REGIONAL COOPERATION AND ECONOMIC INTEGRATION

Radmila Jovančević, Ph.D.,
Professor on the Department of
Macroeconomics and Economic Development
University of Zagreb
Faculty of Economics and Business
Croatia
REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION
The impact of world economic crisis on the
sustainable growth of the South-Eastern
European countries: Does regional cooperation
matter
Abstract
The analysis is focused on the sustainable economic growth of South-Eastern European
countries (SEE) in the conditions of global economic crisis. Statistical data indicate that
those countries experienced slow growth of GDP during the first transition period of 1989
- 1998. During the second 1999 – 2007 period, GDP growth was faster due to higher
growth of export, domestic demand and inflows of foreign direct investments (FDI). In
2008, the global financial crisis had an impact on the decreasing growth rate of exports
as well as on lower inflows of FDI with the worsening of economic performances and
rising unemployment. Since the SEE countries are faced with the rising protectionism
at the global and EU markets, the author suggests straightening regional and economic
integration by trade facilitation and enhancing inflows of FDI between countries in the
region. However, intensive competition, financial crisis and complex adjustment process
of the candidates’ countries on the way to the accession to the EU market makes the future
growth more difficult.
Key words: global crisis, foreign direct investment, regional cooperation
Introduction
The aim of this paper is to analyse the macroeconomic tendencies in the past twenty years
(1989- 2008) in the countries of South Eastern Europe. The coverage includes all countries
in the region and for the purpose of analysis they are divided into Western Balkan countries
and the countries of transition which are already members of the European Union. The
region’s countries have embarked on a steady course towards full EU integration since all
of them, (except Serbia and Kosovo) have signed pre-accession agreements (Stabilization
and Association Agreements – SAAs). However, the lack of progress regarding the EU
candidacy in Serbia, Macedonia, and Bosnia and Herzegovina is evident, while Croatia,
as a candidate country, has had problems with finalising its negotiations by the end of
2009 because of the bilateral disagreement with Slovenia. Having in mind this adjustment
process period towards the EU memberships and at the same time the impact of the global
financial crisis on the region’s economy, it is evident that promoting regional cooperation is
an economic and trade priority and that tighter relations between the neighbouring countries
will be a prerequisite.
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