Globalization, Southeastern Europe, and the World Economy

207 Pages·2015·0.794 MB·English

by  Fikret Causevic

Globalization, Southeastern Europe,
and the World Economy
This book explores the key economic issues facing Southeastern Europe and
Bosnia and Herzegovina, within the context of the serious challenges that the
global economy has faced in recent years. It combines rigorous analysis of the
issues faced by the region with a constructive approach to identifying solutions
for a positive future trajectory.
The book starts by exploring the economic challenges facing the world
economy both before and during the global economic crisis. The second part of
the volume focuses on Southeastern Europe, and especially on the Western
Balkans, assessing the best ways of achieving a positive economic future for
small open economies in the region. The final part of the volume examines the
economic challenges in Bosnia and Herzegovina.
One of Čaušević’s main findings is his proposal for the creation of a Euro-
pean Union Guarantee Fund for the Western Balkans, which would guarantee
long- maturity bond issues by the countries of the region, denominated in national
currencies. These bond issues would be called Euro-B alkan bonds and they
could be classified as financial assets with a lower degree of risk. The revenues
realized would be used exclusively to finance capital projects, preferably at the
cross-b order level. Thus, one of the key problems facing small open economies
which are not yet members of larger associations and therefore lack the backing
of a supranational institution could be solved and systemic risk could be reduced,
stimulating economic growth and employment.
Čaušević had also foreseen the need for a return to Keynes’s thought before
the crisis broke out. In his conclusion on the need for reform of the international
financial system (in 2006), he stated that private institutions/entities would not
be able to replace the international and national authorities in providing key fin-
ancial resources for sustainable development.
Fikret Čaušević is Professor of Economics and International Finance at the
Faculty of Economics, University of Sarajevo, Bosnia and Herzegovina.
Routledge studies in the European economy
1 Growth and Crisis in the 7 The Enlargement of the
Spanish Economy, 1940–1993 European Union
Sima Lieberman Issues and strategies
Edited by Victoria Curzon- Price,
2 Work and Employment in Europe
Alice Landau and
A new convergence?
Richard Whitman
Edited by Peter Cressey and
Bryn Jones
8 European Trade Unions
3 Trans- European Change and response
Telecommunication Networks Edited by Mike Rigby,
The challenges for industrial policy Roger Smith and Teresa Lawlor
Colin Turner
9 Fiscal Federalism in the
4 European Union – European European Union
Industrial Relations? Edited by Amedeo Fossati and
Global challenges, national Giorgio Panella
developments and transnational
dynamics 10 European Telecommunications
Edited by Wolfgang E. Lecher and Liberalisation
Hans- Wolfgang Platzer Edited by Kjell A. Eliassen and
Marit Sjøvaag
5 Governance, Industry and Labour
Markets in Britain and France
11 Integration and Transition in
The modernizing state in the
Europe
mid- twentieth century
The economic geography of
Edited by Noel Whiteside and
interaction
Robert Salais
Edited by George Petrakos,
6 Labour Market Efficiency in the Gunther Maier and
European Union Grzegorz Gorzelak
Employment protection and fixed-
term contracts 12 SMEs and European Integration
Klaus Schömann, Ralf Rogowski Internationalisation strategies
and Thomas Kruppe Birgit Hegge
13 Fiscal Federalism and European 22 International Trade, Consumer
Economic Integration Interests and Reform of the
Edited by Mark Baimbridge and Common Agricultural Policy
Philip Whyman Edited by
Susan Mary Senior Nello and
14 Financial Markets in Central
Pierpaolo Pierani
and Eastern Europe
Stability and efficiency 23 Economic Governance in the EU
Edited by Morten Balling, Willem Molle
Frank Lierman and
Andy Mullineux 24 Financial Integration in the
European Union
15 Russian Path Dependence Edited by Roman Matoušek and
Stefan Hedlund Daniel Stavárek
16 The Impact of European
25 Europe and the Mediterranean
Integration on Regional
Economy
Structural Change and Cohesion
Edited by Joan Costa- Font
Edited by Christiane Krieger-
Boden, Edgar Morgenroth and 26 The Political Economy of the
George Petrakos European Social Model
Philip S. Whyman,
17 Macroeconomic Policy in the
Mark J. Baimbridge and
European Monetary Union
Andrew Mullen
From the old to the new stability
and growth pact 27 Gender and the European
Edited by Francesco Farina and Labour Market
