Strategic Moves - Regional Environmental Center for Central and ...

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C H A P T E R 4
E C O N O M I C D E V E L O P M E N T A N D T H E E U A C C E S S I O N P R O C E S S
S T R AT E G I C M O V E S
in the mid-1990s and the political situation in some of the countries. The process
was delayed by around 10 years compared to Central European countries and Bulgaria
and Romania — a fact that has had a profound impact on the region’s competitiveness
and foreign investment flows.
The process of economic transition was enhanced by big inflows of aid and accompanied
by strong economic growth sustained at an average of between 4 and
7 percent between 2004 and 2008. Kosovo (as defined under UNSCR 1244)
demonstrated the lowest economic growth of 4.2 percent, followed by Croatia and
the former Yugoslav Republic of Macedonia with 4.5 percent average growth, and
Montenegro, Bosnia and Herzegovina and Albania with growth varying between
5.5 and 6 percent. Serbia achieved the most significant growth rates of 6.6 percent
on average (EC, Economic and Financial Affairs website). The majority of countries
with GDP at purchasing power parity (PPP) per capita ranging from USD
6,800 (Albania) to USD 16,500 (Croatia) were classified by the World Bank as
middle-income countries in 2008 (World Bank website). Kosovo (as defined under
UNSCR 1244), with USD 2,600, falls behind all the SEE countries.
The major factors contributing to sustainable economic development were the
dynamic development of the private sector, price liberalisation, the restructuring
and privatisation of key industrial enterprises, the modernisation of the financial
sector, increased revenues and a robust growth in exports. Additional factors seen
as facilitating stable economic growth were the improvement in the transparency
and accountability of public services, the creation of institutions for the regulation
and supervision of the market economy, the provision of necessary legislation, the
stimulation of private consumption, the widening of retail trade and ongoing financial
intermediations. In all countries inflation rates were kept low and currencies
remained stable in recent years due to national governments’ cautious monetary
and fiscal consolidation policies (EC, Economic and Financial Affairs website).
However, inflation trends have begun to reassert themselves as a consequence of rising
global food and oil prices and weakened pressure on the demand side in 2008.
Poverty, unemployment and the exclusion of vulnerable strata of society are still
a cause for concern for many SEE countries. The long period of instability, isolation
and economic turmoil had an adverse effect on living standards for the majority of
the region’s population and was accompanied by a deterioration in social and health
services. The labour market situation is steadily improving in Albania, Croatia,
Montenegro and Serbia, where the official unemployment rate in 2008 ranged between
11 and 14 percent. In the former Yugoslav Republic of Macedonia, unemployment
stood at 33 percent of the labour force in 2008, while Kosovo (as defined
under UNSCR 1244) and Bosnia and Herzegovina had the worst employment figures
at approximately 40 percent unemployment in 2008. Nevertheless, real levels of
unemployment are lower, since a significant number of people who are registered as
unemployed are working in the grey economy (EC, Economic and Financial Affairs
website). The absolute poverty level is also constantly decreasing.