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Relying on the economic complexity and product space approach developed by Hidalgo and Haussmann [21], and using trade data, exporters' financial reports and available macroeconomic statistics, we try to assess the degree of transformation of structure and production potential of the Serbian economy over the last decade. We argue that although the overall economic complexity, as a decent predictor of higher economic growth, did slightly improve over the observed period, there is still large untapped potential in local knowledge and know-how. FDI inflow into manufacturing industry, as the most important factor of the transformation of the production structure and size of the economy, has contributed to growth in employment and export, improving the macro stability. On the other side, its contribution to the higher growth outlook by improving the production capacity was limited as FDI inflow has been directed mostly into low and medium-low technology industries with low complexity products. Moreover, it seems that the vertical spillover through linkages with local suppliers and transfer of technology, knowledge and practices could also be larger. In the same period, some positive developments of limited scale yet are reflected in emergence of a certain number of high-tech industries' products with high complexity, most likely produced by SMEs, such as electrical equipment, lighting, various software embedded devices, etc.

Untapped export opportunities of Serbian economy after a decade of investment and export based growth model