If it makes public procurement more efficient, improves worker education and enterprise productivity, Serbia could achieve double-digit annual growth – said Western Balkans Director of the European Bank for Reconstruction and Development Zuzana Hargitai addressing partners of the German Chamber of Commerce in Serbia.
Recently, an estimate from the IMF and the World Bank has arrived that a GDP growth of seven percent a year is possible in Serbia, but no explanation is given for why this is not happening. Economists agree that such forecasts are a consequence of the political moment and business interests of these international financial institutions.
Namely, Serbia is a client for them, which draws relatively large loans, as well as it pays the IMF patronage, so that, as they say, is a way to help the authorities that make such decisions.
Experts, however, are restrained.
– These are too optimistic estimates, at the “if what, what would be” level, designed to spread optimism but unfortunately without coverage. That is irresponsible and frivolous. They should be asked in two to three years: And why? We never ask people who make such optimistic statements about what went wrong, so their projections did not come true – Boza Draskovic, a professor at the Belgrade Banking Academy, told Danas.
He points out that the only relevant thesis in Director Hargitai’s statement is related to productivity growth, which substantially affects economic growth.
But it is absolutely unrealistic to attribute such high expectations in a country whose economy has been devastated for decades, the industrial sector destroyed, based on foreign direct investment, most often in areas where there are either substantive monopolies or are merely supplementary production for some large companies.
These are, Draskovic says, low-cost branches or more or less the lone jobs that are now being done for the automotive and cable industries. Such an economic structure can neither project nor expect strong growth, Draskovic stated for Danas.
– When it comes to public procurement, they are undoubtedly inefficient and often very corrupt, it is also possible that this packaging with productivity growth is a “twisted pack” for the authorities, and of course that needs to be put in order, which is more a matter of political decision. However, just because they have such a big role in raising GDP, it is not realistic. It is similar to education, because although we cannot say that our system is ideal, it is not so bad that changes would create so much room for economic growth. There would have to be an interaction here, because to educate people to put knowledge into practice, you have to have an industry, have an economy. Our children learn more theoretically than is available to them, especially in high schools but also in higher education. Simply, we no longer have an economy from which people can acquire knowledge from – Draskovic points out.
He adds that sometimes optimism is not so bad if it has a grain of reality. In this case it is about optimism without cover.
– The most intensive economic growth measured by GDP growth was recorded by the former Yugoslavia, through it and Serbia between the 60’s and 80’s, which amounted to about 8.7 percent. And now the question is based on what or which resources the GDP is expected to grow to double digits or seven percent? Our reality hardly fits into this optimism that by 2025 we can have an average salary of 900 euros. The question is, on what basis is such optimism? But secondly, what is the structure in such a wage increase because you can also make such an income distribution where there are a large number of poor people with very low incomes and a small number of rich people, so you get whatever you want on average. So when you talk about income growth, you also have to talk about the structure, what is the number of people who have low salaries of 250 or 300 euros and what is the average of those with 30,000 euros. So it has to dig a little deeper below that – Draskovic points out.
According to him, things are very often politicized and have an immediate purpose, but they are meaningless for any serious analysis. He also recalls that similar projections were made in 2010, based on high growth by 2020, at six and seven percent.
– Even then it was funny and now they should be asked why the forecasts did not come true. And they didn’t because they were unrealistic. Ordered, politically motivated. I think that such deception is not good because it is always better to handle the right data, the right estimates, because that is how we will develop reasonably. It would be a good idea to try to make investments from our own reservoirs, to open up a chance for the development of domestic companies and small businesses. But that’s the problem here, because where can you invest that small, tiny domestic capital today? You cannot in agriculture because monopolization has already taken place and if you turn around Serbia you will see that it is invested only in bakeries and cafes. Is it an element on which high growth can be built? – says Draskovic and concludes that only industry can be a key factor in growth, and it is in our hands in the hands of foreigners.
