REGIONAL COOPERATION AND ECONOMIC INTEGRATION

help to investors and promote new strategies. Countries in the region, which modernized
and provided administrative stability, successfully attract significant new foreign
investment directed to export. The priority objective in this regard should be to remove
existing weaknesses and create a favorable climate and framework for attracting, retaining
and expanding internationally competitive and the export-oriented foreign investment. The
main incentive should be accelerating the improvement of business environment in the
economy of Serbia, for the benefit of all investors.
1. FDI and the privatization process in Serbia
FDI FLOWS IN SOUTH EASTERN EUROPE
On the basis of the previous experiences of the fast growing economies, it can be concluded
that foreign investment played a large role in encouraging the growth of many economies
and solved a number of problems in the creation of new employment and export. Countries
which didn’t pay attention to encouraging domestic and foreign investment, often in spite
of the wealth of natural resources, didn’t make progress in economic development. That’s
why the creators of the economic policy realized that they should encourage investment
and seek ways to improve investment. Strong contribution to economic development by
attracting new foreign investment is in the following elements:
• Rise of employment.
• Increase of international trade flows.
• Change of regulations and modernization of legislation in improving the
management of enterprises.
• Favorable influence on the development of new technologies, skills, management
and business knowledge, as well as the infrastructure that is suitable to
business.
• Development of entrepreneurship.
All foreign investments are categorized by different criteria. They primarily arise from
private sources. By the efficiency of investment, other forms of foreign investment are
similar to public investment and are invested in most cases in accordance with the political
priorities (e.g., grants or loans of international financial organizations for specific projects).
According to the existing classification within the Serbian economy, foreign private
investments are divided on the new direct foreign investment (greenfield), direct foreign
investment in existing buildings (brownfield), classical buying of companies, joint ventures,
re-investment (reinvestment), portfolio investment (investment in valuable papers without
the intention of management) and execution of investment commitments in the process of
privatization.
General types of foreign direct investments, excluding forms of classical sales (merging,
joining and privatization), are classified in the following way:
• Brownfield – a company with foreign investment starts business in the building
or in a place that was previously used for production or other activities, on which
already exists a certain infrastructure.
• Greenfield - a company with foreign investment starts business in a completely
new place.
• Joint ventures - a foreign company invests a significant proportion in the newly
established domestic company.
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