DOI: 10.15201/hungeobull.64.4.7Lončar, J. and Marinković,Hungarian V. Hungarian Geographical Geographical Bulletin Bulletin 6464 2015(2015) (4) (4) 327–344. 327–344.327

Analysis of socio-economic indicators in the context of the regional development of Eastern Croatia

Jelena LONČAR1 and Veni MARINKOVIĆ2

Abstract

The main goal of this paper is to analyse socio-demographic processes in Eastern Croatia. We focus especially on the structure of particular economic activities as well as population, which should be the basis of regional development. We have used several demographic and economic indicators to determine the changes that have taken place in the region. Trends in population change in the last decades, the share of industrial and agricultural workers in legal entities, the share of employed and unemployed persons in cities and munici- palities, as well as the inactive population in fi ve Eastern Croatian counties are examined. Also, agricultural indicators have been analysed, as this is one of the most important economic activities in this area. Thereby, an overview of the main trends in regional development of this area has been given, although some of the data were unavailable at the local level. Altogether, the authors have analysed 126 local units (22 cities and 104 municipalities) within fi ve counties of the Eastern Croatian region.

Keywords: population change, regional development, economic indicators, Eastern Croatia

Introduction The result has been under-used economic potential and a weakened social cohesion, The region of Eastern Croatia belongs to the which is noticeable in the area today (www. underdeveloped group of regions according oecd.org). to the index of development (Ministartsvo According to Hansen, Higgins and Savoie regionalnog … 2010). For this reason, the im- (1990) regional development policy usu- plementation of regional development poli- ally implies all deliberate activities that the cies has great signifi cance. government implements with the goal of Regional development is a broad term but changing spatial distribution of economic it can also be seen as a general eff ort to re- and social phenomena like population, in- duce regional disparities by supporting em- come, government incomes, manufacturing ployment and wealth-generating economic of diff erent goods and services, transporta- activities in such regions. In the past, regional tion infrastructure, social infrastructure and development policy tended to try to achieve political power (Hansen, N. et al. 1990). these objectives by means of large-scale in- Also, it can be said that regional economic frastructural development and att racting in- development can be seen as both a product ward investment. However, previous policies and a process. It is a product of economic de- have failed to reduce regional disparities sig- velopment as well as a process, for example nifi cantly and have not been able to help in- in the case of industry support, infrastruc- dividual lagging regions to catch up, despite ture, the labour force and market devel- the allocation of signifi cant public funding. opment (Stimson, R.J. et al. 2006). Hence,

1 Department of Geography, Faculty of Science, University of Zagreb, CR-10 000 Zagreb, Phone: + 00 385 1 4895 426. E-mail: [email protected] 2 Project assistant. University of Zagreb. E-mail: [email protected] 328 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

cities, towns, counties and all local entities in tant issues in Croatia today. They are part of the global economy have the challenge and governmental strategies for economic growth opportunity of craft ing their own economic and recovery, but they are also the focus of destinies (Blakely, E. and Leigh, N.G. 2009). scientists of diff erent affi liations. Policy mak- In the Republic of Croatia, the process of ers should be able to view economic and establishment of a regional development social realities through the lens of the cor- concept can be traced back to its occurrence rect geographic scale to identify appropriate in Yugoslavia aft er World War II. through policy packages (OECD 2014). the changes of fundamental principles and The authors will try to emphasise the approaches to regional development policy importance of strategies and development that took place in the period of Croatian plans in the context of regional development independence and at the beginning of the as identifying and promoting connections be- European integration process. Based on tween economic, environmental and social the characteristics of regional development goals, which should be beyond administra- policies during each period, major defi cien- tive boundaries (OECD 2014). Also, as data cies and consequences for today’s structural for Croatia as a whole is usually analysed in problems can be identifi ed. most scientifi c papers, authors consider that Also, the comparison of Eastern Croatian detailed analysis at the level of regions, and indicators (consisting of the Slavonian and especially at the level of cities and munici- Baranjan regions) with indicators from some palities, is necessary to fully understand the other neighboring regions, such as northeast- economic-geographic processes that charac- ern Bosnia and Herzegovina or Voivodina, terise this area. Accordingly, we try to ana- would be interesting because they have lyse demographic and economic problems at similar characteristics, but such an analysis the local level, as they are more obvious than would be very diffi cult to achieve. those at the county or state level. In the first place, since Bosnia and In an att empt to establish to what extent Herzegovina has complex administrative changes in population and economic-geo- divisions it is impossible to att ain the data graphic conditions have infl uenced the re- that would be comparable with those in gion of Eastern Croatia, we have established other countries. One possibility is to take three hypotheses: the data for the whole Republika Srpska 1. The contemporary characteristics of de- (the northeastern part of Republika Srpska mographic structures and trends are consid- borders with Slavonia and Baranja) and for ered as one of the most important limiting the District of Brčko, and compare it with factors of regional development in the region Eastern Croatian cities and municipalities. of Eastern Croatia. But in this case, the area does not have simi- 2. There are signifi cant demographic and lar characteristics and would not be compa- economic structural diff erences between the rable. Also, the land utilisation data in the local administrative units of Eastern Croatia, region of Voivodina (Serbia) are not from the among which larger cities stand out especial- same year as those used in this paper, which ly as the cores, and smaller, demographically means that they are incomparable with the and economically weaker municipalities rep- data for Eastern Croatia. resent the rural periphery of this region. 3. The advantages of Eastern Croatia for stronger regional development have not been Theoretical and methodological fully utilised. This especially refers to agri- framework culture as one of the most important tradi- tional and contemporary activities, primarily The problems of regional development and due to the favourable natural conditions in regional policy are two of the most impor- this area. Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 329

