The Kosovo Crisis and the Balkans: Background, Consequences, Costs and Prospects

Summary

The four papers collected in this report treat the economic development of Yugoslavia (Serbia and Montenegro) and of the so-called Western Balkans, the issues of regional trade and investments in the Balkans and some of the political and economic aspects of the Kosovo crisis. Mostly the developments in the second half of the nineties are covered, though there are some references to the economic history of the Balkans and of South-East Europe.

In ‘The Economy of the Federal Republic of Yugoslavia’ the peculiar economic system of that country is described and an account of its performance is given. The key feature of the Yugoslav economic policy in the nineties was the strategy designed to avoid transition or transformation. Because of the lack of reforms and because of the wars in Croatia and Bosnia and Herzegovina, the economic performance of Yugoslavia was characterized by low growth and persistent macroeconomic imbalances.

In ‘Trade and Investment in the Balkans’ it is argued that the regional integration is rather low, while the integration with the European Union is quite significant. This fact has repercussions for the regional policy of the European Union especially in view of the increased awareness that a more ambitious and a more comprehensive policy towards the region should be adopted.

In ‘Patterns of Divergence in the Western Balkans’ the recent development of the countries of the so-called Western Balkans (Croatia, Bosnia and Herzegovina, Yugoslavia, Macedonia and Albania) is put into the context of the longer-term Balkan development. Relying on the idea of Gerschenkron’s about the agents of the economic spur in backward countries or regions, it is argued that neither the local entrepreneurs, nor the banks, nor the states could play that role and that perhaps the only alternative left is to rely on the foreign entrepreneurs to provide for the major impetus to investment and growth in the region. In view of that, the paper provides an overview of privatization programmes and possibilities in the region, country by country (except for Albania).

Finally, in ‘The Kosovo Crisis: Consequences, Costs and Prospects’ a brief treatment of the political and economic consequences of the war in Kosovo on the affected countries is presented. The key point made is that the existing political and security arrangement can support the reconstruction of Kosovo but not the reconstruction of Yugoslavia as a whole but in all probability cannot support the recovery either of Kosovo nor of the region as a whole.
 

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