Navigating Serbia’s Economic Future: The Crucial Role of Productivity

Serbia has grown at a rate comparable to peers over recent decades, but the income gap with the EU, albeit narrowing, remains large. As contributions from labor and capital to potential growth are expected to decline, Serbia needs to accelerate structural reforms to boost total factor productivity (TFP). Successful implementation of structural reforms could yield substantial benefits. Key policy options include those that strengthen governance, reduce state influence in the economy, address skill mismatches, enhance assess to finance among firms, and promote research and development (R&D) and innovation.