The third part of the researching New Economic Geography is a story about the economic decline and social crisis of a formerly proud textile town in a country well-placed on the edge of the largest market for clothes and textiles in the world (the EU), but unable to take advantage of it. It is also a story about the costs of non-Europe in the Balkans. The town is Leskovac; the country is Serbia; and the key policy question is how it was possible that all of Serbia’s neighbours were winners in the global restructuring of the textile and clothing industry (TCI), while Serbia was a loser.
The facts are clear and so are the consequences. In 2004 Serbia employed 56,781 people in the textile and clothing sector. In Bulgaria that number was 168,000. Since then the number has continued to fall in Serbia and has continued to rise in Bulgaria. In 1990 Serbia exported three times more textiles and clothing than small Maceconia. By 2004 Macedonia exported more than double the amount of Serbia. What explains the fate both of Leskovac and of other Serb textile towns in recent years? The story of the collapse of the Serbian textile and clothing sector since 2000 thus goes to the question about both the economic and social future of the country. At the heart of this short paper is a comparison between Leskovac and a similar town in the Western Balkans, Stip. This comparison shows how much Serbia’s isolation from the EU in the 1990s, followed by slow progress in European integration and delays in completing its transition, has cost in terms of employment. Comparing Leskovac with the city of Stip suggests that there could easily be 10,000 jobs more in Leskovac today than there are. This in turn would have improved the economic position of households and would have helped close the prosperity gap with other regions of Serbia. If Serbia would have followed Bulgaria in the period since 1997, today it would have 100,000 additional jobs in the textile and clothing sector alone.