COMPETITIVENESS AND RISKS REDUCTION AS A BASIS FOR ATTRACTING FOREIGN INVESTMENTS IN SERBIA

Abstract

Analysis of key factors of competitiveness and risks should serve as the basis for creating a national strategy that will contribute to the inflow of FDI thus be defined by the weakness in the economy and recommend measures to increase the efficiency of our economy in order to attract FDI.

The aim of this work is defining key problems in fields competitiveness, political and financial risks and giving the solutions which may to create economic policy that incentives foreign investors – foreign capital to invest in Serbia because of raise our competitiveness and risk diminish. Country's competitiveness is its ability to achieve success in the global market. The result is a number of factors such as: (a) a favorable business climate that encourages the introduction of new products and processes, (b) investment and (c) the competitiveness of individual companies. During the last couple of years, the economy of South East Europe (SEE) countries, including Serbia, was strongly affected by the global economic crisis. According to OECD estimates, the long-term competitiveness and prosperity of the region largely depend on whether the individual economies can increase the level of foreign direct investment. OECD's in the 2006^th for the first time published the Investment Reform Index (IRI – a qualitative assessment of policies and institutions that affect the investment environment) that refers to the countries of South Eastern Europe. Since the release of the publication and the first index, progress has been made in reforming policies and institutions that shape the environment for investment. Investment Reform Index 2010 (IRI 2010) shows further reforms in various areas that are essential to encourage investment. The conclusions and recommendations of the Investment Reform Index 2010, covered ten economies – Albania, Bulgaria, Bosnia and Herzegovina, Croatia, FYR Macedonia, Kosovo under UNSCR 1244/99, Moldova, Romania, Montenegro, Serbia, and tested: investment policy and promotion, development of human capital, trade policy and facilitation; access finance, regulatory reform and of parliamentary processes, analysis of tax policy, infrastructure development investment and SME policy. The territorial division was taken over by the European Bank for Reconstruction and Development (EBRD). The analysis of the competition was carried out through: (1) Competitiveness Index (Global Competitiveness Index and Business); (2) General or standard business risk of foreign investors (political and financial risk, the level of transparency of procedures and administrative systems), and (3) Levels of legislative reforms to create a general business conditions both domestic and foreign investors, together with the level achieved fiscal, regulatory and financial incentives to attract FDI.