Russia and Western Balkans: Realized and Missed Opportunities in Trade

Abstract

The research quantitatively evaluates non-economic “factor of friendliness” in Russia’s international trade. Based on panel data, the single-country gravity model applied to the imports of the Russian Federation and partner countries that are members of Eurasian integration projects, BRICS, and SCO. The model includes three dummy variables for each of the three associations and a summary variable for any kind of interstate rapprochement. The results show the correctness of the initial assumption about the significant positive impact of any form of integration with Russia on its imports from partner countries, although membership in these associations does not imply customs relief. The application of the model’s obtained coefficients to the Western Balkans countries indicated huge differences in potential exports with and without the factor of rapprochement. Only Serbia realizes a significant part of its export potential on the Russian market, with possibilities for its additional increase. Other countries of the Western Balkans achieve much less export than the potential. The most important groups of export products for each country were investigated, which identified the sectors that would achieve significant benefits from rapprochement with Russia. Given that North Macedonia, Montenegro and Albania were added to the list of enemy countries by introducing sanctions against Russia during the Ukrainian crisis, their chance to improve these sectors independently under privileged conditions was missed for an extended period of time.