Even though the country is a parliamentary republic, there are a few things in the political economy that keep Serbia from really growing or developing for the benefit of the people of the country. The first is the prevalence of corruptions, especially at the local government level.[i] The corruption keeps the country from being able to get a lot of foreign investment. Countries like the UK and the United States have laws against bribery in other countries, so they cannot be sources of investment in Serbia as long as there is so much corruption.
The second main issue is the relationship with Kosova.[ii] Both of these political economic issues are holding Serbia back by taking them out of consideration from being invited into the European Union. Until these issues get resolved, Serbia will be tied to other corrupt countries and will not have interest from the more developed world in making investments in the country.
[i] BUSINESS, CORRUPTION AND CRIME IN SERBIA: The impact of bribery and other crime on private enterprise, United Nations Office of Drugs and Crime, https://www.unodc.org/documents/data-and-analysis/statistics/corruption/Serbia_Business_corruption_report_ENG.pdf
[ii] The current relationship with Kosova and how it holds back Serbia is covered in “Relaunching the Kosovo-Serbia Dialogue,” International Crisis Group, Europe Report N°262, 25 January 2021 (https://www.crisisgroup.org/europe-central-asia/balkans/kosovo/262-relaunching-kosovo-serbia-dialogue) and download full report.