Policy Options for Competitiveness and Economic Development in the Western Balkans: the Case for Infrastructure Investment


Mario Holzner

wiiw Policy Note/Policy Report No. 16, June 2016
14 pages including 9 Figures

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  • The Western Balkans are a region with a substantial economic catch-up potential. Compared to other European economies these countries are either poor or very poor.
  • Structural underdevelopment and low competitiveness impede the catch-up process. Mass unemployment and a huge trade deficit indicate heavy internal and external imbalances.
  • Short-run policy measures should focus on fiscal devaluation and NPL resolution to foster cost competitiveness and private investment.
  • A ‘Big Push’ in infrastructure investment is imperative for long-term prosperity. An investment volume of EUR 7.7 billion as envisaged in the ‘Berlin Process’ has the potential for an additional GNP growth impulse of about 1% p.a. and a positive employment effect of up to 200,000 people in the region.


Reference to wiiw databases: wiiw Annual Database

Keywords: macroeconomic policy, investment, infrastructure, fiscal devaluation, competitiveness, Western Balkans, Berlin Process

JEL classification: E27, E60, F21, H54, O24

Countries covered: Albania, Bosnia and Herzegovina, Kosovo, North Macedonia, Montenegro, Serbia, Western Balkans

Research Areas: Macroeconomic Analysis and Policy, International Trade, Competitiveness and FDI