Importance of the industrial production sector and Serbia's inclusion in global value chains

Abstract

The share of industrial production in GDP has expressed accelerated decrease for several last decades, while at the same time the sector of services gains an ever-increasing role in the modern society. A general impression is that the process of deindustrialization is an unavoidable global phenomenon. However, the fact that seems to be neglected is that historical observations indicate industrial sector as the pillar of longstanding development and progress, and that its role in overcoming the stages of crisis is of crucial importance, just as showed the episode of COVID-19 pandemic. The modern industrial sector cannot be observed out of the context of international production and trade, which acknowledge and express the final purpose of industrial investments, since they ensure possible overcoming of the national market limits, the achievement of economies of scale in relatively short time, and most importantly - the access to modern technologies. The development of global value chains, i.e. the production fragmentation based on the international division of labour, presents a revolutionary, global phenomenon, which has provided a chance for every country to get included into the process of global industrial production according to its comparative advantages. Serbia takes part in the global value chains owing to its geographic position, respectful human resources/professional staff, infrastructure, and the national openness; however, the implied question is the quality of the participation and what can be done to achieve better results. Can we regard Serbia just as the hub where final products are assembled or there is a considerable value added created in our factories? This paper offers an overview of the subsectors with the highest inclusion in the global value chains, as well as the analysis of their exports, output and gross value added trends, and the parameters of efficiency of investment in the most profitable subsectors. Identifying the areas with low investment efficiency is an important diagnostic tool for decision makers and presents a challenge as regards the adequate allocation of resources leading to increased profitability of investments and exports. Finally, we present the overview of the developments in ICT sector that is recognized as a valuable chance for Serbia, having in mind its increasing share in GDP, and its significance for the forthcoming process of digitalization and Industry 4.0.

The impact of sales growth on manufacturing companies' profitability in the Republic of Serbia: Panel data analysis

“…In 2020 this share was 13.3%, a decline by 1.9 p.p. in comparison to 15.2% in 2011 (Kovačević et al, 2021).…”

Logistics system as a factor of business development: The case of the Republic of Serbia

“…Modern industries have to be considered in the context of international production and trade, where complexity is particularly pronounced in extraordinary circumstances such as the COVID-19 pandemic. This crisis has highlighted the need for countries to participate more effectively in global supply and value chains [17], with logistics as a key element in this process. The identified importance of logistics in different economic circumstances provides an opportunity to examine its contribution to business development within an economy.…”