The economy of the Federal Republic of Yugoslavia (FRY) was devastated during the 1990s. Economic reform since the end of 2000 has marked a sea change in policy that has already had a number of positive effects. Difficult decisions have been taken to implement some structural reforms, and the economy has been substantially liberalised and stabilised. Inevitably there are risks to the hitherto positive macroeconomic developments, especially in Montenegro that has relied heavily on foreign aid. Export-led growth may suffer from the economic slowdown in Europe, the FRY’s largest market. At the same time, the economy needs...

At the time of the last OECD Economic Survey in 1990, what is now the Federal Republic of Yugoslavia (FRY) appeared poised to occupy a position in the vanguard of economic transition in Europe.1 In comparison to the other European transition countries at the time, Yugoslavia boasted more developed market institutions, greater integration into the world economy, more foreign direct investment, and a higher standard of living. While the 1980s proved a difficult period for output, incomes, and inflation, the government showed a renewed determination towards the end of the decade to stabilise and liberalise the economy, and launched a privatisation programme...

This Chapter examines recent performance of the FRY economy, giving attention to questions of economic growth, the balance of payments, the macro-economic policy framework, and commercial banking. A rapidly changing environment and policy mix, together with remaining weaknesses in basic data, complicate an assessment of the current economic situation in the country. Nevertheless, some fundamental problems and trends can be identified. Given the substantial amount of attention devoted to macroeconomic policy in a number of other recent reports on the FRY economy, this Assessment places particular stress on the performance of FRY firms and the barriers to, and prospects for, growth.

New small private businesses have played an instrumental part in economic transition throughout Central and Eastern Europe. Economic restructuring has principally involved a shift of labour, capital, and other resources from large enterprises, commonly loss-making and poorly-governed, to areas of higher efficiency and competitiveness. Small private businesses have been central to this process. These businesses operate under hard budget constraints; they are obliged to meet the demands of rapidly changing market conditions, or fail. A number of studies emphasise the vital importance of small business activity in relatively successful transition economies. Small and medium sized enterprises (SMEs) remain...

Privatisation in Yugoslavia predates the ambitious programme announced by the new democratic government in June 2001. Earnest efforts at privatisation began at the end of the 1980s, and sporadically re-emerged during the 1990s as the government sought to raise revenue, increase efficiency or transfer assets to further its political objectives...

During the early 1980s the share of trade in Yugoslavia’s GDP rose sharply. However, despite a depreciation of the dinar in 1983, disappointing export performance led to the emergence of large current account deficits. This acted to constrain imports, and by the middle of the decade the share of trade was roughly the same as it had been ten years earlier. In 1990, Serbia’s share of trade and exports in GDP (58 and 26 per cent respectively) were nearly the same as those of Czechoslovakia, which was then only about to embark on its economic transition. This comparison treats Serbian trade with the other republics of former-Yugoslavia as external...