Analysing offi cial data from the Croatian The awareness of the importance of re- Bureau of Statistics, we try to gain insights gional development in overall Croatian de- into the main features of demographic velopment was increasingly strengthened at and economic trends in the area of Eastern the beginning of the European integration Croatia through: process in 2001. Croatia has further increased – The characteristics of Eastern Croatian activities in the fi eld of regional development population dynamics and structures, ana- by adopting new legislature and strategic lysed through general population trend documents and also by establishing new in- from 1953 to 2011 on the regional level, the stitutions. Accepting the concept of European index of population changes in the period regional policy, which enabled the use of of 1953–2011 at the local level and the in- pre-accession funds intended for regional dex of ageing in 2011, in order to indicate development projects, a special institution the main demographic trends in this area. was established in 2008 that should partici- – The number and share of employed per- pate in achieving a more balanced regional sons in industry in legal entities at the local development. It was based on the sustainable level. management of natural resources. Also, the – The percentage of (un)employed persons Agency for Regional Development was es- at the local level. tablished in the same year to implement re- – The inactive population in the counties. gional development programs and projects. Although in terms of regional develop- ment, Croatia has been conceptually and Regional development policies in Croatia institutionally moved away from its initial phase, the expected impact is still lacking. The att empt to establish a regional develop- Many analyses indicate contemporary diver- ment policy at the beginning of Croatian in- gent trends in the concentration of popula- dependence was based on determining the tion and the economy, which is the casein the areas with a preferred position within the Eastern Croatian region as well. state. In the 1990s, Croatia did not have a coherent regional developmental strategy, concept or policy. The territory of 20 coun- Means of regional development ties, 268 cities and municipalities (49% of the total number of local units) was specifi ed by Main means of regional development include 4 acts of parliament as areas of special state the adopted legal acts and the development care. These acts were: the law on special strategic documents that prescribe and de- areas under government protection (NN fi ne the objectives and measures of regional 44/96), the law on hilly-mountainous areas development policy. The basis of regional de- (NN 12/02), the law on islands (NN 34/99) velopment policy is defi ned by the Regional and the law on the reconstruction and de- Development Law (NN 153/09)3. It deter- velopment of the City of Vukovar (NN 44/01) mines the goals and principles of regional (Starc, N. and Rašić, V. 2003). However, the development management in Croatia. It pre- eff ects of the above laws were not at the ex- scribes necessary planning documents, ap- pected level, as it has been indicated by the points competent state entities and classifi es contemporary economic and social trends. the development stages of diff erent spatial The fi rst signifi cant document on the issue units. Also, the law prescribes the adoption of of regional development in Croatia was The regional planning documents at the national concept of the regional economic development of level (Regional Development Strategy of the Croatia, published by the Economic Institute 3 At the end of 2013, a draft of the Regional Development on the initiative of the Ministry of Economy Law was introduced to the public as an update to the in 1999 (Čavrak, V. 2002). former Regional Development Law enacted in 2009. 330 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

