Ekonomske promene u regionu Zapadnog Balkana i Srbiji
Economic Changes in the Region of the Western Balkans and Serbia

Author(s): Milica Uvalić
Subject(s): Economy, National Economy, Supranational / Global Economy, Public Finances, Socio-Economic Research
Published by: Институт друштвених наука
Keywords: Transition; liberalisation; privatization; economic development; neoliberal model; welfare state
Summary/Abstract: This chapter describes the most important economic changes that have taken place in the Western Balkan region and Serbia during the past decades. We will first point to the main similarities between the Western Balkan countries, concerning the starting conditions for implementing the transition, phases of economic development and the model of transition to a market economy. Despite a number of differences, all Western Balkan countries have implemented, sooner or later, the neoliberal model of transition in line with the so-called „Washington consensus“, based on the belief that minimal government intervention in enterprise policies was the safest way to secure a functional market economy. Such a transition strategy has brought good results in some areas, but has also caused many socio-economic problems that have been proven difficult to eliminate. This is illustrated in the second half of the chapter that provides an overview of the most important economic changes during the past decade, through a comparative analysis of the most important economic indicators. The global financial and economic crisis that hit the region with force in late 2008 demonstrated the high vulnerability of the Western Balkans to external shocks. The global crisis brought to the surface key structural problems of the Western Balkan economies, including limited competitiveness on external markets, insufficient creation of new jobs, and strong process of deindustrialisation along with limited restructuring of the real sector of their economies. An important role was attributed to foreign investors, who were expected to bring fresh capital, introduce modern technologies and managerial skills, in this way contributing to fast restructuring of a large part of these economies. Such expectations were fulfilled only in part, both in Serbia and in the other Western Balkan countries. One of the main consequences of such a transition strategy has been slow economic development, with limited convergence of the Western Balkan countries income with the average income of the European Union. Regarding future policies, it would be important to implement a more active industrial policy, devote more attention to the development of human capital and improve the functioning of government and non-government institutions.

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