FDI in Serbia

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.