Characteristics of the Supply Chain of Tobacco and Tobacco Products: Evidence from Serbia

Abstract

Serbia is a significant producer of tobacco in Europe and the only country in Europe where tobacco production is growing. Due to privatization, some of the most important multinational companies are now producing tobacco products in Serbia. Bearing in mind the liberalization of the market and the harmful effect tobacco products have on health, this research tried to analyze the tobacco and tobacco products sector in Serbia. The study’s main goal was to analyze the characteristics of the tobacco and tobacco supply chain in Serbia and determine comparative advantages and levels of integration with the world market. The methodology used in this study included the index of concentration of tobacco manufacturers, followed by a panel regression analysis to determine factors that affected profitability in this industry. Also, foreign trade performances were analyzed using the indices of revealed comparative advantages and integration. The research was conducted for the period from 2013 to the last available year. The results indicate the growth of tobacco production despite the decline in the number of farms, the highly concentrated production of tobacco products, and the significant intensification of foreign trade despite modest comparative advantages.