Untapped export opportunities of Serbian economy after a decade of investment and export based growth model

Relying on the economic complexity and product space approach developed by Hidalgo and Haussmann [21], and using trade data, exporters' financial reports and available macroeconomic statistics, we try to assess the degree of transformation of structure and production potential of the Serbian economy over the last decade. We argue that although the overall economic complexity, as a decent predictor of higher economic growth, did slightly improve over the observed period, there is still large untapped potential in local knowledge and know-how. FDI inflow into manufacturing industry, as the most important factor of the transformation of the production structure and size of the economy, has contributed to growth in employment and export, improving the macro stability. On the other side, its contribution to the higher growth outlook by improving the production capacity was limited as FDI inflow has been directed mostly into low and medium-low technology industries with low complexity products. Moreover, it seems that the vertical spillover through linkages with local suppliers and transfer of technology, knowledge and practices could also be larger. In the same period, some positive developments of limited scale yet are reflected in emergence of a certain number of high-tech industries' products with high complexity, most likely produced by SMEs, such as electrical equipment, lighting, various software embedded devices, etc.

Quality management and business performance of Serbian companies

The impact of quality management (QM) programs on business results has been the subject of numerous studies worldwide. However, given the complexity of the contemporary QM paradigm and its context-dependence, it is difficult to generalise its impact on business performance. This study examines QM from the strategic management perspective by comprehensively analysing the effects of quality management system (QMS) certification to ISO 9001 in terms of improved business performance and the achieved level of total quality management (TQM) in Serbian companies. Control variables of industry type and company size are employed to observe their possible impact on motives for, and effects of, QMS certification to ISO 9001. The results reveal that the certification of Serbian companies' QMS to ISO 9001 positively influences their operational and market performance, with the impact intensity dependent upon company size and industry type. The impact of certification on financial performance was examined but not confirmed. Compared to companies motivated primarily by marketing interests and market pressure, companies that certify their QMS to ISO 9001 to improve the quality of their business show a higher level of TQM implementation and gain greater benefits from certification.

The impact of innovation indicators on increasing exports of high technology products

Competitiveness of high-technology products (HTP) is more significant on the world market than products of medium and low quality. Increase in the innovation performance should lead to the growth of high technology application in production consequently rising exports of HTP as an important factor in increasing competitiveness. In this paper we wanted to analyze the correlations and conditionality of exports of HTP (share of exports in total country exports) and selected indicators that influence innovation: GDP, R&D costs (research and development cost in four sectors), degree of education of the population, number of researchers (in four sectors) and global innovation index (GII). The main aim was to identify which indicators contributed to the growth of exports of HTP in the analyzed countries (Serbia, Romania, Bulgaria and Hungary) in the observed period of ten years (2009-2018), in order to give certain recommendations on the measures and procedures Serbia should take to increase the level of innovation index and exports of HTP. In this paper, the exports of HTP was analyzed in Serbia, Romania, Bulgaria and Hungary. The influence of the chosen indicators on export of high technology products was analyzed using the POLS model, the fixed effects model and the random effects model. The results indicate that if analyzed countries do not find resources to intensify investment in education and R&D, they will not reach the average EU innovation indicators for many years. Also, it will seriously harm the competitiveness of the economies of the observed countries in the conditions dictated by the modern business environment and the challenges of the fourth industrial revolution (Industry 4.0).

Influence of external factors on foreign direct investment flows using the example of the Visegrad Group and Serbia

This research paper examines the impact of external factors on the dynamics of foreign direct investment (FDI) trends in specific economies. The same subject will be analyzed through the examples of the Visegrad Group and the Republic of Serbia. The aim of the research is to determine the existence of a link between the impact of foreign direct investments on the growth and development of the economy observed through gross domestic product (GDP) in the 1990-2018 period. The results of the research indicate that Poland was the most successful in attracting and keeping FDI, compared to other countries. Further, the volume of FDI has been dependent on several external factors, such as overall business environment, economic crisis, political risks, positions in relevant institutions, pandemic, etc. Moreover, for the Republic of Serbia, it will be important that all stakeholders in the country have a proactive approach in order to keep FDI in the country. Finally, representatives of the authorities should be committed to fulfilling promised deals related to the regional cooperation and EU (European Union) accession and integration.

Importance of the industrial production sector and Serbia's inclusion in global value chains

The share of industrial production in GDP has expressed accelerated decrease for several last decades, while at the same time the sector of services gains an ever-increasing role in the modern society. A general impression is that the process of deindustrialization is an unavoidable global phenomenon. However, the fact that seems to be neglected is that historical observations indicate industrial sector as the pillar of longstanding development and progress, and that its role in overcoming the stages of crisis is of crucial importance, just as showed the episode of COVID-19 pandemic. The modern industrial sector cannot be observed out of the context of international production and trade, which acknowledge and express the final purpose of industrial investments, since they ensure possible overcoming of the national market limits, the achievement of economies of scale in relatively short time, and most importantly - the access to modern technologies. The development of global value chains, i.e. the production fragmentation based on the international division of labour, presents a revolutionary, global phenomenon, which has provided a chance for every country to get included into the process of global industrial production according to its comparative advantages. Serbia takes part in the global value chains owing to its geographic position, respectful human resources/professional staff, infrastructure, and the national openness; however, the implied question is the quality of the participation and what can be done to achieve better results. Can we regard Serbia just as the hub where final products are assembled or there is a considerable value added created in our factories? This paper offers an overview of the subsectors with the highest inclusion in the global value chains, as well as the analysis of their exports, output and gross value added trends, and the parameters of efficiency of investment in the most profitable subsectors. Identifying the areas with low investment efficiency is an important diagnostic tool for decision makers and presents a challenge as regards the adequate allocation of resources leading to increased profitability of investments and exports. Finally, we present the overview of the developments in ICT sector that is recognized as a valuable chance for Serbia, having in mind its increasing share in GDP, and its significance for the forthcoming process of digitalization and Industry 4.0.

