Economic Analysis <p><strong>Economic Analysis</strong>&nbsp; is a scientific journal published by the Institute of Economic Sciences (IES). It is published twice a year (in June and in December) in English, in printed and e-version. Economic Analysis's <strong>mission</strong> is to inform scientific and professional public about the results of original research in the field of economics, as well as about the positive public policies intended for surpassing the identified challenges.</p> <p>Since 2018, the journal is ranked as the leading national journal (M51) in the filed of economics and organizational science according to the decree of the Ministry of education, science and technological development of the Republic of Serbia.</p> <p><strong>For any information, you can contact us on e-mail <span style="text-decoration: underline;"></span></strong></p> Institute of Economic Sciences, Belgrade, Serbia en-US Economic Analysis 1821-2573 <p>Once the manuscript is accepted for publication, authors shall transfer the copyright to the publisher. If the submitted manuscript is not accepted for printing by the journal, the authors shall retain all their rights. The following rights on the manuscript are transferred to the publisher, including any supplementary materials and any parts, extracts or elements of the manuscript:</p> <ul> <li>the right to reproduce and distribute the manuscript in printed form, including print-on-demand;</li> <li>the right to print prepublications, reprints and special editions of the manuscript;</li> <li>the right to translate the manuscript into other languages;</li> <li>the right to reproduce the manuscript using photomechanical or similar means including, but not limited to photocopy, and the right to distribute these copies;</li> <li>the right to reproduce and distribute the manuscript electronically or optically using and all data carriers or storage media, and especially in machine readable/digitalized form on data carriers such as hard drive, CD-ROM, DVD, Blu-ray Disc (BD), Mini Disc, data tapes, and the right to reproduce and distribute the article via these data carriers;</li> <li>the right to store the manuscript in databases, including online databases, as well as the right to transmit the manuscript in all technical systems and modes;</li> <li>the right to make the manuscript available to the public or to closed user groups on individual demand, for use on monitors or other readers (including e-books), and in printable form for the user, either via the Internet, online service, or via internal or external networks.</li> </ul> <p>Authors reserve the copyright to published articles and have the right to use the article in the same manner like third parties in accordance with the licence&nbsp;<strong>Attribution-Non-Commercial-Non-Derivate 4.0 International (CC BY)</strong>. Thereby they must quote the basic bibliographic data of the source article published in the journal (authors, article title, journal title, volume, pagination).</p> Notes from of new Editor-in-Chief Ivan Stošić ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 V V In Search for RIS3 for the Republic of Serbia: Challenges Between Theory and Reality <p>Objectives of this paper are exploration of the challenges of use of methodology for creation of smart specialization strategy (S3) in Serbia. S3 is focused on use of knowledge for economic development. Major challenges of implementation of S3 in Serbia are weak links between R&amp;D sector and economy, and undeveloped culture of dialogue for adoption and realization of S3 priorities. In this paper are presented key challenges authors of S3 in Serbia are faced with in very first trial of introduction of S3 methodology in country. Paper is organized in four main parts. First part is (critical) description of the main concepts of methodology for creation of S3. The concept of S3 is a tool for realization of the strategy of the European development through "integrated industrial policy for the globalization era" and "Innovation Union". Second part will present implication of implementation of S3 in Serbia, i.e. conditions for use of one theoretical concept in reality of economy and society in Serbia. Third part is discussion of results of implementation of S3 in Serbia achieved so far (process is not finished at the moment of writing of this article, mid 2018), analysing challenges between proposed methodology and real situation in country. Fourth part is addressed to further steps in implementation of S3 in Serbia, with particular attention to the aspects of dialogue which should be organized between involved stakeholders in order to achieve consensus for adoption and realization of S3 priorities in Serbia.</p> Đuro Kutlača ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 1 9 10.28934/ea.18.51.34.pp1-9 Productive Specialisation and Growth in the EU15 <p>This paper analyses the relationship between productive specialisation and economic growth in the 15 older European Union member states between 1970 and 2005. The sectoral taxonomy proposed by (Peneder, 2007) is used to classify the different sectors of activity according to the educational levels of the respective workforce and establish a comparison between the manufacturing and the services sector, based on their potential contribution to productivity improvements. The empirical model corresponds to a growth regression where the employment share of the different sectors is the main explanatory variable taken alongside other control variables identified in the empirical growth literature as robust growth determinants and is estimated with the fixed effects method. The results indicate that a higher weight of manufacturing activities that use mostly very low and low educated workers presents a negative association with growth. Services activities that require low educated workers make a negative growth contribution. Manufacturing activities with high and medium-high educational requirements have a positive growth influence, while in the case of services only activities that require highly-educated workers show a positive correlation with growth. The policy advice that can be extrapolated from this study contemplates the design of industrial policies that promote manufacturing activities such as chemicals, telecommunications and transports equipment, and services such as financial intermediation, audit, tax consulting, engineering and legal activities, to promote growth.