The importance of foreign direct investments and their effect on agriculture and food industry in Serbia

Abstract

Inefficient capital investments as limiting factors of development induce a decrease in future social wealth and Serbian export competitiveness problems. The study suggests the fact that these problems cannot be efficiently resolved without intensifying the foreign direct investment (FDI) inflow. Foreign direct investments are of particular interest to all transition countries, including Serbia, since, as opposed to other capital inflow modalities, the investment packages of FDI include, not only capital, but also technology, managerial and organisational know-how, foreign market access and the like. Therefore, they are essential not only in terms of development requirements of agriculture and food industry, but also in terms of the growth and maintenance of competitive positions and performances.

The establishment of favourable political, macroeconomic and legal frameworks for the FDI inflow is, therefore, an essential requirement of the development of agriculture and, hence, economy as a whole in Serbia as well as of the reintegration into world economic trends. Specific focus should be placed on export-oriented FDI requiring, therefore, continuous engagement in the coordination of the foreign trade policy following a precisely defined FDI attraction strategy. The carefully designed strategy should provide an adequate attitude to foreign investors, being in line with previous experiences of transition countries, particularly in terms of positive and negative FDI effects, with special reference to Serbia’s experience.