Industrial policy for Serbia: A matrix approach

Abstract

There are not many things in economic policy that raised so much controversy about its worthiness like the industrial policy did. Through decades, it followed the path from worshiping to total rejection. The main culprit for displacement of industrial policy from the economic policy throne to a historical trash bin was the Washington Consensus and the neo-liberal doctrine it represented. After it became obvious that the key winners of the neo-liberal economic policy reside in the financial sector, and especially after the burst of the fairytale in 2008, the adreamed advocates raised their voices again. This paper is dedicated to the reborn debate on the necessity of industrial policy in conducting structural changes in the economy, and for attaining an equilibrium as well as sustainable growth path. The aim is to create and propose a comprehensive set of measures adequate for Serbia's economy case. When the suggestions flow from the academic viewpoint, they take the form of the optimal framework for attaining specific goals. We intended to provide a framework that is fact-based, concrete, inciting and realistic. The main output of the analysis presented here is an industrial policy program for Serbia in the form of a matrix with joint horizontal, as well as sector-based vertical measures. In case of strategically important sectors with high growth potentials, sector-based measures resemble traditional vertical policies, while in other cases they merely imply adhering to the sector's specifics in the implementation of the horizontal measure. The matrix shows the most important policy measures required to stipulate growth in a particular industry given its specifics and current conditions. The industries are selected carefully with a genuine belief that they truly represent the key fulcrums of sustainable growth in the future. This paper is written with the support of Professor D. Đuričin, whose valuable advice, as well as joint work on previous research regarding this issue, contributed to a large extent to the following conclusions and suggestions. .