Economic Themes (2013) 51 (1) 1, 1-20

THE IMPACT OF THE WORLD ECONOMIC CRISIS ON FOREIGN INVESTMENTS AND TRADE FLOWS IN THE WESTERN BALKANS


Danijela Jaćimović, Predrag Bjelić, Ivan Marković

Abstract: This economic downturn has largely influenced the domestic economic stability of the Western Balkan economies. This paper will focus on impact of the world economic crisis on the Western Balkan economies and especially on their international trade and investment flows. Since this region is closely economically tied with the European Union, the crisis spread to the region very quickly through decreasing of regional exports to the EU market and through downward trends of foreign direct investments inflows to the region. The Western Balkan economies have low competitive position in the European and world market but this crisis has even further eroded their position. During the crisis time, all regional countries have found themselves in very fragile and vulnerable position, facing very low levels of FDI and diminishing export values. The paper will also examine how the changes of the FDI inflows in the period before and during the crisis have influenced the competition level of the region.

Keywords:  FDI; competitiveness; trade; economic crisis

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