Foreign companies are increasingly attracted to the Western Balkans due to several key factors: a favorable geographical location, a skilled workforce and relatively low wages. However, challenges such as poor governance, weak institutions and inadequate infrastructure continue to hinder growth, according to a survey of 65 companies operating in the region.
Despite these challenges, satisfaction levels among foreign investors remain high, with 72% of respondents reporting they are either satisfied or very satisfied. This survey was conducted by the Vienna Institute for International Economic Studies in collaboration with chambers of commerce across five Western Balkan countries: Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia.
The research also explored the “nearshoring” trend in the region and assessed the potential for attracting investments in green technologies and renewable energy. The findings indicate that nearshoring is gaining traction, particularly in Bosnia and Herzegovina and North Macedonia.
Specific examples of this trend highlight companies that are investing—or planning to invest—driven by the desire to relocate closer to the EU market. Notably, many of these investments are coming from Asian firms seeking strategic positioning in the Western Balkans.
One such example is the Japanese company Nidec (Nidek), which specializes in electric motors for electric vehicles. In May 2023, Nidec opened a factory near Novi Sad, part of a strategy to establish a robust production and supply chain in Europe and reduce reliance on imports from Asia.
Another notable investment in Serbia comes from the Czech firm CTP, known for constructing logistics parks. In January 2023, CTP announced its plans for a logistics hub in Belgrade, highlighting nearshoring as a key factor in its decision.
The study also indicates that foreign companies view the region as a promising destination for green investments. Approximately two-thirds of respondents find the area attractive for such investments, and a similar proportion expressed willingness to invest more if progress is made toward decarbonization.
Decarbonization is recognized as a critical process aimed at reducing carbon dioxide and greenhouse gas emissions. This includes investments in renewable energy, electric vehicles and technologies that enhance energy efficiency.
A separate survey of 382 local companies in the Western Balkans found that around two-thirds are familiar with decarbonization concepts. Most of these companies reported that their primary carbon emissions stem from electricity use, followed by transportation and production processes.
There is a generally positive attitude towards decarbonization among companies, many of which see it as an incentive to invest in new technologies to lower carbon emissions. They believe that such initiatives could enhance their export potential to the EU market. Many companies also have concrete plans to reduce emissions over the next five years by transitioning to cleaner energy sources, lowering energy consumption, and investing in green technologies. However, they emphasize the need for financial support to effectively reduce their carbon footprint.
