06 Edvard Jakopin

06 Edvard Jakopin - PANOECONOMICUS, 2009, 4, pp. 507-525...

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PANOECONOMICUS, 2009, 4, pp. 507-525 Received: 7 April 2009; Accepted: 4 June 2009. UDC: 330:502.131.1(497.11) DOI: 10.2298/PAN0904507J Professional paper Edvard Jakopin Republic Development Bureau, Serbia edvard@yubc.net Jurij Bajec Economics Institute, Serbia jbajec@ecinst.org.rs Challenges of Industrial Development of Serbia Summary : 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. Key words: Industrial challenges, Macroeconomic effects, Structural changes, Competitiveness, Industrial policy. JEL: O10, P30, L50. ‘Everything in the world can be bought with labour, and our wishes are the only cause of our labour’ /D. Hume/ Introduction 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).
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508 Edvard Jakopin and Juric Bajec PANOECONOMICUS, 2009, 4, pp. 507-525
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This note was uploaded on 01/15/2012 for the course ECON 101 taught by Professor Mikson during the Spring '08 term at Aarhus Universitet.

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06 Edvard Jakopin - PANOECONOMICUS, 2009, 4, pp. 507-525...

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