POLICY BRIEF your comments to [email protected]. Territorial Economic (InTER). Development Please send 1 inrespective actors localities. socio-economic modelof cooperation between participatory economic development, it mostlyinvolves a growth. Therefore, aboutlocal whentalking oflifethe quality andconditions for economic joinpowersrespective to territory improve ina andotheractors which localauthorities Local economic development is a process in on thelocallevel. improving economic growth andemployment ships andmany otherinstruments aimedat tise publicinvestments, public-private partner strategic and planning documents- that priori establishing businessincubators, developing vestments, zones building industrial andparks, in- in attracting self-governments putefforts their respective territories. With that goal, local and improvement ofbusinessenvironment in volved inplanningofeconomic development self-governments, more thanever, becamein- by openingofdomesticmarkets. Thus, local ing conditions andsolvingproblems caused local (and regional) in develop authorities created anichefor amore significant role of adequately respond to thesechallenges. This not succeeded to establish mechanismsto competitiveness development policies have and tional economic planningdepartments by competition from around theworld. Na- systems suffering from theburden imposed concept bothcontributed to localeconomic globalisation andliberal economyMarket Introduction December 2012 Dragiša Mijačić the future lessonsfor in : economic development A decadeoflocal

Dragiša is adirector of the Institute Mijačić for 1 - - ment ofbusinessenvironment. at improving oflife thequality andimprove growth related butprimarily aimed to activities basedoneconomic development isnotstrictly becausetheconceptmarily oflocaleconomic ment rate, numberofnewenterprises, etc.),- pri nomic indicators (e.g. GDPgrowth, unemploy outcome measured ofanintervention, by eco considering localeconomic development asan This separated definition shouldbe clearly from nomic development. planning andimplementation oflocaleco for factors successful cies are alsoimportant andharmonisationofpublicpoli- of authority Vertical coordination between different levels others. others. dom ofNorway, and ofDenmark the Kingdom AID, SDC, Sida,ADA, Government- oftheKing from EUfundsandbilateral donorssuchasUS opment were projects initiated aswell, funded first decadeofthenew millennium, thedevel- opment character. However, inthemiddleof thus, assuch,theydidnothave astrong devel- focused onrevitalisation oflocalcommunities, democraticright after changes and they were and national level. First were projects initiated raising awareness onbothlocal amongactors andinitiativesof projects that contributed to which presented theconcept through arange tiated by international development agencies Local economic development was ini- inSerbia local economic development inthefieldof ofdonorprojects Overview - - - - - A decade of local economic development Page 2 in Serbia: lessons for the future?

According to the geography, the projects that have had a direct or indirect impact on local economic de- USAID has also been implementing projects in this velopment can be divided into: category: CRDA and CRDA-E that were implemented between 2001 and 20076, as well as Sustainable Lo- • national, cal Development Project (SLDP), that has been imple- mented since 2011 in 32 municipalities joined in eight • geographically dispersed, or implemented in mu- inter-municipal cooperation clusters.7 nicipalities that are not territorially connected, and Apart from support to multi-donor initiatives, the Swiss • geographically concentrated, or implemented in mu- Government (through its development agency SDC) nicipalities that are territorially connected. has been financing two separate projects that belong to this category. The first one is Municipal Support The first category comprises EU projects: Exchange Programme - MSP (second and third stage) that was (all three phases), MSP IPA 2007, MISP (all phases) and implemented in six municipalities of Central and West RSEDP2.2 These projects have directly or indirectly Serbia.8 The other two initiatives are the Private Sector dealt with issues of importance for local economic Development in Southwest Serbia, that was focused development in the whole territory of the Republic of on 6 municipalities of Zlatibor District9 and the Private Serbia. Sector Development in South Serbia, implemented in 6 municipalities of Pcinja and District.10 Geographically dispersed projects include USAID MEGA, that was implemented in 32 local self-govern- As in case of Switzerland, the Government of the Re- ments throughout Serbia, as well as the first stage of public of Austria participated through its development the Municipal Support Programme, financed by the agency ADA in multi-donor programmes, but also Swiss Government, implemented in 7 municipalities separately financed projects relevant for local develop- and cities of .3 ment with a clear territorial focus. The first such project is the Integrated Regional Development Plan of the Nevertheless, most projects dealing with local eco- Autonomous Province of that was imple- nomic development had a clear territorial focus, most- mented at the provincial level, but affected the local ly covering poor municipalities in Southwest, South development of municipalities in Vojvodina. The sec- and East Serbia. Unlike the first two categories, this one ond project is the Programme of Support to Sustain- includes multi-donor initiatives, such as MIR, PRO, EU able Regional Development of Jablanica and Pčinja Progres and PBILD, which represent the most signifi- Districts that was implemented in the south of Serbia. cant projects in local self-governments in Southwest and South Serbia. GIZ also has a project significant for local economic de- velopment, named Municipal Economic Development Some of the EU projects in this category also include in the Danube Region. This project is implemented in the first phase of the Regional Socio-Economic Devel- ten municipalities of East Serbia.11 opment Programme4 and the Municipal Support Pro- gramme North-East Serbia (MSP NE).5 As special cases, German humanitarian organisation HELP is also active Cross-Border Cooperation Programmes can also be considered as programmes supporting local econom- 6 Even though CRDA and CRDA-E were implemented ic development with a clear territorial focus on border in the whole territory of Serbia, the modality of their im- territories of the Republic of Serbia. plementation through partner organisations that covered clearly defined territories places these two programmes in 2 RSEDP2 can be analysed as a special case because the category of geographically concentrated projects. it supports local economic development through support 7 Geographical areas where USAID SLDP is active to regional development agencies where they exist, and on can be found on the webpage http://www.lokalnirazvoj.rs/ the other hand it directly supports municipalities and cities gde-radimo.html where there are no regional development agencies. Since 8 Arilje, Čajetina, Čačak, Kraljevo, Požega and Užice this includes support to all local self-government units in 9 Arilje, Nova Varoš, Priboj, Prijepolje, Čajetina and Serbia, this programme is placed in the category of national Užice. This programme is implemented by RDA Zlatibor projects. from Užice 3 Čačak, Kraljevo, Kuršumlija, Niš, Novi Pazar, Požega 10 Preševo, Bujanovac, Surdulica ,Trgovište, Vranje and Užice and . This programme is implemented by VEEDA 4 The first stage of RSEDP programme was imple- from Vranje. The project started in 2011 and it will last until mented in the three Banat Districts, Šumadija and Pomorav- 2014. lje District, as well as Jablanica and Pčinja District. 11 Golubac, Zaječar, Sokobanja, Majdanpek, Veliko 5 Three Banat Districts and Braničevo District Gradište, Kladovo, Negotin, Knjaževac, Boljevac and Bor A decade of local economic development Page 3 in Serbia: lessons for the future?

