The Balkans

Today the Balkans region contains the poorest places in Europe. Albania, for instance, has the lowest standard of living and the lowest per capita income in all of Europe. The region of Kosovo, to give another example, was the poorest part of the former Yugoslavia, and it had the highest rates of illiteracy and infant mortality. Not all of the Balkans are poor, by any means, but in general the economic modernization has lagged behind that of Western Europe and even the rest of Eastern Europe, where other such communist countries as the Czech Republic and Poland have considerably more advanced economies.

Until well into the 20th century, far more than half the people in the Balkans earned their living through agriculture, meaning that the Balkans was primarily a rural region, in contrast to Western Europe, which began industrializing heavily in the early- to mid-19th century. During the period of the Cold War (1945-1991), most Balkan countries were included in what was called the "second world." This term had political as well as economic connotations.

The "first world" was said to include Western Europe, the United States, Canada, and Japan, and these countries had the most highly developed industrial economies in the world and were political allies as well.

The "second world," which desribed the Balkan countries' economic development, was represented by a lower level of industrial development and included the Soviet Union and its allies, which were politically opposed to the North Atlantic Treaty Organization (NATO).

What used to be called the "third world" consisted mostly of the far less industrialized countries on other continents that were politically neutral or nonaligned.

This Cold War taxonomy is useful today primarily as a reminder of the Balkans' level of economic development. As much as the Balkans region lags behind Western Europe in terms of urbanization, pollution control, and production of consumer goods, it was far more economically advanced than much of the nonEuropean world, at least until recently. Photo: Factory in Romania (Transylvania) 1987. Photo courtesy of John K. Cox.

Today the Balkans is dealing with the transition from socialism to capitalism (market economies). This transition is difficult and, in many countries, slow. Governments must worry about how (and to whom) to transfer ownership of state-controlled enterprises and about how to turn their "soft" national currencies into "hard" currencies that will merit international recognition. Citizens of these countries worry about rising unemployment and the thinning of the social safety net of government-sponsored educational, medical, and pension benefits. Business people have to operate in an environment of rapidly changing banking and advertising laws. It will take years to sort out exactly which economic path the Balkan countries will take.

The economies of the Balkans are by no means as efficient as those of Western Europe and North America, but this fact cannot be attributed solely to the 45 years of communist rule. The region's economic problems go back further than that. The Balkan states suffered a remarkable decline in their economic fortunes in the early modern era, when global trade routes shifted west and south with the sea-borne age of (West) European expansion. Countries like England, Spain, Portugal, and France, on the other hand, enjoyed a huge economic boost from the establishment of colonies and trade routes to Africa, Asia, and the Americas. Constantinople, once the most glorious city in all of Europe, shrank to only regional significance. Most people in the Balkans were left by their Ottoman overlords simply to continue farming the way they always had, although some industrial production--such as textiles--was encouraged when it served Ottoman needs.

In the 19th century, the newly independent and autonomous Balkan states began building roads and railways and founding banks to foster economic development. Since the capital necessary for such improvements to the infrastructure was lacking in these countries, much of it had to be borrowed from French and German investors. Thus, there were insufficient financial resources to meet development needs. Many of the projects also served the needs of the foreign investors more than the local economies.

Between the World Wars, many people hoped that the Balkan states would work intensely to develop their agricultural systems. Such development would have required in many places a redistribution of land (without fragmenting it into so many parts that the peasants' situation would have become unprofitable). A significant government investment in technical and information services would have been needed throughout all of the Balkan states to help the peasants modernize. Instead, the interwar Balkan governments, which became increasingly authoritarian, concentrated on foreign policy and military build-ups, and left agriculture to stagnate. The thirst for industrial and consumer goods was met during the Great Depression largely by Germany, which had the fateful effect of politically linking the Balkan states to Hitler's regime.

As surprising as it may seem, many scholars credit the communist governments of the post-World War II period with significantly expanding the industrial base of the Balkan states. By mobilizing the "basic factors of production," five-year plans originally inspired by Stalin's model enabled the Balkan countries to improve their infrastructure; provide basic levels of housing, health care, and education; and develop energy sources, heavy industry, and mining. The communist economic transformation failed to provide a basis for qualitative improvement in Balkan economies. The service sector, as well as consumer production, lagged behind, and little groundwork was laid for today's transformation to the information age. But in terms of basic, or quantitative, economic modernization, the peoples of these countries were better off after communist rule than before it. Comparisons with Western Europe, however, constantly reminded people in the Balkans that they did not have the standard of living that they wanted.