Regional Analysis of Agricultural and Food Trade of Serbia

Abstract

The processes of economic transformation and integration in which Serbia is included (gaining membership in the WTO and the EU), are accompanied by significant liberalization of markets, including the market of agricultural products, which causes certain changes in the size, structure and mode of foreign trade. Foreign trade regime of Serbian agrarian products is being harmonized to the requirements of the World Trade Organization (WTO) in anticipation of acquiring the status of member, as well as the Stabilisation and Association Agreement between Serbia and the EU and CEFTA-2006, whose members are the most important trade partners of our country. Trade liberalization and the growing international market of agricultural and food products represent an opportunity to promote exports of agrarian products from Serbia, but also opening of the market might seem a serious threat to some of our agricultural products and affect the change of production structure, where agricultural policy makers should pay special attention. The aim of this paper is to perform a regional analysis of foreign trade of agricultural and food products from Serbia with key trading partners such as EU, CEFTA-2006, and especially with some of its members for the period 2004-2011. In order to gain insight into the degree of integration of the Serbian agricultural sector in the markets of these countries, Grubel-Lloyd index of intra-industry trade (GLIIT) is calculated, which indicate the intensity and the level of intra-industry trade, implying mutual – bilateral exchange (import and export) of similar or identical products between regions (countries). A higher degree of integration on the markets of certain countries indicates the possibility of easier adjustment to the conditions of liberalization (and lower cost) because certain products are already present on them. Performed analysis provides insight into the potential consequences of further liberalization on the development of the agrarian sector and expected structural adjustments. Calculated GLIIT index for different groups of agricultural and food products and for individual countries are considerably different and vary in the observed period, but in general the level of intraindustry trade between Serbia and its leading trade partners (especially the EU) is low, indicating a low integration of agrarian sector of Serbia on these markets.