Balkans: the South-Eastern gateway to a New Europe

The Balkans' economic relations with European Union countries have been particularly intense during the last decades. Geographical reasons together with political and economical links can explain why the process of development and integration of Balkan's countries is of paramount interest for the European Union: this area represents the South - Eastern gateway to a new and more integrated Europe.

In this paper we analyse two main economic links between the European Union countries and the Balkans: trade and Foreign Direct Investments. Integration through foreign trade and investment needs to be considered as two complementary facets of the Region's capacity to get integrated into global markets. Traditionally, European Union countries are the Balkans' main partners both for trade and investments. This relation, especially for Italy, represents one of the few example of a "systemic integration", involving not only commercial exchanges, but also investment flows, presence of credit and financial institutions, labour mobility (through migration flows) , security cooperation and technological and cultural exchanges.

The paper is divided in two sections: in the first one, we analyse the complex network of commercial relations between the Balkans and their European partners. Specifically, we outline the position of Balkans in world trade and the evolution of economic relations between Balkan countries and the European Union and we focus on the links between Balkan countries and Italy, trying to assess the degree of mutual economic and commercial integration. In the second section we study recent FDI flows towards the Region by country of origin and by sectors highlighting the presence of Italian firms.

At this stage, the integration process through trade and foreign direct investment flows is already significant, but it might be improved. This means that the economic integration between Balkan countries and the European Union, and in particular the already strong economic links with Italy, could increase even more in the near future.