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NEXT trend report – Canton

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Table of contents

1. Introduction ...... 5

2. Significance of research, development and technology transfer for competitiveness of economy (EU and BiH context) ...... 7

3. Socio-economic analysis and key sectors for the development of the Herzegovina-Neretva Canton ... 14

4. State and indicators of research, development and innovation ...... 19

5. Investment opportunities ...... 23

6. Analysis of the strategic and institutional framework for promotion of research, development and innovation ...... 25

7. Conclusion ...... 27

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Table of figures

Figure 1 Priorities of the COSME program ...... 10

Figure 2 Thematic pillars of the EU Strategy for the Adriatic and Ionian Region (EUSAIR) ...... 12

Figure 3 Traffic connections between BiH and Europe ...... 15

Figure 4 Geo-communication position of the Herzegovina-Neretva Canton ...... 24

Table of charts

Chart 1 Payments for investments of fixed assets 2009 - 2013 in thousands of KM ...... 26

Table of tables

Table 1 Relevant documents at the EU and BiH levels ...... 7

Table 2 The number of registered persons of the Herzegovina-Neretva Canton (for the municipalities and the city of ) ...... 16

Table 3 Employment and salaries in HNC ...... 18

Table 4 Institutional forms of scientific and research activities ...... 19

Table 5 Business zones in HNC ...... 27

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1. Introduction

This document will provide an insight into the key indicators of research and development in the area of the Herzegovina-Neretva Canton (HNC) at the macro level, identifying key sectors for development of the studied area, analyzing technological development and the degree of application of research, development and innovation in business. Investment opportunities in the considered area, as well as relevant policies and guidelines that determine research, development and innovation will be additionally analyzed.

The main objectives of strategies, which are the starting point for preparation and development of research and technology transfer and innovation in and Herzegovina and Herzegovina-Neretva Canton, will be analyzed by reviewing strategic documents at the European level and relevant documents at the state level.

One of the key indicators of research and development in the area of the Herzegovina-Neretva Canton are the studies carried out, which indicate an inferior state of science, research and technology. This state is caused by the main industrial systems during the war in '90s. These systems had research departments and were poorly equipped, and the equipment of higher education institutions in the observed area was obsolete.

The Next trend report will provide an insight into possibilities for development of productive, innovative and technological economies and support institutions of the Herzegovina-Neretva Canton in order to encourage their improvement and give rise to structural changes for improvement of the administration and management of resources in the fields of innovation, new technologies and research.

The Next trend report was conducted within the project Collaborative platform to support research and technology transfer – NEXT, co-funded within the second call for proposals of the IPA Adriatic Cross-Border Cooperation Program 2007-2013. The NEXT project, financed through the ETC program “CBC IPA Adriatic 2007-2013”, involves 11 partners. The project leader is the Region of Marche and the partners in the project are: the Region of Puglia, the City of Sibenik, IDA, the Chamber of Commerce of Montenegro, the University of Donja Gorica, Montenegro, the Regional Council of Shkodra - Albania, the Faculty of Agronomy and Food Technology Mostar, the Regional Economic Development Agency for Herzegovina - REDAH, REDASP - the Regional Economic Development Agency for Sumadija and Pomoravlje, the Development Trust - Albania, and two partner organizations: the Mountain Area Development Agency - Albania and the Italian National Agency for Foreign Investments and Economic Development - INVITALIJA

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S.p.A., situated in 6 different countries (Italy, Albania, Croatia, Serbia, , and Montenegro). The aim of the NEXT project is to set a platform that can be shared among actors in the Adriatic region, in order to integrate the forces present at the regional level and encourage cooperation, with a focus on economic results. The platform will offer online and offline services for local authorities and institutions, stakeholders such as universities, research centers, technology transfer centers, small and medium enterprises and investors.

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2. Significance of research, development and technology transfer for competitiveness of economy (EU and BiH context)

The significance of research & development and technology transfer for competitiveness of the economy is based on the promotion of scientific excellence, innovation, cooperation and multidisciplinary approach to research in various fields and technologies. The aspiration is to provide long term visibility and recognition in the European environment and contribute to sustainable development of the Bosnian-Herzegovinian economy and society as a whole. Further to the above, the basic objective that arises is to strengthen the research profile and recognizability of the Herzegovina-Neretva Canton with support of research institutions, their infrastructure, stimulating improvement, participating in international projects, and promoting sustainable development, innovation and transfer of knowledge in industry.

