TWIN TRANSITION AN OPPORTUNITY FOR ACCELERATED GROWTH IN WESTERN BALKAN

Global economy is facing economic slowdown, pessimism, uncertainty, fragmentation of economic flows, high indebtedness of private and public sector.High interest rates are prevailing characteristics of current economic life.Many people are not sharing benefits and believe the economies are not working for them.Simultaneously, rapid technological changes and innovations are becoming part of our every-days life.Green economy and AI are becoming embedded in everybody's life.Vision, courage and optimism are becoming key for future development and sharing better life and higher living standard.Society is on cross-road as it was a Century ago, in a dark days of a Great Depression.Pessimism is unjustified, wrote Keynes that days "I believe that this is a wildly mistaken interpretation of what is happening to us.We are suffering not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the painfulness of readjustment between one economic period and another.The increase of technical efficiency has been taking faster, than we can deal with the problem of labor absorption; the improvement of standard of life has been a little too quick,the enormous anomaly of unemployment in a world, full of wants, the disastrous mistakes we have made, blind us to what is going under the surface to the true interpretation of the trend of things (Keynes, 1930)."For Keynes under the surface was unnoticed rapid technological change that was taking place and rapid capital accumulation.In order to predict future, he advocated to disregard short-term, and take a long-term view of a Century: "I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is to-dayThree hours a shift or a fifteen hours week will be working time in progressive countries (Keynes, 1930).From today's perspective, it is surprisingly how much Keynes was right.GDP per capita in the most developed countries for less than a Century increased by 8 times, while population increased by 4 times and life expectancy from 40 to 75 years.Keynes miss the prediction for working Vol.5, IssueInvestments for transformation per regions and group of countries are presented on Graph No. 4. EU would require annual investments of billion or 4,5-5% of GDP.Currently it allocates only half 400 billion or 2.1% of GDP.Workforce requirements would evolve as markets are reshaped and technological processes adapted.Job qualifications would change and educational system would face significant challenges.The net-zero transition could lead to a reallocation of labor.McKinsey Global Institute (2024) predicts that green transition would generate 200 million direct and indirect jobs, while 185 million jobs will be lost by 2050.Western Balkans, is facing big challenges to net-zero transition, but it may be big opportunity, as well, to transform its economies, accelerate growth and income convergence and to become an attractive place for living for its' citizens.Fossil fuel energy dominates and decisively determines structure of WB economies.Graph No. 4, presents the share of fossil fuel energy in total produced energy.Serbia, North Macedonia and Kosovo, rely heavily on coal.Hence, they will face greater challenges in transition and higher costs.Transformational investments for these countries are assessed between 8-10% of GDP annually.Albania, heavily rely on oil.Its costs of transformation are assessed 8% of GDP.Montenegro is in the best position, with energy more than 50% from renewables.Its transformation costs are predicted around 6.5% of GDP, and for Bosnia and Hercegovina around 7.5% of GDP.Thus, almost a third of total investments in Western Balkan in the period 2024-2050 would refer to energy transition to net-zero.Limited domestic savings in Western Balkans, should be not obstacle for comprehensive green transition for fundamental changes in structure of the economy, dislocation of work, changing relative prices, justice within and across society, nations and communities.Part of funds will be secured through Growth Plan for Western Balkans.FDIs and Public Private Partnerships (PPP) should play considerable role as well.However, emitters of CO2 should contribute as well to cover costs of transition.Harmonized carbon tax, should be introduced in all WB countries.It will equally refer to CO2 producers, but also to consumers of goods produced by energy from fossil fuels.Cheap long-term financing is key ingredient for successful green energy transition.Renewables make long-term gains for society.They do not bring high short-term returns for investors.For example, expected rate of return for renewable energy from photovoltaics is 8-10 percent within a period of 15-20 years.Thus, they cannot bear financing costs higher than 3-3.5% (OECD, Environment Working Papers No. 245/18 July 2024).Furthermore, they cannot bear interest rate risk as a result of volatility of interest rate.Thus, financing costs has to be low and fix.Public investments