Serbian economic institutions and the people, accustomed to the market, were in 2000 much better prepared for the transition than other countries of Eastern Europe a decade earlier. Between 2002 and January 2010, on procurements and auctions, 1,746 public companies were sold. 507 contract were terminated out of 2295 privatized enterprises. , foreign direct investment (FDI) are extremely important for Serbia because, unlike other modalities of capital inflows, investment packages brought by FDI include not only capital but new technologies, management and organization skills, foreign market access and likewise. Therefore, they are essential not only in terms of development needs of the economy, but also in terms of growth and maintenance of the competitive positions and performance. Small inflow of FDI, as well as the insufficient number of greenfield projects in Serbia largely coincides with the overall rating of Serbia, that is the investment climate assessments made by the world-renowned and reputable institutions. The paper provides concrete measures to increase FDI inflows. Attention should be focused on maintenance of political stability and improvement of legal safety in order to improve the investment climate. It is a fact that Kosovo problem remains open.