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the post-communist economies. “There wasn’t a transformational moment when the first wave countries from CEE joined the EU. There were a lot of problems that didn’t disappear on accession – corruption, rule of law and so on,”
says Cvete Koneska, associate director at specialist global risk consultancy Control Risks, in an interview with bne IntelliNews. However, she adds, “I still think that if a West European investor looks at two markets where all else is equal and one is an EU member state, they probably would choose the member state.”
The long road to accession
The violent breakup of Yugoslavia caused the fortunes of its successor states to diverge dramatically. While Slovenia was among the first wave of entrants to the EU from the former eastern bloc countries, it took the best part of another decade for Croatia to join – and the remaining countries from the region are still chasing membership.
Serbia and Montenegro are the clos-
est, having opened negotiations several years ago, and the tentative accession target date of 2025 was set out in the European Commission’s new strategy published in 2018 with the aim of revit- alising the enlargement process. Previ- ously, enlargement had slowed after Croatia’s entry in 2013, and observers noted worrying backsliding in democra- tisation in the region and the emergence of increasingly authoritarian local lead- ers as hopes of accession faded. Despite being preoccupied first by the migration crisis and more recently Brexit, EU offi- cials are now devoting more attention to the Western Balkans countries. For some countries, especially those early in the process, more may be needed.
“In general the EU is an important institutional anchor for the Western Balkans, but only as long as the likeli- hood of accession is still there. Probably at the moment people have the feeling that not a lot of changes are being made, and the EU certainly could support the efforts of those countries to take over the acquis communautaire by increas- ing support for investment, for example in infrastructure and state capacities,”
said Richard Grieveson, economist at the Vienna Institute for International Economic Studies (wiiw), in a webinar on March 27.
Many complex issues still need to be resolved even among those states closest to accession. Serbia’s unresolved conflict with Kosovo is stalling its progress, while Montenegro is struggling with corruption and organised crime. Among the other would-be EU members from the region, both Albania and Macedonia are candidates and hope to get the nod for accession negotiations to start this summer. Bosnia hopes to get candidate status soon, but political infighting and a gaping power vacuum that appeared following the October 2018 general election are holding it back. Kosovo is the furthest off from obtaining candi- date status, as five EU members do not recognise it as an independent state.
Even with EU accession as a far off prospect, there have been a significant number of investments into the Western Balkans by international manufacturers, even though volumes are for the most part small compared to those in CEE. Italian carmaker Fiat usually takes the top spot among Serbian exporters, and is a longstanding investor in the country,
North Macedonia (formerly Macedonia) aggressively pursued export-oriented foreign direct investment (FDI) for years under the previous government that
was in power from 2006 to 2016. It’s too early to say what the change of govern- ment in 2017 will mean for investment, but there have been several recent announcements of fresh investment, including from Germany’s Gerreshimer, which supplies the pharma and health- care industries, fellow German investor ODW Elektrik, and the US’s Dura Auto- motive Systems. As the political situa- tion stabilised after a lengthy crisis from 2015 to 2017, exports from Macedonian free industrial zones revived, jumping by 20% in 2018 alone.
Serbia, meanwhile, came out on top
of IBM’s 2018 Global Location Trends report based the number of job created in a country by FDI, relative to the size of the country’s population, and Bosnia and North Macedonia were also among the top ranked countries, although jobs created per million inhabitants dropped in North Macedonia in the crisis year
of 2017 compared to 2012-2016. Serbia “continues to receive significant inward investment in key sectors such as textiles, transport equipment, chemicals and elec- tronics. Not surprisingly, manufacturing
“If a West European investor looks at two markets where all else is equal and one is an EU member state, they probably would choose the member state”
while in recent months new factories were opened in Serbia by the US’s Amphenol Automotive Technologies, fellow auto-components producer
from the UK Delphi, and Calzedonia,
an Italian producer of socks, bathing suits and underwear. Announcements of new investments were also made
by Chinese car-parts producer Minth, German automotive cable manufacturer Leoni and – from Serbia’s near neighbourhood – Slovenian household appliance Gorenje has shifted some of its production to Serbia.
activities account for almost 80% of jobs created from FDI,” the report said.
“The continued strong performance by Serbia and the wider Western Balkans on this measure testifies to the region’s growing success in attracting foreign investment and cementing its position in global value chains. While the per- formance of individual countries varies from year to year, the region as a whole is experiencing a sustained high level of interest from foreign investors,” accord- ing to IBM’s study.
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