Fdi-Led development without structural upgrading: Serbia versus post-communist eu member states

Abstract

This paper reassesses Serbia’s FDI-led development model from a post-Keynesian perspective, comparing Serbia with post-communist EU member states. It shifts attention from the volume of Foreign Direct Investment (FDI) to its sectoral composition and asks whether significant inflows of foreign capital have supported structural upgrading. The evidence shows a quantity–quality divergence: Serbia has attracted substantial FDI, but its inflows have remained weakly oriented towards high-value-added activities. Panel regression estimates confirm a negative Serbia-specific trend in the high-value-added share of FDI relative to the post-communist EU member states comparison group. The findings suggest that Serbia’s FDI-led model has been macroeconomically useful but developmentally incomplete, supporting employment and external financing without producing a comparable transformation of the productive structure or labour market.