Serbian companies’ participation in international production networks depends not only on factory output but also on their ability to provide engineering, design and other specialised services. An analysis in the September MAT report examines how global value chains distribute manufacturing, research, logistics and commercial functions among countries.
Local Value Depends on Activities Performed in Serbia
The analysis highlights the importance of identifying which stages of production take place domestically and which are supplied by businesses abroad when assessing export-oriented investments. A manufacturing facility may generate substantial gross export revenue while relying heavily on imported components and services. By contrast, a smaller engineering operation may perform specialised work incorporated into products that are ultimately exported from another country.
These routes into international production networks have different implications for employment, the development of domestic suppliers and investment returns. Gross export figures alone do not show how much value remains within the domestic economy.
Productivity, Skills and Digitalisation Shape Integration
MAT’s analysis identifies productivity, workforce skills, institutions, infrastructure and digitalisation as important factors in successful participation in global value chains. For Serbia, the framework points to potential opportunities in activities that improve product quality, reduce development times or support manufacturing operations across multiple locations. These functions can complement factory production while allowing domestic businesses to take on specialised responsibilities within international supply chains.
Potential areas include product design, testing, tooling, industrial software and technical support. The commercial viability of these activities depends on customer demand, proven technical capabilities and the ability to meet delivery requirements. The report does not quantify the potential for each of these services in Serbia. It also does not establish that domestic companies are already expanding into such roles on a large scale.
Investment in Capabilities and Customer Relationships
For policymakers and investors, a central consideration is which domestic capabilities can secure repeat commercial contracts. Expenditure on facilities and equipment represents only part of the process; workforce expertise and access to customers also determine whether installed capacity is used. The distribution of functions across global value chains means that companies can participate in international production through activities beyond the physical manufacture of goods. Engineering and specialised services offer a different route from factory-based exports, with the value retained in Serbia depending on the work performed locally. The development of Serbia’s role in supply chains will therefore depend on the responsibilities domestic businesses can assume for the products they help create and the value they retain from those activities.
