Factor Advantages of the Republic of Serbia in Agricultural Production and a Need for Accomplishment of Sustainable Competitive Advantage in the Market

Factor Advantages of the Republic of Serbia in Agricultural Production and a Need for Accomplishment of Sustainable Competitive Advantage in the Market

Vesna Parausic (Institute of Agricultural Economics, Belgrade, Serbia), Velibor Potrebic (Institute of Agricultural Economics, Belgrade, Serbia) and Zoran Simonovic (Institute of Agricultural Economics, Belgrade, Serbia)
DOI: 10.4018/978-1-4666-4098-6.ch004
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A significant wealth, which a country can have in factor conditions (abundance of natural resources, available labor with tradition in agricultural production), can enable to the country a good starting position or good initial terms for development of intensive and competitive agricultural production. However, by themselves, these factor conditions will not provide to the country high productivity and employment in agriculture, high life standard of agricultural producers, and high export results. Numerous theoretical papers point out the fact that for highly developed and intensive agriculture, which provides to the country and the agricultural producers high employment and life standard, it is necessary to build and strengthen new sources of competitive advantage, of which the most important are: research and development activities, associations and joining in clusters, and setting up a stimulating micro-economic business environment. The authors in the chapter determine, by statistical and comparative analysis, a working hypothesis that favorable factor conditions in agriculture by themselves do not lead to accomplishment and keeping up a sustainable competitive advantage of the country, on domestic and foreign market. By analyzing export results of selected European countries in the field of agriculture, the authors determine conditions that are necessary for a country to achieve high and sustainable competitive advantage on the international market. The chapter also presents the conditions needed to set up “new” sustainable sources of agricultural producers` competitive advantage in the Republic of Serbia.
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Background: Competitiveness Assessment Of Agricultural Sector In Serbia

The agricultural production of the Republic of Serbia represents a significant factor of the entire national economy, from aspect of its share in Gross Domestic Products (GDP), employment, balance of payment. This is determined by the following data:

  • Share of agriculture, forestry, and fishery in gross domestic product of the Republic of Serbia in 2010 (at previous year prices) amounts 7.9% (Statistical Yearbook of the Republic of Serbia 2011, pp. 124-126). Together with manufacture of food products, beverage and tobacco products, the agricultural and food sector makes 12.5% of the GDP of the Republic of Serbia.

  • Economic structure of rural areas in the Republic of Serbia is highly dependent from the primary sector (agriculture, mining industry, power supply). According to data of the National Program for Rural Development 2011-2013, a share of the sector Agriculture, Forestry and Water Management in domestic product of rural areas (data for 2004) amounts around 30%.

  • Serbia realizes a positive trend in foreign trade exchange of agricultural-food products with the world. According to data of the Statistical Office of the Republic of Serbia, export of agricultural-food products was increased from 924.4 million USD in 2005 to around 2.7 milliard USD in 2011 (http://Webrzs.stat.gov.rs). Serbian agricultural-food sector is also the only one sector in the national economy with surplus in foreign trade exchange with the world. The surplus in agricultural-food products' exchange in the period 2005-2011 was ranged from 150 million USD (2005) to 1.3 milliard USD (2011);

  • Republic of Serbia provides market surpluses of many agricultural products, which direct toward export (fruits, cereals, sugar). In accordance to the FAO data for 2009 (http://faostat.fao.org), Serbia is in 10th position in the world by export of fruit prp. nes, and in 17th position by export of refined sugar;

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