Attractiveness of Western Balkan Countries for FDI

Matija Rejec and Slavica Penev ()
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Matija Rejec: University of Ljubljana, Faculty of Social Sciences
Slavica Penev: Institute of Economic Sciences
Authors registered in the RePEc Author Service: Matija Rojec

Chapter 2 in Serbia and the European Union: Economic Lessons from the New Member States, 2011, vol. 1, pp 27-46 from Institute of Economic Sciences

Abstract: Based on standard classification of competitive advantages of a country as investment location and complex international assessments of countries' competitiveness, the paper identifies competitive advantages and disadvantages of five Western Balkan countries (WB5), as FDI location. WB5 as a region lags behind EU27 and EU10 average in almost all relevant indicators of locational competitiveness. The identified competitive advantages of WB5 as a location for FDI are the following: stable macroeconomic environment, fast economic growth, geographical proximity to major EU markets, stable and relatively well developed financial system, relatively low cost and qualified labor, and EU Stabilization and Association Agreement with EU, CEFTA and other bilateral trade agreements. The most prominent weaknesses inhibiting more FDI inflows in WB5 are: small domestic market with low per capita income, relatively high country risk, slow progress in structural and institutional reforms, underdeveloped infrastructure, inefficient government bureaucracy and high administrative barriers. The papaer concludes that the main policy message arising from theoretical findings and empirical evidence suggest that the best way for WB5 to attract more FDI in the future is to strengthen the structural reforms and to speed up their EU approximation processes. Any specific FDI policies are only of a secondary importance.

Keywords: FDI; location criteria; WB5; EU10; attractiveness; EU approximation process (search for similar items in EconPapers)
Date: 2011
ISBN: 978-971-9344-03-9
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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