Environment and Economy Interactions in the Western Balkans: Current Situation and Prospects

Abstract

AbstractIn the sustainable development paradigm, the environment and the economy are closely intertwined in many ways. Everything that happens in the environment, whether positive or negative, has a considerable impact on the economy, and vice versa. This research aims to gain a better understanding of the existing condition and prospects of economic-environmental links in the Western Balkans (Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, and Serbia). The issue of environmental protection is fundamental, especially given the Western Balkan countries’ desire to join the European Union and the fact that the decisions made by their governments will have an impact not only on the environment in the region but also on the environment of other countries on the European continent. After gaining a deeper theoretical understanding of the economy-environment relationship, we proceed with a desk study of the economic and environmental state and prospects for the Western Balkans and individual countries. A panel regression analysis is used to further investigate the GDP-CO2 link in the Western Balkan region. The findings show that higher GDP values are associated with higher CO2 emissions and that each additional increase in GDP above the average results in 0.08% higher CO2 emissions. All this confirms that economic growth has harmed the environment in the Western Balkans over the last six decades.KeywordsEconomyEnvironmentWestern BalkansGDPCO2 emissions