Economic Themes (2010) 48 (2) 13, 313-327


Ljubodrag Savić

Abstract: A decade ago, Serbia entered the second transitional phase. The goals set were very ambitious, but their realization does not correspond to the promises and high expectations. Although it has achieved important results, today Serbia is dramatically facing the decrease in the GDP growth rate, unemployment regrowth, huge foreign trade deficit, high and mounting foreign debt, massive public spending and state budget deficit. Serbian economy suffers severe consequences of the world economic crisis, but the majority of the problems listed (excluding the GDP negative growth rate) were evident even before the appearance of the world crisis. Why didn’t Serbia achieve better results in the first transitional decade? Energetic conduct of painful and traumatic reforms eased up considerably in 2003. As the majority of other countries in transition, Serbia was more efficient in conducting one-time reforms related to the privatization and price liberalization, whereas the process of long-term structural reforms went through very slowly. The results, which were worse than expected, were also the outcome of the choice of the economic development model that was based on the foreign capital inflow and dynamic development of the service sector. The global crisis decreased the foreign capital inflow and made the current development model useless. Serbia has no more time to wait. Owing to quite numerous and grave problems of the past development, our country is obliged to turn very rapidly to reindustrialization oriented to export, as this will be the way to generate the conditions needed for the production and employment growth and the reduction of the foreign debt and vast deficit in trading with the world.

Keywords:  transition; reindustrialization; export; model of economic development

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