in the implementation of projects supporting entre- to be wish lists, often unrealistic. Solution for these preneurship development and poverty reduction by problems is expected in the introduction of the pro- supporting vulnerable population groups, refugees grammed budgeting system on the local level.12 and IDPs, and others. Between 2002 and 2012, HELP provided support for 4,491 beneficiaries who were Also, in many municipalities and cities there is an provided equipment and business trainings and coun- obstacle for implementation of strategic plans in the selling. HELP’s activities are geographically concen- lack of political will and a general consensus on de- trated in relation to their four offices, in , Niš, velopment priorities and goals. In a number of mu- Kraljevo and Bujanovac. nicipalities, there is also a big problem in systematic monitoring of strategy implementation based on Finally, there is also the Local Economic Development clear indicators. in the Balkans programme, funded by the Government of the Kingdom of Denmark, and implemented in mu- Another area of intervention targeted by local eco- nicipalities of Nišavski District. nomic development projects is capacity building for project development and implementation, espe- There are also several smaller projects financed by dif- cially projects financed within the EU Instrument for ferent foundations, such as the Fund for an Open So- Pre-Accession Assistance. Results of these activities ciety, Balkan Trust for Democracy and many others. significantly vary between cities and municipali- However, all these projects are small in size, and not ties. Namely, the key problem in capacities to write necessary to be treated separately in this paper. and implement projects is insufficient knowledge of English language at the local level, especially in Types of interventions in the field of local eco- small and undeveloped municipalities. Another nomic development problem is the lack of formal education programmes in the field of Project Cycle Management (PCM). Lo- Local economic development projects were mostly cal professionals are trained in PCM through ad- covering the following four intervention areas: hoc trainings that are often only explaining basic terms, without tackling the essence. The third key • preparation of strategic and action plans for local problem is frequent fluctuation of workforce within development, self-government units. Namely, with the change of political structure on the local level it often happens • capacity building for project proposal writing and im- that trained staff is replaced or marginalised, which plementation, significantly reduces local capacities in this field. This is especially a case in smaller municipalities • development of local social and communal infra- where most often one or two persons are in charge structure, and of project related work. It should also be mentioned that people working on projects often cover several • establishing local economic development offices. other duties, which adds to their burden, and thus reduces their efficiency. Almost all projects focused on local economic devel- opment have supported the preparation of strate- Poor local communal infrastructure is typical for gic and action planning documentation on the local all local self-government units in Serbia. Hoping to level. As a result of these interventions, in 2012, the solve the accumulated problems, local governments Standing Conference of Towns and Municipalities are actively engaged in searching external funds. registered 708 strategic and action plans prepared Therefore, for most local self-governments in Serbia, or being prepared by municipalities and cities. This investments in social and communal infrastructure can lead to a conclusion that the first cycle of stra- are the most attractive part of participation in pro- tegic planning in Serbia has been finished in a large jects. majority of municipalities and cities. Also, there are a number of local self-governments that have initi- Developing communal infrastructure and recon- ated a new cycle of designing strategic and action structing buildings of social importance (schools, plans. hospitals, cultural centres, etc.) are important parts of all projects focused in local economic develop- Main problems in strategic planning include the lack of properly elaborated action plans and finan- 12 In accordance with the Law on Budgetary System, cial mechanisms for their implementation. There- starting with 2015, local self-governments in Serbia have to fore, a significant number of strategic plans remain initiate a new practice in the creation and execution of local budgets – programmed budgets. A decade of local economic development Page 4 in Serbia: lessons for the future?

