REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART V:
The task of the effective use of modern law solutions is reducing unnecessary regulations,
their transparency and making possible the predictive behavior of the participants in
business processes. Improvement of the investment conditions through speeding up
reform programs and the institutions of strenghtening support on national, municipal and
agency level develops faster through better relations with the private sector in solving the
problems competitivity. It implies the constant leading campaign concerning improvement
in understanding the importance of foreign investment for developing municipals and
regions and better functioning of the public enterprises. Institutional strenghtening and
establishing new functions of the state in conditions of market economy should lead to
developing market institutions, liberalization, deregulation and foreign capital inflow. All
of this would appear as a consequence and condition of the construction and functioning of
the economic system which constantly improves and changes with the aim of the market
economy, market institutions and recognition mechanisms, which are in the function of
motivating the competition.
In Serbia, during the last few years, a significant progress has been made in maintaining
stability at macroeconomic level, together with the improvement of legislation in
many areas. What is understood and accepted is the fact that this reform process must
be speeded up and that it is necessary, especially in conditions of economic crisis, to
increase significantly the attraction of new foreign investment in order to improve the
export capacity and competitiveness. However, in addition to all the achieved results, the
following development restrictions are present:
• Relatively low level of foreign investment, which makes Serbia attracted in
comparison with neighboring countries.
• The majority of new foreign investment is mainly focused on the domestic market.
For example, the largest single market in Serbia is the market of cars and transport
means. Over 1,500,000 passenger cars are registered in Serbia. The average age of
passenger cars is over 12 years, while of the cargo vehicles is even more. Starting
from the assumption that in the next 10 years the 2 / 3 of all vehicles are replaced,
the market of more than 1,000,000 vehicles is made, in other words an average of
100,000 vehicles a year. Production of spare parts and services makes the value of
about 2 billion euros per year. Such a market justifies the Italian Fiat as a strategic
partner, which would in “Zastava cars” set a final production of vehicles.
• A small number of companies invest in business-oriented to international
markets.
• Limited development within the state itself and limited understanding of the
need for competitive, modern industry and the possible benefits of direct foreign
investment.
• A low level of export and permanent dependence on international assistance and
private remittances from abroad as Government support programs, confirm the
low level of investment.
• Limited institutional capacity and underdeveloped mechanisms for the support of
investors and implementation of their plans.
Weak economic results due to the lack of new investment in productive economic sectors
are clearly seen in the relatively slower growth of the total gross domestic product (GDP)
and GDP per capita in Serbia in 2008. and the beginning of 2009. In contrast to this, general
progress can be seen in those countries which modernized their laws and regulations,
provided local support to the creation of benefits for investors and which provide active
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