Services Trade and Structural Change in the Western Balkans

    • Belgrade 2017
    • Presentation speakers
      • Ivana Prica, Faculty of Economics, University of Belgrade, Serbia
      • Will Bartlett, London School of Economics, UK

    Abstract:

    The process of services trade liberalisation in Western Balkan countries has been driven by their need to integrate into international markets in order to develop strong market economies and achieve the EU membership. A prerequisite for this is WTO membership. Albania, Macedonia and Montenegro are already WTO members, Bosnia and Herzegovina and Serbia are still negotiating their accession, and Kosovo has not yet applied for membership but is expected to do so. All countries have signed an SAA with the EU and are at various stages of their EU approximation process. Finally, all are members of CEFTA, a regional trade agreement. Compared to the non-Baltic NMS, the Western Balkan service sectors are smaller in size and have a more adverse composition, leaning towards lower rather than higher value added services. The biggest exports of services in the region come from tourism, followed by transport, while only a few countries (Serbia, Montenegro and Macedonia) realise significant trade volumes in higher value-added services. Even if modest, the rate of growth of Western Balkan exports in services is higher than that of non-Baltic NMS, and higher than their own GDP growth, which indicates an improving export performance and allows for a process of gradual catch-up. This paper investigates the development of the services sectors in the Western Balkans both from the point of view of their international integration (EU and WTO membership and accession processes) and from the point of view of the structural changes that are taking place in their economies. The analysis is based on statistical data gathered from various international sources (UNCTAD, WTO and World Development Indicators databases). The paper concludes that in order to achieve a higher level of economic development, these countries need to develop the production and international trade of higher value-added services sectors.

 

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