</p> Andrea Araujo Marta Simões ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 10 23 10.28934/ea.18.51.34.pp10-23 Inflation, Unemployment and NAIRU Estimate in Indonesia: Phillips Curve Approach <p><em>The present study was carried out to analyze the relationship between inflation and unemployment in NAIRU estimate in Indonesia through Phillips curve approach during 25 years data from 1991-2016. The analysis model used in this research was Vector Error Correction Model (VECM) as attempts to determine the long run and short run relationships between inflation and unemployment matters in Indonesia. The results of Granger causality test indicated two-way relationship between inflation and unemployment in Indonesia. The formulated results on long run estimate pointed out that unemployment delivered negative and significant effects on inflation. Nonetheless, Wald Test designated that there was a short run relationship between inflation and unemployment</em></p> Nurul Hafnati Sofyan Syahnur ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 24 32 10.28934/ea.18.51.34.pp24-32 Do Business Regulations Promote Growth in Low-income Countries? <p>The present article addresses the complex web of interactions between the architecture and quality of the business regulatory setting and economic growth. Thus, we aim to advance a two-fold contribution to the literature: we methodologically account for the uncertainty related to possible alternative explanations for growth processes, by means of ‘Bayesian Model Averaging’; and we assess the impact of business environment on growth, involving the descriptors reflected by <em>Country Policy and Institutional Assessment</em>. These indicators benefit from a pronounced ‘in-field’ nature and reflect a large variety of possible public policies. The results suggest a statistically significant positive relationship between the overall quality of business regulatory environment and growth<em>. </em>This outcome is found to be robust to various choices of priors’ structures. Moreover, the outcome’s estimated amplitude largely declines once the endogeneity is considered.</p> Bogdan Dima Stefana Maria Dima ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 33 56 10.28934/ea.18.51.34.pp33-56 Implementation of Gamification in Heis in the Republic of Macedonia <p>The focus of the paper is gamification, which has been researched typically through its’ implementation in the business sector. Our research follows the implementation of gamification in Higher Educational Institutions, since the same concepts and benefits that function in the workplace, should function with similar effect or yield even better results with students. The topic of gamification in education is a relatively novel one, with only a few papers addressing it in detail, especially on the Balkan region. The contribution of the paper is two-sided, i.e., through primary and secondary research, recommendations for optimal ways of implementing gamified systems in higher education is given, and according to the obtained data, present statistics and implications for implementing gamification in HEIs in the Republic of Macedonia. The core elements and mechanics of gamification are researched and adjusted in the context of education, as well as improving existing implementations of gamification in HEIs through the introduction of cycles of interest (rewards for encouraging a certain type of behavior of students) and cycles of progression (a stepwise increase in the weight of the activities).</p> <p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The results of the primary research demonstrate that the concept of gamification offers great potential advantages for students and teaching staff, primarily by increasing the level of intrinsic motivation and the degree of completion of subjects. The paper uncovers the gamification mechanics and elements that would work best for HEIs in Macedonia, as well as outline the biggest motivational problems students have when navigating through the educational process. Through the primary research conducted, the first public available information on the introduction of gamification in higher education in the Republic of Macedonia is made available.</p> Martin Kiselicki Saso Josimovski ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 57 66 10.28934/ea.18.51.34.pp57-66 Comparative Analysis of Tourist Brand of Montenegro and Croatia <p>The importance of tourism for the economy of a country, from the beginning of the 21st century, is significantly increased in relation to its traditional role as one of the segments of the economy. The speed through which tourism in the world, and therefore in the region, develops and the amount of revenues generated through it makes it the generator of the economic development of a large number of countries. Examples of Montenegro and Croatia, as two comparable systems for the way tourism was experienced and developed in the period of the former Yugoslavia, ie the time when the foundations of the tourism economy of the then republics, and today's sovereign states, as well as strategic approach and target markets, were set up is a comparison of the tourist brands of both countries, with the possibility of precisely determining the revenues realized by the two countries through the tourism sector and their two tourist brands as research purposes. The aim of the research is to determine the differences and similarity of tourist brands of Montenegro and Croatia, through analysis of several indicators, starting from those related to tourism and travel revenues and their impact on GDP, to the effects of the economies of these countries from capital investment and employment. Finally, the main result of the analysis is the confirmation that there is a significant impact of the country's tourist brand on the level of revenue generated by the economies of the analyzed countries. The research has also shown the necessity of further development of the tourist brand Montenegro in the direction of Croatia. Which means an active approach to solving infrastructure problems, greater application of marketing management, synchronization of campaigns with the strategies of developing the national brand of the state and building hotel capacities that meet the standards of the most developed tourism economies in Europe.