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How Macroeconomic Policies Erode Business Competitiveness: Serbia’s Experience


  • Dragan Djuričin Iva Vuksanović

    (Faculty of Economics, University of Belgrade, Belgrade, Serbia Faculty of Economics, University of Belgrade, Belgrade, Serbia)


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.

Suggested Citation

  • Dragan Djuričin Iva Vuksanović, 2012. "How Macroeconomic Policies Erode Business Competitiveness: Serbia’s Experience," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 15(Special C), pages 19-34, December.
  • Handle: RePEc:zag:zirebs:v:13:y:2010:i:sci:p:19-34

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    More about this item


    Serbia; competitiveness; real FX rate; industrial policies; energy sector;

    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General


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