Diaspora Contribution to the Economic Development of the Republic of Serbia: Remittances and Investments

Đukić, Mihajlo and Bodroža, Duško (2022) Diaspora Contribution to the Economic Development of the Republic of Serbia: Remittances and Investments. In: Economic and Financial Implications of Covid-19 Crises. Université Côte d'Azur, Nica, pp. 181-199. ISBN 978-2-493478-00-9

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Abstract

This chapter analyzes current and potential ways through which diaspora business engagement has had impact on the Serbian economy. The chapter focuses on the institutional framework established with an aim to stimulate cooperation between diaspora and local business entities, remittance inflow patterns, as well as potentials for enhancing knowledge transfer practices. Moreover, the links between remittance and key macroeconomics variables (GDP growth, current account balance and exchange rate) have been analyzed. The analysis of the institutional and regulatory framework shows that Serbia has already developed a solid institutional framework for diaspora engagement. The potential of the informal diaspora organizations and diaspora related business associations seems still underexploited. The analysis showed that remittances represent important factor which help avoiding the adverse effects of macroeconomic shocks, having countercyclical character. Generous remittance inflows accounted for the almost 80% of the balance of payments deficit in the last decade. Therefore, a stable remittance inflows significantly contributed to the stability of the exchange rate, even putting pressures to appreciate. However, there should be developed more sophisticated policy measures to stimulate diaspora-related investments since the largest share of remittances has been directed to the personal consumption.

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