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Economic and Financial Implications of Structural Reforms in the Economy of the Republic of Serbia
Edvard Jakopin,
Aleksandar Gracanac,
Jugoslav Anicic
Issue:
Volume 10, Issue 5, October 2021
Pages:
162-170
Received:
2 July 2021
Accepted:
14 September 2021
Published:
12 October 2021
Abstract: Economic and financial performance of the economy in the boom period 2015-2019. are significantly improved. The average economic growth in Serbia of 3.5% was higher than the average growth in the countries of the region. The key contribution to economic growth was made by investments, and to a lesser extent by the growth of personal consumption. The implemented structural reforms have had a positive impact on basic macroeconomic aggregates and productivity growth. The effects of the implemented fiscal consolidation in the economy of the Republic of Serbia have contributed to the continuous, from year to year, improvement of the macroeconomic and economic balance of the economy, although it should be noted that in 2019 there were signals of slowing down the trend. The fiscal deficit has been balanced since 2017, but the current account deficit remains acute. The trend of balanced public finances and reduction of public and external debt was disrupted in 2020 due to the pandemic caused by COVID-19. Due to the huge transition gap and peripheral economic status of the entire SEE area, despite the global situation, the implemented structural reforms did not proceed at the desired pace, especially in the segment of solving the problems of large state losers and economic and financial restructuring of public enterprises at all levels. Although the entrepreneurial sector has improved its performance, a number of institutional problems affecting the business environment remain. The structural analysis of the economy showed a continuation of the trend of strengthening the GVA of the service sector, repositioning of key sectors, as well as the trend of strengthening the influence of foreign private companies, which showed better business performance than domestic private companies. Structural reform activities in the coming period should primarily be directed towards creating the most stimulating environment for the development of domestic entrepreneurship and the growth of capital investments.
Abstract: Economic and financial performance of the economy in the boom period 2015-2019. are significantly improved. The average economic growth in Serbia of 3.5% was higher than the average growth in the countries of the region. The key contribution to economic growth was made by investments, and to a lesser extent by the growth of personal consumption. Th...
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Analysis of the Export Potential of Small and Medium Enterprises in the Republic of Serbia
Svetlana Trajkovic,
Ljiljana Stosic Mihajlovic
Issue:
Volume 10, Issue 5, October 2021
Pages:
171-177
Received:
6 September 2021
Accepted:
22 September 2021
Published:
12 October 2021
Abstract: The long-term stagnation of Serbia's exports is a limiting factor for further economic growth. Therefore, increasing exports is seen as a development necessity. The trend of international networking and multicultural business environment represents a new type of requirement for the management of Serbian companies, both at the national and local level. Their main goal is to contribute to a more efficient integration of the domestic economy into global trade and production flows. In this way, exports become one of the most important determinants of successful and sustainable economic development. Only 30% of companies in the tradable sector of the Serbian economy are active exporters, while the remaining 70% of companies are oriented exclusively to doing business in the country. Although most small and medium-sized companies in the tradable sector are exporters, a relatively small number of micro-enterprises have managed to expand their business abroad, which has had a significant impact on the relatively low share of exporters in the total number of companies in Serbia. In general, exporters are more successful and dynamic, as well as twice as productive, as non-exporting companies. The main goal of this paper is to identify the sector of small, medium enterprises and entrepreneurs (SMEs) with development potentials to increase exports and thus create the conditions for these potentials to be used to a greater extent than before. In this way, SMEs can be helped to increase their competitiveness in the international market. This will enable SMEs to make and make a greater contribution to the development of the domestic economy, as well as to broader economic and social priorities. In addition, this paper should indicate which sectors have obvious market potential but at the same time difficulties in achieving their goals and fully realizing that potential. The results of this research should help to design various actions whose implementation would provide adequate support to the identified sectors while minimizing the constraints faced by these sectors.
Abstract: The long-term stagnation of Serbia's exports is a limiting factor for further economic growth. Therefore, increasing exports is seen as a development necessity. The trend of international networking and multicultural business environment represents a new type of requirement for the management of Serbian companies, both at the national and local lev...
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External Debt and Economic Growth Nexus in the Ecowas: A Threshold Analysis
Abu Bakarr Tarawalie,
Talatu Jalloh
Issue:
Volume 10, Issue 5, October 2021
Pages:
178-186
Received:
22 September 2021
Accepted:
8 October 2021
Published:
15 October 2021
Abstract: Literature on the debt-growth nexus postulates that external debt is viewed as capital that closes the financing gap, boost investment and promote growth. Against this background, and given the low revenue mobilization drive, the ECOWAS Member States resort to external borrowing with a view to complement domestic revenue and enhance their ability to finance large infrastructural projects and boost economic growth. However, external debt accumulation has not translated into high growth in the ECOWAS Member States. Thus, the paper investigates the impact of external debt on economic growth in the ECOWAS countries, and determines the optimal threshold level of external debt that promotes growth. The study utilizes panel data for 15 countries spanning from 2000 to 2019, and employs four estimation techniques including the Pooled Ordinary Least Squares (POLS), Fixed Effect Model (FEM), Random Effect Model (REM) and Panel Corrected Standard Errors (PCSE) techniques. The empirical results suggest that external debt (ED), Openness to trade (Opn) and Control of Corruption (CoC) are the main determinants of economic growth in the ECOWAS countries. Specifically, openness has a positive effect on growth, while both external debt and control of corruption have negative impact on growth. Furthermore, the study reveals evidence of a nonlinear relationship between external debt and real GDP, and confirms that the optimal threshold level of external debt in the ECOWAS countries is 111%. Intuitively, the result indicates that any increase in external debt above 111% will reduce growth in the ECOWAS countries by 0.0001% while below the threshold level, economic growth will improve by 0.0222%. The policy implication is that, governments of the ECOWAS countries should ensure that, external debt are utilized in growth enhancing sectors, with a view to boost growth. Also, governments should develop debt management strategic policies, with a view to keep debt levels within sustainable limits.
