Last year, Serbia had good performance, a smaller decline in GDP, attracted additional investments, however, given the long-term development of Serbia and where today the average GDP per capita is in relation to the EU, our country needs a different model of development, which is not focused on foreign direct investment, said today Milica Uvalic, professor of economics at the University of Perugia.
She said at the conference “New Economic Agenda for Serbia”, organized by the Friedrich Ebert Foundation, at the Metropol Hotel in Belgrade, that it was necessary for Serbia to dismantle a more efficient industrial policy, which would take into account some sectoral priorities.
“It is important to pay attention to internal sources of growth, including small and medium enterprises, but also local entrepreneurship, innovation, education, stimulating investments of domestic companies and their connection with foreign companies,” Uvalic pointed out.
Foreign direct investments have arrived, as she emphasized, but it could happen that tomorrow they will go somewhere else, where labor is cheaper, to countries that will offer better conditions.
“After the pandemic in particular, the EU realized that it would strengthen the economy if it had to focus on sectoral priorities. Serbia must adapt to the new challenges. The main emphasis so far has been on attracting foreign investments, but if we look at Serbia, from 2009 to 2019, it had a growth rate of one percent, which is the lowest in relation to the surrounding countries,” said Uvalic.
According to her, the key things are the increase of investments because without them there is no fast economic growth, but it is necessary to provide the same kind of help to domestic investors as to foreigners because some strong domestic companies do not invest here, but abroad.
In order for the economic development of the country to be stronger and better, it is necessary to better target the economic sectors, as she said, but also greater investment in human capital, education, science, research.
“Besides that, there are barriers for the growth of small and medium enterprises because they have great competition in foreign companies, but also in large domestic ones, as well as in the gray economy. Serbia is in a much worse position in that segment compared to other countries,” Milica Uvalic emphasized and added that it was important to encourage the connection of domestic and foreign companies, which do not use enough domestic inputs but import them, nor use enough domestic labor.
Chief economist of the Center for Advanced Economic Studies CEVES Kori Udovicki said that economic growth is happening in Serbia, that we must be aware that it is the most important electorate in Serbia and that any democratic alternative that wants to oppose the government would have to propose a credible economic option. A credible macroeconomic framework is important, she stressed, and currently macro-financial policy is convincing and the focus is on attracting FDI, the same policy as in the previous two decades.
The economy was being built in those two decades, “slowly, but it was being built”, and in the meantime, a transformation was taking place that the mainstream neoliberal economy in which we lived, as she said, did not speak.
“The new policy started in 2015, competitive and sustainable, export growth reached 50 percent of GDP,” said Udovicki. She emphasized that growth as it can last, but that the electorate will say “let go, move” and that in order to know how to do something different, we must first know what is happening now, Danas reports.