The relevant European strategic documents, which are the basis of the documents at the BiH level, are the starting point for preparation and development of research and technology transfer and innovation. The following European and relevant documents at the BiH level in the field of research and development of innovation have been identified:

Table 1 Relevant documents at the EU and BiH levels

Relevant documents at the EU level Relevant documents at the BiH level

• Horizon 2020  BiH development study for the period • EU 2020 2010 – 2015 • COSME - Program for the competitiveness  Strategy for the development of scientific of enterprises (2014 - 2020) research and research & development • World Bank's Regional Research and activities in the Federation of Bosnia and Development Strategy for Innovation in Herzegovina for the period 2012 – 2022 the Western Balkans  Development strategy of the Federation of BiH 2010 – 2020 • The EU strategy for the Adriatic-Ionian region

Source: made by author

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Relevant documents at the EU level Europe 2020

The Europe 2020 strategy brings the vision of Europe's social market economy for the 21st century.

The umbrella strategic EU document Europe 2020 proposes three priorities that complement each other:

wise growth sustainable growth inclusive growth

•development of economy •promoting the economy •fostering the economy based on knowledge and that uses resources more with high employment innovation efficiently and that is rate that delivers social greener and more and territorial integration competitive

The main objectives of the Europe 2020 strategy are:

 75% of the population between 20 and 64 should be employed.  3% of the EU's GDP should be invested in research and development.  It is necessary to meet the climate and energy targets 20/20/20 (including an increase up to 30% of the emission reduction if circumstances permit).  The percentage of persons leaving school early should be under 10% and at least 40% of the younger generation should have completed the tertiary level of education.  20 million people less should be at risk of poverty.

Reviewing the main objectives of the Europe 2020 strategy, it is evident that the EU favors innovation union, youth on the move, digital agenda for Europe, resource-efficient Europe, an industrial policy for the globalization era, programs for new skills and jobs and platform to combat poverty.

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Obzor 2020 (Horizon 2020)

Obzor 2020 (Horizon 2020) is the new program of the European Union for research and innovation for the period from 2014 to 2020 that integrates the activities of the Seventh Framework Program (FP7), innovation aspects of the Competitiveness and Innovation Program (CIP) and the EU's contribution to the European Institute of Innovation and Technology (EIT). The guiding principle of the new framework program is offering solutions and answers to the economic crisis, investing in future jobs and development, resolving the issue of EU citizens on their financial security, general security and the environment, as well as strengthening the global position of the EU in research, innovation and technologies. The structure of Horizon 2020 rests on three main priorities:

scientific excellence

industrial leadership

societal challanges

Horizon 2020 is characterized by an integrated approach for small and medium-sized enterprises covering the entire innovation cycle, from the conceptual and feasibility stage, to research, development and testing, to commercialization and entry into the market. About 20% of the total budget for the priority societal challenges and leadership in the development and industrial technologies is intended for small and medium enterprises, which are conducted through two activities: innovation in small and medium-sized enterprises and access to risk capital, and through the priority scientific excellence, or through its activities (Marie S. Curie) and the activities in the field of future and emerging technologies.

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COSME - Program for the competitiveness of enterprises (2014 - 2020)

Through the COSME program, European Commission wants to promote the creation of new jobs in the business sector, sustainable competitiveness of European companies and increase in the number of entrepreneurs and self-employed entrepreneurs. The program will facilitate access to finances for small and medium enterprises, create favorable conditions for establishment of enterprises and their growth, stimulate entrepreneurial culture in Europe, strengthen sustainable competitiveness of European enterprises and encourage internationalization of small and medium enterprises, as well as their entry into to the European and global market.

Figure 1 Priorities of the COSME program

competitiveness and sustainability of strengthening of enterprises in enterprise the EU, including the tourism sector

improving the availability of access to financial markets within resources to the EU and SMEs globally

Source: made by author

The World Bank's Regional Research and Development Strategy for Innovation in the Western Balkans 2013

The objective of this strategy is to strengthen the capacities for research in the region and improve the cooperation within the region, promote the cooperation in the business sector and search for opportunities to fund research and development from the EU. The research and development strategy enhances the research base and the conditions for scientific excellence in the Western Balkans,

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which slows down the brain drain, promote research, industrial cooperation and technology transfer, business investment in research and innovation and strengthens the management of national policies.

