The Western Balkans Regional Economic Area: From Economic Cooperation to Economic Integration

Abstract

A consolidated multi-annual action plan, intended as the basis for an EU-compliant regional economic area in the Western Balkans, was adopted in July 2017 by the six countries of the region: Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro and Serbia. This chapter outlines the main objectives of this agreement and assesses its likely impact on the region. We argue that the plan correctly identifies some of the main areas where the Western Balkans lags behind EU comparators, such as free movement of goods, services, investments, labour and information. It outlines a number of sensible and practical actions to address the problems, so that the region can move from economic cooperation towards a stronger and more formal economic integration, ahead of the ultimate goal for all six countries of EU membership. At the same time, the plan is relatively silent about some of the long-standing and pervasive problems that hold back the region’s economies, such as weak governance in public administration, limited access to finance for SMEs and widespread corruption and informality. Unless these problems are also addressed in parallel, the prospects for success of the action plan are limited.