Republic of Croatia, 2011–2013) and regional Rural Development); the law on the promo- level (county development strategies). It is tion of investment; and the law on the pro- also in line with practice and requirements motion of development for small entrepre- that derive from Croatian pre-accession ob- neurship. These three laws are not only for ligations towards the EU. This law poses a areas facing diffi culties in development, but few very important facts: also for the Republic of Croatia in general. 1. Induct the practice of partnership as the An important tool for classifying the het- main method of working to shape regional erogeneity and regional diff erences of spatial development policy and as the basic institu- units in Croatia is the development index. tional structure that will enable participatory It classifi es administrative units in compari- work methods such as this. son with the national average using income 2. Introduce a unique model of evaluation per capita, the unemployment rate, citizens’ and classifi cation of regional and local units source income in diff erent counties and/or according to degrees of development and a municipalities, population trends and edu- unique system of criteria for the selection of cational levels as relevant criteria. However, areas with developmental diffi culties. new tools are needed to understand what 3. Defi ne the main planning documenta- infl uences the places where people live and tion that programmes regional development work (OECD 2014). through conciliating and unifying develop- ment in the entire Croatian development policy. Croatian NUTS II classifi cation as EU 4. It clearly defi nes the role and responsi- regional development instrument bility of regional development policy host at the state level. The Bureau of Statistics determined Croatia’s 5. It clearly defi nes the role and responsi- NUTS classification in 2002 with EURO- bility of regional development policy host in STAT’s help and recommendations. All of conception and leadership. Croatia is classifi ed as one NUTS I region, 6. It institutionalises the principles and while NUTS III regions are counties and management of regional development policy NUTS V entities are cities or municipalities. and introduces unique terminology. However, problems occurred during the de- 7. For more effi cient planning and monitor- termination of NUTS II regions, because the ing of the functionality of regional policy, it county level (NUTS III) was too small and identifi es the central electronic base of devel- the level of Croatia as a whole (NUTS I) was opment projects. considered to be too big. On the other hand, In the Strategy of Regional Development most European regions are monitored and (2010), regional development policy is de- analysed at the NUTS II level. Regional de- fi ned as the entirely adjusted agglomerate of velopment and the use of the EU structural goals, priorities, measures and activities aimed funds are expected at this level. It is also a at strengthening the competition of regional and basic framework for the implementation of local units according to principles of sustainable regional policy and the standard level of data development and decreasing regional inequali- availability. ties according to the degree of development. The Through a new statistical classifi cation in Regional Development Policy in Croatia is 2012 by the Ministry of Regional Development defi ned by specifi c laws and it is mostly fo- and EU funding bodies, Croatia was divided cused on the local level. into two NUTS II regions: Continental and Also, part of the non-specifi c assistance Adriatic Croatia. Continental Croatia con- is included in the law on government sup- sists of 13 counties (Zagreb, Međimurje, port for agriculture and fishery (Law on Varaždin, Krapina-Zagorje, Bjelovar-Bilogora, Government support for Agriculture and Koprivnica-Križevci, Virovitica-Podravina, Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 331

Osij ek-Baranja, Požega-Slavonij a, Slavonski since World War II has indicated two diff er- Brod-Posavina, Vukovar-Sirmium, Karlovac, ent stages of population development. The and Sisak-Moslavina counties) and the City fi rst is characterised by the increase in the of Zagreb. It has 64.1 percent of the 27 EU total population of Eastern Croatia until 1991 countries’ GDP. Adriatic Croatia consists of and the Homeland War. Since then a period 7 counties (Lika-Senj, Primorje-Gorski Kotar, of depopulation has taken place. However, Istria, Zadar, Šibenik-Knin, Split-Dalmatia the stagnation or decline in population was and Dubrovnik-Neretva counties), and has recorded in some counties in the 1981 Census 62.1 percent of the 27 EU countries’ GDP. (Virovitica Podravina and Požega-Slavonia This kind of statistical division enables the counties), indicating that the process of use of resources from the Structural Funds shrinkage had already started. with the highest benefi ts to all Croatian re- The entire region of Eastern Croatia, as well gions. Also, it facilitates the implementation as all its counties, has recorded a signifi cant of development projects following the same loss of population in the last three decades, rules in the entire territory of the Republic of the most intensive periods being the inter- Croatia (Ministry of Regional Development censual periods of 1991–2001 and 2001–2011, and EU funds). Observed in terms of during which the region of Eastern Croatia European NUTS II classifi cation according lost about 170,000 people. In the last inter- to the division from 2012, Eastern Croatia be- censual period the population decline of longs to the statistical region of Continental Eastern Croatia were about 85,000 people in Croatia, which has about 62 percent of the 27 total, which is about 9.6 percent of the total EU countries’ GDP. However, it is generally population of Eastern Croatia in 2001. At the known that Eastern Croatian counties have same time, natural decline, together with the a signifi cantly lower average GDP because increased emigration of working and repro- other, more developed counties of Central ductive age groups, has led to a noticeable Croatia also belong to this NUTS II region deterioration in the age-sex population struc- (City of Zagreb, Zagreb County etc.), which ture of Eastern Croatia (Wertheimer, A. and raise the average. Živic, D. 2003 (Figure 1). Negative changes in the population in the last three decades has resulted in a decline of Demographic characteristics as a factor of economic development

