REGIONAL COOPERATION AND ECONOMIC INTEGRATION

Serbian export to CEFTA member countries (Table 4) in last three years shows rising
trend, both in absolute and relative figures in comparison to the rest of the world export.
In 2006, for example, in CEFTA member countries roughly 2 billion US dollars goods
is exported; in 2007 – approximately 2.85 billion US dollars; and in 2008 over than 3.6
billion US dollars, which is very high rate of export growth (over 40% in 4007 and over
25% in 2008). If we know that rate of import growth to CEFTA member economies in the
same period is lower (more than 35% in 2007 and about 20% in 2008), it is not difficult
to conclude that CEFTA countries are very important for Serbian balance of payment.
Especially with the regard that with most of them (including the territory of Kosovo and
Metohija, which according to the United Nations Resolution 1244 still is part of the state of
Serbia, but which unfortunately is aside of balance-of-payment territory of Serbia) Serbia
has surplus of foreign trade (import coverage with export is bigger than 200%). So, while
Serbia importing twice more than exporting, within the CEFTA region, the situation is just
opposite! That is why CEFTA membership is important for Serbia as a source of foreign
goods trade surplus, especially with Bosnia&Herzegovina and Montenegro.
Very similar situation to the Serbian case regarding foreign trade deficit is in all other
CEFTA member countries, which will be only briefly stated due to the lack of length in
this paper (See for more details: Nikolic, 2008, p.80-85). Foreign trade deficit in Croatia in
first nine months of 2008 is 8.91 billion euro, 17.9% more than in the same period of 2007
(import is covered by export 45.2%). In the same period, Albanian deficit was 1.8 billion
euro (14.4% increases), Montenegrin 1.3 billion euro, while in Bosnia&Herzegovina (in
first eight months of 2008) it was 3.21 billion euro (21,8% increases), and in Macedonia
1.58 billion euro.
CONCLUSION
FDI FLOWS IN SOUTH EASTERN EUROPE
In the paper we discussed importance of foreign direct investments in CEFTA countries to
overcome balance-of-payment deficit problems that all countries in the region facing with.
After the introductory part, where we presented theoretical background of free trade area
and history of forming CEFTA 2006 agreement, in the first chapter we considered foreign
direct investments role in increasing export of CEFTA members. In the second chapter of
the paper we argued on balance of payment disequilibrium and foreign direct investments
relationship, with the special regard on Serbia.
In contrary to the beginning of transition period (1990ies) when negative influence of FDIs
were outlined, together with loss of national sovereignty and addiction to foreign capital
inflow, today FDIs are seeing as a leverage of export and technological development.
It is a long-term interest of every export-oriented economy to attract foreign greenfield
investments. Thanks to relatively stable political and judicial environment Central-
European economies were far more attractive for foreign investors than South-Eastern
European ones. But good progress in legislative adjustment to the EU standards, which
is confirmed with announcement by the EU to put Serbia, Macedonia and Montenegro
on “White Shengen list” by the end of this year, made CEFTA countries presently more
attractive than they use to be in the past. Not to mention free trade area forming, which
could be important factor in attraction foreign investments to the Balkan countries.
FDI inflow to the CEFTA agreement countries could help increasing their export
capacity, reducing their balance of payment deficit and improving their overall economic
characteristics. It is indicative that all CEFTA agreement member countries facing
with high deficit of current account, as a result of large foreign trade deficit. In the first
quarter of 2009 global recession is visible, which redirect funds that use to inflow from
developed countries to others, to developed countries itself, which make those funds more
expensive or even non reachable to countries of our region. FDI inflow to the region will
certainly influence economic growth in future, but only if they contribute to the processing
industries and tradable goods, which will support export expansion. This scenario could
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