Transcript the economic crisis

SONJA AVLIJAŠ (FREN, BELGRADE, SERBIA)
AND
CHIARA GUGLIELMETTI (UNIVERSITY OF TRENTO, ITALY)
World Bank Conference on
Poverty and Social Inclusion in the Western Balkans
Brussels, December 14-15, 2010
Contents
I. Regional cohesion and local development in Serbia
through
II. Instruments of decentralisation and regional policy
III. Impact of the international economic crisis on these processes
IV. The case of East Serbia, Timok Region: main research findings
(fieldwork and qualitative research interviews)
V. Concluding remarks
2
Regional Cohesion in Serbia
 Center-periphery relations: critical long-term question
 Reduction of regional disparities:
 Policy issue before the break-up of former Yugoslavia
 Regained momentum over the last decade
 Growing spatial inequalities in the 2000’s – ratio 1:16
 Economic growth failed to translate into employment
 Losers of transition spilled onto government “taps”
 Decentralisation taking place in many sectors in order to
improve service delivery at the local level
 Decentralisation policies not matched by adequate resources
3
Regional Policy (1)
 Centrally managed:
 National Investment Plan, 2006 (€600m 2007; €120m 2009; €250m 2010);
 Serbian Development Fund (i.e. credit lines; subsidies for entreprises)
 Measures implemented by line ministries
 Lack of:
 Coherent selection criteria and trasparent strategy
 Cross-sector cooperation
 Process and impact evaluation
 Microeconomic
restructuring, improvement
environment and competition policy
of
business
4
Regional Policy (2)
 2007 Ministry of Economy and Regional Development
 2009 Law on Regional Development (amended 2010):
 Regions as statistical functional territorial units (art. 4)
 Plethora of national and regional level instituttuons
 Fundamental change in the Law: recognition of existing
RDAs instead of creation ex novo
 RDAs: bottom up, often donor driven (municipalities, cities,
NGOs, private sector) started in 2003
5
Critical aspects and unsettled questions
 Decentralisation – Regional development – Regionalisation:
 Intertwined in political discourse
 Over –politicised
 Threatens to diminish support for decentralisation of service
delivery
 RDAs: undefined role and status (accreditation needed)
 Complex process of institution building that influence interinstitutional relations in unstructured ways (RDAs, LSGs)
 LSGs: no role in new institutional framework for RD, although
the only sub-national tier of government

fundamental actors in legitimising RDAs
6
Impact of the 2008-10 crisis
 2006 Law on financing LSGs broken in 2009 and 2010: transfers
to LSGs reduced by 13% (following SBA with IMF)
In the context of:
 Deteriorating economic and social conditions
(employment at 47.2%, and unemployment at 20.1%, April 2010)
 Lower tax revenues
 Pre-existing unresolved issues
(e.g. Law on Public Property; Exploitation of common pool resources)
7
Source: RARIS
8
Background of Timok Region
Double heritage:
 Vital economic - mainly industrial - area of former Yugoslavia
 ore deposits (RTB, high living standards; migration to Bor and Majdanpek,
one company towns)
 water resources (Danube, Đerdap I and II, transnational cooperation)
 Transit area
 more than 300.000 hectares of farming land
 Severe economic downturn due to
 Long-term economic crisis started in the 1970s
 Break-up of former Yugoslavia: economic devastation and change of
tourism and transit routes
 Economic transition
Strong “regional” identity
 Neither administrative, political entity nor statistical territorial unit
 RARIS, Regional Development Agency of Eastern Serbia, 2007
Timok Region:
Case study of “failed transition”
- Deindustrialisation
(Industrial employment rate fell by 240% between 1991 and
2008)
- Underdeveloped agriculture
(fragmented ownership, poor technology)
- Privatisation: poor results (RTB, Salaš), industrial complexes
underutilised or abandoned
- Education, healthcare and transport infrastructures, water
supply and sewage systems severely affected
- Environmental pollution (RTB Bor)
10
Timok Region:
Case study of “failed transition”
Monthly average income (in dinars)
District of Zaječar
District of Bor
Montly income 1995
273
422
(in dinars)
2009
24,822
29,340
Source: SIEPA, Serbia Investment and Export Promotion Agency
Serbia
366
31,930
11
Timok Region:
Case study of “failed transition”
Average Unemployment Rate (2009)
Average Unemployment rate
Bor
29.1
City of Zaječar
33.0
Knjaževac
39.6
Majdanpek
21.8
Sokobanja
25.4
Kladovo
28.5
Boljevac
23.7
Negotin
22.6
Source: Chamber of Commerce, Zaječar
12
Timok Region:
Case study of “failed transition”
Depopulation
(Bor: from 317,405 inhabitants in
1991 to 284,112 in 2002)
Population change by District (% change 2004-08)
Outmigration & low fertility rate:
ageing of the population
Brain drain
(33% of population older than
15 did not complete primary
school)
Source: Statistical Yearbook of the Republic of Serbia 2009; Avlijas and Bartlett, conference
paper, 2010
13
Regional Policy in Timok Region (I)
 Favourable position: Pan European Corridors IV, VII and X; EU Strategy for the
Danube
 Natural and historical resources
(geothermal springs, Natural Parks Đerdap and Stara Planina, Iron Gates;
Lepenski Vir and Felix Romuliana, UNESCO World Heritage Site)
 Long-term commercial (high level of exports which tend to constantly exceed
imports) and industrial cooperation with Romania and Bulgaria
 Industries (Đerdap, RTB)
Infrastructural and industrial programmes
But
 Unclear agenda (industry vs. eco-tourism)
 Politically visible investments with negligble local implications
(Corridor X, skiing resort in Stara Planina)
 Investments in human resources and SMEs left to donors
14
Regional Policy in Timok Region (II)
Need of a comprehensive effort, pivotal role of public policy
 (Few) Attempts to boost SMEs failed
(Bor and Zaječar accounted for 1.2% and 1.3% of total SMEs in Serbia in 2008, and for
0,7% of the National Value Added)
 Underdeveloped agricultural sector
(a bottom-up upgrading process is highly unlikely)
RARIS
 Significantly engaged in coordination and promotion of regional
development and advocacy campaigns
 Regional Development Strategy and Plan under way (2011): first
attempt
 Participative process, local embeddedness
 Commitment towards regionalisation
15
Concluding remarks
 Regional cohesion crucial for poverty alleviation and






social inclusion (esp. through labour market)
Regional cohesion is a highly politicised process
Its failure is compensated through passive support
(cash benefits)
RDAs underutilised as a vehicle for LED
No efforts to improve the business environment
Importance for cross-sectoral cooperation in attempts
of economic revitalisation
Trade-off between short term political concerns vs.
innovation and sustainable growth
16
Thank you
for your attention!
17