Western Balkan nations could entice FDI by offering cost-effective operations, skilling the workforce, improving infrastructure, streamlining regulations, ensuring stability and providing incentives for foreign companies
Connecting the Region – Building Bridges” is the vital theme of cooperation among the Western Balkan nations as they strive towards accession and integration into the European Union, says Lulzim Rafuna, President of the Kosovo Chamber of Commerce and President of the WB6 CIF Management Board. “In order to achieve this goal, it is imperative that these countries do not impede one another’s progress,” he adds.
This involves a multifaceted approach that includes the complete removal of trade barriers and the facilitation of the free movement of people and capital within the region. By addressing these issues and fostering a harmonious environment, the Western Balkan nations are not only building stronger bridges amongst themselves, but also paving the way to a more interconnected and economically vibrant region.
“Such cooperation is essential not only for regional stability and prosperity, but also as a stepping stone towards achieving aspirations of EU accession and alignment with European standards,” says Rafuna.
Our interlocutor suggests a list of approaches through the Western Balkan countries that can enhance their appeal to potential nearshoring partners.
The inclusion of Western Balkan countries in supply chains drives streamlined trade infrastructure that’s vital to efficient crossborder trade and compliance with EU standards
The first relates to competitiveness on costs. Western Balkan countries can offer cost-effective labour and operational expenses, making it financially appealing for businesses to offshore or nearshore their operations to the region. This could involve competitive wage structures and tax incentives for foreign investors.
Second, the region should focus on improving the skills of its workforce. Western Balkan countries should invest in education and training programmes to ensure a skilled and adaptable workforce. Training in languages, technical skills and industry- specific expertise can make the region more appealing to foreign companies seeking a talented workforce.
Third are investments in infrastructure development, which are essential in terms of improving and modernising infrastructure, including transportation, logistics and digital connectivity. Reliable infrastructure is essential for supply chain operations to run smoothly and business processes to be efficient.
Fourth is the regulatory environment. Western Balkan countries should streamline their business regulations and reduce bureaucracy in order to create a business-friendly environment. This includes ensuring ease of company registration, property protection and simplified customs procedures, as well as the eliminating of barriers to trade.
Furthermore, it is important to maintain political stability and promote the rule of law as a way of instilling confidence in foreign investors. A stable political environment reduces the risks associated with doing business in the region.
Rafuna also believes that Western Balkan countries should provide incentives like tax breaks, grants, or subsidies to attract foreign businesses, while they should additionally establish support mechanisms and onestop shops to assist companies in setting up and running their operations.
The Western Balkan countries should also provide access to each other’s markets without trade barriers and then highlight the region’s proximity to European markets and the potential for expansion to the European Union, demonstrating the strategic advantages of locating operations in the Western Balkans.
It is also important to foster cultural and language affinity. Western Balkan countries have cultural and language affinity, which makes it easier for companies from EU member states to operate and communicate effectively. The youth of Kosovo*, for example, speak different foreign languages.
It is also vital to maintain collaboration and networking between local businesses, foreign investors and government agencies, in order to create a supportive ecosystem for nearshoring. Networking and partnerships can lead to mutually beneficial opportunities.
Cooperation among Western Balkan countries is crucial to regional stability, prosperity and progress on their path to EU accession and alignment with European standards
The inclusion of Western Balkan countries in major supply chains can impact significantly on the process of adopting European standards in several ways.
“To participate in these supply chains, Western Balkan countries need to align their regulations and standards with those of the European Union. This alignment is essential to enabling seamless integration into supply chains and ensuring products and services meet EU requirements,” says Refuna.
Furthermore, companies operating within these supply chains must adhere to the high quality and compliance standards demanded by their clients. “This encourages the Western Balkan countries to improve their quality control, safety measures and production processes to meet EU standards,” explains our interlocutor.
Participation in supply chains often involves transferring technology from more advanced economies. This technology transfer can aid Western Balkan countries in adopting advanced manufacturing and production processes that satisfy EU standards.
“As already noted, skills and expertise are extremely important. In order to become part of these supply chains, the workforce in Western Balkan countries needs to acquire the necessary skills and expertise. This includes knowledge of EU regulations, quality control and best practices, contributing to the adoption of European standards,” adds Refuna.
Being part of major supply chains provides easier access to the EU market. As a result, Western Balkan countries have a strong incentive to conform to European standards, both in terms of product quality and business practices. Moreover, compliance with European standards can provide a competitive advantage for companies operating in the region. “It allows them to attract international customers and business partners who prioritise quality and conformity to EU norms,” concludes Refuna.
Ultimately, the involvement of Western Balkan countries in significant supply chains is crucial in expediting their embracing of European standards. This participation aids in aligning regulations, advancing product quality, refining workforce abilities and simplifying entry into the EU market. This integration not only boosts the economy of the region, but also supports the broader journey of EU accession and compliance with European standards.