As population is the most important factor of regional development planning, it is neces- sary to consider recent demographic proc- esses and structures in terms of identifying the main problems and to evaluate popula- tion resources in the Eastern Croatian region. Large diff erences between particular parts of Eastern Croatia are expressed in terms of population, especially between urban and rural areas, mostly as a result of ‘de-agricul- turisation’, ruralisation and industrialisation aft er World War II. Today, according to the 2011 Census, there are about 806,000 people living in the fi ve Fig. 1. Population of Eastern Croatia 1953–2011, by counties in the Eastern Croatian region. The counties. Source: 1857–2001 Censes, 2011 Census, Eastern Croatian region’s population trend www.dzs.hr 332 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

more than 170,000 inhabitants in the region of Osij ek (163.5%); Slavonski Brod (255.8%); of Eastern Croatia (in the 2011 Census only Virovitica (140.7%); Požega (169.9%); Đakovo Dragalić in Slavonski Brod-Posavina county (150.9%); and Vinkovci (169.5%). Also, areas had minimal population growth in relation and municipalities in their surroundings re- to the 2001 Census). The main causes of such corded a population increase, for example, in an unfavourable state are the consequences the Slavonski Brod region there were increas- of the decline in birth rates, increased mortal- es in the municipalities of Sibinj (114.8%) and ity rates, emigration, adverse economic con- Brodski Stupnik (110.1%); in the Osij ek re- ditions and the consequences of war in the gion in the municipalities of Darda (152.7%), region of Eastern Croatia. Peripheral rural Čepin (155.5%) and Antunovac (106.8%); and areas have suff ered especially as the process in the Vinkovci region in the municipalities of “village senilisation” has been emphasised of Ivankovo (129.6%), Nuštar (140.6%) and with the emigration of younger age groups Andrij aševci (130.9%). (Cifrić, I. 2003). In this way, the development These data indicate the process of popula- potential of Eastern Croatia has been signifi - tion concentration in urban centres, mostly cantly reduced. in the large macro-region (Osij ek) and other The demographic changes of the Eastern regional and county centres (Slavonski Brod, Croatian local units are presented by the in- Požega, Vukovar, Vinkovci and Virovitica) in dex of changes in the number of residents in relation to the remaining rural areas of the the period of 1953–2011 in order to show the region. Only 35 of all local units recorded a intensity and spatial distribution of depopu- population increase in this period and among lated areas, as well as the areas of popula- those three had a doubling of the number of tion increase within the local units. The index residents while others had less signifi cant in- values of less than 100 indicate depopulated creases. The macro-region of Osij ek recorded areas in the period of 1953–2011 (Figure 2). an overall increase of 60 percent compared Mainly, these are rural municipalities that to 1953, which does not belong to the largest are more distant from the urban centres increase compared to other urban areas, due in Eastern Croatia, mostly in the western to the advanced suburbanisation process. and northern parts of Slavonia, especially Another indicator of demographic char- in Podravina, Posavina and the Western acteristics and the region’s potential is the Slavonian micro-regions. index of ageing. It represents the ratio of the The process of depopulation has been the age group of 0–19 (youth) and over 60-year- most intensive in these areas, which reduces olds (senior) (Figure 3). the possibilities of local and regional devel- Generally, a population is considered to opment. It is especially important to empha- be elderly if the index of ageing is over 40 sise that 72 percent of all local government (Nejašmić, I. 2006). The ageing index indi- units in this macro-region have recorded a cates that the population of Eastern Croatia is population decline over this period. Among in general very old. It is an especially remark- them, more than one-third has recorded a able phenomenon if considered at the local decrease of 50 percent or more. For exam- level. First of all, it is important to empha- ple, in 2011 the municipality of Čađavica in sise that no one of the Eastern Croatian local the micro-region of Podravina had only 27 units had an index of ageing less than 40 in percent of its 1953 population. On the other 2011. The lowest values or the most favour- hand, index values over 100 represent areas able ratio of youth to elderly was found in with population increases in the period of urban areas and the municipalities in their 1953–2011. surroundings (with an index of ageing less Their spatial distribution indicates the pop- than 80). At the same time, the oldest popula- ulation increase bigger urban areas or macro- tion was to be found in rural municipalities. regional and regional centres, such as the City In particular, the municipalities and one city Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 333 : 1953 Census and 2011 Census, www.dzs.hr Source The index of population change 1953–2011. Fig. 2. 334 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. : Population contingents by towns/municipalities, 2011 Census, www.dzs.hr : Population Source The ageing index of the Eastern Croatian population in 2011. Fig. 3. Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 335

