European Economic Integration and South-East Europe
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European Economic Integration and South-East Europe

Challenges and Prospects

Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald

With both transition dynamics and the EU integration process having shifted to the south-east of Europe, a region fairly marginalized in the literature, this book fills a gap by taking stock of where South-East Europe’s economies and institutions stood in 2004. The authors evaluate the potential for investment and growth within the South-East European region, including the role of trade and FDI, and discuss the challenges associated with unemployment, poverty and ‘brain drain’. The book also provides insights into the particular monetary and exchange rate policies applied, including cases of ‘euroization’, and finally makes an assessment, against this background, of the European perspective of the countries of South-East Europe.
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Chapter 13: FDI and trade as pivotal elements for catching up and competitiveness

Ewald Nowotny


Ewald Nowotny 1. SOUTH-EAST EUROPEAN COUNTRIES AND A STRATEGY OF EXPORT-LED GROWTH The countries of South-East Europe (SEE) are a very inhomogeneous group, both with regard to their economic and political structures and with regard to their relationship with the EU. But for all of these countries a strategy of export-led growth appears to be the most promising way for economically sustainable development. This is immediately obvious for the many small countries of this region, but is relevant also for Romania, the biggest country. A policy of export-led growth is directly relevant for tackling the problems of high current account deficits. This problem is relevant for most of the countries of the region and has to been seen as one of the major policy restrictions for more expansionist government policies – policy restrictions in many cases institutionalized by IMF agreements (see Table 13.1). One also has to be aware that for the countries of the Western Balkans the external balances shown in this table are the current account deficits after grants. Current account deficits before grants are substantially higher in some countries; in Bosnia and Herzegovina for instance they account for 21.3 per cent of GDP – which is clearly an unsustainable situation. From a longer-term perspective a policy of export-led growth has the even more important effect of enforcing international standards of quality and reliability and thus advancing long-term structural change with regard to institutions, educational and training systems. First of all to be able to qualify...

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