REGIONAL COOPERATION AND ECONOMIC INTEGRATION

REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION
in their balance of payments. Between the year 2000 and 2006 the total amount of outward
remittances increased from USD 755 million to USD 1,779 million, what means increase
of 2.4 times (without Serbia and Montenegro). It is quite likely that inflow of foreign
capital will further increase the size of outward remittances.
3. What might be the impact of world economic crisis to the SEE countries
Prevailing labour market conditions have led to rising unit labour costs and a demand for
greater labour market mobility and increased labour force participation. The survey of the
Gallup running out in 2008 shows that approximately 20% of the respondents from the
West Balkan countries would like to move to another country with the exception of Croatia,
where only 7% would like to move temporarily or permanently abroad. The extremely
incentive to mobility is evident in Kosovo, where three-quarters of interviewees thought
there were better opportunities abroad (Balkan Monitor, 2008).
Looking at the evolution of wages in the period from 1998 to 2006, nominal wages and
salaries increased in all countries: they have increased by a third in Serbia (from 169.7 to
233.3 EUR) and almost 60 % in Croatia (from 578.6 to 905.7 EUR), 80% in Bosnia and
Herzegovina (from 150.3 to 275.1 EUR) and by 40 % in Montenegro (from 173.9 to 246
EUR) – Eurostat, 2009. However, in the conditions of global crisis it would be impossible
for wages to continue growing. On the other hand, the unemployment rate has risen in
2009, as a consequence of the economic crisis. In all SEE countries, unemployment rates
were higher in 2007 than the EU-27 average, with the highest values of almost 44% in
Kosovo, 35% in the FYR of Macedonia and 29% in Bosnia and Herzegovina followed by
Montenegro with a 19.3 % rate and Serbia with an 18.3 %. The lowest values were recorded
in Croatia with an unemployment rate of 9, 6% (Eurostat 2009). The Western Balkans’
countries have not succeeded in combating unemployment, because of the economic crisis
and the lack of possibilities for development. The consequences of unemployment are: the
emigration of intellectuals (brain drain), more illegal work, higher levels of violence and
drug trafficking, and generally, increased criminality.
Table 12: Unemployment rate 1 in EU and Western Balkan states
1999 2000 2001 2002 2003 2004 2005 2006 2007
.. 8.7 8.5 8.9 9.0 9.0 8.9 8.2 7.1
EU-27
18.4 16.8 16.4 15.8 15.0 14.4 14.1 13.8 ..
Albania 2 .. 39.7 40.0 41.1 41.6 41.8 43.9 31.1 29.0
Bosnia-Herzegovina
14.5 17.0 16.3 14.7 14.1 13.6 12.6 11.1 9.6
Croatia
32.4 32.2 30.5 31.9 36.7 37.2 37.3 36.0 35.0
FYR Macedonia
14.5 13.3 13.3 14.5 16.0 18.7 21.1 21.1 18.3
Serbia
19.3 19.3 21.2 20.7 22.7 27.7 30.3 29.6 19.3
Montenegro
.. .. 57.1 55.0 49.7 39.7 41.4 44.9 43.6
Kosovo
Source: Eurostat, 2009; (1) proportion of the labour force aged 15-64 in unemployment (%); (2 ) data refers
to registered unemployment
The present recession is spreading pervasive effects throughout the global economy that
go well beyond substantial declines in GDP (expected contraction by 1.7 per cent in 2009),
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