The Effects of Institutions on the Transition of the Western Balkans
The Western Balkan countries have been lagging behind in their transition process, which started more than 30 years ago. While some justification can be made in the fact that the countries went through wars in the 1990s, the real problem is that they have not been able to create efficient institutions. Inefficient institutions hamper economic growth, as the countries do not attract foreign direct investment (FDI) to the extent they could and should. A lack of FDI affects three aspects of the transition process in the region: developing a functioning market economy, competitiveness, and convergence. Improvements in these areas can only be done by building efficient institutions.