Roberto Tamborini Edited by Francesca Bettio,
Janneke Plantenga and
18 Economic Policy Proposals for
Mark Smith
Germany and Europe
Edited by Ronald Schettkat and
28 The Economic Crisis and
Jochem Langkau
Governance in the European
19 Competitiveness of New Europe Union
Papers from the second Lancut A critical assessment
economic forum Edited by Javier Bilbao- Ubillos
Edited by Jan Winiecki
29 Competitiveness in the
20 Deregulation and the Airline European Economy
Business in Europe Edited by Stefan Collignon and
Sean Barrett Piero Esposito
21 Beyond Market Access for 30 The Contradictions of Austerity
Economic Development The socio- economic costs of the
EU–Africa relations in transition neoliberal Baltic model
Edited by Gerrit Faber and Edited by Jeffrey Sommers and
Jan Orbie Charles Woolfson
31 The New Economic Governance 34 Designing a European Fiscal
in the Euro- Area Union
Armin Steinbach Lessons from the experience of
fiscal federations
32 The Economics of Urban Edited by Carlo Cottarelli and
Property Markets Martine Guerguil
An institutional economics
analysis 35 Globalization, Southeastern
Paschalis Arvanitidis Europe, and the World
Economy
33 South- East Europe in Evolution Fikret Čaušević
Edited by Hardy Hanappi
Globalization, Southeastern
Europe, and the World
Economy
Fikret Čaušević
First published 2015
by Routledge
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© 2015 Fikret Čaušević
The right of Fikret Čaušević to be identified as author of this work has
been asserted by him in accordance with the Copyright, Designs and
Patent Act 1988.
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without intent to infringe.
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ISBN: 978-1-138-83058-5 (hbk)
ISBN: 978-1-315-73720-1 (ebk)
Typeset in Times New Roman
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Contents
List of figures ix
List of tables x
Foreword xiii
PETER SANFEY
Foreword xv
MAX WATSON
Introduction 1
PART I
Economic challenges in the world economy before and
during the global financial and economic crisis 15
1 The international financial system during the great recession
and its implications for a micro-s tate open economy in the
Western Balkans 17
2 Financial liberalization, economic growth, and the need for
reform of the global financial system 33
3 The international financial architecture and the global
financial crisis: its causes, birth, and impact on small open
economies – the case of Bosnia and Herzegovina 49
4 Market fundamentalism, religious fundamentalism, and
economic growth 73
viii Contents
PART II
Economic challenges in Southeastern Europe and the
Western Balkans: lessons learned in the first decade of the
twenty- first century 83
5 What type of fiscal policy is needed to foster the economic
development of the Western Balkans? 85
6 Fiscal policies in the European Union, the United States, and
the Western Balkans in the age of global crisis: controlled fiscal
expansion for a New Deal for the Western Balkans 91
7 Financial constraints on economic growth in Southeastern
Europe 102
PART III
Economic challenges in post- Dayton Bosnia and
Herzegovina 133
8 Macroeconomic management in Bosnia and Herzegovina on the
road to EU accession: 1996–2006 135
9 Bosnia and Herzegovina’s trade policy and competitiveness,
1996–2008: a policy brief 157
10 Economic perspectives on Bosnia and Herzegovina in the
period of global crisis 166
Index 180
Figures
1.1 Notional value of OTC traded contracts in financial derivatives 24
3.1 The United States’ and Japan’s share in world GDP 50
3.2 Brazil, Russia, India, and China’s share in world GDP 51
7.1 Change in ranking and GNI per capita of the Western Balkan
countries, 2008–2012 108
7.2 Change in GDP per capita in SEE countries, 2001–2010 109
7.3 Current account balances of SEE countries, 2004–2010 110
7.4 Credit activity in Albania and FYR Macedonia, 2005–2010 116
7.5 Credit activity in Bosnia and Herzegovina, and Montenegro,
2005–2010 117
8.1 Change in the level of relative economic positions of the
Former Yugoslav republics in relation to their economic
position in 1991 138
8.2 Employment and unemployment in Bosnia and Herzegovina,
2000–2006 148
10.1 Percentage change in credit activity and assets, and nominal
GDP growth rates (year- on-year): Bosnia and Herzegovina,
2005–2011 168
10.2 Foreign assets, foreign liabilities, and net foreign liabilities of
commercial banks in Bosnia and Herzegovina, 2008–2011 169
10.3 Deposits of commercial banks in Bosnia and Herzegovina,
2008–2011 170
10.4 Change in total deposits and net foreign liabilities of
commercial banks in Bosnia and Herzegovina 170
10.5 Exports, imports and trade balance of Bosnia and Herzegovina 171