ment. They can be split into projects dealing ex- ernments should be proactive, maximising their clusively with the development of local infrastruc- potentials and moving the limits of their actions ture (e.g. MISP and its preceded projects) and in areas relevant for local development. Also, it is projects supporting infrastructure development necessary to advance cooperation with the busi- within a component or through calls for proposals ness sector by introducing mechanisms for con- for grants (e.g. MIR, PRO, EU Progres, Cross-Border tinuous consultations and cooperation. Capacity Cooperation Programmes, etc.). building for public and private partnerships will be one of the biggest challenges in the upcoming Establishing local economic development offices period. In addition, it should be kept in mind that and developing their capacities are also a frequent democracy includes pluralism and consensus, and focus of local development project interventions. it is of great importance to include both private The project that stands out by scope of support to and civil sector in making important decisions for this area is USAID MEGA that supported the estab- local development. lishment of 32 local economic development of- fices in self-governments throughout Serbia, but Promotion of entrepreneurship is also an impor- other projects as well, such as RSEDP, MIR, PRO, tant field of intervention. Entrepreneurship based PBILD, LEDIB, MSP SDC and many others. Techni- on economy of knowledge and modern technolo- cal support for establishment of offices was also gies, as well as on industries generating added val- provided by regional development agencies Zlati- ue and job creation needs to be promoted and en- bor, REDAŠP, RARIS, Centre for Development Banat couraged. In this sense, it is necessary to work on and Bačka. development of entrepreneurial skills, especially among qualified professionals who want to start According to the results of the latest research car- their own business, as well youth, women and the ried out by InTER in 2012, out of 144 self-govern- unemployed. ment units in Serbia (not including Belgrade), 121 have some form of local economic development Integrated development of business support in- office. Capacities of those offices vary in different frastructure at the local and regional level should self-government units, with a visible disparity be- also have a significant place in future local develop- tween cities and municipalities. Also, in cities and ment interventions. Elements of business support municipalities with strong capacities within local infrastructure, clusters, business incubators and economic development offices, political influence industrial zones and parks have mostly developed on their work is much weaker than in those with independently of each other, and often in dishar- weak capacities. Another problem shared by local mony with local economic systems and develop- economic development offices is the lack of stand- ment policies. In order to achieve as efficient local ardised set of services that should be provided development as possible, these elements need to by these units. Namely, local economic develop- be linked to serve for a unique vision and strategic ment offices mostly work on preparation and im- orientation of local economic systems. It is also nec- plementation of projects and local development essary to work more actively on the revitalisation of planning, whereas other activities are carried out Brownfield locations in order to put them in opera- to a much smaller extent. tion to serve the economic development.

Conclusion: what next in local economic de- Attracting local and foreign direct investments is velopment? also an area where a more active role of local self- governments is needed. Many municipalities and Today, ten years after the first projects implement- towns prepared promotional materials and they ed in local development, the question is what actively participate in investment fairs in the coun- future project interventions should focus on. The try and abroad. However, it is necessary to work economic environment in Serbia is characterised more actively with potential investors (both na- by inadequate economic legislation, high unem- tional and foreign) and the national government ployment, uncompetitive local economy and a in order to solve problems that follow every invest- high degree of corruption in public procurement ment: from obtaining different permits from na- on all levels. Even though they have been con- tional and local institutions to finding high quality strained with the legal framework, local self-gov- workforce, building the necessary infrastructure, A decade of local economic development Page 5 in Serbia: lessons for the future?

