Industrial Policy Practice in Three Western Balkan Economies and Slovenia

Since 2000, the production landscape in the Western Balkan (WB) countries has undergone profound structural change. These structural dynamics have been driven mostly by the systemic changes that occurred in the 1990s, a period marked by dramatic deindustrialization in these economies. Deindustrialization (i.e., loss of strategic manufacturing industries), in parallel with increased trade imbalances and much reduced technological dynamism, has been a major concern for policy makers in the WBs. The model of economic growth based primarily on extraction of natural resources has been questioned and the policymaking focus has shifted to measures aimed specifically at promoting the production sector.