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Summary: This article analyzes the successes and failures of regional cooperation in the Western Balkans through the prism of two policy areas: trade policy and employment policy. It investigates the role of the Stability Pact as a policy broker in mediating the policy conflicts between various national and transnational advocacy coalitions in these two areas. It concludes that regional cooperation in the field of trade policy has been less contested than in the field of employment policy. However, there have been failures in each policy area. Regional cooperation in trade policy while ostensibly successful has threatened to widen economic gaps between countries in the region. Regional cooperation in employment policy has been contested and although levels of employment protection have been reduced, expenditure of active employment policies remains low and unemployment rates remain high especially in the less developed countries in the region.

In: Southeastern Europe
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Over the last twenty years, numerous international assistance programmes have aimed to provide support for reconstruction and assist the policy reform process in the Western Balkans. In this context, concerns have arisen that poor government policies and inadequate donor coordination have reduced the effectiveness of such assistance. The paper discusses the sources of policy success and policy failure of such international assistance programmes within a principal-agent framework that models the influence of misaligned objectives, differing incentive structures, asymmetric information and moral hazard facing the different actors in the institutional structure of assistance programmes. In this political economy approach the varying influences on multiple principals and agents are key determinants of the effectiveness of policy. The paper takes a sectoral view in examining assistance programmes in the vocational education sector, where large donor effort has been applied in the Western Balkans over the last decade to modernise and reform the education system. The specific focus is on secondary vocational education in Serbia. The paper identifies causes of policy failure in EU pre-accession assistance in this key policy area.

In: Southeastern Europe

Abstract

This article investigates how regional supply chains support the Western Balkans’ economic growth. It first identifies the role of the cefta free trade agreement in expanding the size of the local market and opening up regional trading opportunities. It recounts how the larger market and specific industrial policies have attracted foreign direct investment (fdi) to the region in recent years. It analyses how these two factors have combined to generate export-led growth in the region and have brought about substantial structural changes within these economies. The article argues that to take continued advantage of the success in trade liberalisation and fdi attraction, policymakers should pay special attention to promoting backward spillovers by promoting linkages between local small and middle sized enterprise (sme) supplier firms and the newly arrived multi national corporations embedded into global value chains. Policies should be adopted which build the capacity of local sme suppliers within regional supply chains, both in terms of labour force skills and technological upgrades. The EU’s recently launched Economic and Investment Plan for the Western Balkans and the activities of the Western Balkan Six Chamber Investment Forum may support such policies.

Open Access
In: Southeastern Europe