The Transport and IT Infrastructure in South East European Countries

Abstract

A well-established infrastructure endowment is frequently seen to be an important prerequisite for the catching up of emerging and transition economies. Broadly speaking, infrastructure can be defined as the ‘social overhead capital’ of an economy (Hirschman, 1958), which is necessary for economic agents, for example firms, to start and conduct their activities (Frey, 1988). With a focus on the catching up of emerging and transition economies, and thus on the growth performance of such countries, it is especially important that infrastructure can be seen as ‘the economic growth framework of the market economy’ (Buhr, 2009, p. 1). Thus, inter alia, the growth potential of an economy crucially hinges upon its infrastructure endowment. From an (international) business viewpoint, infrastructure matters insofar as it impacts on production costs and, hence, on the profitability of an investment. Moreover, as infrastructure may induce higher economic growth rates, increases in the infrastructure endowment lead, ceteris paribus, to the larger market size of an economy. The market size of an economy is among the most important determinants in the investments of foreign firms (Bellak and Leibrecht, 2009).