Local economic development in Eastern Serbia

Project description

Title: Local economic development in Eastern Serbia
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ); Swiss Agency for Development and Cooperation (SDC)
Country: Republic of Serbia 
Lead executing agency: Serbian Ministry of Economy
Overall term: 2007 to March 2017

A manufacturer of medicinal plants dried flowers. © GIZ

As part of the process of developing its market economy and moving closer to the EU, the Serbian Government has declared its intention to reduce regional economic disparities. Thus far most municipal authorities in Eastern Serbia have been unable to provide services that stimulate economic development while also meeting the criteria of good governance.

The basic conditions for local and regional economic development in Eastern Serbia are improved, taking into account the mechanisms and standards of good governance.

The key project partners are the nine Eastern Serbian pilot municipalities (Boljevac, Golubac, Kladovo, Knjazevac, Majdanpek, Negotin, Sokobanja, Veliko Gradiste and Zajecar) as well as the Ministry of Economy, the Ministry of Finance, the Ministry of Regional Development and Local Self-Government, the Ministry of Agriculture, the Serbian Standing Conference of Towns and Municipalities and the Regional Development Agency Eastern Serbia (RARIS).

Advisory services provided by Serbian and international experts assist the partners at the local, regional and national level to create conditions that are conducive to private sector development in accordance with the principles of good governance. The project aims to:

  • improve demand-based services for the private sector at local level,
  • promote local cooperation and foster networks at local level,
  • promote more productive and results-oriented cooperation between the various levels of administration, thus improving the operating environment for the private sector.

The project collaborates with other donors’ programmes and initiatives, primarily the Swiss Agency for Development and Cooperation (SDC), which co-finances the project.

Wine producers from Eastern Serbia making wine. © GIZ


  • From 2007 to 2010, the capacity to stimulate economic development of the municipalities receiving project support improved by 11 per cent, compared with an increase of just three per cent in a control group of municipalities receiving no project support.
  • Some 63 per cent of local companies confirm that the economic promotion services provided by municipal offices have improved.
  • In 2011, the Regional Development Agency Eastern Serbia (RARIS), which is supported by the project, became the first regional development agency to receive accreditation from the Serbian Government. It thus serves as the point of contact for the government and is responsible for implementing regional development plans and measures. The improved performance of RARIS is also reflected in its ability to raise additional funds, supplementing those provided by the project, from other partners (such as municipalities, ministries, the EU and other donors) to stimulate local economic development and regional development in Eastern Serbia.
  • The municipality of Golubac received EU funding to invest in tourist facilities at the historic Golubac Grad fortress. This investment is expected to increase annual revenues and create 50 new jobs.
  • Supported by the project, the vintners associations of Knjazevac and Negotin became the first in Serbia to secure country of origin labelling for their wine, in accordance with the new EU regulations. This has been accompanied by improved wine quality and also allowed producers in the relevant municipalities to generate added value.
  • The project supported the National Alliance for Local Economic Development and the Serbian Standing Conference of Towns and Municipalities with the Vision 2016 initiative. In twelve municipalities and towns, local authorities and small and medium-sized enterprises (SMEs) were asked to submit proposals for reform for the next government. The Vision 2016 recommendations have been fed into the coalition agreement that is now being implemented by the government.
  • Municipalities and towns in Eastern Serbia received project support on effectively levying property taxes on citizens and businesses. A fund has been made available to municipalities that did not raise taxes, but instead expanded their scope. The municipalities of Boljevac, Soko banja, Zajecar, Negotin and Veliko Gradiste received funding. Support from the project also made it possible to provide a heating system for a school, waterworks for several villages, LED street lights, a basketball court, and changing rooms at the football pitch.
  • The association of medicinal herb producers in Negotin received support from the project. With the help of distillation apparatus and drying equipment, they can optimise sales of their products. Students from the secondary agricultural school in Negotin can now select herbal science as an elective.
  • In cooperation with the town of Zajecar, the project made it possible for municipal employees to learn sign language. Due to challenges with communication, deaf people had been unable to handle even the most straightforward issues. As a result of the cooperation, 10 municipal employees in Zajecar are now able to communicate with individuals who are deaf or hearing-impaired.
The ceremony awards for municipalities that were the best in the collection of property tax © GIZ


Alexander Grunauer