South-East Europe: Economic Performance, Perspectives and Policy Challenges

The study presents an overview of the economic and social developments in the region in recent years. It focuses on a comparative perspective, using Greece as a benchmark for the region. Section II focuses on the basic economic and social facts and trends. Section III examines the quality of institutions in south-eastern European countries. Section IV looks at recent macro-economic developments. Section V discusses recent trade and foreign direct investment patterns and performance. The analysis identifies the following four main areas where policies should be pushed further to promote competitiveness, economic growth and stability in Southeast Europe: openness to trade and foreign direct investment; regional co-operation; strengthening governance; EU leadership. As in the case of the current EU accession countries, the prospect of future EU membership can play a decisive role in overcoming internal resistance to reform and facilitating institutional improvements. The EU should realise its responsibility for providing such a perspective and exerting leadership in the region, which otherwise could remain a weak and unstable part of Europe for too long.