REGIONAL COOPERATION AND ECONOMIC INTEGRATION

such results seem encouraging, they do not give the real picture, because the inflow of
investments in the following year (2007) was halved. (Savić Lj., 2008).
Countries strive towards attracting larger amounts of foreign direct investments and
obtaining the larger inflow of foreign capital. Thus, in the following section of this paper we
will discuss the current competitive advantages of the West Balkan Countries by analyzing
12 pillars of competitiveness that are further divided into three groups: basic requirements,
efficiency enhancers and innovation and sophistication factors, as well as the analysis of
the global index and particular sub indices of competitiveness.
3. Competitiveness of the West Balkan countries
Countries strive towards attracting larger amounts of foreign direct investments and
obtaining the larger inflow of foreign capital. Thus, in the following section of this paper we
will discuss the current competitive advantages of the West Balkan Countries by analyzing
12 pillars of competitiveness that are further divided into three groups: basic requirements,
efficiency enhancers and innovation and sophistication factors, as well as the analysis of
the global index and particular/individual sub indices of competitiveness.
Table 2: The 12 pillars of competitiveness
BASIC REQUIREMENTS
1. Institutions
2. Infrastructure
3. Macroeconomic stability
4. Health and primary education
EFFICIENCY ENHANCERS
5. Higher education and training
6. Goods market efficiency
7. Labor market efficiency
8. Financial market sophistication
9. Technological readiness
10. Market size
INNOVATION AND SOPHISTICATION FACTORS
11. Business sophistication
12. Innovation
Source: The Global Competitiveness Report 2008.-2009.
FDI FLOWS IN SOUTH EASTERN EUROPE
KEY FOR
FACTOR-DRIVEN
ECONOMIES
KEY FOR
EFFICIENCY-
DRIVEN
ECONOMIES
KEY FOR
INNOVATION-
DREIVEN
ECONOMIES
The above given Table 2 shows the basic pillars of competitiveness that play the key role
in foreign investor’s decision making on investing in some country. If a certain country
strives to attract foreign capital to stimulate its economic growth, equal attention must be
given to the each of the mentioned pillars. Unity of production capacities, efficiency and
innovation represent competitive basis of every country. Therefore, it is necessary to put
huge efforts into creation and continuous development of these pillars.
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