The Western Balkans, comprising Albania, Kosovo, North Macedonia, Bosnia and Herzegovina, Serbia, and Montenegro, are increasingly recognized as prime destinations for foreign investment. Recent research highlights the potential of “near-shoring,” a trend accelerated by the COVID-19 pandemic, which sees companies relocating production closer to home to reduce costs and streamline supply chains.
Branimir Jovanovic from the Vienna Institute for International Economic Research emphasized the region’s advantages in a recent interview with Anadolu Agency. He noted that European investors are seeking alternatives amid geopolitical shifts, such as the war in Ukraine. “The Western Balkans emerged as the first natural option,” Jovanovic stated, citing proximity, relatively low labor costs, and a skilled workforce as key factors attracting foreign investment.
Decarbonization efforts in the region also play a significant role in drawing investors. Jovanovic highlighted that the Western Balkans can support the European Union’s “Green Agreement” by reducing carbon emissions through renewable energy and establishing factories with lower emissions. He noted that while countries like Montenegro remain focused on tourism, most of the region is embracing these investment trends.
Muela Ibrahimi, Director of the Department for Economic Analysis and Strategic Communication of the Chamber of Commerce of Kosovo, added that the region offers fast access to key European markets, making it particularly attractive for companies looking to enhance operational efficiency. “Kosovo’s economy has experienced steady growth in foreign investment and near-shoring since the pandemic,” she stated.
Ibrahimi pointed to the region’s young, educated workforce as a competitive advantage, particularly in technology and engineering fields. With relatively low production costs compared to EU countries, the Western Balkans present an enticing option for investors aiming to maintain high production standards.
Economic expert Visar Ademi from North Macedonia underscored the importance of political stability and the rule of law for foreign investors. He acknowledged that governments in the region offer significant subsidies, enhancing the area’s appeal as an investment destination. Ademi called for concrete steps to reduce carbon emissions in line with EU membership criteria, highlighting the potential for increased trade and competitiveness.
The World Bank’s latest data reveals that Serbia leads the region in foreign direct investment inflows, attracting approximately $4.8 billion in 2023. Albania follows with $1.6 billion, while Bosnia and Herzegovina, Kosovo, North Macedonia, and Montenegro also report significant investments.
As the Western Balkans position themselves as a vital investment hub, the combination of near-shoring and decarbonization presents a promising pathway for economic development, potentially reducing unemployment and raising living standards across the region.
