The growth of exports is key to economic recovery and growth based on exports is essential for enormous resources of Serbia to turn into a better standard of living for its citizens, reads the latest World Bank report entitled “The Road to Progress: Productivity and Exports,” according to Lazar Sestovic, economist of the World Bank Office for Serbia and an author of “Economic Memorandum for Serbia.” Zorica Mijuskovic has more.
Serbian enterprises are less productive, and cost of labor is higher than in the other companies in the region. According to World Bank consultant Peter Miovic, workers in Serbia, for example, produce less than half than those in Slovakia, Poland or Lithuania. However, to increase productivity, businesses also need a favorable business environment, capable institutions, legal regulations to encourage competition, skilled work force and good infrastructure. This means that in the future, the Serbian authorities will have to work more on removing barriers to domestic and foreign investments, which involves intensive structural reforms, and continuation of the integration with European and the world markets.
According to World Bank economist Lazar Sestovic, the report has shown that the greatest opportunities for export growth are in metal, food and automotive industries. As Sestovic emphasized, agriculture is of key importance, and the World Bank recommendations include measures, such as predictable agricultural policies, strengthened supply chain, continued trade liberalization and improvement of efficiency of the agricultural budget. The potentials of the Serbian agriculture are higher and with the help of structural reforms, they could contribute to quadruple food exports. Metal processing industry has proved to be a branch where a successful privatization was carried out and new producers and exporters appeared. In the automotive sector, which the Serbian Government has supported for several years now, the planned results were achieved. Sestovic assessed as good news the fact that Serbia has quite a few other products that are underdeveloped, and whose export potentials are enormous, in chemical, pharmaceutical and textile industries.
When it comes to restrictions, slowing export growth and productivity, according to Sestovic, there is a gap between the knowledge held by graduates, and demand in the labor market. Also, the deficit that threatens the domestic production of electricity and low energy efficiency are the main obstacles to increased competitiveness and continuous growth of Serbian exports. Not less important is the uncertainty when it comes to land rights and inefficiency in the management of land, which is also a strong barrier to economic activities and exports.
The essential goal of the World Bank report on exports and productivity growth in Serbia is to be a stimulus to the entire Serbian society, especially government officials, to begin discussions as soon as possible on a new growth model that will help them to create a broad unity around a set of policies that would be most effective in raising productivity rate and export growth, assessed Head of the World Bank Office in Serbia Louis Brefort. The analysis shows, he added, that this strategy could double Serbia’s per capita income in the next decade.
