Deglobalization of the World Economy and its Effects on the Western Balkan Countries

Abstract

Abstract This paper analyses trends in three key aspects of economic globalization: international trade, foreign investment and global product chains. The paper points to downward tendencies of the world economic integration in all three segments. The paper finds that causes of these trends are not cyclical, but structural, that is, the process of deglobalization of the international market and transformation of the very foundations of the international economic system is underway. The paper also includes an empirical analysis of the potential effects of these changes on six economies of the Western Balkan. The multiple regression models reveal very strong statistic connection between these economies and the world economy trends. There are direct relations with global foreign trade and production, but inverse relation with FDI share in the world economy. That indicates significant challenges such as declining income and job losses, but also certain opportunities to reduce trade deficits and increase domestic production.