Analysis of MSME ecosystem in Serbia and identification of key strategic sectors for its development

Abstract

Serbia's economy is one of the least developed economies in Europe and for the Government it is crucial to find the drivers of economic growth. The transition process has not fulfilled the expectations of governments and citizens in the past 15 years. As an especially bad part of the transition process emerges privatization of former industrial giants, where the vast majority of these enterprises ceased to exist. The companies that have survived are now far from the former size and production power. Because of this privatization process, the majority of large enterprises currently operating in Serbia are the result of foreign direct investment. However, the total amount of foreign direct investment in Serbia is decreasing from year to year, and it becomes clear that economic growth cannot be based solely on that. These are the reasons why drivers of Serbia economic growth have to been sought in the development of entrepreneurship and small and medium-sized enterprises. The Government must create programs of institutional support for development of MSME sector in order to create new jobs, increase employment and generally renew economic activity in the country. However, a key elements of each of the Government programs are strategic sectors that should be supported. The aim of this paper is identification of strategic sectors and the value chains that have the greatest potential for development of the whole MSME ecosystem. Key strategic sectors should be supported by the Government through a more favorable financing, administrative support, training programs etc. A comprehensive analysis MSME sector has been conducted in order to identify key strategic sectors in Serbia, and a part of this analysis will also be shown in the paper.