In Serbia's case, the 2 undoubtedly priorities would be the development of every day easier, more creative workforce, working at more and more decent jobs, and embarking for real on the green transition
With Kori Udovicki, President of the Board and Chief Economist of CEVE we talked about Serbia's MSP100, the function of CEVES and it is organizational partners, state interference and the opportunities for Serbia's SMEs.
As a start, are you able to please tell us what, or rather who, exactly is Serbia's MSP100 (SME100)?
The SME100 companies have been carefully selected to represent Serbia's leading companies created through domestic entrepreneurship -“leading” in the sense that we expect their contribution to be key to Serbia's sustainable development (realization of UN 2030 Agenda). They represent the “Hidden Champions” of Serbia. Most widely known are the ones of Germany (also Austria) where they make much of the “Mittelstand”, a population of SMEs that has played a vital role over the past decades in ensuring their countries didn't de-industrialize as did a number of other complex economies. Although relatively small by global standards these are global leaders in very particular industrial niches, and very often are family-owned. Whilst not comparable in size and sophistication, the SME100 also produce and exports increasingly sophisticated niche products for global markets: tools for the repair of passenger aeroplanes and jet-propulsion motors, laser-based speed-measurement equipment for that measurement of speed in transport, fertilizers and other agricultural products that capture CO2 from the atmosphere, complete theatre stage design and mechanism equipment of probably the most sophisticated global performing centres, an array of IoT along with other artificial intelligence solutions, especially in agriculture.
We estimate the SME100 represent a minimum of 275 Hidden Champions that as a whole generated a lot more than 1.1 billion EUR in exports in 2023 and employ as a whole a lot more than 30,000 people. We believe the actual figures are bigger because domestic financial report data do not cover all the information. We did not within this round cover the companies oriented towards the domestic market whose business services are important to the prosperity of these export- and innovation-oriented companies, and who also deserve attention.
You say carefully selected?
We focused on three “sub-populations” of sustainable development Champions: (i) exporters -as exports really are a sine qua non of any small country's development, that regularly proves their competitiveness and quality by passing the exacting tests of the global markets. (ii) proven innovators even when their exports continue to be in an earlier stage; and (iii) “green pioneers”, companies showing the way for Serbia's green transition. We picked the largest and many impressive exporters among all companies whose direct exports of goods or/and services take into account a lot more than 24.9% of revenues and also have a value more than EUR 1 million. Not including firms that are generating from exports of low-processing resources and agricultural products, or trade, and transportation services. The innovators are recipients of Innovation Fund or Horizon innovation grants, also established as exporters. Saving money pioneers were found through a mixture of factors. A fundamental criterion for those would be a positive business reputation.
Though successful according to those set standards, SMEs can't really pull through the expansion process all alone and the scene seems oddly fragmented. What is the role of CEVES and its organizational partners, and where precisely would you see the importance of the conferences and expos such as the MSP Serbia 2030: MSP100 Expo?
First, let me be clear that the SME100 are Champions. They are winners. Every one of these emphasized they do not need anybody's “help”. We organized the event Serbian SME 2030: SME100 Expo primarily to focus on their development potential to the rest of the country-it is us, Serbia, that needs them. We hoped the event will empower and inspire them to recognize their own potential, talk and fasten, and launch initiatives which will support the development of SMEs more broadly, and direct potency and efficacy towards achieving goals for the whole society. Hundreds otherwise thousands of SMEs have the potential to become “winners”-but may never allow it to be unless we create a more desirable and supportive business environment for SME development overall. Because the SME100 are successful despite there as being a strong bias in Serbia's policies and also the environment against SMEs. While in the EU the practice is to, for example, give SMEs a benefit relative to large companies in public places procurement, in Serbia it's the opposite. SMEs are not exempted from taxes on reinvested profits, while big information mill, and the regulations that for a long time have been used to subsidize employment continue to be completely adjusted to large companies.
How much of state interference, or rather regulation, is needed to make so far successful SMEs more resilient and prepared for further development in increasingly volatile market dynamics? Where is the fine line between letting these firms develop sustainably and based on their nature, and supporting them without making them too reliable on state help?
Governments exist to provide public services – “goods” that whenever “produced” give benefits to more companies, and more citizens compared to what they would when the same money was spent by a company only on itself. Once the government educates and trains citizens to be a productive and inventive workforce, which will benefit their first, second, and third employer. Similarly, when the government invests in and supports, the introduction of quality assurance system institutions, they open the way in which for the development of a lot of companies that will later offer the system through market mechanisms. When the government supports through guarantee funds export credits, it is only compensating for the fact that Serbia's banking institutions are still not recognized as creditworthy enough.
The great news is the fact that programs meant for SME development are being developed and also the resources invested are increasing, but it is insufficient which is too fragmented.
In which domain the most progress could or should be made, to have sustainable development and therefore the UN 2030 Agenda?
Sustainable development is one of the growth and development of people, their possibilities, and options – closing cleavages between those with access to resources and earning power and those without and leaving no one behind. It can also be about carrying this out harmoniously with our environment, healing the harm that the exclusive orientation on “growth” has caused. In Serbia's case, the 2 undoubtedly priorities are the growth and development of every day more productive, more creative workforce, working at ever more decent jobs, and embarking for real within the green transition. It may be the workforce, i.e. people and community development that is the bottleneck of Serbia's development right now.
As the government is slow in improving its own quality of education and training, it might be not only fair but wise whether it compensated, and collaborated with, companies who do this themselves, and well. The more and more people are well-trained, the higher the availability of an excellent workforce for those. The problem is that this involves a government structure capable of working inside a decentralized fashion, reaching out to many SMEs rather than several large companies. It also mandates that the formal education system adapts its offering towards the needs of development, not the other way around.
What challenges will the current global economy present, and just what, if any, are the opportunities for Serbia's SMEs?
Serbia's SMEs weathered surprisingly well the pandemic crisis not only because they were generously (overly so!) helped through the government, but additionally because of their flexibility and diversification strategies. That won't be if, as it is possible, the present financial market bubble under numerous pressures such as the energy crisis and the Ukraine war-bursts and pulls global activity downward. Working to the advantage of Serbia's SMEs may be the ongoing restructuring of global supply chains and nearshoring where Serbia is within an excellent location, around the border of the EU. This, however, can also be at risk due to the ambiguous message being sent by our current foreign policy. Proximity to the EU is efficacious only with a definite EU membership perspective.
