Economics: from International Assistance toward Self-Sustaining Growth

Abstract

The economies of South Eastern Europe (SEE) — Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Montenegro, Serbia,¹ Macedonia and Romania — today face a number of problems which are different from other transition economies, both in Central and Eastern Europe (CEE) and in the Commonwealth of Independent States (CIS). At the heart of the most pressing economic problems are the more general constraints posed by the “indigenous weaknesses” of SEE economies, deriving from internal constraints on growth, low level of development, and aid dependence; and by the “international inadequacies,” deriving from inappropriate international assistance policies and externally-imposed reform agendas.² Despite a large amount of international, particularly European Union (EU), multilateral and bilateral assistance extended to the seven SEE countries throughout the 1990s, this region has remained one of major political and economic instability, characterized by recurrent economic crises, reform backsliding, and reversals in macroeconomic stabilization and economic recovery.³ It is only over the past few years that the economic, political and international prospects of SEE seem to be improving, thanks to both internal political developments in two key countries, Croatia and Serbia,⁴ and to the fundamental change in international strategies towards SEE after the NATO bombardments of the Federal Republic of Yugoslavia (FRY) in 1999. Despite such brighter general prospects, however, a new major crisis has in the meantime emerged (Macedonia), while the status of some entities (Kosovo, Montenegro, Serbia) has still not been definitely settled, clearly indicating that even today, the risk of political and economic instability in SEE has not been completely removed.