Intra-industry Trade between the European Union and Western Balkans A Close-up (original) (raw)
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The EU accession process of the Western Balkan countries has been accompanied by a major increase in commodity trade with the EU Member States. Consequently, the EU has become the most important trading partner of the Western Balkan countries, but exports from the Western Balkans have been mainly based on low value-added products (resource-and labor-intensive ones). This chapter sets out to analyze changes in the dynamics and pattern of trade in products of the manufacturing industry between the Western Balkan region and the EU over the past couple of years. Particular attention has been paid to changes that occurred in the wake of the recent global economic crisis. For the purpose of analysis, the data on commodity trade provided by Eurostat has been used. Based on the results of this analysis, we have concluded that the region, as a whole, continues to specialize in the export of labor-intensive products, such as garments and footwear, and resource-intensive products, such as metals and wood. When more sophisticated goods, such as machinery and transport equipment, are considered, an increase in the volume of exports, as well as their share, can be observed. It also seems that some of the countries are specializing in the production and export of certain types of machinery and transport equipment, but we could not observe a common regional pattern.
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Once regarded as a more prosperous part of socialist world, the region that was within the Yugoslav common market now excludes Slovenia and includes Albania to be renamed as the Western Balkans. After a decade of social unrest and civil wars of mainly ethnic character, it has yet to come up in terms of economic development that is behind some advanced transition economies, namely those in Visegrad countries. With the admission of Bulgaria and Romania in the European Union (EU) since 2007, the Western Balkans finds itself completely surrounded by the EU. Despite that political environment is still fragile, the progress in economic cooperation is gaining a momentum through bilateral free trade agreements which recently are superseded by a single common agreement -Central European Free Trade Agreement (CEFTA), though the risk that the former to undermine the latter should not be underestimated. Whether current reforms are a process of push factors from inside -the necessity of small economies for greater cooperation, or encouraged as a prerequisite by the EU -regional economic integration facilitates the road to the EU accession and membership, they first of all are designed and initiated for sustainable development and better economic welfare. The aim of this paper is two fold: first, to investigate the prospect of trade regimes, investment promotion programs and export incentives; and second, to find out to what extent these reforms are contributing to economic integration and political stabilization of the Western Balkans. JEL Classification: F13, P27, P33.
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