Analysis by Dženita Šiljak
The Western Balkan countries are small, open economies with the aspiration of joining the European Union (EU). As they are in the process of transforming from centrally planned to market economies, they must rely on foreign direct investment (FDI) to bring in new technology, know-how, capital, and new jobs. These countries can attract investment, as they are stable, diverse economies with a prospective for EU membership; they share borders with the EU and offer favourable taxes, low labour costs, and incentives for investors. Starting a business in the region differs among the countries. Kosovo is the most favourable country, while Bosnia and Herzegovina has the longest, most complicated, and expensive process of starting a business.
However, these countries are more corrupt than the EU average, with a less efficient judiciary system. The Western Balkan region is burdened by its history, which affects their relations. One of the latest examples is Kosovo’s imposition of 100% tariffs on goods imported from Bosnia and Herzegovina and Serbia. Political instability discourages investors from coming to the region and encourages the population to migrate to the EU.