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Sector Specific Sources of Competitiveness in the Western Balkans

Recommendation for a Regional Investment Strategy

image of Sector Specific Sources of Competitiveness in the Western Balkans

The Western Balkan region benefits from a cost-competitive labour force and geographic and cultural proximity to EU markets. However, cost competitiveness as a source of differentiation is not sustainable. Cost levels are increasing gradually in some sectors, reducing firms’ profitability. In order to sustain competitiveness, the Western Balkans needs to move up the value chain, from investing in automated technology to producing higher-quality goods and enhancing its human capital. This report examines the apparel manufacturing, automotive components and business process and technology outsourcing sectors, focusing on market competitiveness factors, industry key success factors and policy recommendations.

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Apparel Manufacturing

The apparel industry has experienced profound transformation over the past few decades. On the demand side, consumers are looking for greater range of clothing products more customised to their individual tastes and sizes at the lowest prices. At the same time, consumers are spending a smaller portion of their income on apparel, opting instead for consumer electronics, entertainment, etc. On the supply side, apparel retail outlets are faced with increasing competition, not only from the emergence of mass retailers, but also from increased internationalisation of the most successful apparel retail chains. 

English

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