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FDI in Serbia

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Foreign Direct Investment in the Successor States of Yugoslavia

Part of the book series: Economic Geography ((ECOGEO))

Abstract

After the dissolution of the Socialist Federal Republic of Yugoslavia (SFRY) in the early 1990s, the Republic of Serbia found itself in an unprecedented social, political, and economic situation. Facing a significant delay in the transition process in comparison with other Central and Eastern European (CEE) states, Serbian governments since 2001 have opted for a model of economic development based on attracting foreign direct investment (FDI). This strategic commitment has led to complex and controversial effects on Serbia’s economy. On the one hand, FDI inflows benefited the local economy by increasing its international market competitiveness, contributing to a decrease in unemployment, and enhancing technology transfer. On the other hand, FDI is related to some negative economic trends such as expansion of labor-intensive jobs and an increasing dependency on unpredictable inflows of foreign capital. The aim of this chapter is to offer insights into the empirical literature on FDI to Serbia in the context of Serbia’s historical development and to explore the spatiality and influences of contemporary inflows with a special focus on prospects and suggestions for Serbia’s economic trajectory over the next 25 years. Conceptually, this text is based on Dunning’s eclectic approach to FDI by focusing upon the origins, location, and internalization of foreign capital in the country.

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Notes

  1. 1.

    Serbia’s Free Zones Administration was established in 2008 and is responsible for all activities related to the functioning, promotion, and development of free zones in Serbia. Free zones are recognized as additionally attractive and beneficial for investors. They are excluded from VAT, customs, and clearance. In 2018, there were 15 free zones with 204 multinational companies and annual turnover of EUR 5 billion, providing nearly 14% of all Serbian exports (Razvojna agencija Srbije 2018).

Abbreviations

B&H:

Bosnia & Herzegovina

BPM6:

Balance of Payments and International Investment Manual Version 6

CEE:

Central and Eastern Europe

CEFTA:

Central European Free Trade Agreement

EAEU:

Eurasian Economic Union

EU:

European Union

FDI:

Foreign Direct Investment

FRY:

Federal Republic of Yugoslavia

GDP:

Gross Domestic Product

GFC:

Global Financial Crisis

IT:

Information Technology

JV:

Joint Venture

MNE:

Multinational Enterprise

OECD:

Organization for Economic Cooperation and Development

OLI:

Origins-Location-Internalization

SFRY:

Socialist Federal Republic of Yugoslavia

SME:

Small and Medium-Sized Enterprise

STET:

Societa Finanziaria Telefonica

UAE:

United Arab Emirates

WIIW:

Vienna Institute for International Economic Studies

WOS:

Wholly Owned Subsidiary

WWI:

World War I

WWII:

World War II

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Acknowledgements

This work was supported by the Ministry of Education, Science and Technological Development of the Republic of Serbia under project No. 176017 and project 179065. We would like to express special gratitude to company CUBE team D.O.O Beograd for their generous assistance with data gathering.

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Authors and Affiliations

  1. Faculty of Geography, University of Belgrade, Belgrade, Serbia

    Ivan Ratkaj & Mikica Sibinović

  2. Faculty of Economy, University of Belgrade, Belgrade, Serbia

    Emilija Manić

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  1. Ivan Ratkaj
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Correspondence to Ivan Ratkaj .

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  1. Global Studies Department, Bentley University, Waltham, MA, USA

    Joel I. Deichmann

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Ratkaj, I., Sibinović, M., Manić, E. (2021). FDI in Serbia. In: Deichmann, J.I. (eds) Foreign Direct Investment in the Successor States of Yugoslavia. Economic Geography. Springer, Cham. https://doi.org/10.1007/978-3-030-55739-3_2

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