Local self-government and economic development

Programme description

Title: Programme for local self-government and economic development
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ) 
Country: Bosnia and Herzegovina 
Lead executing agency: Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina (MoFTER) 
Overall term: 2013 to 2018

Context

In recent years, Bosnia and Herzegovina has made little progress in implementing political and economic reform. In international economic efficiency rankings, Bosnia and Herzegovina always occupies a low position among the European countries. For example, it came last out of 46 countries in the Doing Business 2015 index (overall ranking: 107th out of 189 countries).

The productivity of local companies and the quality of their products often do not meet the requirements of international markets. However, in certain sectors – including furniture manufacturing, the metal processing industry, food production and fruit and berry cultivation – the potential is there to satisfy the demand of the domestic market and export products to the EU and other countries. Public institutions, the private sector and civil society must cooperate more closely to improve economic performance and make Bosnia and Herzegovina an attractive business location. In particular, the public administration does not view itself as a driving force behind economic development and, consequently, does not address the structural problems sufficiently.

Objective

Selected locations in Bosnia and Herzegovina improve their economic efficiency and competitiveness.

Approach

The programme focuses on three pilot regions in Bosnia and Herzegovina, where methods and strategies in the fields of promoting local economic development and value chain development are gradually being implemented. It supports municipalities in cooperating with each other and engaging in dialogue with local companies, enabling them to participate jointly in planning and implementing strategic measures.

In addition, GIZ promotes the municipalities’ cooperation with other relevant institutions, such as regional development agencies, ministries and business associations. This ensures that the strategies developed are disseminated throughout the country and that joint initiatives to boost competitiveness are implemented.

Results

In the north of Bosnia and Herzegovina, four municipalities have joined forces with small and medium-sized enterprises to form a local action group (LAG) with a view to jointly marketing products from the region – in particular agricultural produce – and developing new marketing possibilities.

In central Bosnia, three municipalities now carry out inter-entity location marketing under the name Business Excellence Area (BEAR). Their efforts were recognised in early 2014 by Foreign Direct Investment Magazine published by the Financial Times Group. The magazine singled out BEAR as one of the most attractive investment locations in Europe – a claim supported by the real investments now coming into the municipalities.