PANOECONOMICUS, 2009, 4, pp. 507-525
Received: 7 April 2009; Accepted: 4 June 2009.
Republic Development Bureau,
Challenges of Industrial
Development of Serbia
: Built upon education ideologies of the previous century, develop-
ment of Serbian industry is not able to meet global demands of the modern,
21st century market. Innovative ongoing processes in technology and all indus-
trial branches are global and ever more rapid, and they are circumventing the
SEE region. The economic structure of Serbian industry at the beginning of
transition was two decades old. At the beginning of 2009, after eight transition
years, a short economic transition summary is as follows: the trailing caused by
the events of the 1990s is very hard to cope with and we are only half through
with this task; on the other hand, we are lagging behind EU-15 and EU-10
more and more. Apart from the analysis of structural non-adjustment of the
industrial system and its impact on the macroeconomic balance, the paper
underlines a significant role of the state in the formulation of industrial policy.
Industrial challenges, Macroeconomic effects, Structural changes,
Competitiveness, Industrial policy.
O10, P30, L50.
‘Everything in the world can be bought with labour,
and our wishes are the only cause of our labour’
Foreign trade increases economic wealth of a country; it increases ‘the labour fund of
a nation’. The central role in export activities of Serbia is played by the industry.
However, Serbian industry is burdened with issues such as structural discrepancies,
obsolete technology, a low level of investments, high production costs, the social
function still dependant on companies, inefficiency, ecological requirements, but also
low exports, incompatibility with the EU standards, and a lack of comprehension of
industrial processes in the EU. The lag behind the EU industry is increasing. A pretty
bleak transition picture of Serbian industry is further aggravated by the world eco-
nomic crisis which slows down and prolongs the process of industrial restructuring,
and increases its costs. The world economic crisis must not be a reason for the delay
and deceleration of reform processes.
Serbian industry, following a decade long devastation, is only half way
through to catching up with the 1990s. Transitional cumulative growth of industry
during the period 2000-2007 is among the lowest compared to other transition econ-
omies (Poland 84%, Bulgaria 76%, Slovakia 61%, Romania 41%, B&H 81%, Hun-
gary 55%, and Croatia 40%). Sustainability of the macroeconomic model and its key
variables such as exports (the necessary average annual growth at 20%) and FDI
(minimum at $2bn) exclusively depends on manufacturing industry since its share in
GVA of 15% contributes to overall exports with 95% (Republic Development Bu-
reau – RDB, 2009a).