Economic challenges in the south
All countries of the Western Balkans have been seriously affected by the global financial and economic crisis. In 2009, after five years of robust growth of roughly 6 percent per year, Serbia saw its economy plunge by 4 percent. In 2010 the economy began to show signs of recovery, with a growth rate of 1.9 percent. Industrial production, having declined by 12.6 percent in 2009, increased by 2.5 percent. The job market remains in dire straits, however. The official unemployment rate of nearly 20 percent (at the end of 2010) points to considerable challenges ahead.
Over the years, ESI has been conducting research on poor areas in the southern part of Serbia and the obstacles to development. A cross-country economic portrait of the Karadag Mountains, The development trap at the heart of the Balkans, published in 2005, gives a detailed picture of the economic challenges in Presevo (alongside the Kumanovo area in Macedonia and Gjilan/Gnjilane municipality in Kosovo). It finds a municipality characterised by the virtual absence of industrial production, a skills shortage and bad infrastructure, with no policies in place to address these problems.
Another case study is Leskovac, once a proud industrial town, whose former industrial giants now stand idle. ESI's 2007 paper, The cost of non-Europe. Textile towns and the future of Serbia, describes a town starved of investment, either domestic or foreign, which finds itself locked in a cycle of economic decline.
While some time has elapsed since these two studies were published, they still offer a valuable picture of some of the biggest challenges to economic development in Serbia.
20 April 2011