The EU decided last month not to open accession negotiations with Albania and North Macedonia for the time being and a broader discussion on the future of the EU is underway. But there is positive economic momentum in the Western Balkans, with more foreign investment, and it must be maintained, write Borge Brende and Martina Larkin.
Borge Brende is the president of the World Economic Forum. Martina Larkin is Head of Regional Strategies, Europe and Eurasia, and a member of the WEF Executive Committee.
In the meantime, Western Balkan countries will need to continue their strategic cooperation and adopt creative solutions to advance economic growth and stability in the six countries of the region.
It is necessary to maintain this positive dynamic. The six Western Balkan countries have recently experienced an improvement in their situation, regardless of their recent past.
Benefiting from its favorable geographical location, its skilled workforce and its lower wage costs than in Central Europe, the region has experienced strong inflows of FDI, record levels of unemployment in the first half of 2019, strong economic growth in 2018, after two decades of steady growth. expansion and a historic regional roaming agreement that comes into force in 2021.
The international business community is realizing this potential. According to the World Economic Forum’s Global Competitiveness Report, senior executives rate the six economies positively in terms of the efficiency of their product, financial and labor markets, as well as the level of skills available in the workforce .
This progress has been hard won, but it is fragile: a “record” unemployment rate still translates into double-digit unemployment, the GDP per capita of the six countries still represents only 29% of that of Germany, which which was not huge more than twenty years ago. .
Consolidation and further improvements are needed, otherwise the broader progress towards peace and stability that has been made could be at risk.
So, where are the Western Balkan Six? Closer ties with Europe must remain a priority, but there are other ways for these economies to continue their trajectory.
Since January 2018, the World Economic Forum’s Strategic Dialogue on the Western Balkans has provided a platform for leaders and investors from the region and beyond to identify pathways for regional cooperation.
This process continues this week as more than 25 leaders meet in Genevacomprising eight heads of state or government and high-level representation from key partners including the European Union, Greece, Turkey, the United Kingdom and the United States.
It will be a busy schedule. A key area of discussion will be how to address the weaknesses identified by our global competitiveness report.
Although markets and skills are a welcome positive for the region, much remains to be done to create an environment conducive to competitiveness: strengthening institutions and the rule of law, linking transport infrastructure, fighting corruption and organized crime.
At the other end of the competitiveness scale, greater progress is needed to prepare the six Western Balkan countries for the fourth industrial revolution: they must harness the innovative power and dynamism of business if they are to reduce the gap with Western Europe.
It will also be an action-oriented program. To address gaps in the innovation ecosystem, the Forum, in partnership with the Regional Cooperation Council, will create its first regional competitiveness and innovation accelerator for the Western Balkans.
The Accelerator will be part of a global Forum initiative that aims to identify and scale selected initiatives that can help increase the diffusion of innovative technologies and business models and build more inclusive and sustainable systems.
This accelerator will also allow the sharing of models and best practices to improve competitiveness. For example, Albania has managed to increase venture capital volumes and reduce the time needed to start a business.
Montenegro’s long-term vision that has made it the most respected government by the private sector. Serbia prioritizes R&D, which at 1% of GDP is the highest in the region.
We hope that the work of this accelerator will be complemented by the establishment of an affiliated center for the fourth industrial revolution in 2020.
Part of the Forum for the Fourth Industrial Revolution’s wider network of centers, the center will enable the region to participate in key discussions shaping the governance of technologies that are increasingly and fundamentally transforming our work and lives.
These initiatives alone will not address all of the region’s political, economic and societal challenges, but they will provide a vision of what the region is capable of when working together.
Building on the recent success of the regional roaming agreement, historic advances in economic competitiveness and innovation and the Fourth Industrial Revolution could pave the way for greater cross-border integration and cooperation. Even a single market for the Western Balkans has been proposed recently.
The Western Balkans Six are increasingly dynamic in building a more coherent and sustainable future: their leaders must take advantage of this.
