REGIONAL COOPERATION AND ECONOMIC INTEGRATION

FDI FLOWS IN SOUTH EASTERN EUROPE
Biljana Lazić
dipl.ecc, the teaching assistant
Milijana Đorđević
dipl.ecc, the teaching assistant
FOREIGN DIRECT INVESTMENTS AND COMPETITIVENESS
ENHANCEMENT OF WEST BALKAN COUNTRIES
Abstract
Undoubtedly, the forthcoming period is certainly bringing about drastic changes in world
economy, thus this will surely exert influence on general economic situation in European
countries. The Western Balkan, this “rich” and yet “poor” territory, with the turbulent
past, controversial events and unstable situation is becoming an inexhaustible field of
always current and interesting themes for both writing and discussing. Independently
deserved or even partly forced unenviable situation in Serbia as well as in the neighbouring
countries in the region is causing the need for consideration of the possibilities to improve
current position and achieve defined goals. Before we start to analyze this theme, we
must ask ourselves if it is justified to talk about financial sources and modes in the period
of upcoming world crisis and uncertain economic trends! Is the crisis an ideal excuse
for the rich to become richer and an unfortunate set of circumstances for the poor to
become poorer! Viewpoints on such serious matters are different and contradictions are
certainly huge, but the fact is that the transitional countries must gradually adapt to the
forthcoming situation as well, and to continue to follow the way in the direction from
the transformation of centrally-planned economies to the market oriented ones. In the
aforementioned circumstances, a considerable and reliable financial support is necessary.
Such support must initially be manifested through the foreign direct investments. The
purpose of this paper is to prove that the inflow of the fresh capital, which is already
insufficient and missing component in the economies of the aforementioned countries, is
an initial factor of economic development and the major condition for economic recovery.
The foreign capital undoubtedly provides very important benefits to host countries and it
results in achieving political and economic stability, strengthens the legal and institutional
framework, introduces new technological knowledge, improves business environment, as
well as advances the managerial and organizational labor competences. However, this
paper will emphasize all negative characteristics of foreign direct investments, as well as
confirm the existing circumstances, which will eventually lead us to the conclusion that
certain consequences always accompany every transitional process. The purpose of this
paper, in addition to analyzing current situation and possible development potentials, is
to point to the importance of creating an attractive investment environment in the Western
Balkan countries. It is also important to emphasize that a key role in attracting the foreign
capital, is most certainly held by privatization, liberalization and process of establishing
macroeconomic stability. In the following text, we will discuss the relevant standards
of competitiveness in the aforementioned countries, as well as their current values and
possibilities of future progress. To summarize, we will provide an overview of the basic
FDI forms and motives that are behind the actions of foreign investors, where we will
particularly emphasize quantitative indicators of FDI flow in Western Balkan countries in
the previous period.
Key words: foreign direct investments – FDI, transition, investment environment,
competitiveness, developing countries
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