The Effects of Globalization on the International Competitiveness of the Western Balkan Countries

Abstract

Abstract The Western Balkan countries, which are in the late transition process, fail to take advantage of the opportunities brought by globalization and the removal of restrictions to the free flow of capital, technology, knowledge, people and information. Despite the entry of a significant stock of foreign capital into these countries, they failed to significantly improve the technological level of production and the competitiveness of their economies. The subject of the paper research is the examination of the impact of globalization on the reached level of competitiveness of the economies of the Western Balkan, as well as the countries of Central and Eastern Europe, in the period before the emergence of the COVID crisis. The question raised in the paper is to what extent the process of globalization and the entry of transnational corporations into the Western Balkan countries affected their economies’competitiveness. These two issues permeate each other to a large extent, considering that the governments of the transition countries believe that the foreign capital inflow, in the form of highly sophisticated technology, will simultaneously enable the completion of the transition process and a more decisive integration of the five countries of the Western Balkan in global investment and trade flows. The research confirmed that the degree of involvement in international economic flows has a statistically significant and positive impact on the growth of competitiveness, and that these effects are more pronounced in the Western Balkans than in the Central and Eastern European regions.