The road to stability and prosperity in South Eastern Europe : a regional strategy paper

"There is no denying that achieving social and political stability and sustainable development will take years for most countries. Nor will progress towards these goals be smooth or automatic. Several factors indicate how difficult this road will be." The past decade of transition and conflict has left the South East European region with a legacy of inadequate growth and declining living standards. In the past several years, overall growth has declined, increasing the gap between these economies and the rest of Europe. More alarming is that there has been a deterioration in living standards, as evidenced by higher poverty, inequality, and unemployment. The reasons for the poor economic performance are varied. The most destabilizing factor, of course, has been the regional conflicts, which have devastated the area, undermined structural reform policies, and discouraged foreign investment. Much of the economic development, social inclusion, regional stability in South Eastern Europe will depend on strengthening of institutions, governance, and a lowering of the level of corruption. This report, prepared in response to the mandate given to the World Bank and the European Commission under Article 41 of the Stability Pact to coordinate a regional approach to South Eastern Europe, outlines four broad thrusts for action. These actions are intended to support the achievement of the goals of peace, stability, and prosperity. They include moving rapidly towards trade integration with the EU and within the region, fostering social inclusion and social change to reduce tensions, improving institution capacity and governance structures, and investing in regional infrastructure to integrate the region physically within Europe. This report outlines a comprehensive approach to regional development and integration in South Eastern Europe. It develops a comprehensive strategic framework for development activities in the region. The fundamental objectives of the strategy are increased prosperity and a reduction in poverty for all people living in South Eastern Europe. The report's main premise is that establishing peace, stability, and sustainable growth throughout the region is essential to achieving these objectives. The report outlines four broad thrusts for action to support the achievement of the goals: a) moving rapidly towards trade integration with the European Union (EU) and within the South East European region itself, and creating a stable, transparent and non-discriminatory environment for private sector development; b) fostering social inclusion and social change within the region to reduce tensions and create the conditions for peace and stability; c) improving institutional capacity and governance structures, and strengthening anti-corruption efforts in the region; and d) investing in regional infrastructure to integrate the region physically with the rest of Europe and within itself, which must include initiatives that safeguard the environment 'Report prepared by the Europe and Central Asia Region, World Bank, in close consultation with the International Monetary Fund...'--P. ix.