in Eastern Slavonia (Vukovar, Erdut, Ilok, was held in Croatia in 2003, 27 percent of all Lovas, Negoslavci, etc.) had the highest val- Croatian agricultural households were in the ues in the index of ageing, which is a conse- region of Eastern Croatia, as well as 43 per- quence of the war and youth emigration . cent of all business entities. Unfortunately, These indicators show the Eastern Croatian the current situation in the agricultural sector region’s demographic potential and prob- of Eastern Croatia is characterised by small lems. The most important demographic indi- farms, an aging workforce and a small and cators refl ect the processes of depopulation, uncertain market. regional population concentration and the The involvement in the global agricultur- unfavourable age structure of the population. al market is still too much to expect at this At the same time, the spatial distribution of level of agricultural development in Eastern these unfavourable processes indicates that Croatia. In most of the counties in Croatia, in- bigger urban centres and the municipalities cluding the counties of Eastern Croatia, most in their surroundings record bett er demo- of the utilised agricultural land is up to 5 ha graphic profi le and structures in comparison (in some counties up to 50 percent of all uti- with remote rural municipalities. lised land). The strategy for enlargement of Migration is considered to be an impor- the parcels should be re-parcelling and land tant key in solving the puzzle of providing management. In this way, the agricultural a healthy foundation for future economic sector should be able to grow and have big- growth. For those areas that are increasingly ger production and export (Table 1).

Table 1. Basic agricultural indicators of utilised agricultural land in Eastern Croatia by counties, 2003 Number of Utilised agricultural land, hectares County business in agricultural in land business households total entities households entities Virovitica-Podravina 19,062 78 83,752 58,862 24,890 Požega-Slavonia 13,521 37 42,548 31,675 10,873 Slavonski Brod-Posavina 20,704 109 62,316 47,377 14,939 Osij ek-Baranja 41,103 235 184,094 95,987 88,107 Vukovar-Sirmium 26,316 130 121,078 84,821 36, 257 Source: Agricultural Census, 2003 (www.dzs.hr) confronted with population aging, att racting If the agricultural structure of Eastern the fl ow of young people represents the only Croatian households and business entities are alternative in the short and medium term analysed, it is obvious that the number of ag- (Mazilescu, R. 2012). The biggest problem in ricultural households is much larger than the this region is the emigration of skilled labour number of business entities. The same applies because productive workers move to urban in the case of utilised agricultural land that is areas that pay higher real wages while the in the hands of households. Data show that sending/source region becomes less special- utilised agricultural land that is used by agri- ised and less productive (Edwards, M. 2007). cultural households is almost twice as big as the utilised agricultural land used by business entities. This shows that an att empt to make Economic-geographic indicators of development bigger businesses in the agriculture sector in Croatia is still economically risky. Croatian As agriculture and industry, especially the farms are among the smallest in the EU. food industry, are two traditional economic Besides that, our data show that the activities in Eastern Croatia, they will be number of agricultural workers in most cit- analysed in the next section of this paper. In ies and municipalities is below 10 percent, the period of the last agricultural census that while only municipalities farther from bigger 336 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