Priorities of the World Bank's Regional Research and Development Strategy for Innovation in the Western Balkans:

improving the research base and research conditions

promoting science, industry and technology transfer

possibilities of business innovations and inovative startups

stronger national research management and innovation policy

The EU Strategy for the Adriatic and Ionian region (EUSAIR)

Adriatic-Ionian strategy, whose mission is to connect and protect, is benefited by a high degree of political commitment and awareness in the countries1 involved and represents not only a challenge but also a great opportunity. The strategy provides support for cohesion even outside the EU's borders, in the area that is very important for stability. The strategy incorporates four thematic pillars: boosting innovative maritime and marine growth, connecting the region, preserving, protecting and improving environmental quality and increasing attractiveness of the region.

1States involved in the strategy are the member states outside the EU Albania, Bosnia and Herzegovina, Montenegro and Serbia, which cooperate with the EU member states Croatia, Greece, Italy and Slovenia

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Figure 2 The thematic pillars of the EU Strategy for the Adriatic and Ionian region (EUSAIR)

importance innovative efficient and of maritime cost-efficient biodiversity and marine connection of and strong growth countries in existence of support for the region habitats tourism

Source: made by author

a) Relevant documents at the BiH level

Strategy for the development of science in BiH

Strategy for the Development of Science in BiH contains strategic guidelines and action plan for the development of scientific and research activities in Bosnia and Herzegovina in the period 2010 – 2015 aimed at prosperous development of science and research, economy, education and culture in Bosnia and Herzegovina. It is stated within the strategy that scientific and technological development of Bosnia and Herzegovina should be be founded on continuous acquisition, renewal and enhancement of knowledge, its effective implementation, and exchange and transfer of experiences and technologies. Realization of the set objectives and strategic priorities is monitored by implementing this document.

Strategy for the development of scientific research and research & development activities in the Federation of Bosnia and Herzegovina for the period 2012 – 2022 The framework for identification of strategic directions is globalization of economy, society and the very process of creating knowledge and innovation. The strategy for the development of scientific research and research & development activities is aimed to identify strategic directions for the development of education and technology that will ensure key directions of the development of education and technology and educational and technological progress. The strategy aims to encourage all existing and the emergence of new local groupings (clusters), develop a strong and high-quality system of primary education, encourage schools and faculties to serve the needs of specialized groupings, support the development of grouping through investments that create specialized factors (eg. technical and biotechnical institutes, centers for professional training, data banks and specialized infrastructure), encourage research and

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development in small enterprises by building technological parks, encourage the formation of research and development centers in larger enterprises.

Strategy for development of the Federation of BiH 2010 – 2020 The strategy presents and promotes core values and accomplishments to be achieved in the period 2010 - 2020 and is based on the European path of development and the basic situational analysis of FBiH. The following are defined as framework strategic objectives: stable macroeconomic framework, competitiveness and output, public sector, employment, sustainable growth and development, and social inclusion.

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3. Socio-economic analysis and key sectors for the development of the Herzegovina-Neretva Canton

Geographical position of the Herzegovina-Neretva Canton

The Herzegovina-Neretva Canton (hereinafter: HNC) covers the area of about 4,500 square kilometers (19% of the Federation of Bosnia and Herzegovina), from Makljen and Ivan Sedlo in the north to Ivanjica above in the south. The Canton consists of eight municipalities (Capljina, Citluk, Jablanica, , Neum, Prozor-, Ravno and Stolac, and the City of Mostar), inhabited by the population of about 270,000.2

The specificity of HNC is in that it contains mountain, lowland, seaside and continental features. This diversity is integrated by the unique territory shaped by glades and hills, lowland area along the Neretva River with its tributaries (Rama, Trebizat, , ), coastal belt and the .

The city of Mostar is situated in the central part of the Canton, covering an area of 1,227 square kilometers, and it represents the political, economic, scientific and cultural center of the region. Mostar has been at the crossroads of various civilizations for centuries, and famous historical monuments are found in it and its close proximity.

2Source: Statistical bulletin, Federal Bureau of Statistics, 2011 census

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Since 1981, Medjugorje has become a significant place of the Herzegovina-Neretva Canton as a regional center of the development of religious tourism. That is where major tourist and supporting facilities have been built thanks to the big interest of tourists from all over the the world.

