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2016, vol. 64, iss. 1-2, pp. 15-36
The future of Serbia and how to survive it: Catching up and convergence with the EU
University of Belgrade, Faculty of Economy, Department of Business Economics and Management
Keywords: Serbia; new global normality; industrial revolution 4.0; multipronged reforms; new industrialization
Hypercompetition, sometimes referred to as 'universal transformative global discontinuity', is the greatest challenge the mankind faces today. The key characteristics of this stage of development are: hiking up of risk stressors and disruptive innovations. Great volatility of global markets is a consequence of permanent shortening of life cycle of almost everything relevant to them (growth model concepts, geopolitical interests, regulations, business models, supply chains, technologies, products, etc.). Maybe more than ever in modern history, we live in a time of profound changes. New normality creates a significant impact on politics, economy, and society. From many perspectives, it is a pivotal moment for mankind. The main attributes of this stage of development pertain to the vast impact of new normality coming from socio-political context, reflected in financialization, concentration of wealth, massive spillover effects of geopolitics on the economy (particularly on commodity prices), climate changes and security challenges, as well as the impact of technology development (this time inspired by the industrial revolution 4.0) on the growth model and economic policy platform. Addressing these challenges and discussing how national economies and their organizations can benefit from them is the main purpose of this paper. Again, to survive and prosper, every economy needs to keep growing. Growth, sustainable and inclusive, should not be questioned at all. In new circumstances every national economy, large or small, developed or developing, mature or emerging, is looking for a new vision of growth model. But, it is not easy to make right (re)positioning vis-à-vis the leading trends and strategy of market makers. Change management (macro and micro) is a way to respond to main challenges in the age when speed is becoming the currency. Change management is of critical importance for a small, impotent and out-of-tune economy with delay in transition and limited capacity to respond quickly and accurately to the universe of risk stressors. Serbia's economy is underdeveloped, with delay in transition, catching up and income convergence with developed economies from its surroundings. Vulnerability indicators and cross section analysis of macroeconomic data indicate the presence of many anomalies in the system. The main contradiction is deindustrialization which, combined with relatively high financialization, produces output gap, macro deficits, and growing indebtedness. Coming up with a new growth model that will put the economy in line with the future is not an easy endeavor when an economy is encumbered with serious structural imbalances from the past and risk stressors influencing its future position. Having in mind the fact that right now the economy is not sustainable, the main challenge for Serbia is not its future, but how to survive it? Multipronged reform agenda is the way to escape from structural crisis and get adequate answers to leading trends in order to shift the economy to sustainable and inclusive growth trajectory. Discussing how Serbia's economy would benefit from right answers to previously raised question, is a very specific purpose of this paper. The paper is organized into five parts, apart from conclusion. The first two sections are dedicated to principal drivers of change, new normality in socio-economic context and industrial revolution 4.0 affecting the new growth model and economic policy platform. The purpose of the third section is strategic audit of Serbia's economy at the end of 2015. The fourth part consists of a concise elaboration of the EU's major challenges, inspiring the reforms in Serbia, too. The fifth and sixth part provide an overview of currents stage of reforms and proposals for multipronged reforms considering the intersection of new context, economic fact sheets in Serbia and the EU and leading trends. The new industrialization is a core idea.
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article language: English
document type: Review Paper
DOI: 10.5937/ekopre1602015D
published in SCIndeks: 13/01/2017