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Serbia’s economic diplomacy: Navigating global partnerships

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Serbia’s foreign policy orientation has long been a topic of debate, with questions arising about its alignment with either the East or the West. However, a closer examination of its economic and investment strategies reveals that Serbia’s foreign relations are primarily influenced by its economic interests.

Over the past decade, Serbia has seen a surge in state-backed projects, substantial private investments with subsidies, and an attractive business environment for foreign investors, often leading to partnerships with major global economic and political players, sometimes accompanied by assurances of political support.

Recent data from the National Bank of Serbia underscores the significant influx of foreign direct investment (FDI), which reached 4.52 billion euros last year. Notably, China emerged as a key contributor to FDI, alongside other major investors like the Netherlands, the UK, Austria, and Germany.

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Serbia’s economic landscape reflects diverse international partnerships. Russian involvement in NIS dates back significantly, while American initiatives such as the Moravian Corridor are in progress. French entities dominate public-private partnerships, and Chinese firms spearhead large-scale projects, particularly in the mining sector. German companies, often in collaboration with Italian counterparts, form the backbone of Serbia’s industrial sector, particularly in automotive manufacturing. Turkish contributions focus on infrastructure, while Arab investors have made inroads in real estate.

Germany holds a prominent position as Serbia’s largest trading partner, with bilateral trade continually on the rise. A significant portion of Serbia’s exports to Germany comes from the mobility sector, indicating the strong presence of renowned German companies within Serbia, especially in automotive manufacturing.

Among these companies, ZF Friedrichshafen and Leoni have made notable contributions, with Leoni benefiting from Serbian subsidies. Another significant investment is the Kontinental factory and research center in Novi Sad, which received substantial funding last year.

Italy also plays a significant role in Serbia’s economy, with investments spanning various sectors, including automotive manufacturing, construction materials, home appliances, textiles, and banking.

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China’s influence in Serbia is evident through substantial investments in mining and infrastructure projects. Notable examples include the Belgrade-Budapest railway, part of China’s Belt and Road initiative, and involvement in highway construction projects.

In summary, Serbia’s economic policy plays a central role in shaping its foreign relations, with partnerships and investments from global economic powers guiding its trajectory.

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