The municipalities of Prozor-Rama, Konjic and Jablanica, characterized by areas of agricultural land, are situated in the northern part of the Herzegovina-Neretva Canton. This area includes 73,791 hectares of agricultural land, of which 81% accounts for meadows and pastures. In the area of these municipalities, there are also two reservoirs (Rama and Jablanica lake) and the rivers of Rama, , Krupic and other small rivers. Although the municipalities have great potential in the form of water resources, currently this potential is only partially exploited, and so mainly for fish farming.

The southern part of the Herzegovina-Neretva Canton consists of the municipalities of Capljina, Citluk, Stolac, Ravno and Neum. It is known for the cultivation of grapes and production of wine. Fourty wineries were registered in the area of this part of HNC, producing three grapevine products: white wine, red wine and grape brandy. In its territory, the Herzegovina-Neretva Canton also has two nature parks: and Blidinje.

Traffic connection of the Herzegovina-Neretva Canton Figure 3 Traffic connections between BiH and Europe

HNC has a central position in Herzegovina. Considering its central position traversed by the Neretva River, the area is also crossed by the major road M-17, railroad and partly the route of the future highway on the Corridor Vc. The Project Corridor Vc, as the largest investment in infrastructure in Bosnia and Herzegovina so far, will have a significant impact on the whole region.

The climate of the Herzegovina-Neretva Canton Source: Mostar regional and enterprise development The climate of the area is influenced by the proximity of the Adriatic Sea, relief and altitude. Mediterranean climate, characterized by mild winters and warm summers, mainly predominates in large part of Herzegovina. Exceptionally rainy months occur during cold seasons (November to February), while high temperatures reach their maximum during summer months (July and

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August). Mountainous parts of this canton are predominated mainly by the continental climate with more pronounced snowfall. Winds are usually from the north and northeast.

Population of the Herzegovina-Neretva Canton

The area integrated by the 1995 Dayton Agreement was inhabited by the population of 269,000 before the war (in 1991). At that time, the Herzegovina-Neretva Canton had a fairly wide and certainly remarkable availability of living space for its population. Of the eight municipalities that existed before the war, almost half of the population lived in the then municipality of Mostar (126,600 or 47%). According to the 2013 census, the HNC has a population of 236,278 in total. The average age of HNC population is 40, while the aging index is greater than 1. Some municipalities, like Mostar, Neum, Stolac and Ravno, are in the stage of increased old age. In addition, a larger number of population was registered in the category of 65 years of age than it was in the category 0-14 years of age. The birth rate of the Canton is negative, and negative level of young population was registered in all the municipalities of the Canton.

Table 2 Numbers of registered persons of the Herzegovina-Neretva Canton (for municipalities and the City of Mostar)

registered persons total Herzegovina-Neretva Canton 236,278 Capljina 28,122 Citluk 18,552 Jablanica 10,580 Konjic 26,381 Grad Mostar 113,169 Neum 4,960 Prozor 16,297 Ravno 3,328 Stolac 14,889 Source: Statistical data of BiH 2013.

Educational structure of the Herzegovina-Neretva Canton

Educational structure of the population of HNC continuously develops towards higher quality of human resources. Indicators of education, or qualification levels, show that production capabilities are significantly increased considering the quality of human labor. There are two public institutions of higher education in the Canton (the University of Mostar and the University "Dzemal Bijedic" in Mostar) and five private higher education institutions (University "Herzegovina", the University of Modern Sciences CKM-Mostar, the "Logos Center" College Mostar, the College of Tourism and Management Konjic, the College of Applied Economics Fircon Mostar)

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Employment in the Herzegovina-Neretva Canton

The situation in the labor market in the Canton is unfavorable like in the entire country. The war destroyed basic industrial capacities, and there was no renewal after the war. Table 2 shows data on employment and salaries in the area of the Herzegovina-Neretva Canton for individual sectors. The labor market in the region is burdened with many problems and in such conditions the market of the so-called grey economy has developed as a result. The emergence of grey economy is due to the autocratic behavior of entrepreneurs, then due to large deductions of taxes and contributions for employees and due to the poor functioning of the state administration and the unstimulating legislation. A review of the statistical data shows that many employees are not registered in the system.

Below is a tabulation of employment and salaries in HNC by activity.

