Economic Developments in the Balkan Countries and the Role of Greece: From Bilateral Relations to the Challenge of Integration

Throughout the post-war period Greece has faced a unique, and unfavourable, situation consisting of: (i) a perimetric location away from major European markets; and (ii) distorted economic relations as its northern borders were designed to be real barriers to communication and trade with neighbouring countries. This type of border conditions have adversely affected the structure and performance of the economy and its prospects for convergence. This paper examines the post-1989 developments in the Balkan region from a Greek perspective. Growth rates, development levels, economic structures, trade relations, factor movements and the spatial structure of the region are examined on a comparative basis, in order to detect major trends and developments that are taking place, as a result of an unprecedented integration-transition process. On the basis of the analysis, it is concluded that Greece can overcome isolation and effectively deal with the pressures and difficulties of European integration, by pursuing a strategy that will gradually recompose the economic space in its vicinity, with the creation of a large and accessible regional Balkan market. The appropriate policy mix should include, among other things, steady and energetic encouragement to all Balkan countries, to join in the future the European Union and the promotion of a EU-strategic development plan for the Balkan region, with the active participation of Greece and special emphasis on issues of intra-regional cooperation and integration.