Western Balkans at Crossroads: a comprehensive analysis of the policy strategy for the future integration of the region.

Details

Supervisors

Houssa, Romain ; Giovanna, D'Adda

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale, à finalité spécialisée

Abstract

This project aims to analyse the Western Balkans’ economies, evaluating the feasibility of monetary integration in the region. We discuss the socio-economic costs linked to the monetary policy’s transfer to a Supranational authority, taking into analysis the degree of symmetry of the macroeconomic shocks. We present a comprehensive analysis of the policy strategies for the future development of this area. We describe in detail the status of the literature on the topic of economic and political integration in the Western Balkans region. We give a rigorous reconstruction of the historical timeline of the region, describe the efforts in support of regional integration, and introduce relevant elements for the identification of the costs of monetary integration. The evidence reveals the existence of a core and a periphery in the Western Balkan region, with Bosnia and Herzegovina, North Macedonia, Serbia, and to some extent, Montenegro representing the core. These countries share similarities in response to shocks, a high shock correlation, and relatively high levels of intra-industry trade. On the other hand, Albania is not a suitable candidate to form a monetary union with the other Balkan countries. Albania is the least similar to the other in terms of shock-correlation and trading behaviour. Therefore, forming a monetary union with the core Western Balkans would be economically costly for Albania. Whereas, for the core countries, the cost of joining a monetary union among themselves is much more convenient given the high affinity revealed by the evidence.