engleski

The impact of foreign direct investment on the unemployment rate in The Republic of Serbia

This paper analyzes the Republic of Serbia in the period of transition from a planned economy with special social, political and economic conditions towards an open economy through the inflow of FDI and their impact to the unemployment rate. Creating the conditions for an inflow of FDI started in 2000 in Serbia primarily to increase the employment rate. Since 2000 most FDI has entered the sector of non-exchangeable goods which led towards increasing unemployment. That has had negative effects on Serbia from the development viewpoint, since the country needs FDI to the sector of exchangeable goods, as they encourage productivity, technological progress and employment. Foreign investors to Serbia were primarily interested in profiting from the privatization (Brownfield investments) of former state-owned companies which led to the rationalization of the privatized companies through redundancies. The benefits that Serbia has had from the inflow of FDI are significant transfer of technology, enhancement of competition on the local market. On the other hand, the negative effects are increase in the unemployment rate at the national level.

brownfield investments, FDI, greenfield investments, Republic of Serbia, unemployment rate, SEE countries

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