The obsolescence of export structure: an obstacle to economic growth

Abstract

Although the decrease in foreign trade imbalance is almost the only positive macroeconomic shift in 2005, it seems that this problem is losing importance for no reason. Other burning economic problems (inflation, first of all) have pushed aside this problem that was a real burning issue. Of course that there has to be understanding for such treatment by the creators of economic policy considering the fact that the inflation in this year will surpass the originally planned inflation almost twofold, and that the International Monetary Fund is firm in insisting on additional rendering both fiscal and monetary policy more severe in order to restrain the growing price instability. Bearers of economic policy have already fulfilled a large part of the given requirements. Nevertheless, the foreign trade imbalance is still fairly high. This thesis is supported by the fact that Serbia is a country in transition with almost the lowest degree of import coverage by export. Despite the marked rise in goods export that has been realized in this part of the year, it is difficult to say which part of the growth has been caused by the privatization processes and restructuring, and which part accounts for a more realistic statistical expression that is a consequence of value added tax (VAT) endorsement. Also, there are certain vague issues concerning the import itself. The economists agree that VAT endorsement led to overflowing the import from 2005 to 2004 especially in the last quarter of 2004. Additionally, it seems that there is a wide consensus that VAT endorsement implied the decrease in the phenomenon which was supposed mostly by the creators of economic policy, to have played an important role, and it is about the "inflated" import invoices. Elimination or at least reduction in this phenomenon resulted in more realistic expression of goods import value. It is almost clear that a part of this year?s decrease in foreign trade imbalance has been due to temporary disorder caused by VAT endorsement. On the other hand, there is no doubt that the rest is due to the expansive increase in export which is the consequence of restructuring and privatization of domestic enterprises. In another words, if the mentioned tax form had not been endorsed, the foreign trade deficit would have been decreased, but with rather low intensity.