EUROPEAN FOREIGN DIRECT INVESTMENT IN THE BALKANS
This research paper discusses the historical background and contemporary geopolitical and economic perspectives of foreign, primarily European, direct investment (FDI) in the Balkans and in particular Balkan nations.
The national economies which make up the Balkan Peninsula have not shared appreciably in the tremendous global expansion of FDI which has occurred in the last quarter of the 20th century. The ending of the Cold War and the apparent dampening down of the wars of the 1990s which accompanied the disintegration of the former Yugoslav Federation have ushered into power throughout most of the region governments which are receptive to FDI.
FDI and other forms of European foreign capital played a major role in the initial economic modernization of the major Balkan nations, especially during the half century which preceded the First World War and to a lesser extent during the mid-1920s. That modernization was, however, very incomplete and was interrupted by two World Wars, ethnic and religious tensions, political instability, economic nationalism, the Depression and other factors. FDI was excluded from the Balkans, except in Yugoslavia during the latter phase of Josef Tito's rule, in the communist centrally planned economies of the years 1945-1990, which generally unbalanced and retarded Balkan economic development and made Balkan re-entry into the world economy a very painful process.
Future prospects for European FDI in the Balkans vary by region and by country. They are most attractive in the Northern tier states of Slovenia and Croatia, but the growth of FDI has remained modest even there, due to principally to economic and social dislocations caused by the wars of Yugoslav secession. The central Balkans region (Serbia, the international protectorate over Kosovo since 1999, Bosnia, Albania and Macedonia) has been and is likely to remain for the indefinite futu...