The haves and have-nots — how delaying EU accession drives disparity in Balkans

European Union membership has delivered well-documented benefits to post-transition countries, particularly by accelerating income convergence with the EU average. However, an overlooked issue is the widening income gap between Balkan countries that have joined the EU — Bulgaria, Romania and Croatia, and those still outside — the Western Balkans countries. This growing divergence gains importance as the integration of the Western Balkans continues to be delayed.

In 2007, when the EU expanded to include Bulgaria and Romania, income disparities between these countries and the Western Balkans were relatively modest.

Romania’s GDP per capita, adjusted for purchasing power, stood at €10,800, and Bulgaria’s at €10,000—only slightly above the upper income range in the Western Balkans, where GDP per capita varied from €9,800 in Montenegro to €5,800 in Albania.

Yet a decade and a half later, the income gap between Romania and Bulgaria and the Western Balkans has widened considerably.

By 2023, Romania's GDP per capita has reached €30,000 (just 20 percent below the EU average), and Bulgaria's has risen to €24,200, both significantly higher than any Western Balkan country. Montenegro now has a GDP per capita of €19,500, while Albania has the lowest at €13,300.

This raises a theoretical question that may never have a real answer: what would income levels in the Western Balkans be today if they had joined the EU in 2007?

This question is not as speculative as it may seem, given that the institutional capacity of the countries that joined the EU was not dramatically better than that of those remaining outside.

For instance, the Corruption Perceptions Index, which ranges from one (very corrupt) to 10 (very clean), showed similar scores in 2007 for both Bulgaria and Romania as well as for all Western Balkan countries (except Albania): all scoring three, with differences between them in the first decimal place.

Considering the benefits of EU single market access, increased foreign direct investment, and cohesion funds, it’s plausible to imagine that had the Western Balkans joined in 2007, their GDP per capita could be much closer to Bulgaria’s current €24,200. 

However, while the past cannot be changed, the future can — but it has become even more uncertain.

Not only does the timeline for potential EU enlargement remain unclear, but so is the type of membership on offer.

The recent Growth Plan for the Western Balkans proposes integration only into the EU’s single market, directing the integration process towards some form of a secondary membership without the full rights and benefits enjoyed by existing EU members and likely excluding complete access to EU cohesion funds.

EU cohesion funds are important, with numerous studies highlighting their role in fostering economic convergence within the EU.

A recent study by Poland’s ministry of economic development indicates that 25-30 percent of the real convergence achieved by the Visegrád Group with the EU resulted from these funds.

The Western Balkan countries, in contrast, rely on the comparatively limited Instrument for Pre-Accession Assistance (IPA). From 2007 to 2013, the IPA I financed €4.2bn to the six Western Balkan countries, with an additional €1.3bn for cross-border projects that included neighbouring EU members. From 2014 to 2020, the IPA II allocated €4.3bn under IPA II, plus €3.2bn for similar cross-border projects.

In comparison, European Structural and Investment Funds (ESIF) allocated €46.3bn to Romania and Bulgaria between 2014-2020. Relative to GDP, this means that the Western Balkans received funding equivalent to 5.9 percent of their combined GDP (from 2014), while Romania and Bulgaria received 23.9 percent of their combined GDP. 

In 2021-2027, ESIF allocated another €41.7bn to Romania and Bulgaria. Meanwhile, the Growth Plan for the Western Balkans increases funding to the six countries to €6bn. But even with this increase, the funding level remains significantly lower than that for EU member countries in the region. This means that income divergence within the region will be further widened.

Income divergence within the Balkans is creating two groups: those “left on the sidelines” and the so-called “chosen ones.”

The former group is losing competitiveness relative to neighbouring EU countries due to insufficient funding for critical investments in modern infrastructure, technology, and education.

Meanwhile, the “chosen ones” seated at the table in Brussels have the influence to shape EU policies in the region to serve their interests, including using political leverage to block neighbouring countries. 

The EU should not support income divergence within the Balkans. Opening cohesion funds to the Western Balkans, with far stricter reform conditions, can be the first step.

Weak reform pressure serves only the interest groups that benefit from the status quo. By 2030, the region should join the EU as full members. Any other approach would prolong the state of limbo and exacerbate the income gap within the Balkans.