The Western Balkan economies have been implementing reforms to improve their competitiveness since the early 2000s. These reforms contributed to economic growth by removing barriers to trade and investment and facilitating the region’s integration into global markets. This led to a doubling of the size of their economies and a six-fold increase of their export volumes.Although the region has considerably reinforced its integration into global value chains, remaining non-tariff trade barriers and regulatory restrictions continue to hamper full access to foreign markets. Many industries in the Western Balkans remain fragile, their technology largely outdated and their products not sufficiently competitive outside the region. Their improved macroeconomic performance has only partially accelerated the structural transformation of domestic producers and their integration into global value chains. Limited business opportunities are a cause of high unemployment, pressing young and talented people to search for better opportunities abroad. At the same time, the Western Balkans face an issue common to all middle-income economies – pressure from countries with lower production costs. Therefore, a shift towards higher technological standards is needed to compete in international markets.The prospects of accession to the European Union (EU) and the alignment with the EU acquis represent excellent opportunities for the Western Balkans to fully embed their economies in European value chains, benefitting from increased investment flows and an upgrade of their manufacturing infrastructure. Against this backdrop, the Berlin Process represents a unique occasion for EU Member States to support the Western Balkans in their ongoing reform efforts, and for the Western Balkan economies to intensify mutual co operation and gain recognition for their endeavours. The OECD is launching this new study on trade and investment in the Western Balkan economies on the occasion of the 2019 Poznań Summit of the Berlin Process, with the support of the Ministry of Foreign Affairs of Poland, to help the region target the most strategic sectors for inclusive and sustainable growth. This publication was prepared within the OECD South East Europe regional programme, which supports governments in the region to foster sustainable growth, investment and employment through reforms promoting competitiveness and private sector development. This report represents a tangible contribution to the region’s ongoing process of economic reform, which aims to foster inclusive and sustainable growth for the benefit of all the citizens of the Western Balkans.
Unleashing the Transformation Potential for Growth in the Western Balkans
