In order to boost the attractiveness of the region to investors, we need infrastructure improvements and the removal of hurdles at border crossings and non-tariff barriers that consume both time and money
Ensuring the attractiveness of countries for investment implies a good business environment and long-term security for investors, which requires political stability in the region, credible state institutions, adherence to the rule of law, the protection of private property and encouragement of competition.
To increase the attractiveness of the region’s countries to investors and prompt them to transfer their operations to the Western Balkans, we require (in addition to the generally low taxes compared to other regions) infrastructure investments in an efficient and unimpeded transport system, which will provide connectivity within the region, as well as with other countries. Furthermore, a reduction in the number of border crossings, physical inspections at borders and numerous non-tariff barriers, which consume time and funds for companies, is necessary. According to the World Bank’s 2023 Logistics Performance Index, which assesses infrastructure development, customs procedures and logistics, countries in the Western Balkans are ranked low (Serbia in 73rd place, Bosnia and Herzegovina 61st, Montenegro 73rd, Albania 97th and North Macedonia 57th among 139 countries), and this needs to be addressed.
Demographic shifts due to reduced population growth and the emigration of young and educated people from the region are reflected in a shortage of workers with appropriate skills for companies in the region. It is therefore necessary to increase labour mobility in the Western Balkans and ease the obtaining of work permits, as well as ensuring the mutual recognition of professional qualifications.
The participation of Western Balkan trade in the total trade of the EU is only 1.4%, indicating that there is significant room to increase that share
The free movement of goods and services, capital and people within the Western Balkans can help countries overcome the limitations created by poor infrastructure, inefficient policies, geographical affiliation and demographic changes, rendering the region more attractive to investors and encouraging them to transfer their operations to this region.
In order to enhance the presence of Western Balkan companies on the European market, we need incentives, expertise, financial support and access to EU structural funds
For Western Balkan countries, the EU is the leading trading partner, accounting for two-thirds (65.8%) of total trade in 2022, when the region’s total trade with the EU reached historically high levels of €85 billion. This trade expansion largely favours Western Balkan countries. Over the past decade, the region increased its exports to the EU by 217%, compared to an increase in imports from the EU to the region by 125%. These figures indicate that our companies are penetrating the European market, which implies the adoption of European standards by certain companies and an improvement in performance, but also continuous coping with high pressure from the competition.
However, the participation of Western Balkan trade in the total trade of the EU is only 1.4%, indicating that there is significant room to increase the share. In order to achieve this goal, in addition to preferential trade that allows exports to the EU without duties and quota restrictions (with some exceptions, which all Western Balkan countries have had since 2000), it is important to meet European standards, especially relating to compliance with and acceptance of industrial products, veterinary, sanitary and phytosanitary standards for products of plant and animal origin, as well as those set by the European Green Deal and the Green Agenda for the Western Balkans. In order to achieve a greater presence of Western Balkan companies on the European market and their inclusion in supply chains, incentives in the form of expertise and financial support for meeting standards are necessary and infer a need for access to EU structural funds.
