Serbia’s next growth challenge is not only capital, infrastructure or export access. It is the conversion of human capital into productivity. MAT’s analysis of education and productivity argues that expanding education alone does not automatically raise living standards. The decisive issue is whether knowledge, skills and personal development are converted into productive work, higher wages, innovation and long-term economic growth. That is a crucial distinction for Serbia, where education levels have improved over time, but productivity, regional inequality, labour-market mismatch and youth emigration remain persistent constraints.
The old development formula treated education as a near-automatic route to growth. More schooling would create more skills; more skills would create higher productivity; higher productivity would raise wages. MAT’s argument is more realistic. Human capital is not created only in schools and it is not used automatically once created. It depends on families, early-childhood conditions, local institutions, health systems, transport access, workplace quality, management practices and the structure of employment.
The workplace is especially important. MAT notes that in middle- and low-income countries, an estimated 70% of the workforce is employed in low-productivity sectors, including informal work, small agricultural holdings and micro-enterprises. In such environments, jobs do not provide sufficient opportunities for skill development because they operate with limited technology, weak organisation and little systematic investment in employees. Education can therefore become underused capital. The economy may produce educated people without creating the jobs that develop and reward their skills.
This is highly relevant to Serbia’s regional-development problem. A young person with the same formal education can have different outcomes depending on whether they live near a dynamic industrial centre, a university city, an export cluster, a logistics corridor or a municipality with weak labour demand. MAT refers to these as place effects: local institutions, infrastructure, environmental quality, health services and labour-market depth shape whether education becomes economic opportunity.
For Serbia, this means productivity policy cannot be limited to higher education reform. It must include firm-level upgrading, vocational training linked to real employers, regional industrial clusters, workplace learning, management quality, digital systems, transport access and local economic institutions. The country needs more jobs that can absorb skills, not only more graduates. Otherwise, better education will continue to feed emigration, underemployment or wage pressure without matching productivity growth.
The industrial angle is direct. Serbia wants to move further into automotive components, electrical equipment, renewable-energy services, mining-related processing, CBAM-compliant production, logistics and higher-value manufacturing. Each of those sectors requires technicians, engineers, quality managers, environmental specialists, data operators, commissioning teams and financial-compliance professionals. These skills are not created only in classrooms. They are built through projects, factories, laboratories, site supervision, supplier qualification and export-client requirements.
Human capital therefore becomes a bankability issue. Investors assess labour availability, but they also assess whether the labour market can sustain productivity improvements over the project life. Banks financing industrial projects care about whether operating margins can absorb wage growth. Exporters care about whether staff can meet EU documentation, quality and compliance standards. Serbia’s next productivity step will depend on aligning education, local development, employer demand and workplace learning into one economic system.
The country has improved access to education. The harder task now is turning that education into productive capacity, stronger firms and regional growth that does not depend only on a few cities or a few foreign-owned export platforms.
