Innovation without borders: The growth of the Western Balkan startup landscape

Monitoring the technological ecosystem in Europe, much like in other sectors, reveals a significant development gap between major technological powers and smaller, less developed countries. These countries are making active efforts to leverage their unique advantages (such as compact territory, greater flexibility, adaptability, strong connectivity, and strategic geographic location) to build reliable and competitive tech ecosystems. Although they often face delays and challenges along the way due to broader structural issues, they continue working to create environments that offer real opportunities for growth and innovation.

This is also the case for the Western Balkan countries (according to the European Commission, the Western Balkans includes Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Kosovo, and Serbia. In most political and EU enlargement contexts, the term "Western Balkans" specifically refers to these six countries, excluding Croatia, as they are either potential or current candidates for EU membership but have not yet joined the Union).

The Western Balkans is undergoing a significant digital transformation, driven by a growing recognition of the vital role that education, technology, innovation, and entrepreneurship play in shaping inclusive and sustainable economic growth. Governments are investing in key areas that form the backbone of a thriving tech ecosystem: improving digital connectivity, enhancing human capital and digital skills, aligning regulatory frameworks with EU standards, fostering startup innovation, and expanding access to targeted funding initiatives.

Connectivity and infrastructure

One of the key prerequisites for fostering the growth of tech startups is the existence of well-developed and reliable infrastructure. In the Western Balkans, the situation varies significantly from country to country. Montenegro is advancing rapidly with 5G trials and expanding connectivity in all areas. The country has achieved strong digital development, with internet penetration reaching nearly 90% and 89.7% of mobile connections classified as broadband. All major telecom operators were required to activate 5G in every municipality by the end of 2024. North Macedonia continuously works on improvements in broadband infrastructure, with near-universal 3G and 4G coverage and 5G now available in multiple cities, supported by robust regulatory reform and competitive broadband speeds. In Serbia, 4G connectivity is widely available. However, a new strategy for electronic communications development through 2027 was adopted, emphasizing the advancement of 5G infrastructure. In Kosovo, mobile internet usage is high and early 5G tests have shown promising speeds. Albania has begun deploying 5G, focusing on non-standalone (NSA) networks that leverage existing 4G infrastructure and continues to face rural–urban disparities in broadband access. Bosnia and Herzegovina is still below the EU average, often due to regulatory and structural bottlenecks that hinder faster infrastructure development.

Human capital and digital skills

Across the region, governments are increasingly acknowledging the importance of equipping citizens with the knowledge and capabilities needed in the digital era. Serbia offers a range of digital skills programs, offering specialised IT education, coding bootcamps, and extensive retraining initiatives. Kosovo and North Macedonia are leveraging their young, tech-savvy populations by integrating digital education into schools and expanding EU-backed training opportunities for both youth and professionals. Montenegro is also placing a strong emphasis on digital skills, implementing reforms in vocational training and ICT-oriented education. Albania and Bosnia and Herzegovina are making progress, supported by local and EU-led initiatives, but both continue to face challenges in expanding digital literacy, particularly among marginalised communities. Strengthening human capital across all these countries is not only essential for employment and individual advancement but also for sustaining innovation and accelerating the growth of the digital economy.

Regulatory alignment with the European framework

Regulatory alignment with the European Union’s digital framework remains a central objective for Western Balkan countries, reflecting their ambition for deeper integration into the EU Digital Single Market. Albania is actively updating its digital legislation, with ongoing reforms in cybersecurity and e-government services. In Bosnia and Herzegovina, progress has been slower and more uneven due to administrative fragmentation, although efforts continue under the EU’s Digital Agenda. Kosovo is steadily aligning its ICT legislation with EU standards, particularly in areas like e-commerce, data protection, and digital service regulation. Montenegro is among the most advanced in this regard, actively working to implement the Digital Services Act and strengthen cybersecurity measures. North Macedonia has made substantial progress in harmonising its legal framework, especially in data protection, digital identification, and online public services. Serbia has not fully implemented the EU's Digital Services Act (DSA), but it has taken steps to enhance its digital governance framework. 

