Globalization in the Balkans: Free trade agreement and the perspectives of attracting large institutional investors on the domestic capital market

Abstract

In order to take advantage of potentially positive effects that free trade flows have on economic growth, eight countries from South-East Europe united to create a regional free trade agreement. Significant market enlargement, cancellation of customs, tariffs and other export barriers create favorable opportunities for the development and growth of domestic companies. What is more, new sources of growth and development for local enterprises, as well as intensified competition, result in increased attractiveness of the region for large international investors. On the other hand, in order to take advantage of the presence of large international investors on the domestic market, it is very important to have in function a stable and rational financial system. Again, it is questionable how to develop in the most efficient way, at the moment, our underdeveloped financial market. A complementary solution is to attract large institutional investors on the domestic market, on one hand, and the foundation of domestic ones, on the other, in order to achieve a significant enlargement of the market liquidity as the basic determinant of its future development.