How the Western Balkans can catch up

By Peter Sanfey, Jakov Milatović and Ana Krešić

Countries in the Western Balkans – Albania, Bosnia and Herzegovina, FYR Macedonia, Kosovo, Montenegro and Serbia – all aspire to membership of the European Union, but they face a major convergence challenge in terms of living standards. The main reason behind this prosperity gap lies in the failure over the years of Western Balkans countries to be competitive, meaning that they lack the appropriate factors and institutions needed for high levels of long-term productivity. The key issue is whether the Western Balkans countries can narrow the gap in the coming decade and, if so, what do they need to do to achieve this.