Structural changes are crucial for sustainable industrial development. The aim of the paper is to point out that structural changes in the Serbian manufacturing industry should be accompanied by growth in production specialization and the share of hightechnology products in order to increase competitiveness. For the analysis of structural changes, a comparative method is used, to analyze production specialization, industrial sector specialization index, and for the analysis of competitiveness, the revealed comparative advantage index. The manufacturing industry is the most important sector of the Serbian economy, and, despite growth, specialization in this field is not high, which affects the lack of comparative advantages and uncompetitiveness of this sector on the EU market. The paper can be of assistance to industrial policy makers, in order to determine the best path to sustainable industrial development, using the benefits of production specialization.