The effects of foreign direct investments on the labor market in the Republic of Serbia are a controversial topic, due to the role that foreign capital plays in shaping the institutional framework of the Serbian economy and the level of fiscal incentives intended to attract and retain foreign investors, on the one hand, and the quality of jobs created through such a policy on the other. A deeper analysis of the available data suggests the existence of a gap between the public interest and the interest of foreign capital. This gap can primarily be explained by the fact that, from the perspective of public policymakers in Serbia, foreign direct investments serve to resolve a number of macroeconomic and structural imbalances. While the quality of jobs is important, it is not the sole determining factor in shaping policy toward foreign investors. Problems noted in the labor market and comparative examples from successful post-transition countries suggest that the developmental effects of foreign capital primarily depend on national control over that process. Hence, the government’s role should not be solely to deregulate and liberalize the economy according to the interests of foreign capital but rather to encourage institutional changes that reflect national interests, improve public services, and adopt developmental economic policies.