Digital economy and startup innovation 

The digital economy and startup ecosystems across the Western Balkans are evolving at varied paces, influenced by national development strategies, international cooperation, and private sector involvement. While some countries are emerging as regional innovation leaders, others continue to build foundational infrastructure and regulatory frameworks to support digital growth. In Albania, the digital economy is gaining momentum, spurred by government incentives for digital services and rising interest in AI and fintech. This has contributed to a fast-growing startup scene, particularly in Tirana, where public support and innovation grants are catalysing early-stage development. Bosnia and Herzegovina is making gradual progress, with the digital sector advancing through support for SMEs and IT outsourcing. Despite ongoing regulatory and structural hurdles, organisations like BIT Centre are nurturing the startup landscape through incubation, acceleration, and tailored support services. Kosovo’s digital sector plays a vital role in its economy. The ecosystem is driven by call centres, software development, and IT services, while the Innovation Centre Kosovo (ICK) and various international initiatives foster an outward-looking, export-oriented startup environment. Montenegro is seeing steady digital growth, supported by institutions such as the Innovation Fund and Technopolis. These hubs provide essential resources for commercialising innovations and facilitating tech transfer, helping startups scale effectively. In North Macedonia, strong EU backing fuels rapid expansion in ICT services and e-commerce, while the Fund for Innovation and Technology Development (FITD) offers strategic leadership, funding, and policy guidance. Serbia benefits from a robust outsourcing sector, high ICT exports, and a thriving ecosystem supported by accelerators, venture capital, and an extensive network of science and technology parks. With national support offered through the Innovation Fund, Serbia aims to foster innovative entrepreneurship by providing financial, technical, and advisory support to startups and research institutions, thereby strengthening the link between science and the business sector. 

Additionally, numerous initiatives have been launched by European leaders to assist these countries in their development, reduce disparities, and lay the groundwork for full EU integration. One of the most notable is the Growth Plan for the Western Balkans, introduced in November 2023. This initiative is designed to offer some benefits of EU membership before full accession, with the goal of accelerating integration and fostering economic development. A core objective of the plan is to narrow the substantial economic gap between the region and the EU average. With its support, the Western Balkans could potentially double their economic output over the next decade.

To help realise this ambition, the EU established the Reform and Growth Facility, which allocates €6 billion between 2024 and 2027 to support critical reforms and drive sustainable economic growth across the region.

One of the key initiatives under the EU's Growth Plan for the Western Balkans is the expansion of the European Digital Innovation Hubs (EDIHs) Network, announced in January 2025. This expansion introduced new hubs across the Western Balkan region. EDIHs function as one-stop shops, providing services such as access to technical expertise, training, digital skills development, financing advice, and the ability to test digital technologies before making investment decisions. These hubs are co-financed by the Digital Europe Programme along with contributions from national or private sources.

Digital nomadism

The Western Balkans are increasingly positioning themselves as attractive destinations for digital nomads. With relatively low living costs, strong internet infrastructure, and vibrant cultures, several countries in the region have introduced visa programs, policy initiatives, and infrastructure improvements to welcome location-independent professionals.

Montenegro has emerged as a regional leader with its official Digital Nomad Visa, launched in 2023. It allows non-EU nationals to stay up to two years, provided they meet income and insurance requirements. The government has also introduced a broader strategy to cultivate an environment favourable to remote work. Albania’s Unique Permit enables digital nomads to live and work in the country for a year, with multiple renewal options. Its simple application process and cost-effective lifestyle are attracting a growing remote workforce. In North Macedonia, the digital nomad visa is still under development. However, the country provides several alternative options for extended stays. Recognised as an appealing destination for digital nomads, Serbia does not yet offer an official digital nomad visa, but it does provide alternative options that allow remote workers to live and work in the country. In Bosnia and Herzegovina, although it still does not have a Digital nomad visa program, digital nomads can stay 90 days on a tourist visa or visa-free entry.

Conclusion

Starting a tech startup in the Western Balkans presents a compelling opportunity for entrepreneurs seeking affordability, talent, and growth potential in an emerging market. The region offers significantly lower operating costs, with affordable yet highly skilled talent, alongside low overheads for office space and services.

A young, tech-savvy population with solid STEM education, supported by government and EU-backed training programs, creates a growing talent pool. High English proficiency further supports international collaboration.

Digital infrastructure is advancing rapidly. Robust public and EU funding offers vital equity-free support and commercialisation aid. Western Balkan countries are also aligning increasingly with EU digital regulations, improving the region’s appeal for cross-border investment.

The region’s under-digitised traditional sectors offer rich ground for innovation, with local challenges often reflecting global ones, making it ideal for scalable, impact-driven startups. For founders seeking a cost-effective, strategically located, and increasingly connected environment, the Western Balkans offers a promising launchpad for sustainable growth and regional leadership in innovation.

Finally, the Western Balkans are increasingly recognising the value digital nomads bring to local economies, particularly through long-stay tourism, co-working growth, and international networking. 

Lead image: Freepik