Economic growth of the Western Balkans.

What is it about?

This paper analyses the Western Balkan economies within a wider perspective of the European economy as a whole. It first defines four groups of European countries comprising the inner and outer Cores, and the inner, outer and super Peripheries. As Peripheral economies have adopted austerity policies they have been less able than before the crisis to provide a source of demand for exports from the Core economies, leading to secular stagnation in the Core. The paper analyses the dependence of the economies of the European super-periphery, mainly composed of Western Balkan economies, on the economic fortunes of the wider European economic area. It also identifies the latent economic potential of the region. The paper proposes that a coordinated fiscal expansion to stimulate domestic and Europe-wide demand would provide a solution to the problems of secular stagnation in the European economic area.

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Why is it important?

The paper provides a new analysis of the development prospects for the Western Balkan economies and provides new evidence that while the region is dependent on the economic fortunes of the wider European economic area, the region also has its own source of latent economic dynamism that could be activated by appropriate economic policies.

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