Serbian economy recovery in the post COVID-19 era: Cluster approach

Abstract

The COVID-19 crisis differs from previous ones. It disrupts global value chains, redirects business toward regional cooperation in a highly globalized world, and forces new business model development toward digitalization. This crisis affected both supplyand demand-side and all countries worldwide, regardless of their economic strength. To support economic recovery, while at the same time fighting for health system endurance through lockdowns and prevention measures, economic decision-makers all around the globe have been using expansive macroeconomic policies. One of the first measures was loosening monetary policy. Such measure was taken in 80% of the countries globally and in all emerging markets. Fiscal policy was significant in supporting demand in the short-term, simultaneously resulting in higher public debt, which is becoming one of the constraints for future development. While economists of today are discussing which letter visualizes the best the character of this crisis - V, U, L, W, we got the letter K, which indicates that recovery among countries will differ in growth rates and duration. Accordingly, we are going to live in a world where change is the only constant. To survive within these conditions, digitalization and key clusters' development are crucial for long-term competitiveness. In this paper, we analyzed the competitiveness of the Serbian economy by using the Country Competitiveness Index, emphasizing the importance of microeconomic indicators that represent a powerful tool in analyzing crucial segments for the economy's recovery. We also focused on three clusters' potential: tech, agribusiness and organic food, and tourism.