Foreign direct investment and technology transfer: unlocking Serbia’s growth potential

Abstract This paper examines the effects of foreign direct investments (FDIs) on economic development and the transfer of knowledge and technology (technology spillover) in developing countries, specifically focusing on the Republic of Serbia. The analysis is based on a comparative review of EU countries and Serbia in terms of statistical data on R&D activities and patent applications. The study synthesises existing research and proposes a methodological framework for future empirical studies. Findings indicate that technology spillover - horizontal and vertical - has not yet reached the desired levels in Serbia. Despite the presence of FDIs, the anticipated improvements in domestic innovation and technological advancement remain limited. This study contributes to the literature by contextualising technology spillover in Serbia and identifying gaps in its realisation. It also provides a foundation for future research on the mechanisms by which FDIs influence domestic enterprise performance and national economic development. The paper offers insights for policymakers and business leaders seeking to maximise the FDI benefits. It suggests the need for strategic policies to enhance technology transfer, support domestic R&D, and foster stronger linkages between foreign investors and local firms to accelerate economic development.