Civil Society Forum of the Western Balkans Summit Series
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Source: Euractiv

Why we need to stabilise the Western Balkans

15.05.2018

As Europe is confronted by different visions about its future, the question remains how these different visions will affect the developments in the Western Balkans. The Balkans remain fragile, and the external pressures and internal divisions could deliver fresh instability in the region, writes Martina Larkin.

Martina Larkin is the head of Europe and Eurasia and a member of the Executive Committee of the World Economic Forum.

The Western Balkan Six (WB6) comprise Albania, Bosnia and Herzegovina, FYR Macedonia, Kosovo, Montenegro and Serbia, with a total population of about 18 million and a GDP of approx. €80 billion.

While the region had seen above EU average growth rates of 5.3% in the early 2000s, today these economies show volatile and slowing growth and high unemployment rates with high youth unemployment and significant brain drain.

While there is a more upbeat forecast for accelerating growth rates in the future, based on increased export, investment and spending, it is important to ensure a sustainable, long-term development of the region to deliver both a stable political environment and sound reforms leading to further economic growth and investment.

To address the issues which are stalling progress in the region, three key priorities need to be addressed:

1. Strengthening growth and investment through public-private partnerships

Increased regional cooperation on trade, infrastructure and the digital agenda holds significant potential for the Western Balkans. For example, on trade, Western Balkan countries could raise their degree of openness as measured by the share of exports in GDP, from less than 40% to at least 80%, as in other small transition economies in Europe.

Also, the completion of the WTO accession process for all six countries in the region, from currently three, would be an important step for the region. The development of a Regional Economic Area, agreed by the leaders of the Western Balkans in July 2017, would further strengthen trade and investment within the region and with the European Union.

It will also help accelerate enterprise and skills development, research and innovation and smart growth.

To achieve sustainable growth, it will be important to develop strong partnerships with the private sector, which can complement the investments from the public sector and ensure projects deliver the necessary impact.

2. Driving a future-oriented digital ecosystem

In a world characterised by the rapid and transformative technological advancements, countries and businesses need to adapt to remain competitive. The Western Balkans have shown a strong growth of its start-up environment and several countries have launched digital initiatives to transform their economies and societies.

However, business sophistication ranks still very low in the region, which points to a lack of integration and industry density and much remains to be done to ensure the region can withstand the pressures on their job markets and deliver successful efforts to develop reskilling and technological skills in all industries.

To continue to foster a vibrant start-up ecosystem, the region needs to support start-up activities, access to finance, access to talent as well as collaboration between the new and established businesses. Regional leaders will need to strengthen the digital and innovation ecosystem, which can transform their economies in an unprecedented way. The use of data to address corruption, civil engagement and increased sophistication of government services provides unique opportunities.

3. Supporting next-generation leadership

Given the significant demographic challenges in the region and the brain drain that the region is facing, it is imperative to harness the dynamism of the youth in the region both in terms of their political participation and their contribution to innovation and entrepreneurship.

Current efforts like the Regional Youth Cooperation Office (RYCO) need to be further supported to achieve their goal to promote cooperation and a positive agenda for youth in the region.

Young political leaders need to be encouraged to participate in the national and inter-regional processes, while young entrepreneurs need to be given incentives to start their businesses in the region. Addressing youth unemployment and providing youth with the skills, especially the technical skills they need to flourish in the future, will need to be a key priority.

The current and next Presidency of the Council of the European Union of Bulgaria and Austria, respectively, as well as the dedicated efforts of the members of the Berlin process, with the government of the United Kingdom leading its annual meeting this year, provide excellent opportunities in the next 12 months to make serious progress in the Western Balkans.

The World Economic Forum, as the international institution for public-private cooperation, has also launched a strategic dialogue initiative at its Annual Meeting 2018 bringing together the political leaders of the six Western Balkans, business leaders and investors as well as other relevant regional players for a dialogue on how to strengthen the Western Balkans.

Recognising the important role the business sector can play in strengthening investment and sustainable development in the region, the Forum will continue this effort, with a special meeting in Sofia in collaboration with the Bulgarian presidency of the Council of the European Union.

The aim is to advance on the three key priorities, strengthening economic growth and investment through public-private partnerships, driving a future-oriented digital ecosystem and supporting next-generation leadership.

Tangible progress is possible in the near future to transform the Western Balkans and it is imperative that we support these countries in their transition to transparent, inclusive societies which can thrive in the future and contribute to regional stability and growth. Either that or they might become a new risk factor for Europe.