REGIONAL INEQUALITIES IN SERBIA IN THE CONTEXT OF STRUCTURAL REFORMS

Belgrade, Institute of Economic Sciences, 26th November, 2015.

Edvard Jakopin

INTERNATIONAL SCIENTIFIC CONFERENCE“DEVELOPMENT, COMPETITIVENESS AND INEQUALITY IN EU AND

WESTERN BALKANS”

STARTING POINTS Hypothesis 1: Does growth in itself generate

inequalities? Does regional and social inequality create macroeconomic vulnerability?

Hypothesis 2: Do inequalities increase during the period of transition reforms?

Hypothesis 3: Has recession led to declining inequalities?

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ЕU-15 ЕU-10 SEE

1990 100 100 100

2000 126 119 83

2008 146 168 127

2014 145 180 120

SEE: LAG, THE TREND OF INCREASING ECONOMIC GAP

Human Development Index

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THE DEVELOPMENT POSITION OF SERBIA 2014.

1990=100 2000 2008 2014

Industry 42 51 46

Employment 82 79 67

Investment 23 40 30*

2014

GDP PPP(ЕU-28=100) 35

Employment rate /15-64/ 50%

Unemployment rate 17%

External debt(% GDP) 78,3%

Public debt(% GDP) 70,9%

INVESTMENTS

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COMMODITIES FOREIGN TRADE DEFICIT

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THE REFORM RISK -TRANSITION SPEED

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The slowest reform in areas:1. Large scale

privatization2. Governance and

enterprise restructuring

3. Competition policy

IMPACT OF RECESSION ON THE SMEs SECTOR

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SMEs Sector2007-2014:

GVA - fall of 16% Employment - drop

in by 16% Earnings - fall of

13% Number of medium

enterprises - fall in the by 17% (from 2,572 to 2,134)

DEMOGRAPHIC REGRESSION

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The demographic imbalance 2002-2014Belgrade 99.176Raska-Rasina -7.559Backa -26.005Sumadija-Pomoravlje -28.239Srem -29.307Danube-Branichevo -38.831Nis-Toplica-Pirot -41.478Bor-Zajecar -48.968Zlatibor-Moravica -52.056Jablanica-Pcinja -58.992Macva-Kolubara -61.517Banat -74.839

EU-REGIONAL DISPROPORTION

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TRANSITION&INEQUALITY

X:I decile 2006 2007 2008 2009 2010 2011 2012 2013 2014

Beograd 11:1 6,8:1 5,2:1 5,3:1 5,6:1 5,5:1 6,3:1 6,9:1 7,6:1

Vojvodina 14:1 12,6:1 12:1 8,3:1 7,8:1 7,7:1 9,2:1 9,7:1 10.4:1

Sum-West 8,5:1 9,2:1 7,2:1 6,9:1 7:1 6,3:1 8:1 8:1 8,9:1

South-East 8,6:1 7,5:1 7,1:1 7:1 6,4:1 6,1:1 6,6:1 7,2:1 8,4:1

Lorenz curve2014

SRBIJA - GINI 2014INCOME 0,38CONSUMPTION 0,26

X:I decile

BUG HUN ROM SRB ESP ITA

2008 12:1 5:1 13:1 8:1 11:1 9:1

2014 11:1 6:1 11:1 9:1 16:1 10:1

RECESSION&MIDDLE CLASS-INCOME

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RECESSION&MIDDLE CLASS-CONSUMPTION

RECESSION&MIDDLE CLASS-REGIONAL ASPECT NUTS 2

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INCOME CONSUMPTION

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COMPOSITE INDEX OF SOCIAL COHESION(Srbija=100)

SOCIAL COHESION

TRANSITIONAL REGIONAL DIFFERENCES

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SUCCESS RATE OF PRIVATIZATION DEVELOPMENTAL VULNERABILITY INDEX

RESTRUCTURING OF ECONOMY

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MOST CRITICAL FIELDS OF SERBIA 2015 /WEF/

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Pillar Rang (1-140)Protection of minority shareholders’ interests 1 138Burden of government regulation 1 136Extent of staff training 5 135Extent of market dominance 6 134Buyer sophistication 6 133Agricultural policy costs 6 132Country capacity to retain talent 7 140Country capacity to attract talent 7 139Cooperation in labor-employer relations 7 136Reliance on professional management 7 131Venture capital availability 8 130Nature of competitive advantage 11 138Extent of marketing 11 135Willingness to delegate authority 11 134Production process sophistication 11 133Capacity for innovation 12 132

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ECONOMIC GROWTH BASED ON EXPORT

CONCLUSION /1/ Transitional growth was not function of reducing

regional and social inequalities in Serbia, which are constantly at a high level

High regional and social inequalities have increased macroeconomic vulnerability

Faster transition reforms affecting the increase in regional and social inequalities. In periods without reforms to reduce inequalities. More developed regions rapidly implement reforms, reduce inequality and increase social cohesion

The recession has reduced regional disparities21

CONCLUSION /2/Transitional development of regional and social inequalities in Serbia in the future will depend primarily: speed transition reforms (post-privatization

restructuring, structural reforms, investments)reforms in education and

regional models of endogenous growth and social inclusion. The focus of structural reforms will be areas where the greatest degree of inclusion gap: institutional reform, labor market reforms and reforms in education.

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