Private Sector Development Facts

Most of what we know on the structural reforms of the Serbian economy comes from official sources which often lack adequate data and appropriate observation methods. The biggest problem with almost every corporate sector analysis is that they neglect an important part of the Serbian economy, consisting of small firms and entrepreneurs. This sector of the economy is normally not considered because these companies are seen as having small market shares and not being dynamic. Since the micro-enterprise and sole-proprietor sector is not well covered in the statistics, we gauged its size by analyzing electricity consumption in Serbia in the period 2001-2005^[1]. This preliminary analysis showed that they are in fact dynamic, and that, since their participation in the electricity consumption turned out to be high, their contribution to economic growth cannot neglected.

In light of these findings, and with the objective to understand the private sector in Serbia, FREN started a two phase project "Documenting development of the private sector in Serbia". Over time, the project's main theme came forward: we lack an understanding of the small scale economy in Serbia - the way entrepreneurs work and the way firms are structured. Little is known about the 200,000 individuals, small shops, artisans, craftspeople, traders, professionals, service workers, etc. that are on the verge of entering VAT rolls. These are the very small, the "micro-entrepreneurs" that need to be, and can be, contacted. The only way for these people and establishments to enter statistics, and sometimes the only way for them to relate to their government is through their payment of taxes.

In the first phase of the project, which has now been completed, the aim was to elaborate a methodology for researching the private sector in Serbia. In the coming phase, we plan to conduct an in-depth survey of the development and behavior patterns of enterprises in Serbia, with an emphasis on the effect of type of ownership on economic performance. The survey would allow us to summarize these characteristics through good representation and a quality questionnaire. FREN's team simplified and integrated the sampling and questionnaire designs through a number of iterations. The questionnaire uses every measure of size available from the Tax Office VAT Registry list.

Here you can download presentation about this project (.ppt) (424 kb)

^[1] Radosavljević Goran, "Consumption of Electric Power as an Indicator of Economic Growth", Quarterly Monitor of Economic Trends and Policies in Serbia, July - September 2005, pp. 49-57.