 years, regional integration and endogenous business development are still lagging. This is much the outcome of persistent state rigidities and trade distortions. On the one hand, regional integration has been adopted as the policy for enhancing the region’s competitiveness in the context of EU accession and globalization. But this has been only manifested in Regional Trade Agreements with the EU. On the other hand, trade relations among the region’s countries are weak. Many governments have maintained intra-regional trade barriers to secure customs revenues, while they have directed trade to EU markets. However, results have been poor: FDI and exports have risen only in textiles, metals and mining where competitiveness is based on cheap labor or natural resources; and very few local companies have been able to compete in EU markets as most are too weak financially to upgrade production to EU high value-added standards. Nevertheless, data supports that intra-regional trade is important for the countries and sectors in question. Trade with neighboring countries can be a realistic way to improve the potential of local businesses – struggling with obsolete equipment, high debts and low productivity. Restoring old trading relationships interrupted by war could considerably increase cross-border trade, and assure regional business viability. The barriers posed by the individual countries in the region to doing business especially across borders, indicate that regional integration in Western Balkans is very weak from the economic point of view. We argue however, that regional integration from a socio-cultural point of view – built on people’s common historical background, shared goals and concerns for good neighborly relations – constitutes a solid base for cross-border business cooperation. We outline here an analytical approach, capturing the complexity of the war-torn Western Balkan area and its socio-cultural and political specificities, overlooked by mainstream economics. We argue that Western Balkan countries can accelerate their economic development by exploiting their potential for cross-border trading and entrepreneurship. This may offer a politically and economically realistic strategy for regional integration in the area. Economic development and regional cooperation could directly benefit stability and security as well. Cross-border business clusters, embedded in common socio-economic contexts, could act as development leverage. Existing obstacles need to be addressed and overcome; and this is more a question of political willingness than of corporate strategy.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Similar content being viewed by others
References
Balasubramanyam VN, Sapsford D, Griffiths D (2002) Regional integration agreements and foreign direct investment. Manch Sch 70:3
Bank of Albania (2011) Annual Report 2011
Barrett L (2002) Business in the Balkans: the case for cross-border co-operation. Centre for European Reform. www.cer.org.uk. ISBN 1 901 229 32 7
Bartlett W (2009) Regional integration and free-trade agreements in the Balkans: opportunities, obstacles and policy issues. Econ Change Restruct 42:25–46
Bartlett W, Bukvič V (2002) What are the main barriers to SME growth and development in South East Europe? In: Bartlett W, Bateman M, Vehovec M (eds) Small enterprise development in South East Europe. Policies for sustainable growth. Kluwer, Dordrecht
Bayoumi T, Eichengreen B (1997) Is regionalism simply a diversion? Evidence from the evolution of the EC and EFTA. In: Taketoshi I, Krueger AO (eds) Regionalism versus multilateral trade arrangements, vol 6, NBER-East Asia seminar on economics. University of Chicago Press, Chicago
Ben-David D (1998) Convergence clubs and subsistence economies. J Dev Econ 55:155–157
Bergstrand J, Egger P (2007) A knowledge- and physical-capital model of international trade flows, foreign direct investment and multinational enterprises. J Int Econ 73:278–308
Carmignani F (2007) A note on income converge effects in regional integration agreements. Econ Lett 94:361–366
Delevic M. (2007) Regional cooperation in the Western Balkans. European Union Institute for Security Studies: Chaillot paper no 104
Frankel J, Stein E, Wei S (1997) Regional trading blocs in the world economic system. Institute for International Economics, Washington, DC
Grupe C, Kušić S (2005) Intra-regional cooperation in the Western Balkans: under which conditions does it foster economic progress? Centre for the Study of Global Governance, London School of Economics and Political Science, discussion paper 37
Jackson M, Petrakos G (2000) Regional differences in the impact of EU integration on the industrial structure and competitiveness of CEFTA countries. Acta Oeconomica Pragensia 97–144
Johnston RJ (1976) The world trade system. St. Martin’s Press, New York
Kaminski B, de la Rocha M (2003) Stabilization and association process in the Balkans. World Bank Policy Research working paper 3108
Karras G (1997) Is government investment underprovided in Europe? Evidence from a panel of fifteen countries. Economia Internazionale/Int Econ, Camera di Commercio di Genova 50(2):223–235
Kathuria S (ed) (2008) Western Balkan integration and the EU: an agenda for trade and growth. The World Bank, Washington, DC
Keating M, Loughlin J, Deschouwer K (2003) Culture, institutions, and economic development: a study of eight European regions. Edward Elgar, Cheltenham
Kosovo Agency of Statistics (2011) External Trade Statistics, Pristina
Petrakos G, Totev S (eds) (2001) The development of the Balkan region. Ashgate, Aldershot
Petričušić A (2005) Regional cooperation in the Western Balkans – a key to integration in the European union. Croat Yearb Eur Law Policy 1(1):213–223
Schiff M, Winters A (2003) Regional integration and development. World Bank and Oxford University Press, New York
Sklias P (2011) The political economy of regional integration in Western Balkans. Int J Econ Sci Appl Res 4(3):21–37
Sklias P, Tsampra M (2013) Assessing regional integration and business potential in the Western Balkans. Int J Econ Bus Res 6(1):28–51
Smallbone D, Xheneti M (2008) Policy issues related to entrepreneurship development and cross border cooperation in case study regions. Challenges and prospects of cross border cooperation in the context of EU enlargement. Deliverable 12, FP 6, Priority 7 – Citizens and Governance in a Knowledge Based Society
Soloaga I, Winters A (2001) Regionalism in the nineties: what effect on trade? Policy Research working paper 2156, World Bank, Washington, DC
Statistical Office of Montenegro (2011) External trade of Montenegro, External Trade Statistics Section, Podgorica
Statistical Office of the Republic of Serbia (2011) External trade of Serbia: exports and imports by selected countries, Belgrade
Uvalic M (2005) Trade liberalisation in Southeast Europe – recent trends and some policy implications. UNECE spring seminar 2005 – financing for development in the ECE region: promoting growth in low-income transition economies, Geneva
Venables A (2003) Winners and losers from regional integration agreements. Econ J 113:747–761
Venesaar U, Pihlak M (2008) Consequences of EU enlargement for economic development in border regions. Challenges and prospects of cross border cooperation in the context of EU enlargement. Deliverable 12, FP 6, Priority 7 – Citizens and Governance in a Knowledge Based Society
Von Hagen J, Traistaru I (2003) The South East Europe review 2002–2003. World working papers 21
Welter F, Smallbone D (2011) Institutional perspectives on entrepreneurial behavior in challenging environments. J Small Bus Manage 49(1):107–125
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Sklias, P., Tsampra, M. (2014). Regional Integration in Western Balkans: A Case for Cross-Border Business Cooperation?. In: Karasavvoglou, A., Polychronidou, P. (eds) Economic Crisis in Europe and the Balkans. Contributions to Economics. Springer, Heidelberg. https://doi.org/10.1007/978-3-319-00494-5_10
Download citation
DOI: https://doi.org/10.1007/978-3-319-00494-5_10
Published:
Publisher Name: Springer, Heidelberg
Print ISBN: 978-3-319-00493-8
Online ISBN: 978-3-319-00494-5
eBook Packages: Business and EconomicsEconomics and Finance (R0)