This report looks beyond the currentglobal financial crisis to the restoration of dynamiclong-run growth in Serbia. The answer in this report is thatSerbia will need to fundamentally alter its growth model tocompete effectively in world markets. The past model relyingon excessive inflows of capital and credit that, in part,fuelled a consumption boom has run its course in allEuropean countries. Serbia must shift to a greater exportorientation so that it can attain the major gains inproductivity and competitiveness necessary to propeleconomic growth to a much higher trajectory. This cannothappen without an explicit export strategy, and a set ofconcomitant structural reforms, driven by commitment andcoordination at the highest political level. This reporttries to pinpoint policy actions that would be mosteffective in raising the rate of productivity growth ofSerbia s enterprises so that better export performance andsustained growth could be achieved. The report has threeparts. Part I reviews Serbia s macroeconomic situation andits progress on structural reforms. Part II starts with areview of the current status of Serbia s exports and tradepolicy and regional trade arrangements. It then uses productspace (PS) analysis to examine areas where Serbia has arevealed or potential comparative advantage. The report thenmoves on to two such areas, metal processing and automobileproduction, which are subjected to value chain analysis toidentify bottlenecks that need to be removed for Serbia tobecome a successful producer and exporter in these areas.The final part of the report looks at obstacles to morerapid and sustainable development of production and exports.It starts with the analysis of the business environment,based on a range of surveys, which is followed by foursectoral chapters that discuss the obstacles found to bemost binding in the business environment: labor skills,power supply and efficiency of its use, use of land, andtrade facilitation.
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