Unlocking the Potential of Serbia’s Economic system

This note, rebalancing Serbia’s economy: improving competitiveness, strengthening the private sector and creating jobs, offers an in-depth analysis of the key areas in which Serbia has a clear comparative advantage, and gives specific recommendations on how the country can better those advantages can use. Among the areas that need special attention to spur growth, one thing stands out, according to the note: exports.

Although Serbia has a strong comparative advantage in ICT services, transport services and food production, the country does not take advantage of these advantages and continues to lag behind its regional competitors. Food production is the largest sub-sector of manufacturing, accounting for almost 20% of employment in the sector, while ICT services account for around half of service exports.

These segments of the Serbian economy represent solid areas of growth. ICT shows the country’s ability to expand by stimulating innovation and productivity in an area of ​​modern business, while food production – an area that has been largely privatized – highlights the potential for empowerment the role of the private sector in boosting the Serbian economy.

However, these sectors continue to underperform.

In light of this underperformance, this new Policy Note addresses the key constraints affecting the country’s economic competitiveness and offers strategic advice on reorienting the economy to better exploit areas of economic benefit. In particular, the note highlights the need to significantly improve the business environment in order to stimulate private sector investment and improve productivity. Reducing administrative burdens can help make running a business easier, and improving planning and procedures for obtaining building permits can make it easier to invest and expand in business. By focusing simultaneously on expanding private-sector exports and reducing the size of the public sector – with the aim of increasing both the number of people employed in the formal private sector and the sector’s total contribution to GDP. Today, only 23% of the working-age population has a job in the private sector and only 60% of GDP comes from this sector.

By taking a broader approach that examines strategic areas for reduction or expansion and focuses on key areas with comparative advantages for different sectors of the Serbian economy, this memo offers a number of pragmatic recommendations on how the Serbian government can transform the country into a fully functioning market economy a dynamic private sector. This multifaceted approach can help the country’s policymakers adopt strategic reforms that will better leverage the potential of the Serbian economy by igniting more engines that can move the country into the next phase of development faster.

Comments are closed.