Application of the TOPSIS Multi-Criteria Decision-Making Method for the Analysis of Economic Sectors in Serbia

Abstract

 The TOPSIS method represents an important tool in multi-criteria decision-making, enabling a systematic ranking and evaluation of alternatives based on their distance from the ideal and anti-ideal solutions. Its fundamental principle is the quantitative measurement of each alternative’s deviation from the optimal values of the selected criteria, thereby providing a more precise and objective understanding of the observed phenomenon.

In order to ensure a higher level of objectivity in the evaluation process, the weights of the criteria were determined using the entropy method. This approach reduces subjectivity in weight assignment by relying on the informational content and variability of the data. The entropy-based weighting method was integrated into the TOPSIS procedure, thereby enhancing the reliability and robustness of the final ranking results.

The aim of this study was to rank 15 economic sectors in the Republic of Serbia using available economic and business data. The ranking procedure was carried out based on the number of business entities, total turnover, registered employment, average net wages, and gross value added. This approach enabled the identification of sectors with the greatest current development potential, as well as those requiring additional institutional support and investment.

The sectors of trade, manufacturing, and information and communication were identified as the three most promising and stable sectors according to the selected indicators. The conducted analysis provides insight into sectors with relatively lower competitiveness among the selected economic activities in Serbia and may serve as a useful basis for strategic planning and the direction of future investments.