ECONOMIC TRANSFORMATION OF THE POST-COMMUNIST COUNTRIES OF THE WESTERN BALKANS AFTER 2008

Abstract

The article has two cases for investigation – Albania and Montenegro, which are the most dissimilar in the middle of the Western Balkans, in order to provide the difference between neighbouring countries, as well as about the common tendencies in group. The purpose of the article is identification of the key problems of economic transformation of the post-communist countries of the Western Balkans after the onset of the world economic crisis. The global financial crisis of 2008–2009 affected most of the trade partners of the Western Balkans countries, which in turn affected exports and imports. Іn highly developed Slovenia, after a slight increase in the growth rate in 2010–11, the budgetary regime was shortened and the unfavourable economic situation in key partner countries led to another round of crisis. The global financial crisis put an end to the Albanian model of growth based on domestic consumption. Among the reasons for the economic decline in 2012–2013 were also the budget deficit and the growth of sovereign debt and the increase in rates associated with the debt crisis in Greece and other countries of the EU. Regardless of the fact that Albania didn’t go through a unique recession, the crisis led to a change in transfers and other flows, which, in its turn, contributed to lower growth, especially in the housing sector, which has since experienced a sharp decline. Having close ties with the Greek and Italian economies through exports, transfers and financial flows, Albania bore the brunt of the crisis of the Eurozone’s debt. In Western countries, imports outweigh exports, so they are importers of goods in the wider world. The Western Balkans may show the same trend. Another emerging trend is a change in the influx of direct investment, which is associated with the on-going independent development and strengthening of national economies. The tide of foreign exchange and economic development cannot be guaranteed by the EU. For foreign investors is important to invest in sectors of the economy that are already sufficiently regulated, have a well-developed infrastructure, and are not constrained by financial and industrial pressures. Supporting economic renewal will require further reform and elimination of macroeconomic shortfalls in government finances and the financial sector. Following the additional programs of the International Monetary Fund, the Western Balkans began to consolidate their national finances, and a consistent monetary policy supported economic developments. Business-important reforms were initiated, such as a comprehensive overhaul of the justice system. But troubling macroeconomic shortcomings and structural disruptions for growth require constant efforts for the most pressing problems. Thus, the process of European integration threatens to be delayed due to the inconsistency of the WB region’s economic indicators with EU standards.