SONJA AVLIJAŠ (FREN, BELGRADE, SERBIA)

ANDCHIARA GUGLIELMETTI (UNIVERSITY OF TRENTO,

ITALY)

World Bank Conference on Poverty and Social Inclusion in the Western Balkans

Brussels, December 14-15, 2010

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Contents

I. Regional cohesion and local development in Serbia

through

II.Instruments of decentralisation and regional policy

III. Impact of the international economic crisis on these processes

IV. The case of East Serbia, Timok Region: main research findings (fieldwork and qualitative research interviews)

V.Concluding remarks

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Regional Cohesion in Serbia

Center-periphery relations: critical long-term question Reduction of regional disparities:

Policy issue before the break-up of former Yugoslavia Regained momentum over the last decade

Growing spatial inequalities in the 2000’s – ratio 1:16 Economic growth failed to translate into employment Losers of transition spilled onto government “taps” Decentralisation taking place in many sectors in order to

improve service delivery at the local level Decentralisation policies not matched by adequate

resources

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Regional Policy (1) Centrally managed:

National Investment Plan, 2006 (€600m 2007; €120m 2009; €250m 2010);

Serbian Development Fund (i.e. credit lines; subsidies for entreprises)

Measures implemented by line ministries

Lack of: Coherent selection criteria and trasparent strategy Cross-sector cooperation Process and impact evaluation Microeconomic restructuring, improvement of

business environment and competition policy

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Regional Policy (2)

2007 Ministry of Economy and Regional Development

2009 Law on Regional Development (amended 2010): Regions as statistical functional territorial units

(art. 4) Plethora of national and regional level instituttuons Fundamental change in the Law: recognition of

existing RDAs instead of creation ex novo

RDAs: bottom up, often donor driven (municipalities, cities, NGOs, private sector) started in 2003

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Critical aspects and unsettled questions

Decentralisation – Regional development – Regionalisation: Intertwined in political discourse Over –politicised Threatens to diminish support for decentralisation of

service delivery RDAs: undefined role and status (accreditation needed) Complex process of institution building that influence inter-

institutional relations in unstructured ways (RDAs, LSGs) LSGs: no role in new institutional framework for RD,

although the only sub-national tier of government fundamental actors in legitimising RDAs

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Impact of the 2008-10 crisis

2006 Law on financing LSGs broken in 2009 and 2010: transfers to LSGs reduced by 13% (following SBA with IMF)

In the context of:

Deteriorating economic and social conditions (employment at 47.2%, and unemployment at 20.1%, April 2010)

Lower tax revenues Pre-existing unresolved issues

(e.g. Law on Public Property; Exploitation of common pool resources)

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Source: RARIS8

Background of Timok Region Double heritage: Vital economic - mainly industrial - area of former Yugoslavia ore deposits (RTB, high living standards; migration to Bor and

Majdanpek, one company towns) water resources (Danube, Đerdap I and II, transnational

cooperation) Transit area more than 300.000 hectares of farming land Severe economic downturn due to Long-term economic crisis started in the 1970s Break-up of former Yugoslavia: economic devastation and change

of tourism and transit routes Economic transitionStrong “regional” identity Neither administrative, political entity nor statistical territorial

unit RARIS, Regional Development Agency of Eastern Serbia, 2007

Timok Region: Case study of “failed transition”- Deindustrialisation

(Industrial employment rate fell by 240% between 1991 and 2008)

- Underdeveloped agriculture (fragmented ownership, poor technology)

- Privatisation: poor results (RTB, Salaš), industrial complexes underutilised or abandoned

- Education, healthcare and transport infrastructures, water supply and sewage systems severely affected

- Environmental pollution (RTB Bor)10

Timok Region: Case study of “failed transition”

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Monthly average income (in dinars)

District of Zaječar District of Bor Serbia

Montly income (in dinars)

1995 273 422 366

2009 24,822 29,340 31,930 Source: SIEPA, Serbia Investment and Export Promotion Agency

Timok Region: Case study of “failed transition”

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Average Unemployment Rate (2009)

Average Unemployment rate

Bor 29.1

City of Zaječar 33.0

Knjaževac 39.6

Majdanpek 21.8

Sokobanja 25.4

Kladovo 28.5

Boljevac 23.7

Negotin 22.6

Source: Chamber of Commerce, Zaječar

Timok Region: Case study of “failed transition”

Depopulation (Bor: from 317,405

inhabitants in 1991 to 284,112 in 2002)

Outmigration & low fertility rate:

ageing of the population

Brain drain (33% of population older

than 15 did not complete primary school)

Population change by District (% change 2004-08)

Source: Statistical Yearbook of the Republic of Serbia 2009; Avlijas and Bartlett, conference paper, 2010

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Regional Policy in Timok Region (I)

Favourable position: Pan European Corridors IV, VII and X; EU Strategy for the Danube

Natural and historical resources (geothermal springs, Natural Parks Đerdap and Stara Planina, Iron

Gates; Lepenski Vir and Felix Romuliana, UNESCO World Heritage Site)

Long-term commercial (high level of exports which tend to constantly exceed imports) and industrial cooperation with Romania and Bulgaria

Industries (Đerdap, RTB)

Infrastructural and industrial programmesBut

Unclear agenda (industry vs. eco-tourism) Politically visible investments with negligble local implications

(Corridor X, skiing resort in Stara Planina) Investments in human resources and SMEs left to donors

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Regional Policy in Timok Region (II)

Need of a comprehensive effort, pivotal role of public policy (Few) Attempts to boost SMEs failed

(Bor and Zaječar accounted for 1.2% and 1.3% of total SMEs in Serbia in 2008, and for 0,7% of the National Value Added)

Underdeveloped agricultural sector (a bottom-up upgrading process is highly unlikely)

RARISSignificantly engaged in coordination and promotion of

regional development and advocacy campaignsRegional Development Strategy and Plan under way

(2011): first attemptParticipative process, local embeddednessCommitment towards regionalisation

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Concluding remarks

Regional cohesion crucial for poverty alleviation and social inclusion (esp. through labour market)

Regional cohesion is a highly politicised process Its failure is compensated through passive support

(cash benefits) RDAs underutilised as a vehicle for LED No efforts to improve the business environment Importance for cross-sectoral cooperation in

attempts of economic revitalisation Trade-off between short term political concerns vs.

innovation and sustainable growth

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Thank you for your attention!