Abstract
The aim of this paper is to investigate the dynamics of foreign and regional investment in the Western Balkans. Using a comprehensive dataset, covering a period between 2000-2021, we examine the features of foreign and regional inward investment in the five countries of Western Balkans: Albania, North Macedonia, Montenegro, Bosnia and Herzegovina and Serbia. Our study shows that regional investment has increased across time and has increasingly replaced non-regional investment indicating a movement toward a circular regional economy. In our study, we also investigate changes in the purchase of control ownership across different industries before and after 2010, the year when EU initiated the economic and access programmes with Western Balkans. Our finding shows that at the industry level communication, technology, and transportation as well as consumer goods are more likely to be selected by regional firms after 2010 and that investment is more likely to involve a purchase of control ownership. This suggests an increase in confidence in investment in the regional economy by the regional firms as opposed to non-regional foreign firms, consistent with a movement towards a circular economy.