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In this paper the impact of political risk on the movement of stock prices in the capital market of the Republic of Serbia is analysed. This is the market with a short history of trading, characterized by a high degree of volatility, with frequent and high jumps in prices. In addition, it is a very narrow and depth lacking market dominated by share trading in that period; the market where the trading in neither treasury, nor corporate bonds was well-developed. All stipulated above indicates a high degree of correlation between the stock price and the current local political events, with the exception of the financial crisis as a global factor. Serbian political shocks are frequent, unpredictable and well defined, which allows us to clearly identify political risk. We have identified the dates/periods when certain jumps in the volatility of the market index return happened, which were then brought into connection with the occurrence of appropriate political news. In that way we were able to quantify the effects of political events on the volatility of return. This is the first paper that deals with the impact of political risk on stock returns in Serbia. Additionally, it is shown that Serbia's score of political risk in December 2009 was the highest in the Eastern Europe region. In 2015 it is around regional Balkan's average, and it lies between Albanian and Macedonian score of political risk index.

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In this paper we will try to identify key characteristics of public enterprises restructuring processes and analyze their contribution to overall economic competitiveness in Serbia and some neighboring countries, such as Slovenia, Croatia and Bosnia and Herzegovina. Special attention will be paid to public enterprises in the Republic of Serbia, where no major restructuring activities have been observed so far. Consequently, this sector in Serbia still faces low level of competitiveness. At the same time, a lot of challenges and open issues concerning mostly rationale for and against privatization, legal and regulatory practices, government oversight and corporate governance, transparency and accountability are present in Serbia. Last, but not least, we will try to identify key factors, on national as well as regional level, which could help increasing public enterprises competitiveness. This paper consists of five parts. The first part gives brief introduction as of changes which occurred in the region. The second part deals with the analysis of basic characteristics and some problems of public enterprises in the four observed countries. The third part analyzes the relation between the public enterprise sector and the source of national competitiveness. The fourth part treats the efforts made by the Republic of Serbia so as to restructure the sector of public enterprises, while the fifth part gives conclusions.

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