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Table 3 Employment and salaries in HNC

activity average number of employees average net salary in KM 2012 2013 2012 2013 total 45,442 46,712 897 891

1. agriculture, forestry and fishery 600 592 673 688

2. mining and quarrying 144 110 439 430

3. processing industry 6,058 6,395 817 789

4. production and supply of 1,883 1,830 1,660 1,685 electricity, gas, steam and air conditioning 5. water production and supply; 973 987 811 604 waste water removal, waste management and environmental remediation activities 6. civil engineering 2,367 2,313 617 529

7. wholesale and retail trade; repair 7,906 8,291 534 879 of motor vehicles and motorcycles 8. transport and storage 2,206 2,262 874 606

9. accommodation providing 1,972 2,363 569 1,390 activities and food preparation and serving 10. information and communication 1,402 1,364 1,377 1,402

11. financial acitivities 1,440 1,412 1,445 621

12. real estate business 151 117 565 621

13. professional, scientific and 807 875 691 719 technical activities 14. administrative and support 2,092 2,162 403 426 service activities 15. public administration 4,749 4,793 1,189 1,208

16. education 4,269 4,299 854 857

17. health and social care activities 3,643 3,750 963 965

18. arts, entertainment and 1,219 1,188 447 446 recreation 19. other service activities 463 500 979 987

20. uncategorized by National 1,101 1,109 - - Classification of Activities (NKD) Source: Federal Bureau of Statistics

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4. State and indicators of research, development and innovation

The science of research, development and innovation

Numerous studies made on the state of science, research and technology in BiH show that research and development (R & D) infrastructure in BiH is not at a satisfactory level. Before 1992, R & D activities were primarily associated with large industrial systems and their research departments and to a slightly lesser degree with higher education institutions (mostly at some technical faculties). During the war, a large part of industrial capacities was destroyed, and thereby the R & D infrastructure was destroyed too, while the other part of undestroyed R & D equipment is largely obsolete for a serious scientific research work. Nowadays, most of the R & D infrastructure is in public universities, where all the research work in Bosnia and Herzegovina is performed. Scientific and research activities in BiH are developing today through the following institutional forms shown in Table 4.

Table 4 Institutional forms of scientific and research activities

technology transfer scientific institutions R & D organizations linking organizations organizations technology transfer universities/faculties R & D units centers scientific and research research and scientific and innovation centers institutes development institutes technological parks scientific and scientific and research research and technological centers development centers incubators research and scientific and research development laboratories laboratories Source: Strategy for Development of Science in Bosnia and Herzegovina 2010 – 2015

Entrepreneurship of research, development and innovation

Transformation of enterprises from small to medium must be conditional on better structure of human resources, distinctive and high-quality product, appropriate state incentives, cluster organizational form of production and strong linkage with the academic community through forms of technology centers and parks. Low financial capability, outdated equipment and insufficient experience of staff in the collaboration

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with the economy in the present academic community makes that community a weak link in the staffing and development processes of the Canton's economy.

The most developed industrial branches of HNC are:

 metallurgy and metal processing  civil engineering  agriculture  energy production  forestry and wood processing  food industry

Large and medium-sized enterprises account for about 80% of total economic activity in the production and export. However, small and medium enterprises, supporting activities of large companies in their further production, constitute a significant potential and support for large enterprises. Small and medium enterprises support activities of large enterprises in the procurement of raw and production materials and spare parts, and in the use of final products of large enterprises in further production.

The importance of small enterprise is shown by the fact that the EU adopted in Lisbon in 2000 the European Charter for Small and Medium Enterprises, which has become a key political tool for the general promotion of enterprises. The charter emphasizes the decisive role of small and medium enterprises in achieving competitiveness and raising employment rates. Since 2003, Bosnia and Herzegovina has been continuously carrying out the principles recommended by the European Union in the Charter for Small and Medium Enterprises, and the Herzegovina-Neretva Canton continuously implements measures to improve the business environment for small and medium enterprises and thus increase employment rates in the Canton.

The priority task of the Government of the Herzegovina-Neretva Canton is development of enterprises, stimulation of the creation of new enterprises and their inclusion in research, development and creation of innovation in the area of the Canton in order to achieve the development of economic entities and facilitate the development of competitive economy.

Better development, research and creation of innovation within HNC require support of the institutions listed below in this document.

