At a turning point: The Southeast economies

In recent years, politicians and economic-policy decision makers pay increasing attention to the processes in the Southeast European region on account of its diminishing economic and political risks, and accelerating or stabilizing high-level growth, i.e. factors which have all appreciated the area. Consequently, foreign investors show a growing interests in the terrain as they attach high hopes to market opportunities that may yield substantial market expansion and profit gains. However, despite the undisputable stabilization, the economic processes of the region leave a set of questions open. On the one hand, the conditions of sustainable development have only evolved in the smaller part of the region, while several countries are still being engaged in creating the foundations of economic activity, eliminating serious imbalances and introducing market reforms, on the other. Favourable processes can be enhanced as policies of the European Union towards the region – characterized by ambivalence in the nineties – have become unambiguous. Relations between the EU and Southeast Europe received a sounder framework, although the integration process in most Balkan countries is in an initial phase, yet. Besides stabilization, the acceleration of privatization processes in the area facilitated the more active presence of foreign investors. In some countries foreign-owned firms or enterprises with foreign participation already contribute to improving the structure of economy and easing unemployment. Hungarian companies enter the region in growing numbers too, though there are only firms of larger size that dominate investment activity, so far. Smaller firms confine themselves to invest in a limited circle of countries. In our opinion, it must be treated as a priority that Hungary’s relations with Southeast Europe should help diversify Hungarian foreign trade and improve the growth prospects of the economy by additional impulses. The analysis of the processes outlined above has belonged to the major research fields of the Institute for World Economics for years. In this number of Working Papers we examine the features of development and the factors influencing investment in the region (Romania, Bulgaria, Croatia, Serbia and Montenegro, Macedonia, Bosnia-Herzegovina and Albania) from the viewpoint of the European integration and the Hungarian economy.