etc. Establishing a unique one-stop shop system means that the level of inter-municipal coopera- that would work within LED offices could be the tion is significantly higher in areas with stronger first step towards a more active approach to sup- presence of donor projects. Inter-municipal co- porting foreign investors on the local level. operation is also stronger in areas with active re- gional development agencies. This shows the im- Capacity building of local self-governments and portance of initiating and implementing projects LED offices is also a significant field of intervention of joint interest for local self-governments on the in the following years. It is especially necessary district or regional level, as well as strengthening to strengthen human potentials to develop local cooperation between local self-government units development policies based on quality analyses. and regional development agencies. Collecting and analysing statistical data on the lo- cal level is also a necessity which can considerably At the national level it is necessary to work on im- contribute to better local development planning proving legislation that affects the development of in Serbia. and implementation of local economic develop- ment policies. A set of indicators that would fol- There is no city or municipality that can solve de- low the level of development of local self-govern- velopment problems on their own. Thus it is nec- ments in Serbia in a comparative way should also essary for them to work more on implementation be developed. of regional development policies and strengthen- ing inter-municipal cooperation. However, major- Finally, it is important to mention that it is neces- ity of local self-governments in Serbia develop sary to work on the promotion of lessons learned their own development policies without analysing and good practice examples from previous work their immediate territorial environment. In many in the field of local economic development. With cases, there are animosities between neighbour- that regard, it is necessary to conduct a compre- ing municipalities, based on political, historical, hensive impact assessment of implemented pro- cultural or ethnic grounds. However, there are evi- jects on sustainable local economic development dences showing that the level of inter-municipal in Serbia, which would adequately answer which and regional cooperation is in a clear correlation types of interventions helped the most in building with the number of geographically concentrated human and operational capacities, as well as eco- project interventions in a specific territory. This nomic empowerment on the local level. n A decade of local economic development Page 6 in Serbia: lessons for the future?

Table 1: Overview of projects with impact on local economic development in the Republic of Serbia

Time period

Donors Project National dispersed concentrated 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Geographically Geographically Geographically

Municipal Improvement and Revival √ RS* Programme (MIR) Norway, Norway, EU, Sida, EU, ADA and ADA

Municipal Development √ Programme(PRO) and RS EU, SDC EU,

European Partnership with Municipali- √ Multidonor ties (EU PROGRES) and RS EU, SDC EU,

Peacebuilding and Inclusive Local Devel-

RS √ opment (PBILD) Norway, Norway, Sida, SDC, MDG-F and EU Exchange (I, II, III) √ MSP IPA 2007 √ MISP (MIASP, MISP CARDS2006 and MISP √ IPA2008)

EU RSEDP √ RSEDP2 √ MSP NE √ IPA CBC √ CRDA √ CRDA-E √

USAID MEGA √ SLDP √ MSP I √ MSP II, III √ Donor Private Sector Development in South-

SDC √ west Serbia Private Sector Development in South √ Serbia Strategic Partnership in Support of the √ Economic Development of Vojvodina

ADA Support to Sustainable Regional Devel- √ opment of Jablanica and Pčinja Districts Municipal Economic Development in √ GIZ the Danube Region Programme of Support to entrepreneur- ship Development and Socially Vulner- √ HELP able Population Groups

LEDIB √ Den - mark

*RS - Government of the Republic of Serbia Policy Brief: Impact Assesment of EU Financial Assistance in Serbia This paper argues for the necessity of a comprehensive impact assessment of EU financial assistance to Serbia to-date, with the parallel goal of designing better instruments for measuring impact, and thereby contributing to improved policy design for the country’s socio-economic development and future EU accession. The paper explores the scale of EU assistance in Serbia, giving an overview of the history of EU development cooperation over the time period 2000-2012, before going on to provide an analysis of the tools currently used for assessing impacts of the Instrument for Pre-accession Assistance (IPA). The paper ends with conclusions and policy recom- mendations for including impact assessment as an integral element of all EU-assisted operations.

The publication is in Serbian and English language and it is available on InTER website. www.lokalnirazvoj.org

Policy Brief: A decade of local economic development in Serbia: lessons for the future Local economic development in Serbia was initiated by international development agencies which presented the concept through a range of projects and initiatives that contributed to raising aware- ness among actors on both local and national level. This document provides an overview of donor projects and interventions in the field of local economic development in Serbia, and deals with the issues of what should be done next in terms of future projects interventions.

The publication is in Serbian and English language and it is available on InTER website. www.lokalnirazvoj.org

Policy Brief: Slovak Official Development Aid to the Republic of Serbia – is it time to phase out?

Policy brief ‘Slovak Official Development Aid to the Republic of Serbia – is it time to phase out?’ was pre- sented at the international conference “110 years of SlovakAid”: a Vision of Development Cooperation for a Changing World”. Policy Brief was written by Jana Radaković and Dragiša Mijačić.

The publication is in Serbian, English and Slovak language and it is available on InTER website. www.lokalnirazvoj.org

InTER – Institute for Territorial Economic Development – is an independent non- governmental think thank with the mission of promoting and advancing sustain- able socio-economic territorial development in the Western Balkans.

InTER • Vlajkovićeva 29, Belgrade • e-mail: [email protected] • web: www.lokalnirazvoj.org