Original scientific paper
How Macroeconomic Policies Erode Business Competitiveness: Serbia’s Experience
Djuričin Dragan
; Faculty of Economics, University of Belgrade,Belgrade, Serbia
Vuksanović Iva
; Faculty of Economics, University of Belgrade,Belgrade, Serbia
Abstract
Current economic crisis in Serbia is not only a consequence of the last global economic
crisis, but also a consequence of pre-crisis structural instabilities and uncompleted transition,
both geopolitical and economic. Actually, ever since the transition in Serbia offi cially
started in 1990, the country has never left the crisis. Namely, the output gap is still signifi -
cant, both transitional (GDP in 2011 is around 30% lower than GDP in the last pre-transition
1989 year) and factual (Serbia lives far beyond its transitional peers and its potential).
The fact that macroeconomic policies did not manage to fi x these problems forces us to
question weather the orthodox policy framework followed by Serbia’s macroeconomists
gave best possible results. This paper analyses the infl uence of macroeconomic policies on
performance and competitiveness of Serbia’s economy. The accent will be on monetary
policy with respect to its role during transition and subsequent policies considering prime
rate, FX rate and infl ation, as well as other impediments and functional distortions faced
and borne by the economy. The paper shows that continuing policy of gradual infl ation
and real FX rate appreciation constantly erodes competitiveness of Serbia’s enterprises
and their profi tability. Additionally, it provides recommendations for overcoming current
situation in the light of double-dip crisis in Europe.
Keywords
Serbia; competitiveness; real FX rate; industrial policies; energy sector
Hrčak ID:
98272
URI
Publication date:
1.12.2012.
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