To accelerate growth and create jobs,the Western Balkans and Croatia will need faster economicgrowth generated by advanced industries and services thatusually concentrate in cities. Raising the competitivenessof leading cities will thus be the priority for growth andjob creation in the region. At the same time addressing thechallenges of places left behind will be increasinglyimportant for shared prosperity and sustainable growth.European Union (EU) accession, technological changes, andglobalization are most likely to create growth opportunitiesthat will favor cities and their agglomeration economies.These trends, if left unchecked, are also more likely toincrease spatial welfare disparities. This report advocatesfor a stronger focus on cities, especially capital citiesand their metro regions, as engines of growth and jobcreation. It also argues for policymakers to focus onlagging regions to address spatial welfare disparitieslikely to increase with the concentration of people andeconomic activity in fewer places.