Serbian economy needs foreign investments

Since the collapse of former Yugoslavia, the Serbian industry is in a difficult space. The reason is that the successive governments and the lack of radical measures r

esulted in a stagnation of the economy. Moreover, a bunch of new initiatives were recently taken to solve the main problem of the country, which apparently lays in a lack of modernization of the industry.

The crisis impact on ex-Yugoslavia

Before Yugoslavia collapsed, the main part of the Serbian economy was based on its agriculture which was very fruitful in the Moravia and Voïvodine regions.  People used to buy food products directly by local producers, until in 2002 supermarkets started establishing themselves all over the country, weakening the local agriculture and preventing a potential development of the food sector for the benefit of foreign distributors. Another sector that used to be strong in Serbia was the metallurgical industry, as the country possesses many mineral finds that remain today unexploited. But the economical crisis hit the country; a lot a factories closed their doors as the low quality of the local infrastructures and equipment didn’t seduce any foreign investor that could have potentially took the factories over to keep the activity going. This is under those unfavorable economical conditions that the government elaborated two strategies to reindustrialize Serbia.

Outsourcing industry

With only a few coins in one’s pocket, it is a real challenge to start anything. This is why the Serbian government is soliciting the help of foreign investors. For those foreign investors, it is a great opportunity to outsource the production at lower costs. Therefore, Serbia is in 2014 giving priority to a new expanding sector: the information technologies sector. Every year the number of firms starting an activity in this sector is growing by 20% as the government is providing some funds to expand the sector. This is why starting and activity in the IT sector could be advantageous, as Serbia is able to provide highly qualified workers speaking many languages, and on another hand, the IT sector does not require significant initial investments. Undeniably, the IT sector has a lot to offer, especially when considering the growth of the use of new technologies.

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New initiatives

Serbia may have found its way through the crisis, moreover, remains the industrialization problem. The former Serbian economical model was aiming to control the inflation and encourage the consumption, but has not been as successful as expected. Therefore the government set up an economical plan to reindustrialize the country that should show some results over 15 years. The target is to attract even foreign investments to allow the industrial sector to grow and become more productive. Some investors already started the process by establishing in Serbia, as for instance the Korean firm Yura which opened a subsidiary of the company in Nis producing electronic components for the automotive industry. Outsourcing should allow the country to develop on the world market on a long term basis. Nevertheless, it is essential to not only offer services to become economically independent in order to be able to face the crisis which is not about to end up yet.

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