Exit “Raves Up” Engine of Serbia’s Battered Economy

As fun-loving foreigners flock to Exit every year, they also help the festival pour millions of euros into an economy struggling with recession and the legacy of war.

The annual event’s growing popularity abroad has helped transform its domestic image from a rebellious outlier to an advertisement for post-conflict Serbia.

Commercial and critical success has highlighted Exit’s worth to a country that often seems poised on the brink of financial collapse and political chaos.

About 700,000 Serbs – representing 10 per cent of the population – live below the poverty line, earning less than €80 a month. The average monthly salary is around €350, while the unemployment rate is about 19 per cent.

Since the capture of war crimes suspect Ratko Mladic this spring, the pro-Western government in Belgrade has been hoping for a smoother, if still lengthy, ride into the European Union.

But anger over the flailing economy, exacerbated by a broader crisis in Europe, could help revive some of the virulent nationalism that flourished during the wars.

While Exit was once feted by Belgrade for improving Serbia’s reputation after the conflict, today it is praised for its contribution to a weak economy.

“The festival should be seen as an investment, not as an expense,” the mayor of Novi Sad, Igor Pavlicic, told Belgrade Insight.

The city’s gains in terms of promotion, taxes and tourism revenues were “disproportionate” to the amount it invested in the festival, he added.

In April 2009, the festival that had started off fighting the government was effectively proclaimed a protected institution, with funds guaranteed from the provincial cultural budget.

But although it receives a substantial share of the budget, Exit’s value to the local economy is estimated to far outweigh the amount spent on it by the government.

According to figures provided by Pavlicic, the city’s economy gains €67 for every euro that it gives to Exit.

The consultancy firm Booz Allen Hamilton, hired by Exit, says the festival pumps €13.6 million into Novi Sad’s economy every year. The city’s total annual budget is around €155 million. Offset against the amount Exit receives from the city, these figures suggest the festival contributes eight per cent of the city’s budget.

Dusan Kovacevic, a co-founder of Exit, says the Serbian authorities’ contribution to the festival compares favourably with the support provided by other governments to similar events in their own countries.

But, he adds, more should be done, particularly to encourage festival-goers to visit other parts of Serbia. “All in all, the support [from the government] is not enough,” he told Belgrade Insight.

Despite its praises and promises, parts of the Serbian establishment are perhaps still unsure of how exactly to deal with Exit.

According to Miloje Sekulic, a Belgrade-based marketing expert, the broader economic gains from Exit have so far been indirect.

“The positive influence of Exit has been spontaneous,” he said. “For 11 years, neither the state nor anyone else has [exploited it] systemically.”

Exit attracts between 150,000 to 200,000 people every year, of whom some 30,000 are foreigners. Revellers from Britain and northern Europe form a sizeable contingent.

The event also attracts youth from the Balkan region, including some from the former Yugoslav republics that were at war with Belgrade during the 1990s.