Capital Inflows in the Balkans: Fortune or Misfortune?

The present study measures the effects of various types of capital inflows on key macroeconomic variables of the Balkan countries. Capital inflows appear to have a positive impact on economic growth and the trade sector of the host countries, while they did very little in promoting domestic fixed investment and saving. Moreover, capital inflows benefit the host countries only after the implementation of a stabilization plan that sets up the stage for further structural reforms. Finally, the speed and the advancement of structural reforms do not seem to alter the impact of capital inflows on the process of economic development of the countries in our sample.