A New Economic Agenda for Southeast Europe

The event consisted of two panels that were focused on five country reports and ten policy recommendations. The first panel highlighted the recommendations developed by a network of economists, political scientists and experts. These are supposed to provide a roadmap of what needs to be done. The second panel addressed how sustainable economic growth and development can be achieved in the Western Balkans.

Innovative policy proposals are in play in countries of the region. Demands for development banks, wage-led growth and industrial policies signal a determination to rephrase the economic agenda in the Western Balkans. The region needs fresh oxygen for its political economies. New ideas are part of the process to identify viable reform alternatives for Southeast Europe.

The following take-aways from the event stand out:

- During the past two decades, the usual medicine of neoliberal economic policy measures did not deliver the intended results. There is no ‘one size fits all’ solution. Therefore, the studies dig deeper and focus attention on the countries’ institutional channels, governance traditions and political-economy legacies.

- Credit availability remains difficult and provides a major challenge, for SMEs and business start-ups in the region. The demand for development/promotional banks to support export capacity is growing among countries in the region. Bulgaria, Croatia and Slovenia have established such financial innovation. But these institutions need a critical mass of financial capacity, require local administrative expertise and responsible, i.e. transparent lending strategies.

- Industrial policy, both at the national and regional levels, must be more targeted and coordinated towards priority areas. The advocacy of industrial policiesin countries of the Western Balkans needs to be aware of the risks involved when trying to ‘pick winners‘. As a policy recommendation pro-active industrial policy making must be compatible with the EU accession process. A new avenue could be the mobilization of indigenous resources instead of subsidizing foreign direct investment in Special Economic Zones.

- Fiscal transparency emerged as a recurring issue during the discussions, strongly promoted by Dragan Tevdovski, the Minister of Finance of the Republic of Macedonia. How citizens’ tax obligations are spent by the state, including EU funding programs, is critical in achieving compliance and adherence from the public. Citizens want to know what the state owns, how its assets are valued and if they are managed in a transparent manner.

- Outward migration of talented, well-educated young members of the labor force remains a major challenge for any new economic agenda to succeed in practice in Southeast Europe. There are innovative sectors emerging in the region that are highly competitive and whose employees are much sought-after by companies abroad, e.g. in the digital economy.

- Smart specialization was repeatedly advocated as a policy instrument capable of leveraging EU funds while strengthening local economy linkages, e.g. in pilot projects focused on social entrepreneurship.

- Mobilizing the diaspora beyond the transfer of remittances was equally seen as a policy recommendation in need of further impetus and direction.

The network of experts discussing the New Economic Agenda for Southeast Europesince 2015 concluded its proceedings with this public event in Belgrade. But the discussion will continue with specific topics addressed in focus groups and further outreach activities.

The full publication can be found here.