cities or regional centres have a population their own development. The main charac- made up of over 30 per cent of agricultural teristic of recent rural development policy workers. Some of them (Vrbanja, for exam- is an eff ort to stop the developmental delay ple) are more focused on the forestry sector of rural areas by effi cient use of all local re- (Figure 4). This result is signifi cant if we take sources. Directing rural development strives into account that traditionally this is an ag- to increase the competitiveness of agricul- ricultural area with all the preconditions for ture and forestry, improve the environment, the further development of the agricultural landscape, and quality of life in rural areas sector (ecological cultivation, for example). and diversify the rural economy. The contem- However, years of neglect and lack of invest- porary rural developmental policy is based ment that would have improved knowledge on the LEADER approach, which means, in agricultural business, as well as a lack of “links between the actions in development investment in new technologies and the lack of the European rural areas”, which is also of local communities’ capacity to get more the method used to mobilise the potential of resources from EU funds, have had the result rural communities. This also includes: that Croatia imports a signifi cant part of its 1. Sustainable rural development based on food products from abroad the conservation and balancing of environ- As Croatia became member of the EU there mental, social and economic capital; have been many opportunities for Eastern 2. Approach based on local characteristics, Croatia’s agricultural sector using EU funds. potential, uniqueness and distinctiveness; “The agricultural sector of rural develop- 3. Bott om-up approach, which means that ment satisfi es an economic way of reasoning local stakeholders are involved in taking de- which turns out to be insuffi cient to enable cisions; rural areas to apprehend the new issues of 4. Establishment of local partnerships (lo- territorial cohesion. In order to contribute to cal action groups) composed of public, civil the Lisbon and Gothenburg objectives, rural and economic sectors that seek to identify development strategies should focus on in- and implement local development strategy; novation and the transfer of knowledge and 5. Innovations to represent traditional val- good practices” (Zorzoliu, R. 2012). ues in a new and competitive manner; In general, rural areas should play a more 6. Integrated, multi-sectoral approach in- signifi cant part in regional and economic volves horizontal, cross-sectorial as well as development if the further concentration of vertical connectivity, linking local, regional population and economic activities in Eastern and national institutions in order to achieve Croatia are wanted to be avoided. The con- sustainable rural development; temporary understanding of rural develop- 7. Networking and connectivity, learning ment involves a comprehensive development from best practices, exchange of knowledge with the participation of the community it- and experience; self, or the process by which institutions and 8. Cooperation representing a further step people from the community are mobilised in of networking towards the development and order to create, strengthen and stabilise ac- implementation of individual projects of two tivities using the resources of the area in the or more LAGs within a country or region. best possible way to achieve stable economic Rural development and the LEADER ap- and social development (Greffe, X. 2005). proach are relatively new concepts in Croatia, The modern local development policy is dating back to the early implementation of the based on the OECD approaches and prin- European model of rural development and the ciples of: qualitative development, a diff er- pre-accession IPARD programme in which it was entiated and unique approach to each local a key instrument. In accordance with it, in 2008 area and the involvement of local stakehold- the Strategy of Rural Development 2008–2012 ers in the creation and implementation of was adopted in Croatia, with the main objectives Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 337 : Employment and Wages, Statistical Reports, 2011, calculated by authors : Employment and Wages, Source . The share of agricultural workers in total employment (in all activities), 2011. . The share of agricultural workers Fig. 4 338 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

