Macroeconomic trends of economic development in the Western Balkan countries

Abstract

The economic growth in the Western Balkan countries in the period of transition was based on the investments into the service sector rather than the industry and other manufacturing sectors, which resulted in low productivity and competitiveness of companies in the international market. The basic characteristics of the transitional period are undeveloped institutions, low level of private and public investments, unfavourable demographic situation, widespread grey economy and high foreign debt. Although these countries have complementary economies that suit one another, they have not yet sufficiently overcome small and fragmented national markets, and that is mostly reflected in the unfavourable structure of their export. This paper provides the analysis of the results achieved by the economies of the Western Balkan countries between 2016 and 2020, compared to the surrounding EU member coun-
tries. The indicators analysed point to the slow economic recovery in these countries, as well as the fact that the Western Balkan countries have not reduced their huge delay in development, that a long period of time will be necessary to overcome it, es-
pecially with negative consequences of the pandemic in mind because it has affected these countries to a greater extent than the developed countries.