Suchergebnisse

The economic annihilation caused by the wars, sanctions and hyperinflation has elevated the issue of restoring previous income and welfare levels to the very top of political and social agenda. Consequently, all efforts during the past two decades were focused on reviving economic growth. Initially the main source of growth was consumer demand financed by external grants and privatization proceeds, followed by industrial revival and new jobs financed by external borrowing and strong FDI flows. In recent years it is becoming increasingly clear that higher sustainable rates of growth needed for income convergence with Europe and improved standards of living can only be achieved with production, organizational and process innovations. This paper reviews the elaborate structure of the present national innovation system in Serbia and concludes that more than 120 academic and almost 80 R&D institutions are competing for very limited resources of around 0.9% of GDP, produce declining innovation output and do not collaborate with the enterprise sector to increase productivity and growth. To have a better impact on productivity, long-run growth and well-being of all citizens, innovation funding must be doubled, innovation priorities must be identified based on empirical evidence and R&D and innovation performance must be evaluated based on results.

The paper reviews new standard policy response to global COVID-19 pandemic led by the IMF. It identifies new innovative approaches in the design of expansionary fiscal support measures and accommodating monetary policy. Particular attention is paid to the treatment of labor markets, job-retention measures, and worker-reallocation efforts deployed at appropriate stages of continued pandemic, initial post-COVID-19 economic recovery and longer-run investment for sustainable future growth. The paper detects inherent policy limitations in the treatment of local, national and global public goods, excessive globalization, and unregulated financial markets and capital mobility, as well as weak integration between prevailing economic policy paradigm and other social sciences. It seeks a solution in expanding economic policy framework beyond neoliberalism, by harnessing democracy and human wellbeing consistent with sustainable development goals through balanced conduct of economic policy, efficient and adequately regulated markets (as needed), and responsible and transparent state actions.

The paper argues that Serbia must address a complex set of challenges as it prepares for the EU accession and seeks convergence to the European quality of life within a reasonable timeframe. To successfully close institutional, infrastructure and income gaps with core EU countries, while, at the same time, responding to likely pressures from the Fourth Industrial Revolution requiring profound social, industrial and organizational changes, the country will have to first address the institutional legacy of the past which now stands in the way of introducing modern, efficient and transparent governance systems into the state, public and private sector. The only institutional and policy scenario that supports this growth path may be more demanding, but it offers relatively fast convergence based on a smart industrial policy and deep structural changes of economic organization, education and social systems. New social consensus may not be easy to reach, but it will be well worth the effort if it offers a base to fend off future governance risks and ensure prosperity in the challenging new digital world.

Fiscal consolidation in Serbia was based on a comprehensive, multiyear program built on broad-based expenditure cuts, better revenue performance, and related structural reforms and pro-growth policies. During the first two year of implementation the actual fiscal performance substantially exceeded the original and revised deficit targets set in the IMF supported three-year precautionary program. In 2015, the actual deficit (3.7 percent of GDP) exceeded program target by 2.2 percentage points. In 2016 the implementation performance further improved as the actual deficit (1.36 percent of GDP) was 2.6 percentage points better than the plan. The result implies a 4.4 percentage point structural deficit adjustment which exceeds the program target one year ahead of schedule. In this, revenues contribute 3.5 percentage points, public wages 1.0, pensions 0.6 and reversals of structural expenditure savings take away -0.7. The program had a beneficial impact on economic growth. The economy bottomed-out in the third quarter and started recovering in late 2014-early 2015 leading to a positive 0.8 percent growth for the entire year. The growth further recovered in 2016 (+2.8 percent) and is expected to reach 3 percent in 2017 and stabilize at 3.5 percent annually thereafter. With this performance Serbia may become a case of 'expansionary austerity' which demonstrates that fiscal consolidation programs designed in line with sound principles and synchronized with key structural reforms and pro-growth policies can generate growth. Carefully selected expenditure cuts combined with pro-growth revenue collection efforts can have expansionary effect on growth even under most difficult circumstances The political economy issues of fiscal consolidation and structural reforms gain increasing importance in the last year of the program, two months ahead of presidential elections. Fresh thinking is needed to demonstrate that the completion of difficult reforms is a win-win for all, and most everybody loses if reforms are stalled or abandoned.

Fiscal consolidation in Serbia was built on broad-based expenditure cuts, better revenue performance, and related structural reforms and pro-growth policies. In 2015 the actual fiscal performance exceeded the original and revised deficit targets set in the IMF program. The final outcome was a deficit of 3.7 percent of GDP, a huge 2.9 percent improvement over 2014. The result contains a 2.5 percentage points of structural fiscal adjustment with 1.5 percentage points in permanent expenditure cuts and 1.0 percentage point in structural revenue improvements. This increases front loading and allows more fiscal space for the implementation of pending structural reforms. The program had a beneficial impact on economic growth which turned out positive at 0.8 percent, 1.3 percentage points above IMF and IFI projections. With this performance Serbia may become a case of 'expansionary austerity', which demonstrates that fiscal consolidation programs designed in line with sound principles and synchronized with key structural reforms and pro-growth policies can generate growth. Carefully selected expenditure cuts combined with pro-growth revenue collection efforts can have expansionary effect on growth even under the most difficult circumstances. The political economy issues of fiscal consolidation and structural reforms gain increasing importance in the second year of the program, two months before the early parliamentary elections. Fresh thinking is needed to demonstrate that the completion of difficult reforms is a win-win for all, and almost everybody loses if reforms are stalled or abandoned.

The main purpose of the paper is to discuss an apparent erosion of competitiveness of the Serbian economy in the aftermath of the global crisis and to propose a set of policy interventions that would restore the pre-crisis level of competitiveness, as well as support the resumption of institutional and policy reforms needed to close the gap with new EU members and other candidate countries. Comprehensive measures of competitiveness (such as GCI produced by the World Economic Forum), empirical studies, and academic papers provide a wealth of information on key determinants of competitiveness, growth, and current account sustainability. GCI alone measures 111 indicators organized into 12 pillars and three blocks focusing on basic requirements, efficiency and innovation. Empirical studies identified dozens of factors that contribute to or explain import and export dynamics, and determine CA movements with large numbers of possible policy combinations (mixes) that could be associated with desirable growth outcomes. Clearly, not all factors are equally important or really binding. To identify the key binding constraints to competitiveness and sustainable growth of the Serbian economy the paper uses a diagnostic methodology advanced by Rodrik and Hausmann [9] and further developed by Hausmann et al. [1 ]. We confirm recent empirical findings and claims of Serbian businesses that the real effective exchange rate (REER) indeed represents an immediate binding constraint on competitiveness and growth which needs to be addressed as soon as possible. However, it should be stressed that finding and maintaining equilibrium REER is not a panacea that will cure all problems of tradable sector in Serbia. It is closely followed by high real cost of financing and inefficient financial intermediation, expensive and intrusive state (resulting in costly uncompetitive business environment), and inefficient management and labor force (manifested through high unit labor costs or low productivity). These constraints need to be addressed in short sequence to restart the engines of export led growth.