and measures of developing agriculture and mostly in cities like Donji Miholjac, Valpovo, rural areas. Through the EU accession, Croatia Beli Manastir and Županja, industrial em- opened up the possibility of using the European ployment is above average (more than 30 per- Agricultural Fund for Rural Development cent). Eastern Croatia in general has an av- (EARDF), fi nanced by the Common Agricultural erage industrial employment rate of around Policy (CAP), which contributes to achieving the 22 percent. Today, industry is still the most objectives of the Europe 2020 strategy promoting signifi cant economic activity in this area if the sustainable rural development throughout the number of employees in industry and other European Union. economic sectors are compared (Table 2). Nowadays, Croatia is implementing the The main characteristic of the business life Rural Development Programme 2014–2020 in Croatia is the decline of the working popla- with defi ned measures that outline the eff ec- tion, which is a result of negative demograph- tive usage of resources from the fund. ic development, emigration and an ageing of When analysing industry, it is necessary workforce. The necessary policies that should to say that in this region it has traditionally be implemented should take into considera- been based largely on agricultural produc- tion the following goals: an increase of the tion, but “unfortunately”, the percentage of active population, an increase of the employ- agricultural products that are fi nalised in this ment rate, as well as an increase of workforce region is not known. However, empirically it mobility, because the labour market is a major may be concluded that the insuffi cient degree factor in determining the economic growth of completion, which aff ects the levels of em- of an area (Edwards, M. 2007). This is why ployment in the region, aff ects the low level communities must continuously invest in as- of new investment and economic growth” suring a highly skilled workforce (Blakely, E. (Baban, L.J. and Ivic, K. 2003). and Leigh, N.G. 2009) (Figure 5). The most severe decline of industry in Analysing the statistics for Croatia as a this area happened after 1990 when the whole, the number of registered business war caused big damages and the destruc- entities increased by 9.56 percent during the tion of factories that then stopped operat- period of 2008–2012, from 263,760 registered ing and were closed. Also, badly managed business entities to 288,972. The increase oc- privatisation and the new rules that capital- curred in all sectors except for public de- ism brought found Croatian industry un- fence, compulsory social security, wholesale prepared. Under these conditions, the loss and retail trade. The largest number of new of old markets and the lack of new ones businesses during the period 2008 to 2012 almost caused the collapse of industry in have been registered in wholesale and retail Eastern Croatia. In the Republic of Croatia, trade, followed by construction, manufactur- the number of employed persons in industry ing and professional, scientifi c and technical decreased aft er the transition and privatisa- activities. Unlike the 9.56 percent increase tion almost threefold. New jobs in industry in the number of registered legal entities, in the meantime (reindustrialisation) have the number of active legal entities in the ob- not materialised. served period increased only by 1.69 percent, From the data available, it is obvious that in or by 2,224 legal entities (Industrial Strategy Eastern Croatia only 5 cities/ municipalities for Republic Croatia, 2014). have industrial employment of over 60 per- Also, for Croatia as a whole, the long-term cent and their economy is mostly connected unemployment rate of 18.9 percent (in 2012) to the paper and petroleum industries (a re- has been an unsolvable problem for several fi nery in Slavonski Brod). A slightly bett er years. The main problems that the govern- situation can be found in the area of Western ment also tries to cope with are: the low share Slavonia with the city of Požega as its cen- of active population, structural inconsistency tre, while in Eastern Slavonia and Baranja, of supply and demand in professional occupa- Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 339

tions, the low number of fl exible and adaptable companies and the low utilisation of human potential and resources (Industrial Strategy for

1,216 1,650 2,406 5,683 2,672 Republic Croatia, 2014) (Figure 6). Human 13,627 health and social work The problem of unemployment persists because the number of unemployed is al- most permanently higher than the demand. Therefore, employers behave as if staff were always available, as reflected in the very 1,756 1,627 2,982 7,645 3,988

17,998 low level of investment in employee educa- Education tion. However, the existence of a structural mismatch has been confi rmed by Croatian Employment Service and research results also indicate a lack of specifi c personnel, the existence of occupations and the lack of cer- Public 1,517 1,520 2,378 6,832 4,570 16,817 tain skills among those who apply for the job. and defence administration The clustering of the most capable, highly ed- ucated people in the fi eld of services could be a limiting factor for reindustrialisation based on new materials and technologies in terms 624 598

1,118 3,324 1,600 7,264 of increased competition.

and storage The planning of necessary resources by us- Transportation Transportation ing stimulation to select the required interests, determining quotas and adapting educational program needs with adequate fi nancial sup- port can lead to improvements in the structure 1,951 1,631 2,721 3,686

10,217 20,206 of knowledge and skills that are necessary for retail trade

Wholesale and development (Industrial Strategy Republic of Croatia, 2014) (Figure 7). When analysing the active and inactive populations of Eastern Croatia at the county level, it becomes clear that in every county 3,415 3,933 6,573 4,847 13,183 31,951 the share of inactive population is over 50

Manufacturing percent and in some cases close to 60 percent (Požega-Slavonia county, for example). The biggest number/share of the inactive popu- lation involves pupils and students as well

970 940 as retired people. These indicators show a shing 1,153 4,108 3,100 fi 10,271 very small worker pool that can’t be the base forestry and Agriculture, for economic and regional development and prosperity, especially in periods of economic Table 2. Number of employed persons in legal entities in some economic activities in Eastern Croatia by counties, 2011 2. Number of employed persons in legal entities some economic activities Eastern Croatia Table stagnation or crisis, and it will also infl uence the decline of GDP per capita. If GDP data for the year of 2005 on the NUTS 2 level is compared between the EU and

