Migration, Brain Drain and the Western Balkans

Migration has always been a fundamental element of the history of the Western Balkans, with persistent East-West flows.

Unlike recently, when this small region on Europe’s southeastern edge featured in global news primarily as a way station for illegal migration from Syria and other places, it has itself long been a place of origin for such illegal migration..

Past as prologue

The Western Balkans has been a major source of illegal economic migrants seeking jobs in Europe’s wealthier countries first in the early 20th century and then again especially since the late 20th century.

In 2015 alone, more than 130,000 irregular migrants from Kosovo, Albanian and Serbia, were asylum seekers in the EU, with Germany as their main destination.

However, a large majority of the asylum seekers were sent back home, since all Western Balkan countries are now considered “safe countries.”

More despair

The post-1990s East-West migration in Europe has been unique in its unprecedented speed, scale and persistence.

Before the 1990s, labor migrants from the Western Balkans (except Albania, which was completely isolated from the rest of the world) exceeded 1.3 million people.

Geography played a crucial role, along with the relatively low cost of moving. In the 1990s, forced ethnic and humanitarian migration was a characteristic of the region, after the fall of the iron curtain and the breakup of Yugoslavia.

Between 1990 and 1995, more than one million people left Bosnia and Herzegovina alone, a country of only 4.3 million inhabitants.

Large labor outflows have continued over the last 20 years in the region, with Albania serving as the major sending country (with almost one-third of its population having emigrated).

Young and skilled

Most of the Western Balkans emigrants are young and relatively skilled. Moreover, their emigration seems to be permanent, with only limited numbers of return migration. Migration from the Western Balkans towards the West is caused primarily by high economic and institutional despair.

With income and institutional quality differentials between the Western Balkans and Western Europe still wide and actually widening, the push and pull factors driving emigration will likely persist even stronger in the future.

Leaving the region is highly desirable, with every other person contemplating to looking for a job abroad. At the same time, this is the worst indicator of the state of affairs in the region.

Remittances and beyond: The benefits or burden of migration

Migration has a regional impact in three areas — the labor market, the public purse and economic growth.

Economic models of neoclassical growth suggest that emigration increases per capita income in sending countries (via remittances) and therefore accelerates economic convergence.

And indeed, so far emigration seems to have been beneficial for the economies of the Western Balkans. Remittances have indeed played an important role in their economies.

While migration and remittances are not easy to measure, as not all flows are recorded, official data suggest that countries are heavily dependent on remittances.

On average, it amounts to more than 10% of the GDP of the Western Balkans, with Kosovo reaching up to 17% in 2016.

Little inward FDI

The amount of the stock of FDI in the region is less than 1% of the world total (0.9%), while the EU attracts the highest level of the global FDI, with 32% of the global stock.

On the other side, countries such as Germany are among the main foreign investors in the world (EU countries account for 37% of the outward stock of global FDI), but with little interest for the Western Balkans, despite the proximity.

The share of remittances has been much higher than the other potential driver of home-bound economic growth and employment, foreign investment toward the region.

Remittances mainly support consumption and also boost private investment in human and financial capital by alleviating the burdensome credit constraints in the region.

There is still a big need to better leverage remittances in order to promote investment rather than consumption. Most importantly, remittances have played the role of social valves in absence of public social benefits in the Western Balkans.

Brain drain and the Western Balkans

The magnitude of the brain drain from the Western Balkans is difficult to estimate without reliable data.

Generally, small states such as the Western Balkans, are the main losers from the brain drain because of the easily negative impact on their small country size.

What is especially problematic is that skilled emigrants exhibit a much greater sensitivity to standard push factors, such as weak governance and lack of opportunities.

The drain of the young and the skilled individuals in the Western Balkans, in turn, is likely to reduce private sector activity and productivity, as well as the overall competitiveness of the region.

After all, the outward move lowers the human capital stock as well as the rate of return on labor and capital.

As a consequence, this emigration of the skilled appears to have slowed income convergence of the Western Balkans with the rest of Europe.

Editor’s note: The views expressed here do not necessarily represent the views of the Valbona Zeneli’s institutional affiliations.