Abstract: Literature on the debt-growth nexus postulates that external debt is viewed as capital that closes the financing gap, boost investment and promote growth. Against this background, and given the low revenue mobilization drive, the ECOWAS Member States resort to external borrowing with a view to complement domestic revenue and enhance their ability t...
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Testing Endogeneity, Convexity and Congestion in a Matching Function: Evidence from Finland
Issue:
Volume 10, Issue 5, October 2021
Pages:
187-202
Received:
9 September 2021
Accepted:
8 October 2021
Published:
21 October 2021
Abstract: This study contributes to the literature on the efficiency of regional labor markets using matching function to model labor markets and nonparametric methods DEA and FDH to measure efficiency of those markets. DEA has been the most popular method in empirical studies measuring efficiency for an industry and there is also a literature applying DEA to study the efficiency of labor markets. However, this literature neglects two problems important for consistent estimation of a matching function: the possible endogeneity of inputs and non-convexity of the production set. Endogeneity manifests as correlation between inputs and efficiencies. In this paper, we first analyze whether the inputs of the matching function or unemployed jobseekers and open vacancies are exogenous. As our results do not reject exogeneity, we continue treating these inputs exogenous. Next, we evaluate convexity of production set. Testing convexity is an important prerequisite for the use of DEA, because DEA assumes convexity and supplies consistent efficiencies only when the production set is convex. However, convexity is rarely assessed when DEA is applied. In this paper, we evaluate convexity of the production set of the matching function. We use several tests including ones that are based on recently proposed central limit theorems for moments of DEA and FDH estimators. Out of ten tests performed, six ones reject convexity while four ones do not. The tests leave us with a strong belief in non-convexity, and this directs us to apply FDH instead of DEA in the sequel, when we study congestion of inputs. We find strong congestion of open vacancies concerning Helsinki travel-to-work area for several years. In 2017 the loss of matches due to congestion was more than 20 000, amounting to 2.5% of the labor force in Helsinki region, 0.8% in the whole country. Our research with data on 113 travel-to-work areas and 15 public employment (TE-) offices in 2007–19 in Finland, shows huge differences in labor market situation between regions, especially Helsinki and the rest of the country, calling attention from the decision-makers both in firms and government. Also, our study emphasizes the need to pretest data for exogeneity and convexity before applying DEA.
Abstract: This study contributes to the literature on the efficiency of regional labor markets using matching function to model labor markets and nonparametric methods DEA and FDH to measure efficiency of those markets. DEA has been the most popular method in empirical studies measuring efficiency for an industry and there is also a literature applying DEA t...
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Testing Convergence in Post-War Transition Country
Muamer Halilbasic,
Emir Agic
Issue:
Volume 10, Issue 5, October 2021
Pages:
203-208
Received:
19 September 2021
Accepted:
13 October 2021
Published:
28 October 2021
Abstract: The issue of economic convergence has been widely analyzed by the researchers. Convergence hypothesis has been tested at different levels - global, national, regional and local. This paper is analyzing local economic convergence in Bosnia and Herzegovina (BiH) in last three decades. In this period the country was facing twofold transition: from war to peace and from socialism to market economy. The regression and distributional approach to convergence analysis are combined. The first hypothesis research is testing is that poor municipalities grow faster comparing to rich municipalities – unconditional beta convergence. Second hypothesis is that dispersion of local per capita GDP decreases over time – sigma convergence. To further investigate the issue and check the changes in the distribution, several visual inspection instruments were also used. The research findings are inconclusive. While regression analysis provides some evidence for unconditional beta-convergence, in a case of sigma convergence, results are mixed. This is related to significant structural changes country went through, firmly confirmed with the transitional probability matrix data. Findings confirm the necessity for combining different approaches and instruments while analysing convergence. From the specific country perspective, research results can be used as a strong argument for the necessity of new more balanced regional development policy.
Abstract: The issue of economic convergence has been widely analyzed by the researchers. Convergence hypothesis has been tested at different levels - global, national, regional and local. This paper is analyzing local economic convergence in Bosnia and Herzegovina (BiH) in last three decades. In this period the country was facing twofold transition: from war...
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