REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART I:
What are the main reasons for such poor performance of economic growth of this region
The analysis shows that almost all transition countries, during the first nine years of
restoration of capitalism and development of market economy, have a decrease in GDP:
in Bosnia and Herzegovina, Montenegro and Serbia the volume of GDP almost halved, it
was lowered for 30 per cent in Bulgaria, by quarter in Romania, by 19 per cent in Croatia
and by 8 per cent in Hungary. In the same period, insignificant growth has been obtained
in Albania and Slovenia, which could be explained by the specific type of privatisation in
these countries. The main reasons for this contraction could be found in the former nature
of industries created in former socialist countries (autarchy, manufacturing with low level
of technology etc.), lack of entrepreneurship and forms of privatisation of industries.
The opposite situations developed in the region after 1998. All countries experienced a
yearly growth of almost 4 per cent. However, this growth was faster in NMS of the EU (4, 3
per cent yearly) than in Western Balkan countries (where the average growth was only 2, 16
per cent yearly). The lowest growth rate has been obtained in Macedonia, Montenegro and
Serbia while the fastest was in Albania, Bosnia and Herzegovina, Bulgaria and Romania.
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Table 3: Gross Domestic Products (GDP) of South Eastern Europe
GDP (in million US $, PPP of
1990)
Percentage of
world GDP
GDP growth rate
(%)
Region/ Countries 1989 1998 2007 1989 2007
1989- 1998-
2007 2007
A. Western Balkan
124548 81293 98506 0.47 0.21 -1.30 2.16
3.00
Albania 7917 8001 13570 0.03 0.03
6.05
Bosnia
&Herzegovina
17810 9261 14500 0.07 0.03 -1.12 5.11
Croatia 35860 29189 39030 0.13 0.08 0.47 3.29
Macedonia 7956 6175 7150 0.03 0.01 -0.68 1.62
Montenegro 2835 1485 1756 0.01 0 -2.68 1.88
Serbia 52430 27182 34500 0.20 0.07 -2.30 2.69
B. Members of
342489 319652 462410 1.29
EU(2007)
0.97 1.68
4.19
Bulgaria 55883 38793 60010 0.21 0.13 0.39 4.95
Greece 101425 118351 171400 0.38 0.36 2.96 4.19
Hungary 71776 66039 96400 0.27 0.20 1.65 4.29
Romania 90051 66895 100700 0.34 0.21 0.62 4.63
Slovenia 23354 23574 33900 0.09 0.07 2.10 4.10
TOTAL 467037 394945 560916 1.76 1.17 1.03 3.97
Sources: For the year 2007: Authors calculations based on IMF World Economic Survey, 2008
Rather low GDP growth rates in SEE countries compared with the world and dynamic
economies should be explained (see table 4). Without any doubt, the decline of GDP in
Western Balkan Countries (WBCs) for the whole 18 years period might be explained
primarily by the war which took place in Croatia, Bosnia and Herzegovina and Serbia in the
nineties. In the countries which are already in the EU, low rate of growth is primarily due to
the costs of transition process. Privatisation, coupled with the creation of an open economy
and enhanced liberalization process has caused lower growth rates in those countries! If we
compare those countries growth rates with the Greece rate of growth, the cost of transition
process becomes evident.