County Croatia, the regional GDP in Eastern Croatia

: Employment and wages, Statistical Reports, 2011, www.dzs.hr Statistical Reports, 2011, www.dzs.hr : Employment and wages, according to purchasing power parity is only

ek-Baranja ij at 34.5 percent of the EU average (while, for Vukovar-Sirmium Total Virovitica-Podravina Požega-Slavonia Brod-Posavina Slavonski Os Source example, the North-western region of Croatia 340 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Employment and Wages, Statistical Reports, 2011, calculated by authors Employment and Wages, Source: The share of industrial workers in total employment (in all activities) 2011. The share of industrial workers Fig. 5. Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 341 Employment and Wages, Statistical Reports, Employment and Wages, Source: 2011, calculated by authors Share of employed persons per 100 inhabitants in cities and municipalities Eastern Croatia, 2011. Share of employed FFig. 6. 342 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. Croatian Bureau for Employment, Source: www.hzz.hr, calculated by authors www.hzz.hr, Share of unemployed persons per 100 inhabitants in cities and municipalities Eastern Croatia, 2011. Share of unemployed Fig. 7. Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344. 343

is at 64.3 percent of the EU average and the opment of these activities and investment Adriatic region is at 47.6 percent of the EU in new technologies and research will not average). Diff erences in wealth between these be possible. Both of these sectors have been three regions can be linked back to the main in economic crisis for decades. That is why economic structure, i.e. the share of certain specialised geographical production systems sectors compared to national average. Eastern should be developed to serve as a basis for Croatia is economically very homogeneous, the food industry and the agro-food sector in while the other two regions have more het- general. A big part of this production could erogeneous economical structures. Regions be used in the tourism sector to a much great- with a narrow economic base are more sensi- er extent than it is now. tive to all economic crises and less competi- In this context, authors can conclude tive in comparison with regions that have a that the first hypothesis is confirmed. As broader economic base (Strategy for Regional the population is the most important fac- Development). If we also take into consid- tor of regional and local planning and de- eration demographic structures in Eastern velopment, the unfavourable demographic Croatia, the number of active members in the dynamics and structural characteristics of population declines further (Table 3). Eastern Croatia reduce development po-

Table 3. Population of Eastern Croatia by current activity status, 2011

Economically Population, Employed Unemployed County inactive person person % person % person % Virovitica-Podravina 71,344 24,084 33.7 6,662 9.3 40,577 56.8 Požega-Slavonia 64,892 21,948 33.8 5,727 8.8 37,194 57.3 Slavonski Brod-Posavina 131,512 41,804 31.7 15,393 11.7 74,288 56.4 Osij ek-Baranja 258,226 95,300 36.9 26,363 10.2 136,505 52.8 Vukovar-Sirmium 149,070 48,894 32.7 16,426 11.0 83,693 56.1 Source: Population aged 15 and over by current activity status, age and sex, Census 2011, www.dzs.hr tential in this region, especially at the local level. The second hypothesis in this paper Conclusions is not confi rmed fully, as indicators show that the whole of Eastern Croatia has similar Eastern Croatia is a region with numerous population and economic-geographic prob- economic and development advantages in lems. However, at the local level, we have comparison to other Croatian regions. Un- demonstrated that bigger urban centres and fortunately, there are also numerous disad- municipalities and their surroundings have a vantages that have disabled the full use of bett er developmental position in comparison resources and capacities in this area. with remote rural municipalities. The third One of the biggest problems is depopu- hypothesis is confi rmed, as population and lation and the lack of young and educated economic potentials of Eastern Croatia for people who are usually the ‘engine’ of posi- regional development are not used in a way tive changes and the basis for social and eco- that would increase regional prosperity and nomic development.. the development of this area. In terms of agriculture and industry, once Eastern Croatia’s unique identity might the traditional sectors in the region of Eastern become a signifi cant resource and could be Croatia, without further fi nancial help from utilised for the further development of re- the state and EU cohesion and structural gional economy in agriculture, tourism or funds, the further restructuring and devel- other economic activities. 344 Lončar, J. and Marinković, V. Hungarian Geographical Bulletin 64 (2015) (4) 327–344.

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