Countries in Southeast Europe are failing to attract potential foreign direct investment (FDI) because the region still suffers from a poor image, according to a report by the Organization for Economic Cooperation and Development (OECD).
"Actual FDI flows remain well below the region's potential, particularly in the Western Balkan countries," the report by the Organization for Economic Cooperation and Development said.
FDI inflows depend heavily on privatization.
The OECD report studied government policies aimed at improving the investment environment in Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Macedonia, Moldova, Montenegro, Romania and Serbia.
Bulgaria, Croatia, Romania and Serbia attract 90 percent of investment to the region, pointing to a deepening regional split, the report pointed out.
OECD advised local governments to improve skill-orientated education, encourage competition, intensify regional cooperation and intra-regional trade, and step up the fight against corruption in order to avoid being marginalized.
These countries "risk being squeezed between the Central Eastern European countries, which are increasingly active in high-value, more capital and technology intensive sectors and low-cost, labor-intensive producers in Asia and North America," the report said.
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