Executive Summary

The Western Balkans have made measurable economic progress, but convergence with the European Union remains slow. Despite deeper trade integration, foreign investment and growing access to European programmes, regional GDP per capita remains below 40 per cent of the EU average. This brief argues that accession and market integration cannot by themselves produce economic transformation. The central constraint is the region’s limited institutional conversion capacity: its ability to turn knowledge, capital, entrepreneurship, infrastructure and external integration into productive firms, technological upgrading and sustained improvements in productivity.

Accelerating convergence requires a shift from measuring access and formal alignment to evaluating productive outcomes. Innovation policy should help firms progress from local experimentation to regional and international scale; the Common Regional Market should function as a genuine home market; foreign investment should generate supplier development, knowledge transfer and domestic capability; and universities, financial institutions and public bodies should support the commercial application of knowledge. The Western Balkans’ strategic objective should not be to remain a source of labour and cost-competitive production, but to become a producer of technology, scalable enterprises and capabilities that are valuable to Europe. Prosperity cannot be imported through accession—it must be built and continuously reproduced within the region.