FOSTERING SERBIA’S ECONOMY THROUGH A MORE DIVERSIFIED INDUSTRIAL POLICY: UNLOCKING THE POTENTIAL OF INTERNAL SOURCES OF GROWTH

Abstract

Serbia has experienced an acceleration of its GDP growth rate in recent years, to a large extent thanks to strong inflows of foreign direct investment (FDI). Given that such favourable trends may not continue in the coming years as multinational companies move to other locations, it may be wise to reflect on a different type of industrial policy. Rather than relying predominantly on attracting foreign investors, Serbia could implement a more diversified industrial policy that would place major emphasis on internal sources of growth, in this way embedding recent economic successes into the local economy. Serbia’s economic growth could be accelerated by implementing several groups of inter- related measures: increasing domestic investments while targeting priority sectors more efficiently; devoting major attention to R&D, innovation and education; offering more adequate support to local enterprises, particularly SMEs; and devising measures to facilitate the green and digital transitions. Deeply rooted institutional weaknesses must also be addressed through better governance within both state and non-state institutions.