Sectoral FDI and destination country fundamentals: Implications for Serbia

Abstract

This paper implements a new empirical framework for identifying the key host country drivers of FDI flows and studies the performance of Serbia with respect to the identified indicators at the disaggregated sector level. We propose a new method for estimating country scores based on the estimated model parameters. We apply the methods to Serbian data and identify the main potential constraints for stronger production and R&Dtype FDI inflows in higher value-added sectors. While we observe some heterogeneity in the performance across different sectors, the results also point to several priorities on the policy agenda.