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Institutions of the Herzegovina-Neretva Canton

1. Ministries  Ministry of Economy  Ministry of Agriculture, Forestry and Water Management  Ministry of Education, Science, Culture and Sports 2. Educational institutions  University of Mostar  Faculty Agriculture and Food Technology, Faculty of Economics, Faculty of Civil Engineering, Faculty of Medicine, Faculty of Health Studies, Faculty of Pharmacy, Faculty of Humanities and Social Sciences, Faculty of Science and Education, Faculty of Law, Faculty of Engineering and Computer Science, Academy of Fine Arts  University "Dzemal Bijedic" in Mostar  Agro-Mediterranean Faculty, Faculty of Economics, Faculty of Humanities, Faculty of Information Technology, Faculty of Civil Engineering, Faculty of Mechanical Engineering, Teachers Faculty, Faculty of Law  Institutes of the University of Mostar  Institute of Economics, Institute of Law, Institute of Social Research, Institute of Civil Engineering, Institute of Croatian Language, Literature and History, Institute of Research and Development in Karst, Institute of Latinity, Institute of Mechanical Engineering, Institute of Tourism and Environment  Institutes of the University "Dzemal Bijedic" in Mostar  Institute of Mechanical Engineering, Institute of Design and Testing of Materials and Structures of the Faculty of Civil Engineering - ZPIMK 3. Agencies  Foreign Investment Promotion Agency - FIPA  Regional Economic Development Agency for Herzegovina - REDAH 4. Chambers  BiH Chamber of Commerce 5. Business zone  Business Zone Hodovo, Stolac Municipality  Business zone Domanovici and Zvirovici,Capljina Municipality

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 Business zone Tromedja Medjugorje, Blizne Gomile, Blizanci and Biletici, Citluk Municipality  Business zone Juzni Logor, the City of Mostar

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5. Investment opportunities

One of the important goals of investment opportunities is the development of productive, innovative and technologically developed economic entities, because this category of entrepreneurs is the basis for development of a competitive economy. However, the financial support from budget funds also has a significant role for such development. It will stimulate the establishment of intermediary institutions - technological agencies and centers, innovation centers that help the transfer of knowledge from science to the economy and the necessary transfer technology.

Business zones, incubators, technological parks and clusters represent the new concept that is recognized as one of the instruments to encourage faster economic development. These instruments can offer more favorable conditions in terms of rentals of office premises, rentals of facilities and industrial, traffic and municipal infrastructure, thereby creating a positive business environment that motivates the creation and growth of small and medium enterprises.

Investment opportunities in the Herzegovina-Neretva Canton

The energy sector, wood and wood-processing industry, agriculture and metal and metal-processing industry are defined as strategic sectors in the entire Bosnia and Herzegovina and in the Herzegovina- Neretva Canton.

Investment promotion and attraction within the Canton are at an exceptionally low level, and investment opportunities are very low. The Canton should raise to a higher level certain key factors (educated workforce, scientific and educational institutions, business incubators, business zones, etc.), which have a beneficial effect in improving investment opportunities in individual sectors, and encourage their progress.

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According to the Foreign Investors Council (FIC), the lack of Figure 4 Geo-communication position of the Herzegovina-Neretva Canton action by representatives of the Canton is the biggest obstacle to investment. The Council emphasizes the importance of concrete steps that result in improved investment attraction conditions (the most significant problem for investment attraction in the Canton is the legal system, administration and corruption).

One of the advantages of the Canton is that, due to its geostrategic position, it has a developed basic economic infrastructure, which includes the airport of Mostar, easy access to the Ploce port in Croatia, roads and railroad to Sarajevo and access to the sea in Neum.

The main pillars of the regional economy are reflected in the strengths of of the Canton, which are:

 favorable geographical and transport position - transport links with main regional, state and international roads  natural resources with business tradition in various Source: Google maps sectors  energy production - the Neretva River  possibilities for multi-sectoral development - the diversity of industrial potentials, mineral resources etc.  growing rate of small and medium enterprises  strong entrepreneurial spirit.

< analysis and processing of investment opportunities in the area of the Canton (the possibilities offered by identified institutions) is foreseen in the next version of the document >

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6. Analysis of the strategic and institutional framework for promotion of research, development and innovation

In order to encourage the promotion of research, development and innovation, it is necessary to carry out structural changes that involve management methods and procedures, resource management, privatization, restitution and the like. In addition, modern technology orientation must be brought to the fore in order to raise the efficiency per unit of capacity. Promotion of research, development and innovation is based on the adoption of intensely moderate, sustainable production technologies and their spatial locating in relevant production zones.

Identifying objectives and policies of development and promoting research, development and innovation is intended to more rapidly align the policy within the competence of the Canton with the EU integration.

