Serbia has advanced from last year’s 84th to the current 74th place on the latest ranking list of the Index of Economic Freedoms, but it is still at the very back of Europe, and the biggest problems are in the area of rule of law, said the non-governmental organization Lübeck.
The Economic Freedom in the World Index is published by the Fraser Institute in Canada and measures the level to which fairly acquired property is protected and how much individuals are involved in voluntary transactions.
“As in previous editions of the Index of Economic Freedoms, Serbia is poorly evaluated in the area of the rule of law, which is the cornerstone of a market economy,” it is emphasized in the statement of Lübeck.
It is added that in such an economic environment, “there are no adequate mechanisms for the protection of private property, which directly leads to low levels of domestic investment and low rates of economic growth, and low living standards and high emigration rates are a consequence of this environment.”
Hong Kong and Singapore are at the top of this year’s Index, followed by New Zealand, Switzerland, Australia, the United States, Mauritius, Georgia, Canada and Ireland.
The worst ranked countries are Venezuela, Sudan, Libya, Angola, Iran, Algeria, Congo, Zimbabwe, DR Congo and the Central African Republic.
Of the surrounding countries, Romania ranks 23rd, Bulgaria 32nd, Croatia 61st, Slovenia 62nd, Northern Macedonia 71st, Montenegro 80th and Bosnia and Herzegovina 82nd.
The total score of Serbia on the list of the Index of Economic Freedoms is 7.05, which is slightly lower than the world average.
“Serbia’s poor result is still in the area of business regulation – in addition to the very nature of regulation which in some cases restricts competition and creates rent for interest groups close to the government. A big problem is the application of the law in practice, due to often contradictory, unclear regulations or they cannot be implemented without the missing bylaws. A major problem is the unequal treatment of different economic actors before the law, due to corruption or political pressure,” Lübeck said in a statement.
It is added that the public sector is still oversized in relation to the possibilities of the private sector to finance it.
“Apart from the fact that the public sector is expensive, it is also very inefficient compared to European countries, due to the high rate of corruption, public companies are seen as party booty and not as a service to citizens, while the state administration is weak due to party interests in employment and progress,” Lübeck said.
It was also pointed out that even in areas where Serbia is relatively highly ranked, such as freedom in international trade, there are still problems that negatively affect the level of freedoms. Serbia is still outside the World Trade Organization (as the only European country along with Bosnia and Herzegovina and Belarus), while regulations concerning technical standards are not yet fully in line with European rules, and the customs administration uses outdated technical solutions, with numerous slow procedures.
Lübeck proposed in-depth reforms, primarily in the areas of justice, state administration and business regulation.
“Serbia is still a country where inefficient state-owned companies are a big employer, subsidies are almost three times higher than in other transition countries, and total public spending is not only high but also inefficient. Free trade, although proclaimed in principle, is still made difficult by bad regulations, and business regulation stifles entrepreneurial initiative by imposing high administrative costs,” Lubeck said.
It is estimated that the growth of economic freedoms of one point on a scale of 1-10 contributes to a long-term economic growth rate of 1.24 percent through an increase in the level of investment, Novi Magazin reports.
