The Significance of ICT Services for the Balance of Payments in the Republic of Serbia

Abstract

The balance of payments deficit is the problem faced by numerous countries. To solve the problem of the balance of payment deficit, the creators of economic policy try to stimulate the sectors that secure the largest inflow of foreign currencies and have a beneficial impact on the reduction of deficit. The international trade in informational, computer and telecommunication services records enormously high growth rates in the 21st century. The specificity of ICT sector opens a perspective even to less developed economies to take part more significantly in the exports, which hold a large percentage of a value-added. The goal of this paper is to determine the significance of ICT services for the balance of trade and the current account adjustment, as well as the contribution to generating the surplus of the total balance of services. In the case of the Republic of Serbia, the surplus of ICT sector covers almost one-fifth of the balance of trade deficit, almost one-third of the current account deficit, while every fourth dollar achieved by the services’ exports is achieved by the exports of ICT services. If the same trend of ICT sector’s growth continues, the predictions say that the surplus of this sector will be enlarged by almost 60% till the year of 2024, when compared to the level in 2020. Finally, potentially the most significant advantage, which ICT sector brings with itself, is the reduced brain drain, which is the most destructive consequence brought to the less developed countries by the liberalization of workforce’s movement.