Policymakers in Serbia must adapt a proactive approach to re-igniting economic growth by focusing on increasing exports. It appears quite clear that the country can no longer rely on demand-led growth to drive economic development. Not only are the inexpensive capital flows of the 1990s and most of the 2000s unlikely to return, but the Serbian economy simply does not generate enough demand in its small, relatively saturated market to sustain long-term development. Companies and political leadership must look to foreign markets and exports to drive development. This report argues that Serbia should employ an Export-Led Growth (ELG) model as the foundation of its economic development strategy. This implies encouraging increased exports as the primary engine of wider economic growth. An ELG-based model can promote smart, sustainable, and inclusive economic growth by promoting innovation and the production of goods and services with higher value added, fostering competitive exports which are more resilient to external shocks, and helping create more long-lasting employment for more marginalized groups in Serbian society.
The goal of export performance analysis is to identify industries that possess the necessary resources and capabilities for strong, dynamic, diversified, and sustainable export operations. The export performance analysis will enable an in-depth look at industries’ main international characteristics, through measurement of key performance indicators (KPI), such as comparative and competitive advantages. This analysis will help us identify the industries that can outgrow competitors and penetrate foreign markets successfully due to the presence of particular advantages.
The graph below reveals which particular industries within these sectors are benefiting from that advantage and strengthening their significance in exporting, and which are not. Industries with competitive advantage, located in quadrants I and II, are identified as Export stars and Rising stars, respectively, according to their level of RCA. In the same manner, industries without competitive advantage (located in quadrants III and IV) are classified as Marginal industries and Falling stars, respectively (more in report, page 63).
Graph – Distribution of industries according to both their comparative and competitive advantages (2009-2013)