The book states that Serbia’s economy, during the analyzed period, underwent significant structural changes from a hybrid market socialist system to a market economy dominated by private ownership. This perspective is presented through econometric analysis, explaining the crises examined and the effects of macroeconomic reforms.
It is also noted that in response to the fiscal crisis caused by the global financial crisis of 2008-2009, Serbia initially responded by reducing public investments, followed by increasing current government spending until 2014.
“Despite high current government spending, Serbia’s economy, as predicted by econometric assessments, was practically in recession almost all the time, while on the other hand, there was a growing budget deficit and uncontrolled growth of public debt,” the book states.
On the other hand, significant increase in public investments in Serbia occurred in 2019, with a considerable delay after the beginning of consolidation in 2015, which indeed stimulated economic growth as predicted by econometric analysis.
The analysis also indicates that Serbia, as mentioned, grows slower by 1.5 to two percentage points compared to its potential as a less developed country.
Econometric assessments indicate that very weak institutions are the primary factor hindering Serbia’s economic growth, followed by insufficient investments from the domestic private sector, particularly in technologically advanced branches of the manufacturing industry, as well as inadequate levels of education.
The book also mentions an important econometric finding regarding migrations from Serbia and the CEE region, indicating that weak institutions, along with the quality of healthcare, education systems, and public services, critically influence them.
It emphasizes that in the future, Serbia should focus on significantly improving its very weak institutions to stimulate strong economic growth on one hand and curb large-scale emigration on the other.
