The Economic Effects of Market Integration in the Western Balkans

In the Western Balkans, trade and transport policy reforms that reduce waiting time at theborder by just three hours are equivalent to removing a value-based tariff of 2 percent. Reform gains are maximizedwhen they are coordinated across economies and implemented jointly: cross-border coordination in the implementation ofthe package of national single window and other trade facilitation reforms would generate 8 percent higher gainsthan if each economy were to carry out the reforms autonomously. The impacts of trade reforms and improvementsin road infrastructure would be further amplified if Western Balkan economies belonged to the European Union, which wouldresult in an additional 6 percent boost to welfare. Moreover, the accession of Western Balkan economies to theEuropean Union would have positive spillover welfare effects for countries such as Croatia, Bulgaria, Romania, andHungary, and negligible effects for other EU members.