</p> Jovan Rabrenović ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 67 80 10.28934/ea.18.51.34.pp67-80 Estimation of Tobacco Products Price and Income Elasticity using Aggregate Data <p style="margin: 0px 15.13px 0px 0px; text-align: justify; line-height: normal;"><span style="margin: 0px; font-family: 'Cambria','serif'; font-size: 10pt;">In order to estimate elasticity of demand for tobacco products authors of this paper used aggregate level data. Research among low and middle income countries over the world empirically showed that demand for tobacco products is usually inelastic. Analysis conducted in the Republic of Serbia showed that price elasticity ranged between -0.76 and -0.62 while income elasticity ranged between 0.34 and 0.39.<span style="margin: 0px;">&nbsp; </span>The main aim of this paper is to estimate long run and short run demand elasticity based on aggregate level data for period 2002-2016 using Error Correction model. This research is unique in the SEE countries, while research conducted in other low and middle income countries in Western Balkan region showed similar results. </span></p> Olivera Jovanovic Jovan Zubović Marko Vladisavljević Duško Bodrož Isidora Ljumović Ivana Domazet Mihajlo Đukić ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 81 94 10.28934/ea.18.51.34.pp81-94 Competitiveness of the Serbian Economy Through the Prism of Tax Incentives for Foreign Investors <p>In order to make Serbia the most attractive investment destination in relation to countries in the region, special attention should be paid to the current tax incentives granted to foreign investors. Hence, the aim of this paper is to find the opinion and attitudes of foreign investors in the relevant research and analysis regarding the importance of tax relief for their investment in Serbia. Tax incentives are one of the most important tax instruments that can play a decisive role on foreign investors when choosing an investment location, and therefore to increase the competitiveness of the Serbian economy. In this paper, special attention will be given to tax incentives in certain areas for the business of foreign investors, depending on the way foreign investors enter the Serbian market. The methodology of empirical research in this paper is based on a quantitative approach to the collection of primary data through the survey of relevant subjects, the comparison of collected data, and the analysis of the causality of the investigated phenomena. On the basis of the obtained results it can be concluded that the greatest influence on the investor when making a decision on investing in Serbia is tax incentives in corporate income tax.</p> Darko Marjanović ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 95 104 10.28934/ea.18.51.34.pp95-104 The State of Public Enterprise Financial Reporting in Serbia <p>Serbian public enterprises bear a strong general pressure initiated on the account of unsatisfactory quality of services they provide and difficulties related to their ability to service the costs. A discrepancy between general public expectations and actual performances of these entities is transformed into a systematic search for conditions that would enable their reform and further development. However, this issue is very complex and it is based on important qualities of organisational structure and functioning of public enterprises. Moreover, it to an extent merges with another issue - that of the quality of financial reporting. In that respect, this paper presents financial statements in the context of characteristics of public enterprises and their environment, and outlines the directions of changes aimed at their improvement.</p> Miroslav Milojević ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 105 114 10.28934/ea.18.51.34.pp105-114 Satisfaction and loyalty of clients towards banking products and services <p>Transformation of the banking sector has led to today's banks providing a complete service - financial service both on the domestic and international level. The focus of their business is the client whose loyalty depends on the operations of the bank. The aim is to indicate that there is a direct link between the quality of the banking product and the service that affects the client's satisfaction and loyalty, which directly affects the bank's business and its competitive advantage in the financial market. The paper gives a theoretical and practical overview of the quality of service, satisfaction and loyalty of clients, and the performance of the bank, which depends on clients. In the theoretical part, the concept of a client, its significance and specifics related to its influence on the bank's business, through its satisfaction and loyalty to the bank, is defined. The empirical part deals with the analysis of customer satisfaction and loyalty towards banking products and services in Montenegro and how much the quality of banking services has an impact on the satisfaction and loyalty of the customer. The analysis of the factual situation will be carried out, the conclusions will be presented and recommendations made for improvement of the quality of the service, which will contribute to the greater satisfaction of the clients, and therefore the loyalty to the particular bank. All of this is directly related to the possibility of achieving the competitive advantage of banks within the banking sector where a particular bank operates.</p> Milica Raičević Dijana Medenica Mitrović ##submission.copyrightStatement## 2018-12-27 2018-12-27 51 3-4 115 124 10.28934/ea.18.51.34.pp115-124