The Business Landscape in the Western Balkans: Challenges and Opportunities

Interview with John Kay, Program Manager, Center for International Private Enterprises

In a recent interview with John Kay, the DC-based Program Manager, managing CIPE programs across the Western Balkans and EU member states, talked about the Western Balkans business dynamics, a spectrum of challenges and opportunities emerges.

World Politics: The Western Balkans is one of the most sensitive regions in Europe. Many cultures meet, which inevitably leads to friction. How is this perceived in this business world? Is cultural diversity currently improving or detracting from business performance?

To begin with the interview John Kay mentioned the significance of regional cooperation as a crucial factor for business success. He acknowledged the potential for friction arising from the convergence of different cultures but emphasized that the business leaders in the region recognize the importance of collaboration across various groups. While past national and ethnic conflicts have raised concerns about investor confidence, there are ongoing initiatives and efforts aimed at promoting regional integration and cooperation. Kay mentioned that these initiatives are designed to allow the Western Balkans to operate across cultural and national boundaries, making it a more attractive destination for investors. In essence, while cultural diversity can be a strength, the success lies in the initiatives towards cooperation and partnerships that are already underway in the region.

In terms of whether cultural diversity is currently improving or detracting from business performance, Kay’s response indicated that while diversity can be a strength, its positive impact depends on the active efforts to foster cooperation. The diverse cultures and communities within the Western Balkans can indeed contribute positively to the business environment, but for this potential to be realized, the ongoing initiatives for regional cooperation and partnerships need to be effectively executed, moving beyond mere public commitments.

World Politics: So due to the historical reason, as you mentioned, the lack of trust is significant tradition in the state and rules in this region. This also has an impact on business life. What disadvantage do you see in the lack of trust? What difficulties do the companies entering this market have to face? What do you advise them to do to avoid these difficulties?

John Kay addressed the impact of historical factors on the lack of trust in the state and rules within the Western Balkans region. He emphasized that the lack of trust poses a significant risk to businesses, particularly in terms of investor confidence and confidence in the rule of law. This lack of trust can undermine the business environment and discourage potential investors from entering the market.

Companies entering the market in the Western Balkans face several difficulties due to the lack of trust. One of the key challenges is the erosion of investor confidence, which affects the willingness to invest and commit resources to the region. Additionally, the absence of a strong rule of law can lead to uncertainties regarding legal protections and contract enforcement, further deterring potential investors.

To navigate these difficulties, John Kay provided insights and advice. He highlighted the importance of being part of the solution at both policy and business levels. Businesses can actively engage in advocating for policy reforms through chambers of commerce and business associations and should take proactive steps to enhance their internal ethics and compliance policies. By focusing on this, companies can bolster their confidence in investments within the region.

World Politics: How do historical, social or political factors impact the business culture in the Western Balkans and its approach to true compliance?

John Kay offered insights into how historical, social, and political factors impact the business culture in the Western Balkans and its approach to compliance. He noted that despite not being part of the European Union, the region is deeply intertwined with European values due to its geographical location at the heart of Europe. This historical context shapes the business culture and provides a foundation for adopting compliance standards and best practices.

The Western Balkans’ proximity to Europe and its historical ties have resulted in a business culture that aligns with European values and business ethics. While the region faces challenges, it holds tremendous potential to incorporate some of the world’s best compliance standards. This potential is a reflection of its history and culture, which are deeply rooted in European values.                                                              

In essence, the historical, social, and political factors have positioned the Western Balkans as a region with a natural inclination towards compliance and adherence to international standards. The region’s history of interaction with Europe has paved the way for a business culture that values compliance and ethics, allowing it to integrate effectively into international business practices.

World Politics: Are there specific industries or sectors in the Western Balkans that are particularly receptive to development and innovation? What factors contribute to their growth?

John Kay discussed the sectors in the Western Balkans that are particularly receptive to development and innovation, along with the factors contributing to their growth. He highlighted the IT and startup community as a sector that is actively fostering innovation and growth across the region. Additionally, he pointed out opportunities for nearshoring supply chains in sectors such as agriculture, textiles, and manufacturing. This sectors mentioned above have the potential to integrate more deeply within European supply chains, aligning with EU environmental priorities and green transition goals.

World Politics: Have you observed any efforts by businesses in the West and Balkans to adapt or align their practices with international standards or best practices?

John Kay provided insights into the efforts that there are indeed, existing initiatives in the region aimed at achieving compliance and meeting international standards. Kay highlighted: “We’ve been very pleased with our partnership with the American Chamber of Commerce in Bosnia and Herzegovina” that focuses on raising internal ethics and compliance standards within member companies. He also noted that many major firms in the Balkans are taking compliance seriously, implementing new positions and policies within their companies to ensure alignment with international standards.

World Politics:  It’s quite interesting that you mentioned that the EU membership joined this process. And that’s the reason why I ask you that for the countries that joined the European Union in 2004 and 2007 to catch up, multinational companies were a major support. Will this model prevail in this region as well?

Due to the size of the Western Balkans and its relatively small economic zone, international cooperation, including involvement with multinational companies, is essential for growth. He highlighted the impact that multinational companies have already had on the region, especially through their business relationships. However, he also stressed the importance of the Western Balkans looking for various forms of international cooperation, given its strategic position in the world.

John suggested that while the Western Balkans holds tremendous potential, the model of multinational support could indeed play a significant role in the region’s development. Without a doubt this model of multinational support could be relevant for the Western Balkans. It is just one facet of the larger strategy that the region needs to adopt to ensure economic growth and integration. The region’s small size and strategic significance call for a multifaceted approach that includes both multinational involvement and broader international cooperation.

World Politics: What can different civil organizations such as CIPE do for faster integration? What results are you able to achieve and where do you need to improve?

John Kay discussed the role of civil organizations, like CIPE, in fostering faster integration within the Western Balkans. He highlighted two primary areas in which civil organizations can contribute to the region’s integration efforts. John emphasized: “On one hand, trying to help the business community be the most ethical and compliant and competitive that it can be” by helping the business community enhance compliance and due diligence standards. Civil organizations can provide resources and assistance to businesses in aligning with international standards, which is crucial for deeper integration into EU supply chains. By ensuring that businesses are ethical, compliant, and competitive, civil organizations contribute significantly to the region’s readiness for integration.                                                         

Secondly, John Kay highlighted the need to strengthen public-private dialogue in the region. He noted that the Western Balkans is characterized by a complex array of regional integration initiatives and investment efforts. Civil organizations can play a pivotal role in facilitating open and direct dialogue between business leaders and policymakers. This inclusivity ensures that economic policies are accountable to all stakeholders, be it businesses, civil society, or the general public.

There is a broad awareness within the Western Balkans’ business community regarding the importance of compliance and international standards. John Kay pointed to initiatives such as partnerships with chambers of commerce and business associations, which have led to increased compliance and ethics standards within member companies.

Efforts are being made by individual businesses and business associations to ensure that the region’s businesses are ready and competitive in the face of increasingly demanding EU regulations and international expectations. In summary, civil organizations like CIPE can play a pivotal role in promoting compliance, facilitating dialogue, and driving integration efforts within the Western Balkans. While they have already achieved results, there’s a continuous need for improvement to further enhance compliance, accountability, and integration within the region.

Thank you for your answers!


Clara Fernandez Saralegui – László Trautmann

“This interview was prepared with support from the Center for International Private Enterprise (CIPE), whose mission is to strengthen democracy around the globe through private enterprise and market-oriented reform. The report was researched, prepared, and published exclusively by the IVE. These views do not necessarily reflect those of CIPE.”

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