The Effect of the World Economic Crisis on the Countries of the Balkan Region

Abstract

In the end of 2007 and the beginning of 2008 the US economy experienced the first signs of economic slowdown. Warning signs of increased unemployment and decreasing output were detected in the US economy. Contrary to the government’s efforts for an economic revival, the economic slowdown continued to deepen and by the end of 2008 the US economy faced the largest financial shock since the Great Depression of 1929. The crisis that originated in the United States was gradually transferred across the Atlantic and by the beginning of 2009 strongly affected all the European countries, being felt particularly severely in the Eastern European countries, which were experiencing an economic renaissance by that time. The objective of this paper is to provide a comparative analysis of the impact of the World Economic Crisis on the business environment in the Eastern European countries with a main accent on the countries in the Balkan region. For the purpose of our analysis we are looking at the data on GDP per capita, unemployment rate, and inflation rate just before and right after the beginning of World Economic Crisis in 2009. Next we conduct an empirical study of the effect of the World Economic Crisis on the business environment in the countries of the Balkan region. We do our analysis separately country by country as well as we estimate the impact of the World crisis on the Balkan region as a whole. Even though there are many theoretical studies of the effects of the World Economic Crisis on business environment, there are not many empirical tests of these theories. We empirically test the theoretical findings, answering the question of whether there is a significant negative impact of the World Economic Crisis on the business environment in the Balkan region countries. For our empirical analysis we will use data from one of the most detailed macroeconomic data web site www.indexmundi.com. Our paper will be organized in the following way. Section 1 – An Introduction, Section 2 – Review of the economic channels of distribution of economic crisis, Section 3 – Data and empirical research and Section 4 - Conclusion.