REGIONAL COOPERATION AND ECONOMIC INTEGRATION

REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION
At the global level, FDI inflows reached an estimated $1.8 trillion in 2007, surpassing
the previous record level of 2000 (WIR, 2008) with a rise in flows to South-East Europe.
The financial and credit crisis that started in the latter half of 2007 has not substantially
affected FDI inflows to the region thus far. In fact, between 2004 and 2007, total FDI net to
transition economies nearly doubled, from $15, 7 billion to a $30, 4 billion.
Table 8: Foreign direct investments in South Eastern Europe (SEE)
Country/Region
FDI net (in millions Cumulative inflows Per capita
of US $) (millions of US $) inflows (US $)
2004 2007 1989-2007 1989-2007
WBCs 2791 10541 42509 1790
Albania 324 641 2655 830
Bosnia &
708 2023 5124 1464
Herzegovina
Montenegro 63 717 1986 3150
Croatia 732 4644 18515 4208
FYR Macedonia 322 321 2234 1106
Serbia 966 2195 11995 1225
Members of EU 12933 19816 125377 2375
Bulgaria 2879 8154 29444 3770
Hungary 3405 2197 48557 4810
Romania 6368 9818 44894 2060
Slovenia 281 -353 2482 1240
Total SEE 15724 30357 167886 2205
Source: EBRD, 2008
Cumulative inflows of FDI for the period 1989-2007 in SEE reached almost 170 billion
US $, but was unevenly distributed by the countries. Calculation on per capita basis shows
that the SEE countries, members of the EU, were able to attract 33 per cent more FDI per
capita than countries in WB. As far as countries concerned, the largest inflow per capita
in this period was in Hungary (4810 $) followed by Croatia (4208) and Bulgaria (3770$).
The smallest inflow of the FDI per capita was in Albania (only 830 $), Macedonia (1106)
and Serbia (1225). Slovenia, as the most developed country of the region attracted only
1240 $ per inhabitant. However, the correlation of FDI per capita with the growth rate of
economies exists, dependent on the time- lags between the entrance of FDI and increase of
GDP, although not a high one.
The analysis of the structure of FDI projects in SEE showed that manufacturing is the
main investment activity. However, the leading investment sectors in SEE have been food,
business-to-business services, non-metallic mineral products, automotive components,
electronics, plastics and chemicals. The top four fastest growing sectors in both SEE and
the Western Balkans are: business services, plastics and rubber, transport services, and
machinery and equipment (World Bank, 2007).
2.1. Impact of remittances on South-Eastern European Economies
There is also a link between remittances and trade deficit. The remittances have impact
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