The 2025 analysis of Serbia’s economic convergence shows steady progress, but also a growth structure that constrains further convergence toward the European Union average. The remaining gap with the EU points to an economy that is still dependent on lower value-added activities, as well as on foreign direct investment as the main driver of growth.
Wages are converging at a pace similar to GDP; however, their low level relative to GDP and productivity highlights persistent labour market weaknesses, limited transmission of productivity gains to employees, and high direct or indirect profit margins within the economy.
Plan for the continuation of joint work in 2026
On 16 February 2026, a working meeting was held at the Vienna Institute for International Economic Studies (wiiw), where the results achieved so far within the converge2eu project were reviewed, and plans for 2026 were defined. The working meeting was chaired by Branimir Jovanović, an expert from the Vienna Institute for International Economic Studies (wiiw). It was attended by the leadership of Think Europe from Ljubljana, as well as regional partners. The Institute for Development and Innovation was represented by its Director, Nenad Jevtović.
Advocacy has been positioned as the central direction of the project’s development in 2026, to ensure that its findings and analyses are more actively used in public policy processes.
Communication efforts are planned to be intensified toward decision-makers in the Western Balkans, EU institutions, and relevant stakeholders in Brussels, alongside strengthening public visibility through coordinated promotional and media activities.
The Need to Change the Economic Growth Model
The Institute for Development and Innovation identifies, as its main recommendation and the key economic policy challenge in the Republic of Serbia, the transition from a model primarily reliant on foreign capital and low labour costs toward a model based on productivity, knowledge, and innovation.
This can most effectively be achieved through targeted support to domestic small and medium-sized enterprises that lag behind in technological development, as well as through well-designed industrial and innovation policies that strategically select priority sectors and support them with tailored measures. Without such a shift, Serbia’s economic convergence is likely to remain gradual, uneven, and insufficient to ensure a sustained improvement in living standards.
Through the implementation of the “converge2eu” project, the Institute for Development and Innovation aims to establish a comprehensive research and advocacy framework for monitoring Serbia’s socio-economic development indicators in comparison with those of the European Union.
