How regional integration agreements can foster inclusive growth: lessons from exporting SMEs in the Western Balkans

Abstract

Empirical evidence on regional integration indicates that CEFTA?s Common Regional Market (CRM) could have spatially unequalising effects across the Western Balkans. Such an outcome would be in conflict with CEFTA?s goal of inclusive regional economic integration. This article offers a roadmap to avoid that pitfall. Literature on the changing global economy in the digital era and ICT-led growth and literature on the political economy of trust and cooperation between smaller economic agents are brought into a conversation with bottom-up empirical insights from small and medium enterprises (SME) from the region. Empirical data are collected from in-depth interviews with 58 export-oriented SMEs in Bosnia & Herzegovina and Serbia. I find that smaller firms are immensely interdependent with the environments within which they operate and that their competitiveness also stems from their ability to successfully leverage on these communal resources and local public goods. Finding ways to preserve and enhance this collective infrastructure is often more of a priority for them than market expansion and technological progress. The paper concludes by arguing that designing (supranational) institutions which can facilitate local and translocal cooperation among competitive exporting SMEs would mobilise greater democratic support for the CRM project.