Development Performance of the Textile Industry of Serbia

Abstract The textile industry is still significantly involved in production and employment in developed countries and is a major source of growth in many developing countries. As a business with a long history, the textile industry undergoes radical transformations at a global level. With the emergence of new competitors, global business conditions have changed significantly. Nevertheless, European manufacturers have remained world leaders in the production of industrial textiles and fashion clothing. Many European manufacturers resort to subcontracting or relocating capacity for labour-intensive activities in countries with lower labour costs, such as Serbia, in order to maintain competitiveness. The greatest success of the domestic textile industry was recorded in the late 1980s when it was a significant source of employment, the creation of added value and more balanced regional development. Although it is still not at the level of the 1980s, positive developments in the domestic textile industry appeared in 2016 in the direction of growth in production, employment and exports. The state seeks to accelerate the development of the textile industry through the subsidisation of foreign and domestic investors. However, growth that is primarily based on foreign direct investment is a long-term unsustainable concept. In order for growth to be sustainable, it is necessary to encourage the development of activities that produce greater added value and increase competitiveness. That is the reason why it is necessary to support the development of domestic enterprises, as well as the arrival of those foreign investments that generate multiple levels of added value.