Everybody talks about the great FDI influx, but nobody about the outflow of capital

Belgrade’s Faculty of Economics professor, Milorad Filipovic says that the effects of foreign direct investments (FDI) are much smaller than presented by state officials, because nobody talks about the capital that foreign companies take out of Serbia.

“So, of the 2.3 billion euro, which is the value of the FDI we got last year, we have to deduct more than 1.1 billion euro from the relevant balance sheets since this amount of money has been repatriated. This is what foreign investors had generated and taken out of our country as their income,” Filipovic said at the forum “Grants, economic development and investment growth” organized by Nova Ekonomija and the Balkan Fund for Democracy (BFD).

Filipovic also says that foreign investors in Serbia usually operate as “isolated islands” and are not integrated into the national economic system, citing the example of Philip Morris, which, after buying a tobacco factory in Niš, hired suppliers from abroad.

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“None of the original suppliers had been re-hired. Suddenly, Philip Morris Serbia had a 100% import-dependent production,” Filipovic said, adding that it is wrong to use the gross domestic product (GDP) as the main indicator of economic growth, because the gross national product (GNP) is the key here.

According to him, the gap between the GDP and gross national income is constantly widening due to the influx of foreign investments. Last year, the gross national product was 10% lower than the national GDP.

The second indicator to be observed is gross or net value-added, which shows the results of company operations and which economy segments are growing and which are falling behind.

The professor says that the biggest drop in gross value added has been recorded in the food industry and this decreases the food industry’s participation in both production and exports.

(Nova Ekonomija, 19.11.2019)



This post is also available in: Italiano

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