COVID-19 impact on cultural and natural Pan-European thematic routes

Although the definitive effect is not measurable yet, it is evident that the hospitality and tourism sectors have endured the greatest pressure in the coronavirus pandemic crisis. This paper presents the analysis of the impact of the crisis on the thematic tourism routes. The emphasis is placed on investigating the impacts on market structure and seasonality, being the external dimensions, and on employment and cost-controlled measures as instruments of the internal management dimension. The case study analysis employed is based on the empirical examples of Pan-European thematic routes titled "Roman Emperors & Danube Wine Route" (RER & DWR) and "Via Dinarica Route" (VDR). The paper also discusses models of various scenarios for business recovery and further development. The findings show that COVID-19 has had a minimal impact of -2% on employment in the thematic routes and that massive cost control measures have been predominantly aimed at fixed operational costs. Thematic routes have experienced a decrease in operating time of up to 50%, and at the same time are undergoing market restructuring, with domestic and regional guests being the leading segments. Research further shows that the most needed form of government support through crisis mitigation measures is destination promotion support, followed by wage support and utility cost reduction.

Impact of the COVID-19 crisis on SMEs and possible innovation responses

The aim of this paper is to analyze the impact of the COVID-19 crisis on the business operations of small and medium-sized enterprises (SMEs) in Serbia as well as to identify the best ways to overcome the crisis effects and stimulate further SME growth. On a sample of 689 SMEs in Serbia, in the present paper we study the impact of the COVID-19 crisis on both the overall business of firms and certain aspects of their business (demand, logistics, organization of business activities, collection of trade receivables, and access to financing). The results of our research suggest that the crisis effects vary across the SME sector depending on the business activity, size, region an SME operates in, and the extent of achieved business digitalization and networking during the pandemic. Lastly, based on the effects of the COVID-19 crisis on the business operations of SMEs in Serbia and taking into account the experiences of other economies with the COVID-19 crisis as well as the lessons learned from previous crises, in this paper we highlight the significance of innovation and possible innovation responses of SMEs to the crisis effects as the ways to overcome it.

Characteristics of intellectual capital, competitiveness and industrial policies of innovation-intensive sectors in Serbia

This paper explores the characteristics of intellectual capital, competitiveness and industrial policies of innovation-intensive sectors in Serbia. It consists of four parts. The first part presents the characteristics of intellectual capital as the basis of economic growth and competitiveness. The second part analyses the characteristics of national intellectual capital and competitiveness of individual countries in the global economy, while the third part of the paper discusses the competitiveness of the Serbian economy and gives recommendations for a new growth model. The fourth part of the paper is concerned with analysis of the characteristics of intellectual capital and industrial policies of innovation-intensive companies in Serbia, presenting also the results of the research study. The paper proposes that the new growth model of the domestic economy should be based on advanced industrial production and services with a high degree of added value, as well as the application of new economic policies, which should be based on a heterodox approach. It is also concluded that the level of development of intellectual capital of the analyzed companies is at a relatively high level, their structural capital is relatively developed, and the surveyed companies have an excellent reputation. Finally, it is concluded that further development of innovation-intensive sectors implies the application of appropriate industrial policies specific for containing the elements of both vertical and horizontal policies which should focus on encouraging development and innovation.

Expansion of direct investment and resilience of Serbian labour market: A regional and sectoral perspective

In recent years, Serbia has established itself as a leading destination for FDI thanks to its generous policy aimed at attracting direct investment. In this paper we look at the labour market effects of the policy of incentivised direct investment, first from a sectoral and regional perspective, and then by taking a holistic view at its impact on the overall labour market and economic development. We find that this policy has contributed to overall sectoral rebalancing of the labour market by increasing manufacturing jobs. It has also contributed to regional labour market rebalancing, most notably in improving the quality of employment in less developed regions and in stabilizing the shares of regional wage funds. Still, labour market, educational and infrastructure cleavages between regions remain very large. The transformational potential of Serbian labour market is far from being fully exploited, and Serbia still needs to sustain high level of investment in manufacturing jobs while at the same time supporting the gradual shift toward high-technology investment.

Analysis of the systemic credit risk component in the banking sector of the Republic of Serbia

The subject of this research paper is quantification of the degree of systemic risk exposure of the Serbian banking sector's loan portfolio in the period from 2008Q4 to 2019Q3, including by main commercial segments (corporate and retail). The Basel Committee on Banking Supervision, under its regulatory framework, makes a distinction between corporate and retail loans regarding the exposure to systemic risk. Based on the above, the following hypotheses are set: a) There is a significant difference in systemic risk exposure between corporate and retail loans in the Serbian banking sector and b) Forecasting the exposure to systemic risk of the entire Serbian banking sector can be performed on the basis of corporate loans due to the specificity of the economic system of the Republic of Serbia. The results of the research corroborated the truthfulness of both hypotheses, which has a multifold significance for commercial banks' management, macroeconomic and macroprudential policy makers. First, banking and accounting regulations require stress-testing of probability of default on the change in macroeconomic aggregates and its impact on the bank's capital. Second, a bank's sensitivity to changes in macroeconomic aggregates predominantly depends on the loan portfolio structure by commercial segments. Third, the conclusion of the academic elite that the development of the capital market would lead to an increase in the macroeconomic stability of the Republic of Serbia and reduce the procyclicality of credit risk was confirmed. We used the autoregressive distributed lags model (ARDL model) because there is a difference in order of integration in the observed time series (I(0) and I(1)), and because this method provides good results for relatively small sample data sizes.