The fundamental goal of the HNC is to create a platform that will offer:

 development policy that will facilitate the realization of goals and place in integration processes  framework regulations that will be in accordance with laws of the Federation of Bosnia and Herzegovina  legal frameworks within the Canton that will be in conformity with laws of the Federation of Bosnia and Herzegovina  industry development directions in the context of sustainability and environmental protection  accelerated development of sectors and competitive market  creating sustainability of sectors  creating jobs.

Introduction of business zones, incubators, clusters and business infrastructure in the development policy of HNC stimulates the production of competitive products and services that facilitate strengthening of competitiveness of companies within the Canton and strengthening of economic stability and creation of new jobs.

According to statistical data from the Agency for Statistics of Bosnia and Herzegovina, the total value of investments made for fixed assets of legal entities in Bosnia and Herzegovina in 2012 was 4.488,543 thousands KM, while in 2013 it was 4.617,861 thousand KM, which represents an increase of 2.88%.

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Investments in new fixed assets in 2012 amounted to 4.107,910 thousand KM, while in 2013 they amounted to 4.180,848 thousand KM, which is an increase of 1.78%.

Chart 1 Payments for investments of fixed assets 2009 - 2013 in thousands of KM

Source: Federal Bureau of Statistics of Bosnia and Herzegovina

By activities of investors, the highest investments in total investments 2013 were were made in:

 processing industry 16.76%  wholesale and retail trade 14.47%  professional, scientific and technical activities 12.44%  public administration and defense 11.36%  production and supply of electricity 8.53%.

By activities of investors, the highest share in realized investments in new fixed assets in 2013 were made in:

 processing industry 15.67%  professional, scientific and technical activities 13.43%  wholesale and retail trade 13.07%

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 public administration and defense 12.42%  production and supply of electricity 9.37%.

The state of business zones in the Canton:

In the area of HNC, individual cases of establishing business zones by entrepreneurs from this Canton were registered3. The main problem for entrepreneurs in the area of the Canton was to solve business premises. Establishment (construction) of business zones was undertaken in order to obtain functional business premises and affordable rents. It is the interest of the Canton to have as many zones as possible in order to provide adequate and affordable business premises for entrepreneurs from the area of the Canton.

According to a study by REDAH - Regional Economic Development Agency for Herzegovina, in the Canton there are three zones arranged and registered in accordance with legal provisions, and four potential business zones.

Table 5 Business zones in HNC

Existing business zones Potential business zones

Unis – Konjic Zvirovići – Capljina Quarry – Jablanica Domanovići – Capljina Sipad – Konjic Vranjevo selo – Citluk Hodovo - Stolac

Source: Made by author

7. Conclusion

The NEXT project is aimed to establish and promote the cooperation of key actors in the innovation process. This project is especially important for entrepreneurs, scientific institutions, representatives of the public sector and support institutions that can significantly stimulate innovation and technology transfer by synergy of their activities.The Herzegovina-Neretva Canton (HNC) has potential for the development of

3 Source: REDAH - Regional Economic Development Agency for Herzegovina

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knowledge, innovation and enterprise in order to be competitive in the market. The aim of HNC must be to integrate science and innovation with economy, or to support commercialization of research results and technology transfer of higher education institutions and public scientific organizations, in order to facilitate sustainable development of the Canton and competitiveness of the economic sector.

Consequently, the Canton has to work on:

 improving the possibilities for efficient and effective application of scientific research results in order to develop the economy and society  encouraging the transfer of knowledge between educational institutions and the economy  providing support for marketing of new technologies and innovations  linking relevant subjects, establishing networks and collaboration for the purpose of a more intensive technology transfer  raising awareness of intellectual property  increasing capacity of technology transfer in higher education institutions  providing support in the development of technological and economic feasibility studies  assisting in the creation of new innovation centers, incubators, business and technology parks.

Investment in research, development, innovation and strengthening of human resources are in the first place in the structure of investments from EU funds, and so the development of the Canton should go in the direction of developing knowledge and innovation in the economic sector.

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www.project-next.eu

NEXT trend report Herzegovina-Neretva Canton

This document has been produced with the financial assistance of the IPA Adriatic Cross-Border Cooperation Programme. The contents of this document are the sole responsibility of provider contracted by Faculty of agriculture and Food Technology University of Mostar and can under no circumstances be regarded as reflecting the position of the IPA Adriatic Cross-Border Cooperation Programme Authorities.

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